ACQUISITION AGREEMENT BY AND AMONG INDUSTRIAL ENTERPRISES OF AMERICA, INC., UNIFIDE INDUSTRIES, LIMITED LIABILITY COMPANY, BARRY J. MARGULIS AND SCOTT L. MARGULIS
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BY AND
AMONG
UNIFIDE
INDUSTRIES, LIMITED LIABILITY COMPANY,
XXXXX X.
XXXXXXXX AND XXXXX X. XXXXXXXX
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Agreement
dated as of the 1st day of June 2005 by and among, Industrial Enterprises of
America, Inc., a Nevada corporation, with an address at 000 Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, XX 00000 (“Industrial Enterprises”), Unifide Industries, Limited
Liability Company, a New Jersey limited liability company, with an address at
000 Xxxxxxx 00, Xxxx Xxxx Xxxxxx, XX 00000 (“Unifide”), Xxxxx X. Xxxxxxxx with
an address c/o Unifide, 000 Xxxxxxx 00, Xxxx Xxxx Xxxxxx, XX 00000 (“Xxxxx”) and
Xxxxx X. Xxxxxxxx with an address c/o Unifide, 000 Xxxxxxx 00, Xxxx Xxxx Xxxxxx,
XX 00000 (“Xxxxx”); Xxxxx and Xxxxx are hereinafter jointly referred to as the
“Unifide Members”) who own all of the issued and outstanding membership
interests of Unifide (the “Membership Interests”) as of the date of this
Agreement.
WITNESSETH
WHEREAS,
Industrial
Enterprises is a reporting company registered with the Securities and Exchange
Commission (the “SEC”), whose stock is quoted on the Pink Sheets under the
symbol ILNP;
WHEREAS, the
Board of Directors of Industrial Enterprises and the Unifide Members deem it
advisable and in the best interests of each entity and their respective
stockholders and Members that Industrial Enterprise purchase one hundred (100%)
percent of the Membership Interests of Unifide in exchange for cash, a
promissory note and shares of capital stock of Industrial Enterprises;
WHEREAS, on the
Closing Date (hereinafter defined in Article “4” of this Agreement), Industrial
Enterprises shall acquire one hundred (100%) percent of the Membership Interests
of Unifide; and
WHEREAS, the
Board of Directors of Industrial Enterprises and the Unifide Members have
approved this Agreement.
NOW,
THEREFORE, in
consideration of the mutual covenants of the parties hereinafter set forth, and
for good and valuable consideration, receipt of which is hereby acknowledged,
IT IS
AGREED:
1. Recitals. The
parties hereby adopt as part of this Agreement each of the recitals which is set
forth above in the WHEREAS clauses, and agree that such recitals shall be
binding upon the parties hereto by way of contract and not merely by way of
recital or inducement and such WHEREAS clauses are hereby confirmed and ratified
as being accurate by each party as to itself and himself.
2. Acquisition.
A. Subject
to, and consistent with, the provisions of this Agreement, Industrial
Enterprises shall on the Closing Date acquire one hundred (100%) percent of the
Membership Interests of Unifide.
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B. On the
Closing Date, subject to and pursuant to the terms and conditions of this
Agreement, Industrial Enterprises shall, in exchange for one hundred (100%)
percent of the Membership Interests of Unifide:
i. Pay an
aggregate of eight hundred thousand ($800,000) dollars in cash to the Unifide
Members.
ii. Issue
promissory notes (the “Promissory Notes”), in the form annexed to, and made a
part of, this Agreement as Exhibit “A” (Article “2.B.ii”.), in the aggregate
principal amount of one million two hundred thousand ($1,200,000) dollars in
favor of the Unifide Members which shall be secured as set forth in the
Promissory Notes.
iii. Issue an
aggregate of three million, five hundred thousand (3,500,000) shares (the
“Shares”) of common stock of Industrial Enterprises, par value $.001 (the
“Common Stock”) to the Unifide Members; provided, however, that if the average
of the closing price of the Common Stock for the period from July 1, 2005
through July 10, 2005 is less than thirty ($.30) cents, then the number of
shares to be issued to the Unifide Members shall be adjusted so that the
aggregate value of the shares issued to the Unifide Members shall be one
million, fifty thousand ($1,050,000) dollars.
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The
closing price of the Common Stock shall be the average of the closing price of
the Common Stock for the period from July 1, 2005 through July 10, 2005 provided
by the national securities exchange or inter-dealer quotation system on which
Industrial Enterprises is listed at that time, or if the last sale price per
share is unavailable, the average of the closing bid and asked prices per share
on such date, or if there was no trading or quotation on such date, the last
sales price, if available, or the average of the closing bids and asked prices
per share on the next preceding date on which there was trading or
quotation.
3. Employees.
A. Industrial
Enterprises agrees that it shall cause Unifide to enter into employment
agreements with each of the Unifide Members, in the forms which are annexed to,
and made a part of, this Agreement as Exhibits “B” (Article “3.A.”) and “C”
(Article “3.A.”).
B. Industrial
Enterprises further agrees that it shall grant to Unifide’s employees, other
than the Unifide Members, on the Closing Date, an aggregate of two hundred
thousand (200,000) options to purchase two hundred thousand (200,000) shares of
Common Stock of Industrial Enterprises at a purchase price of forty ($.40) cents
per share pursuant to Industrial Enterprises’ 2004 Stock Option Plan. No
employee of Unifide shall be eligible to purchase any shares of Common Stock
pursuant to the options granted pursuant to this Paragraph “B” of this Article
“3” of this Agreement until said employee has been employed by Unifide for a
period of two (2) years after the Closing Date. The options shall expire ten
(10) years after the Closing Date.
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C. If, at
the end of each twelve (12) month period commencing (i) July 1, 2005 and (ii)
July 1, 2006, Industrial Enterprises’ earnings before interest, taxes,
depreciation and amortization (“EBITDA”), as determined by Industrial
Enterprises’ independent certified public accountants which are certifying the
Industrial Enterprises’ financial statements for the same period utilizing
accounting principles generally accepted in the United States which are
consistently applied, exceed seven hundred thousand ($700,000) dollars (the
“Base EBITDA”), each of Unifide’s Members shall be granted as of the last
business day of the applicable period, for every one hundred thousand ($100,000)
dollars by which the Industrial Enterprises’ EBITDA exceeds the Base EBITDA, an
option (the “EBITDA Option”) to purchase fifty thousand (50,000) shares of
Common Stock of Industrial Enterprises. If there is less than a full one hundred
thousand ($100,000) dollars or increment thereof, the Employee shall receive a
prorata portion of the EBITDA Option. The purchase price for the EBITDA Option
shall be equal to the closing price of the Common Stock on August 15th of each
applicable year. The EBITDA Option shall expire ten (10) years after the date on
which it is granted.
The
closing price of the Common Stock shall be the last sale price per share
provided by the national securities exchange or inter-dealer quotation system on
which Industrial Enterprises is listed at that time, or if the last sale price
per share on the applicable day is unavailable, the average of the closing bid
and asked price per share on such date, or if there was no trading or quotation
on such date, the last sales price, if available, or the average of the closing
bid and asked price per share on the date preceding such date on which there was
trading or quotation.
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D. Industrial
Enterprises hereby agrees that it shall grant to Xxxxx an option to purchase one
million seven hundred forty one thousand, two hundred and fifty (1,741,250)
shares of common stock, par value $.001 of Industrial Enterprises, at a purchase
price of twenty-three ($.23) cents per share. Said option shall expire on May
31, 2015 and shall be subject to the terms of the Option Agreement in the form
of which is annexed hereto as Exhibit “D.”
E. Industrial
Enterprises hereby agrees that it shall grant to Xxxxx an option to purchase
three thousand seven hundred fifty (3,750) shares of common stock, par value
$.001 of Industrial Enterprises, at a purchase price of twenty-three ($.23)
cents per share. Said option shall expire on May 31, 2015 and shall be subject
to the terms of the Option Agreement in the form of which is annexed hereto as
Exhibit “D.”
4. Closing
Date. The
closing of this transaction (the “Closing”) shall take place upon delivery of
all of the items set forth in Article “12” of this Agreement by the parties at
the offices of Xxxxx & Fraade, P.C., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 11:00 A.M on or prior to June 30, 2005 (the “Closing Date”), provided
that this Agreement has not been terminated pursuant to Article “15” of this
Agreement by any party.
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5. Representations,
Warranties and Covenants of Industrial Enterprises.
Industrial Enterprises represents, warrants and covenants to Unifide and the
Unifide Members as follows:
A. Corporate
Status.
i. Industrial
Enterprises is a corporation duly organized, validly existing and in good
standing pursuant to the laws of the State of Nevada, with all requisite power
and authority to carry on its business as presently conducted in all
jurisdictions where presently conducted, to enter into this Agreement and to
consummate the transactions set forth in this Agreement; and
ii. Copies of
(a) the Articles of Incorporation of Industrial Enterprises, and all amendments
thereto, certified by the Secretary of State of the State of Nevada, (b) the
By-Laws of Industrial Enterprises, as amended, certified by the Secretary of
Industrial Enterprises, and (c) a good standing certificate for Industrial
Enterprises issued by the Secretary of State of the State of Nevada as of a date
not more than thirty (30) days prior to the date of this Agreement, are annexed
to, and made a part of, this Agreement as the following Exhibits: “E” (Article
“5.A.ii.”), “F” (Article “5.A.ii.”) and “G” (Article “5.A.ii.”) respectively,
and are complete and correct as of the date of this Agreement.
B. Capitalization.Industrial
Enterprises’ capitalization shall be as set forth in the Form 10Q for the period
ended March 31, 2005 which was filed with the SEC on June 6, 2005. Upon issuance
in accordance with the terms of this Agreement, the Shares will be validly
issued, fully paid and non-assessable.
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C. Authority
of Industrial Enterprises.
Industrial Enterprises has the full corporate power and authority to execute,
deliver, and perform this Agreement and has taken all corporate action required
by law and its organizational documents to authorize the execution and delivery
of this Agreement and the consummation of the transactions set forth in this
Agreement. This Agreement and the consummation by Industrial Enterprises of the
transactions set forth in this Agreement have been duly and validly authorized,
executed, and delivered by the Board of Directors of Industrial Enterprises, and
this Agreement is valid and binding upon Industrial Enterprises and enforceable
against Industrial Enterprises in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, bank moratorium or similar
laws affecting creditors' rights generally and laws restricting the availability
of equitable remedies and may be subject to general principles of equity whether
or not such enforceability is considered in a proceeding at law or in equity). A
certified resolution of the Board of Directors of Industrial Enterprises is
annexed to, and made a part of, this Agreement as Exhibit “H” (Article
“5.C.”).
D. Compliance
with the Law and Other Instruments. Except
as otherwise provided in this Agreement and in the exhibits or schedules annexed
to this Agreement, the business and operations of Industrial Enterprises have
been and are being conducted in all material respects in accordance with all
applicable laws, rules and regulations of all authorities which affect
Industrial Enterprises or its properties, assets, businesses or
prospects.
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E. Absence
of Conflicts. The
execution and delivery of this Agreement and the issuance of the securities of
Industrial Enterprises, and the consummation by Industrial Enterprises of the
transactions set forth in this Agreement: (i) do not and shall not conflict with
or result in a breach of any provision of Industrial Enterprises’ Articles of
Incorporation or
By-Laws, (ii) do not and shall not result in any breach of, or constitute a
default or cause an acceleration under any arrangement, agreement or other
instrument to which Industrial Enterprises is a party to or by which any of its
assets are bound, (iii) do not and shall not cause Industrial Enterprises to
violate or contravene any provision of law or any governmental rule or
regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of Industrial Enterprises. Industrial
Enterprises has performed in all material respects all of its obligations which
are, as of the date of this Agreement, required to be performed, pursuant to the
terms of any such agreement, contract or commitment.
F. Environmental
Compliance. To
Industrial Enterprises’ knowledge, it is in compliance with all applicable
environmental laws (the “Environmental Laws”). Industrial Enterprises is
presently authorized, if required, to generate, transport through third parties,
store, use, treat, dispose of, release, and conduct other handling of, as
required, those hazardous substances used in Industrial Enterprises’ business,
which consist of, hazardous waste, hazardous material, hazardous constituents,
toxic substances, pollutants, contaminants, asbestos, radon, polychlorinated
biphenyls, petroleum product or waste (including crude oil or any fraction
thereof), natural gas, liquefied gas, synthetic gas and other material defined,
regulated, controlled or subject to any remediation requirement under any
Environmental Law.
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G. OSHA
Compliance. To
Industrial Enterprises’ knowledge, it is in compliance with all applicable
federal, state and local laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder and other
governmental requirements relating to occupational health and safety, including
but not limited to the Occupational Safety and Health Act of 1970, as amended,
and the rules and regulations promulgated thereunder.
H. Financial
Statements.
Industrial Enterprises’ last annual report on Form 10-K for the fiscal year
ended December 31, 2003 (the “Form 10K”) and Industrial Enterprises’ quarterly
reports on Form 10-Q for the periods ended March 31, 2004, June 30, 2004,
September 30, 2004, December 31, 2004 and March 31, 2005 (the “Forms 10Q”; Forms
10Q and Form 10K are hereinafter collectively referred to as the “Industrial
Enterprises Financial Statements”) have been prepared using accounting
principles generally accepted in the United States (“GAAP”) applied on a
consistent basis. The Industrial Enterprises Financial Statements fairly present
the financial condition and results of operations for Industrial Enterprises.
Except as indicated in the Industrial Enterprises Financial Statements, or in
any exhibit or schedule to this Agreement, Industrial Enterprises did not have
as of March 31, 2005 any outstanding indebtedness or other liabilities or
obligations of any nature (whether absolute, accrued, contingent or otherwise,
and whether due or to become due). Except as set forth on the disclosure
schedule (the “Industrial Enterprises Disclosure Schedule”) which is annexed to,
and made a part of, this Agreement as Exhibit “I” (Article “5.H.”), since March
31, 2005, there has not been any material adverse change in Industrial
Enterprises’ financial condition, assets, liabilities or business, or any
damage, destruction or loss, whether or not covered by insurance, materially
affecting Industrial Enterprises’ properties, assets or business, and Industrial
Enterprises has not incurred any indebtedness, liability or other obligation of
any nature whatsoever except in the ordinary course of business and Industrial
Enterprises has not made any change in its accounting methods or
practices.
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I. Taxes.Industrial
Enterprises has timely filed all required federal, state, city and local tax
returns for income, franchise, social security, withholding, sales, excise,
unemployment insurance, real estate and other taxes, and has paid or made
adequate provision for the payment of all such taxes shown to be due on said
returns.
J. Litigation.Except as
set forth on the Industrial Enterprises Disclosure Schedule, there are no legal,
administrative, arbitration, or other proceeding or governmental investigations
adversely affecting Industrial Enterprises or its properties, assets or
businesses, or with respect to any matter arising out of the conduct of
Industrial Enterprises’ business pending or to its knowledge threatened, by or
against, any officer or director of Industrial Enterprises in connection with
its affairs, whether or not covered by insurance. Except as set forth on the
Industrial Enterprises Disclosure Schedule, neither Industrial Enterprises nor
its officers or directors are subject to any order, writ, injunction, or decree
of any court, department, agency, or instrumentality, affecting Industrial
Enterprises. Except as set forth on the Industrial Enterprises Disclosure
Schedule, Industrial Enterprises is not presently engaged in any legal action.
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K. Reporting
Company Status.
Industrial Enterprises is a reporting company registered with the SEC whose
stock is quoted on the Pink Sheets under the symbol ILNP. Industrial Enterprises
has not received any notice with respect to non-compliance with any rules or
regulations that would affect the eligibility of the Common Stock to be quoted
on the Pink Sheets.
L. SEC
Filings. Except
as set forth on the Industrial Enterprises Disclosure Schedule, Industrial
Enterprises has filed all forms, reports and documents required to be filed by
Industrial Enterprises with the SEC since March 31, 2004 (collectively, the “SEC
Reports”) and the SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended, (the “Act”) and the Securities Exchange Act of 1934, as amended, as the
case may be, and (ii) did not, to Industrial Enterprises’ knowledge, at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a fact required to be stated in such SEC
Reports or necessary in order to make the statements in such SEC Reports, in the
light of the circumstances under which they were made, not materially
misleading.
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M. Absence
of Changes. Except
as set forth on the Industrial Enterprises Disclosure Schedule, subsequent to
March 31, 2005 and through the date of this Agreement, and except as in the
ordinary course of business and with respect to any items reserved by Industrial
Enterprises and reflected in the Industrial Enterprises Financial Statements,
there has not been any material adverse change in, or any event or condition
(financial or otherwise) affecting the business, properties, assets,
liabilities, historical operations or prospects of Industrial Enterprises, there
are no liabilities or obligations of any nature, whether absolute, contingent or
otherwise, whether due or to become due (including, without limitation,
liabilities for taxes with respect to or measured by income of Industrial
Enterprises for any period prior to, and/or subsequent to, March 31, 2005 or
arising out of any transaction of Industrial Enterprises prior to, and/or
subsequent to, such date). Except as set forth on the Industrial Enterprises
Disclosure Schedule, subsequent to March 31, 2005, there has not been any
declaration, or setting aside, or payment of any dividend or other distribution
with respect to Industrial Enterprises’ securities, or any direct or indirect
redemption, purchase, or other acquisition of any of Industrial Enterprises’
securities. To Industrial Enterprises’ knowledge, there has not been an
assertion against Industrial Enterprises of any liability of any nature or in
any amount not fully reflected or reserved against in the Form 10Q for the
period ended March 31, 2005.
N. No
Approvals. No
approval of any governmental authority is required in connection with the
consummation of the transactions set forth in this Agreement.
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O. Broker.
Industrial Enterprises has not had any dealing with respect to this transaction
with any business broker, firm or salesman, or any person or corporation,
investment banker or financial advisor who is or shall be entitled to any
broker's or finder's fee or any other commission or similar fee with respect to
the transactions set forth in this Agreement. Industrial Enterprises represents
that it has not dealt with any person, firm or corporation and agrees to
indemnify and hold harmless Unifide and the Unifide Members from and against any
and all claims for brokerage commissions by any person, firm or corporation on
the basis of any act or statement alleged to have been made by Industrial
Enterprises or its affiliates or agents.
P. Complete
Disclosure. No
representation or warranty of Industrial Enterprises which is contained in this
Agreement, or in a writing furnished or to be furnished pursuant to this
Agreement, to Industrial Enterprises’ knowledge contains or shall contain any
untrue statement of a material fact, omits or shall omit to state any fact which
is required to make the statements which are contained herein or therein, in
light of the circumstances under which they were made, not materially
misleading. There is no fact relating to the business, affairs, operations,
conditions (financial or otherwise) or prospects of Industrial Enterprises which
would materially adversely affect same which has not been disclosed in this
Agreement.
Q. No
Defense. It
shall not be a defense to a suit for damages for any misrepresentation or breach
of covenant or warranty that Industrial Enterprises knew or had reason to know
that any covenant, representation or warranty of Unifide or the Unifide Members
in this Agreement or any exhibit attached to this Agreement furnished or to be
furnished to them contained untrue statements.
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i. Obligations. On the
Closing Date, Industrial Enterprises shall assume all of the obligations of the
Unifide Members with respect to the business of Unifide, provided however, that
Xxxxx and Xxxxx agree that they shall continue their bank guarantee on behalf of
Unifide for a period of thirty (30) days after the Closing Date. If Xxxxx and
Xxxxx are not removed as guarantors of the Bank of New York obligations within
thirty (30) days following the Closing Date, Industrial Enterprises shall be
required to pay the sum of five hundred thousand dollars ($500,000) to The Bank
of New York to reduce the obligations of Unifide to The Bank of New York.
Thereafter for every (30) thirty days that Industrial Enterprises fails to
obtain a release for the Unifide Members with respect to The Bank of New York,
Industrial Enterprises shall be required to pay the sum of five hundred thousand
dollars ($500,000) to the Bank of New York to reduce the obligations of Unifide
to The Bank of New York until the earlier of such time as the guarantees by the
Unifide Members are removed or the loans are paid in full.
R. Guarantee.
Industrial Enterprises hereby guarantees the obligations and commitments of
Unifide to Xxxxx and Xxxxx pursuant to or arising out of this Agreement.
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6. Representations,
Warranties and Covenants of Unifide and the Unifide Members. Unifide
and the Unifide Members, jointly and severally, represent, warrant and covenant
to Industrial Enterprises as follows:
A. Status.
i. Unifide
is a limited liability company duly organized, validly existing and in good
standing pursuant to the laws of the State of New Jersey, with all requisite
power and authority to carry on its business as presently conducted in all
jurisdictions where presently conducted, to enter into this Agreement and to
consummate the transactions set forth in this Agreement; and
ii. Copies of
(a) the Articles of Formation of Unifide, and all amendments thereto, certified
by the Secretary of State of the State of New Jersey, (b) the Operating
Agreement of Unifide, as amended, certified by the Unifide Members, and (c) a
good standing certificate for Unifide issued by the Secretary of the State of
the State of New Jersey as of a date not more than thirty (30) days prior to the
date of this Agreement, are annexed to, and made a part of, this Agreement as
the following Exhibits: “J” (Article “6.A.ii.”), “K” (Article “6.A.ii.”) and “L”
(Article “6.A.ii.”) respectively, and are complete and correct as of the date of
this Agreement.
B. Capitalization. One
hundred (100%) percent of Unifide’s Membership Interests are validly issued,
fully paid and non-assessable. Except as set forth in Article “2” of this
Agreement there are no subscriptions, options, warrants, rights or other
agreements outstanding to acquire any of Unifide’s Membership Interests or any
other equity security or security convertible into a Membership Interest.
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C. Authority
of Unifide and the Unifide Members.
i. Unifide
has the full power and authority to execute, deliver, and perform this Agreement
and has taken all action required by law and its organizational documents to
authorize the execution and delivery of this Agreement and the consummation of
the transactions set forth in this Agreement. This Agreement and the
consummation by Unifide of the transactions set forth in this Agreement have
been duly and validly authorized, executed, and delivered by the Unifide
Members, and this Agreement is valid and binding upon Unifide and enforceable
against Unifide in accordance with its terms (except as the enforceability
thereof may be limited by bankruptcy, bank moratorium or similar laws affecting
creditors' rights generally and laws restricting the availability of equitable
remedies and may be subject to general principles of equity whether or not such
enforceability is considered in a proceeding at law or in equity). Certified
resolutions of the Unifide Members are annexed to, and made a part of, this
Agreement as Exhibit “M” (Article “6.C.”).
ii. The
Unifide Members are individuals who each have the full authority, right, power
and legal capacity to enter into this Agreement and to consummate the
transactions which are provided for herein.
This
Agreement is valid and binding upon each Unifide Member and enforceable against
him in accordance with its terms (except as the enforceability thereof may be
limited by bankruptcy, bank moratorium or similar laws affecting creditors'
rights generally and laws restricting the availability of equitable remedies and
may be subject to general principles of equity whether or not such
enforceability is considered in a proceeding at law or in equity).
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D. Ownership. The
Unifide Members are the record, beneficial and equitable owners of the
Membership Interest set forth next to his name on the Member Schedule which is
annexed to, and made a part of, this Agreement as Exhibit “N” (Article “6.D.”).
Each holds his respective Membership Interest free and clear of all liens,
claims or encumbrances and each has the full right and authority to exchange his
Membership Interest for the consideration set forth in Paragraph “B” of Article
“2” of this Agreement.
E. Compliance
with the Law and Other Instruments. Except
as otherwise provided in this Agreement and in the exhibits or schedules annexed
to this Agreement, the business and operations of Unifide have been and are
being conducted in all material respects in accordance with all applicable laws,
rules and regulations of all authorities which affect Unifide or its properties,
assets, businesses or prospects.
F. Absence
of Conflicts. The
execution and delivery of this Agreement, the transfer of the Membership
Interests, and the consummation by Unifide and the Unifide Members of the
transactions set forth in this Agreement: (i) do not and shall not conflict with
or result in a breach of any provision of Unifide's Articles of
Formation or
Operating Agreement, (ii) do not and shall not result in any breach of, or
constitute a default or cause an acceleration under any arrangement, agreement
or other instrument to which Unifide and/or Unifide’s Members are parties to or
by which any of Unifide’s assets are bound, (iii) do not and shall not cause
Unifide to violate or contravene any provision of law or any governmental rule
or regulation, and (iv) will not and shall not result in the imposition of any
lien, or encumbrance upon, any property of Unifide. Unifide has performed in all
material respects all of its obligations which are, as of the date of this
Agreement, required to be performed, pursuant to the terms of any such
agreement, contract or commitment.
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G. Environmental
Compliance. To the
knowledge of Unifide and the Unifide Members, Unifide is in compliance with all
applicable environmental laws (the “Environmental Laws”). Unifide is presently
authorized, if required, to generate, transport through third parties, store,
use, treat, dispose of, release, and conduct other handling of, as required,
those hazardous substances used in Unifide's business, which consist of,
hazardous waste, hazardous material, hazardous constituents, toxic substances,
pollutants, contaminants, asbestos, radon, polychlorinated biphenyls, petroleum
product or waste (including crude oil or any fraction thereof), natural gas,
liquefied gas, synthetic gas and other material defined, regulated, controlled
or subject to any remediation requirement under any Environmental
Law.
H. OSHA
Compliance. To the
knowledge of Unifide and the Unifide Members, Unifide is in compliance with all
applicable federal, state and local laws, rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder and
other governmental requirements relating to occupational health and safety,
including but not limited to the Occupational Safety and Health Act of 1970, as
amended, and the rules and regulations promulgated thereunder.
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I. Employees,
Compensation and Employee Benefit Plans.
i. Annexed
to, and
made a part of, this Agreement as
Exhibit “O” (Article “6.I.”) is a true and complete schedule, as of the date of
this Agreement, showing the names of all persons employed by Unifide together
with a statement of the amount paid or payable to each such person for services
rendered or to be rendered, including all accrued and unpaid benefits and the
basis therefor, for such person.
ii. Except as
set forth in Exhibit “O” (Article “6.I.”), Unifide has complied with all
applicable federal and state laws, including, but not limited to, ERISA,
relating to the employment of labor, including provisions relating to wages,
hours, collective bargaining, and payment of social security taxes, and is not
liable for any arrears of wages, or any taxes or penalties, or for failure to
comply with any of the foregoing.
iii. Except as
set forth in Exhibit “O” (Article “6.I.”) Unifide and/ or any ERISA affiliate is
not a party to any employment contracts, collective bargaining agreements with
employees, consulting agreements, employees' pension, bonus, retirement, profit
sharing, hospitalization or medical plans, employees' stock purchase or stock
option plans, or other employee benefit plans or to which Unifide and/ or any
ERISA affiliate contributes or is or was obligated to contribute (the “Unifide
Employee Benefit Plans”).
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iv. Except as
set forth in Exhibit “O” (Article “6.I.”), there is no pending litigation or, to
the knowledge of Unifide or the Unifide Members, any threatened litigation or
pending claim, that involves the Unifide Employee Benefit Plans.
v. Except as
set forth in Exhibit “O” (Article “6.I.”), none of the Unifide Employee Benefit
Plans is or ever was subject to Title IV of ERISA or Section 412 of the Code.
Neither Unifide nor an ERISA affiliate is or ever has been required to
contribute to an Employee Benefit Plan that is a Multi-employer
Plan.
J. Unifide
Employees and Consultants. Except
as set forth in Exhibit “P” (Article “6.J.”) which is annexed to, and
made a part of, this Agreement, Unifide
does not have any contingent liabilities as a result of any agreement with a
Unifide employee or consultant. Except as set forth in Exhibit “P” (Article
“6.J.”) there is no pending litigation, or to the knowledge of Unifide and the
Unifide Members, any threatened litigation or pending claim against Unifide as a
result of any agreement with a Unifide employee or consultant.
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K. Related
Party Transactions. Except
as set forth on Exhibit “Q” (Article “6.K.”), which is annexed to, and
made a part of, this Agreement:
i. No
employee, officer or director of Unifide, no affiliate of any employee, officer
or members of Unifide, and no member of the immediate family of any employee,
officer or member of Unifide is indebted to Unifide,
ii. Unifide
is not indebted, and is not committed to make loans or extend or guarantee
credit, to any employee, officer or member of Unifide or any affiliate of any
employee, officer or member of Unifide or any member of the immediate family of
any employee, officer or member of Unifide.
iii. No
affiliate, officer or member of Unifide and no member of the immediate family of
any affiliate, officer or member of Unifide is interested, directly or
indirectly, in any material contract with Unifide, except for employment
agreements entered into in the ordinary course of business and approved by the
Unifide Members. To the knowledge of Unifide and the Unifide Members, no
employee and no member of the immediate family of any employee is interested,
directly or indirectly, in any material contract with Unifide.
22
L. Financial
Statements. Annexed
to, and made a part of, this Agreement as Exhibit “R” (Article “6.L.”) are true
copies of Unifide’s unaudited statements of profit and loss for the fiscal years
ended December 31, 2003 and December 31, 2004 and for the period ended May 31,
2005 (collectively, the “Financial Statements”), which have been prepared using
GAAP applied on a consistent basis. The Financial Statements fairly present the
financial condition and results of operations for Unifide. Except as indicated
in the Financial Statements, or in any exhibit or schedule to this Agreement,
Unifide does not have any outstanding indebtedness or other liabilities or
obligations of any nature (whether absolute, accrued, contingent or otherwise,
and whether due or to become due). Except as set forth on the disclosure
schedule (the “Unifide Disclosure Schedule”) which is annexed to, and made a
part of, this Agreement as Exhibit “S” (Article “6.L.”), since the date of the
Financial Statements, there has not been any material adverse change in
Unifide's financial condition, assets, liabilities or business, or any damage,
destruction or loss, whether or not covered by insurance, materially affecting
Unifide’s properties, assets or business, and Unifide has not incurred any
indebtedness, liability or other obligation of any nature whatsoever except in
the ordinary course of business and Unifide has not made any change in its
accounting methods or practices.
M. Taxes. Unifide
has timely filed all required federal, state, city and local tax returns for
income, franchise, social security, withholding, sales, excise, unemployment
insurance, real estate and other taxes, and has paid or made adequate provision
for the payment of all such taxes shown to be due on said returns.
23
N. Contracts.Annexed
to, and made a part of, this Agreement as Exhibit “T” (Article “6.N.”) is a true
and complete schedule of all of Unifide’s contracts. All of the contracts so
listed have been entered into in the ordinary course of business and neither
Unifide nor any other party to any such contract is in default under any such
contract.
O. Litigation.Except as
set forth on the Unifide Disclosure Schedule, there are no legal,
administrative, arbitration, or other proceeding or governmental investigations
adversely affecting Unifide or its properties, assets or businesses, or with
respect to any matter arising out of the conduct of Unifide’s business pending
or to its knowledge threatened, by or against, any officer or member of Unifide
in connection with its affairs, whether or not covered by insurance. Except as
set forth on the Unifide Disclosure Schedule, neither Unifide nor its officers
or members are subject to any order, writ, injunction, or decree of any court,
department, agency, or instrumentality, affecting Unifide. Except as set forth
on the Unifide Disclosure Schedule, Unifide is not presently engaged in any
legal action.
P. Absence
of Changes. Except
as set forth on the Unifide Disclosure Schedule, subsequent to the date of the
Financial Statements and through the date of this Agreement, there has not been
any material adverse change in, or any event or condition (financial or
otherwise) affecting the business, properties, assets, liabilities, historical
operations or prospects of Unifide, and except as in the ordinary course of
business and with respect to any items reserved by Unifide and reflected in its
Financial Statements, there are no liabilities or obligations of any nature,
whether absolute, contingent or otherwise, whether due or to become due
(including, without limitation, liabilities for taxes with respect to or
measured by income of Unifide for any period prior to, and/or subsequent to, the
date of the Financial Statements or arising out of any transaction of Unifide
prior to, and/or subsequent to, such date). Subsequent to the date of the
Financial Statements, there has not been any declaration, or setting aside, or
payment of any distribution with respect to the Membership Interests, or any
direct or indirect redemption, purchase, or other acquisition of any Membership
Interest. To Unifide’s and Unifide’s Members’ knowledge, there has not been an
assertion against Unifide of any liability of any nature or in any amount not
fully reflected or reserved against in the Financial Statements.
24
Q. No
Approvals. No
approval of any governmental authority is required in connection with the
consummation of the transactions set forth in this Agreement.
R. Accredited
Investors. Each
Unifide Member is an "accredited investor" as that term is defined in Rule
501(a) of Regulation D promulgated under the Act.
S. General
Solicitation. The
Unifide Members are not acquiring the Shares as a result of, or following, any
advertisement, article, notice, or other communication published in any
newspaper, magazine or similar media, or broadcast over television or radio, or
presented at any seminar or meeting, or any solicitation or subscription by a
person other than a representative of Industrial Enterprises.
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T. Industrial
Enterprises Shares. The
receipt by each of the Unifide Members of the Shares is for his own account, is
for investment purposes only, and is not with a view to, nor for offer or sale
in connection with, the distribution of the Shares. Each Unifide Member
understands that the Shares have not been registered under the Act or the
securities laws of any state and, therefore, cannot be sold, except for a sale
to the Immediate Family of a Unifide Member, as such term is defined in Article
“10” of this Agreement, unless they are subsequently registered under the Act
and any applicable state securities laws or exemptions from registration
thereunder are available. Each Unifide Member further understands that only
Industrial Enterprises can take action to register the Shares.
U. Restrictive
Legend. Each
Unifide Member understands the Shares shall bear the following restrictive
legend:
“The
Common Stock which is represented by this Certificate has not been registered
under the Securities Act of 1933, as amended (the “Act”). These securities have
been acquired for investment purposes only and not with a view to distribution
or resale, and may not be sold, transferred, made subject to a security
interest, pledged, hypothecated or otherwise disposed of unless and until
registered under the Act, or based upon an opinion of counsel for the Company,
that registration is not required under such Act.”
The Company
may also issue “stop transfer” instructions with respect to the Common Stock
acquired by the exercise of the Options. The Company shall cooperate with any
effort by the Unifide Members with respect to obtaining an available exemption
from registration of the Common Stock. All expenses in connection with the
issuance of an opinion of counsel therewith shall be borne in full by the
Company.
26
V. Broker. None of
Unifide or the Unifide Members has had any dealing with respect to this
transaction with any business broker, firm or salesman, or any person or
corporation, investment banker or financial advisor who is or shall be entitled
to any broker's or finder's fee or any other commission or similar fee with
respect to the transactions set forth in this Agreement. Unifide and the Unifide
Members represent that none have dealt with any person, firm or corporation and
Unifide and the Unifide Members agree to indemnify and hold harmless Industrial
Enterprises from and against any and all claims for brokerage commissions by any
person, firm or corporation on the basis of any act or statement alleged to have
been made by Unifide, the Unifide Members or their affiliates or
agents.
W. Complete
Disclosure. No
representation or warranty of Unifide or the Unifide Members which is contained
in this Agreement, or in a writing furnished or to be furnished pursuant to this
Agreement, to the knowledge of Unifide and the Unifide Members contains or shall
contain any untrue statement of a material fact, omits or shall omit to state
any fact which is required to make the statements which are contained herein or
therein, in light of the circumstances under which they were made, not
materially misleading. There is no fact relating to the business, affairs,
operations, conditions (financial or otherwise) or prospects of Unifide which
would materially adversely affect same which has not been disclosed in this
Agreement.
27
X. No
Defense. It shall
not be a defense to a suit for damages for any misrepresentation or breach of
covenant or warranty that Industrial Enterprises knew or had reason to know that
any covenant, representation or warranty of Unifide or the Unifide Members in
this Agreement or any exhibit attached to this Agreement furnished or to be
furnished to Industrial Enterprises contained untrue statements.
7. Mutual
Covenants of the Parties.
A. Best
Efforts. Each of
the parties shall use its best efforts to perform or satisfy each covenant or
condition to be performed or satisfied by each of them before and after the
Closing Date.
B. Notice
of Developments and Updates. Each of
the parties shall give prompt written notice pursuant to Paragraph “C” of
Article “20” of this Agreement to the other parties hereto to of any act, event
or occurrence which may cause or constitute a breach of any of his or its own
representations, warranties or covenants which are set forth in Articles “5” and
“6” of this Agreement.
28
C. No
Public Announcement. None of
the parties hereto shall, without the prior written approval of the other party,
make any press release or other public announcement or communicate with any
customer, competitor or supplier of the other party concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall determine is required by law (which determination shall be made by such
party based upon the advice of its counsel), in which event the other party
shall be advised and the parties shall use their best efforts to cause a
mutually agreeable release or announcement to be issued.
8. Conduct
of Industrial Enterprises’ Business Prior to the Closing Date. Between
the date of this Agreement and the Closing Date, Industrial Enterprises shall
carry on its business in the ordinary course and in the same manner as
heretofore conducted.
9. Conduct
of Unifide’s Business Prior to the Closing Date.
A. Between
the date of this Agreement and the Closing Date, Unifide shall carry on its
business in the ordinary course and in the same manner as heretofore conducted
and shall preserve intact the existing business organization of Unifide, and use
its best efforts to (i) keep available to Unifide the services of Unifide’s
present officers and employees, (ii) preserve Unifide’s relationships, if any,
with customers, suppliers and others having business dealings with Unifide, to
the end that its goodwill and ongoing business shall not be materially impaired
on the Closing Date, (iii) maintain all of Unifide’s properties in their present
condition (ordinary wear and tear excepted) and (iv) maintain insurance policies
with respect to Unifide’s business and properties consistent with current
practice.
29
B. Without
the prior written consent of Industrial Enterprises, neither Unifide nor the
Unifide Members shall, except as set forth in the Unifide Disclosure Schedule or
as provided for in this Agreement:
i. make any
change in the Articles of Formation or Operating Agreement of Unifide;
ii. conduct
Unifide’s business in any manner other than in the ordinary course;
iii. issue any
membership interests or any rights, warrants, options or convertible securities
to acquire any membership interests;
30
iv. pay any
accrued and unpaid compensation, nor increase the compensation payable to, or to
become payable by Unifide to any officer, member or employee or make any bonus,
insurance, pension, or other benefit plan, payment or arrangement to or with any
officer, member or employee;
v. hire any
employee other than in the ordinary course of business;
vi. except
for liabilities incurred and obligations under contracts entered into in the
ordinary course of business, incur any obligation or liability (absolute or
contingent), including, but not limited to, any debt or guarantee any such debt
or issue or sell any debt securities or guarantee any debt securities of
others;
vii. declare
or make any distribution to the members of Unifide (other than payment of
compensation for services rendered, if applicable) or purchase or redeem any
membership interests;
viii. mortgage,
pledge or subject to lien, charge or any other encumbrance, any asset, whether
tangible or intangible, of Unifide;
ix. sell,
lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of,
any of Unifide’s assets except in the ordinary course of business unless any
such successor assumes any and all outstanding liabilities;
x. take any
action or omit to do any act which would cause the representations, warranties
or covenants of Unifide or the Unifide Members contained herein to be untrue or
incorrect in any material respect;
31
xi. commit
any act or omit to do any act which would cause a material breach of any
agreement, contract or commitment which is listed in an exhibit annexed to this
Agreement; or
xii. commit
any other act or omit to do any other act which would have a material adverse
effect upon the business, financial condition or earnings of
Unifide.
10. Nondisclosure
of Confidential Information.
A. As used
in this Agreement, “Confidential Information” shall mean oral or written
information which is directly or indirectly presented to a party, its past,
present or future subsidiaries, parents, officers, consultants, directors,
stockholders, affiliates, attorneys, employees, agents and its and their
respective Immediate Families (as defined below; all of the foregoing are
hereinafter collectively referred to as “Agents”) by another party or its
Agents, including, but not limited to, information which is developed, conceived
or created by the party, or disclosed to the other party or its Agents or known
by or conceived or created by the other party or its Agents during, or after the
termination of, this Agreement if disclosed to the other party or its Agents or
known by or conceived or created by the other party or its Agents as a result of
this Agreement, with respect to the party, its business or any of said party’s
products, processes, and other services relating thereto relating to the past or
present business or any plans with respect to future business
32
of the
party, or relating to the past or present business of a third party or plans
with respect to future business of a third party which are disclosed to the
party. Confidential Information includes, but is not limited to, all
documentation, hardware and software relating thereto, and information and data
in written, graphic and/or machine readable form, products, processes and
services, whether or not patentable, trademarkable or copyrightable or otherwise
protectable, including, but not limited to, information with respect to
discoveries; know-how; ideas; computer programs, source codes and object codes;
designs; algorithms; processes and structures; product information; marketing
information; price lists; cost information; product contents and formulae;
manufacturing and production techniques and methods; research and development
information; lists of clients and vendors and other information relating
thereto; financial data and information; business plans and processes;
documentation with respect to any of the foregoing; and any other information of
the party that the party informs the other party or its Agents or the other
party or its Agents should know, by virtue of said party’s position or the
circumstances in which said party learned such other information, is to be kept
confidential including, but not limited to, any information acquired by the
other party or its Agents from any sources prior to the commencement of this
Agreement. Confidential Information also includes similar information obtained
by the party in confidence from its vendors, licensors, licensees, customers
and/or clients. Confidential Information may or may not be labeled as
confidential.
For
purposes of this Agreement, “Immediate
Families” shall include, but shall not be limited to, the following: any spouse,
parent, spouse of a parent, mother-in-law, father-in-law,
brother-in-
33
law,
sister-in-law, child, spouse of a child, sibling, spouse of a sibling,
grandparent, spouse of a grandparent or any issue or spouse of any of the
foregoing. A parent of a specified person shall include an affiliate controlling
such person directly or indirectly through one or more
intermediaries.
B. Except as
required in the performance of a party’s or its Agents’ obligations pursuant to
this Agreement, neither said party nor its Agents shall, during, or after the
termination of, this Agreement, directly or indirectly, use any Confidential
Information or disseminate or disclose any Confidential Information to any
person, firm, corporation, association or other entity. Said Party or its Agents
shall take all reasonable measures to protect Confidential Information from any
accidental, unauthorized or premature use, disclosure or destruction. The
foregoing prohibition shall not apply to any Confidential Information which: (i)
was generally available to the public prior to such disclosure; (ii) becomes
publicly available through no act or omission of said party or its Agents (iii)
is disclosed as reasonably required in a proceeding to enforce said party’s
rights under this Agreement or (iv) is disclosed as required by court order or
applicable law; provided, however, that if said party and/or its Agents are
legally requested or required by court order or applicable law, including, but
not limited to, by oral question, interrogatories, request for information or
documents, subpoenas, civil investigative demand or similar process to disclose
any Confidential Information, said party and/or its Agents, as the case may be,
shall promptly notify the party of such request or requirement so that the party
may seek an appropriate protective order; provided further, however; that if
such protective order is not obtained, said party and/or its Agents, as the case
may be, agree to furnish only that portion of the Confidential Information
34
which they
are advised by their respective counsel is legally required.
C. Upon
termination of this Agreement for any reason or at any time upon request of a
party, the other party and its Agents agree to deliver to the requesting party
all materials of any nature which are in the other party’s or its Agents’
possession or control and which are or contain Confidential Information, or
which are otherwise the property of the requesting party or any vendor,
licensor, licensee, customer or client of the party, including, but not limited
to writings, designs, documents, records, data, memoranda, tapes and disks
containing software, computer source code listings, routines, file layouts,
record layouts, system design information, models, manuals, documentation and
notes. The other party and its Agents shall destroy all written documentation
prepared by them for internal purposes based in whole or in part on any
Confidential Information and such destruction shall be confirmed to the
requesting party in writing by the other party and/or its Agents.
D. Upon the
consummation of the transaction set forth in this Agreement, all of the
Confidential Information shall be deemed to be the property of Industrial
Enterprises and Unifide, the Unifide Members and/or their respective Agents may
not disclose any Confidential Information, of Industrial Enterprises or Unifide,
without the prior written consent of Industrial Enterprises.
11. Conditions
of Closing.
35
A. Conditions
to Industrial Enterprises Obligation to Close. The
obligation of Industrial Enterprises to close the transactions set forth in this
Agreement shall be subject to the following conditions:
i. Access
to Records. Unifide
and the Unifide Members shall grant Industrial Enterprises and its Agents full
and unrestricted access, during normal business hours, to the offices,
properties, books, documents and records of Unifide to conduct such examinations
and investigations thereof as they may desire. Unifide and the Unifide Members
shall also cause the officers, employees and financial, legal and other
representatives of Unifide to be available for consultation and discussion with
Industrial Enterprises and its Agents during normal business hours and to
furnish such persons with any information as they may, from time to time,
request, and the Unifide and the Unifide Members shall otherwise cooperate fully
in permitting Industrial Enterprises and its Agents to investigate the business,
properties and financial condition of Unifide.
ii. Representations
and Warranties of Unifide and the Unifide Members to be True. To the
knowledge of Unifide and the Unifide Members, the representations and warranties
of Unifide and the Unifide Members set forth in this Agreement shall be true in
all material respects on the Closing Date with the same effect as though made at
such time, except to the extent waived or affected by the transactions set forth
in this Agreement; and Unifide shall have delivered to Industrial Enterprises a
certificate of Unifide in the form annexed to, and made a part of, this
Agreement as Exhibit “U” (Article “11.A.ii.”), signed by the Unifide Members and
dated the Closing Date to such effect;
36
iii. Performance
of Obligations of Unifide. Unifide
shall have performed all obligations and complied with all covenants set forth
in this Agreement to be performed or complied with in all material respects by
it prior to the Closing Date, and Unifide shall have delivered to Industrial
Enterprises a certificate of Unifide in the form annexed to, and made a part of,
this Agreement as Exhibit “U” (Article “11.A.ii.”) signed by the Unifide Members
and dated the Closing Date to such effect;
iv. No
Adverse Change. There
shall not have occurred any material adverse change since the date of the
Financial Statement and through the date of the Closing Date in the business,
properties, results of operations or business or financial condition of Unifide
and Unifide shall have delivered to Industrial Enterprises a certificate of
Unifide in the form annexed to, and made a part of, this Agreement as Exhibit
“U” (Article “11.A.ii.”), signed by the Unifide Members and dated the Closing
Date to such effect;
v. Statutory
Requirements. Any
statutory requirement for the valid consummation by Unifide of the transactions
set forth in this Agreement shall have been fulfilled; any authorizations,
consents and approvals of all federal, state and local governmental agencies and
authorities required to be obtained, in order to permit consummation by Unifide
of the transactions set forth in this Agreement and to permit the business
presently carried on by Unifide to continue unimpaired following the Closing
Date, shall have been obtained, and Unifide shall have delivered to Industrial
Enterprises a certificate of Unifide in the form annexed to, and made a part of,
this Agreement as Exhibit “U” (Article “11.A.ii.”), signed by the Unifide
Members and dated the Closing Date to such effect;
37
vi. No
Governmental Proceedings. No
action or proceeding shall have been instituted before a court or other
governmental body by any governmental agency or public authority to restrain or
prohibit the transactions set forth in this Agreement and Unifide shall have
delivered to Industrial Enterprises a certificate of Unifide in the form annexed
to, and made a part of, this Agreement as Exhibit “U” (Article “11.A.ii.”),
signed by the Unifide Members and dated the Closing Date to such
effect;
vii. Consents
Under Agreements. Unifide
shall have obtained the consent or approval of each person whose consent or
approval shall be required in connection with the transactions set forth in this
Agreement and Unifide shall have obtained the consent or approval of each person
whose consent or approval shall be required in connection with the transactions
set forth in this Agreement, and Unifide shall have delivered to Industrial
Enterprises a certificate of Unifide in the form annexed to, and made a part of,
this Agreement as Exhibit “U” (Article “11.A.ii.”) signed by the Unifide Members
and dated the Closing Date to such effect; and
38
viii. Good
Standing Certificate. On the
Closing Date, Unifide shall provide a good standing certificate for Unifide
issued by the Secretary of State of the State of New Jersey complete and correct
as of five (5) business days prior to the Closing Date.
B. Conditions
to Unifide Obligation to Close. The
obligation of Unifide to close the transactions set forth in this Agreement
shall be subject to the following conditions:
i. Representations
and Warranties of Industrial Enterprises to be True. To
Industrial Enterprises’ knowledge, the representations and warranties of
Industrial Enterprises set forth in this Agreement shall be true in all material
respects on the Closing Date with the same effect as though made at such time,
except to the extent waived or affected by the transactions set forth in this
Agreement; and Industrial Enterprises shall have delivered to Unifide a
certificate of Industrial Enterprises in the form annexed to, and made a part
of, this Agreement as Exhibit “V” (Article “11.B.i.”), signed by the President
of Industrial Enterprises and dated the Closing Date to such
effect;
ii. Performance
of Obligations of Industrial Enterprises.
Industrial Enterprises shall have performed all obligations and complied with
all covenants set forth in this Agreement to be performed or complied with in
all material respects by it prior to the Closing Date, and Industrial
Enterprises shall have delivered to Unifide a certificate of Industrial
Enterprises in the form annexed to, and made a part of, this Agreement as
Exhibit “V” (Article “11.B.i.”), signed by the President of Industrial
Enterprises and dated the Closing Date to such effect;
39
iii. No
Adverse Change. There
shall not have occurred any material adverse change since March 31, 2005and
through the date of the Closing Date in the business, properties, results of
operations or business or financial condition of Industrial Enterprises and
Industrial Enterprises shall have delivered to Unifide a certificate of
Industrial Enterprises in the form annexed to, and made a part of, this
Agreement as Exhibit “V” (Article “11.B.i.”), signed by the President of
Industrial Enterprises and dated the Closing Date to such effect;
iv. Statutory
Requirements. Any
statutory requirement for the valid consummation by Industrial Enterprises of
the transactions set forth in this Agreement shall have been fulfilled; any
authorizations, consents and approvals of all federal, state and local
governmental agencies and authorities required to be obtained, in order to
permit consummation by Industrial Enterprises of the transactions set forth in
this Agreement and to permit the business presently carried on by Industrial
Enterprises to continue unimpaired following the Closing Date, shall have been
obtained and Industrial Enterprises shall have delivered to Unifide a
certificate of Industrial Enterprises in the form annexed to, and made a part
of, this Agreement as Exhibit “V” (Article “11.B.i.”), signed by the President
of Industrial Enterprises and dated the Closing Date to such effect;
40
v. No
Governmental Proceedings. No
action or proceeding shall have been instituted before a court or other
governmental body by any governmental agency or public authority to restrain or
prohibit the transactions set forth in this Agreement and Industrial Enterprises
shall have delivered to Unifide a certificate of Industrial Enterprises in the
form annexed to, and made a part of, this Agreement as Exhibit “V” (Article
“11.B.i.”), signed by the President of Industrial Enterprises and dated the
Closing Date to such effect;
vi. Consents
Under Agreements.
Industrial Enterprises shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with the
transactions set forth in this Agreement, and Industrial Enterprises shall have
obtained the consent or approval of each person whose consent or approval shall
be required in connection with the transactions set forth in this Agreement and
Industrial Enterprises shall have delivered to Unifide a certificate of
Industrial Enterprises in the form annexed to, and made a part of, this
Agreement as Exhibit “V” (Article “11.B.i.”), signed by the President of
Industrial Enterprises and dated the Closing Date to such effect;
vii. Personal
Guarantees.
Industrial Enterprises shall, on or prior to the Closing Date use, commercially
reasonable efforts to obtain a release for the Unifide Members from the
guarantees they have issued on behalf of Unifide to third parties which include,
but are not limited to, The Bank of New York.
41
viii. Good
Standing Certificate. On the
Closing Date, Industrial Enterprises shall provide a good standing certificate
for Industrial Enterprises issued by the Secretary of State of the State of
Nevada complete and correct as of fifteen (15) business days prior to the
Closing Date.
12. Documents,
Certificates, etc. to be Delivered at Closing.
A. At the
Closing, Unifide and the Unifide Members shall deliver the following
items:
i. the
Members’ Certificate of Unifide signed by the Unifide Members in the form
annexed to, and made a part of, this Agreement as Exhibit “U” (Article
“11.A.ii.”);
ii. the good
standing certificate for Unifide dated as of no more than fifteen (15) days
prior to the Closing Date; and
iii. any
certificate or other document representing the Membership Interests, together
with a duly executed power or assignment with respect to the respective
Membership Interests.
B. At the
Closing, Industrial Enterprises shall deliver the following items:
i. cash
payment of one million ($1,000,000) dollars;
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ii. the
Promissory Note in the form which is annexed to, and made a part of, this
Agreement as Exhibit “A” (Article “2.B.ii”);
iii. stock
certificates for the Unifide Members evidencing the Shares to be issued to
them;
iv. the
employment agreements with each of the Unifide Members, in the form annexed to,
and made a part of, this Agreement as Exhibits “B” (Article “3.A”) and “C”
(Article “3.A”).
v. the
Officer’s Certificate of Industrial Enterprises signed by the President of
Industrial Enterprises in the form annexed to, and made a part of, this
Agreement as Exhibit “V” (Article “11.B.i.”);
vi. the good
standing certificate of Industrial Enterprises dated as of no more than fifteen
(15) days prior to the Closing Date; and
vii. The
Pledge Agreement in the form annexed to, and made a part of this Agreement as
Exhibit “W.”
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13. Non-compete.
A. In order
to induce Industrial Enterprises to enter into this Agreement, the Unifide
Members agree on their own behalf and on behalf of their respective Agents that
neither they nor their Agents shall during the term of this Agreement and, for a
period of two (2) years from the Closing Date, (i) manufacture any competing
product, (ii) directly or indirectly sell or market any product which competes
either directly or indirectly with any product of Industrial Enterprises or
Unifide or their respective subsidiaries or affiliates, or (iii) directly or
indirectly own, manage, participate in the operation or control of, or be
connected as an officer, director, shareholder, partner, consultant, owner,
employee, agent, lender, donor, vendor or otherwise, or have any financial
interest in or aid or assist anyone else in the conduct of any competing entity
which manufactures, distributes or offers for sale competing products or is
engaged in, either directly or indirectly, the business then conducted
by Industrial
Enterprises or
Unifide or any of their respective subsidiaries or affiliates which Industrial
Enterprises or
Unifide any of their respective subsidiaries or affiliates plan to conduct at
such time.
Notwithstanding the foregoing, the Unifide Members and their Agents may engage
in the following: (i) make and supervise passive invest-ments in businesses
which do not in any manner compete with Industrial Enterprises or Unifide or
their respective subsidiaries or affiliates and which investments are equal to
no more than a one (1%) percent interest in any such business-, (ii) own shares
of any publicly held corporation which does not in any manner compete with
Industrial Enterprises or Unifide or their respective subsidiaries or affiliates
and which shares are equal to no more than five (5%) percent of the issued and
outstanding shares of such corporation, (iii) own shares of any publicly-held
corporations which in any manner competes with Industrial Enterprises, or
Unifide or their respective subsidiaries or affiliates which shares (a) are
equal to no more than three (3%) percent of the issued and outstand-ing shares
of such corporation, and (b) have a value equal to no more than five (5%)
percent of the Unifide Members net worth, or (iv) serve on the Board of
Directors of another Company as long as there is no conflict of interest.
44
B. The
Unifide Members further agree on their own behalf and on behalf of their
respective Agents that neither they nor their Agents shall during the term of
this Agreement and for a period of two (2) years from the Closing Date (i)
personally, or cause others to personally induce or attempt to induce any
employees to terminate their employment with Industrial Enterprises or Unifide;
(ii) interfere with or disrupt Industrial Enterprises’ or Unifide’s relationship
with its suppliers, vendors, customers or employees; (iii) solicit or entice any
person to leave their employ with Industrial Enterprises or Unifide; or (iv)
take any action prejudicial to Industrial Enterprises or Unifide and their
respective business, affairs or interests.
C. The
Unifide Members agree on their own behalf and on behalf of their Agents that the
duration, scope and geographic area for which the provisions set forth in
Paragraphs “A” and “B” of this Article “13” of this Agreement are to be
effective are reasonable. If any court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable by reason of such
provision extending the covenants and agreements contained herein for too great
a period of time or over too great a geographical area, or by reason of it being
too extensive in any other respect, such agreement or covenant shall be
interpreted to extend only over the maximum period of time and geographical
area, and to the maximum extent in all other respects, as to which it is valid
and enforceable, all as determined by such court in such action. Any
determination that any provision of this Agreement is invalid or unenforceable,
in whole or in part, shall have no effect on the validity or enforceability of
any remaining provision of this Agreement.
45
D. Any
period of time set forth in this Article “13” of this Agreement shall not be
construed to permit the Unifide Members or their Agents to engage in any of the
prohibited acts set forth in this Agreement after such period if such acts would
otherwise be prohibited by any applicable statute or legal
precedent.
14. Tax
Matters.
A. The
parties agree that they shall each cooperate fully as and to the extent
reasonably requested by any of the other parties, in connection with the filing
of tax returns and any audit, litigation or other proceeding with respect to
taxes. Such cooperation will include the retention and (upon request of any of
the other parties) the provision of records and information which are reasonably
relevant to any such tax return, audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Unifide and the
Unifide Members agree that they shall cause to be retained all books and records
with respect to Unifide tax matters relating to any taxable period commencing
prior to the Closing Date until the expiration of the statute of limitations
(including any extensions thereof) of the respective taxable periods, and to
abide by all
46
record retention agreements entered into with any taxing authority. Within thirty (30) days after the Closing Date, Unifide and the Unifide Members will provide Industrial Enterprises with a schedule of all tax elections made by Unifide which will affect the taxes of Industrial Enterprises for all taxable years which end on or after the Closing Date. As long as taxable periods of, or related to, Unifide ending on or before the Closing Date remain open, Industrial Enterprises will, and shall cause Unifide to, promptly notify the Unifide Members in writing of any pending or threatened tax audits or assessments for which the Unifide Members have or may have liability. The Unifide Members will promptly notify Industrial Enterprises and Unifide in writing of any written or other notification received by them from the Internal Revenue Service or any other taxing authority of any proposed adjustment raised in connection with a tax audit, examination, proceeding or determination of a taxable period of Unifide, ending on or before the Closing Date. For purposes of determining the respective tax obligations of the Unifide Members and Industrial Enterprises related to the operations of Unifide for 2005, the parties shall jointly determine the profit and loss of Unifide as of the Closing Date, which profit and loss shall be allocated exclusively to the Unifide Members. When full year profit or loss is determined for 2005, the difference from the profit or loss determined as of the Closing Date shall be allocated exclusively to Industrial Enterprises. Industrial Enterprises shall pay to the Unifide Members forty five (45%) percent of any profits of Unifide which are allocated to Industrial for 2005, on or prior to March 31, 2006.
B. All
transfer, documentary, sales, use, stamp, registration and other such taxes and
fees (including any penalties and interest) incurred in connection with this
Agreement, will be paid by the Unifide Members when due, and the Unifide Members
shall, at their own expense, file any necessary tax returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other taxes and fees, and, if required by applicable law,
Industrial Enterprises will, and shall cause its affiliates to, join in the
execution of any such tax returns and other documentation.
47
15. Method
of Termination. This
Agreement may be terminated prior to the Closing Date, by any of the following
methods:
A. mutual
consent of the parties;
B. by
written notice from any party (i) if within ten (10) business days after receipt
of written notice that the Closing Date has passed, the Closing has not
occurred; provided, however, that if the Closing shall not have occurred on, or
prior to, the Closing Date as a result of any action taken, or failure to act,
by any governmental or regulatory authority including, but not limited to, the
withholding of, or a delay in, any approval in connection with any aspect of the
transactions contemplated hereby, then the Closing Date shall automatically be
extended until a date which is a reasonable time subsequent to the date upon
which such governmental or regulatory action is resolved which will allow the
parties to complete the procedures required to consummate the transactions
contemplated hereby; provided, further, however, that the right to terminate
this Agreement pursuant to this Paragraph “B” of this Article “15” of this
Agreement shall not be available to any party whose failure to fulfill any
obligation pursuant to this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such date;
48
C. by
Unifide if there is a material breach of any representation or warranty set
forth in Article “5” of this Agreement or any covenant or agreement to be
complied with or performed by Industrial Enterprises pursuant to the terms of
this Agreement, including, but not limited to, the covenants set forth in
Article “9” of this Agreement, or the failure of a condition set forth in
Article “11” of this Agreement to be satisfied (and such condition is not waived
in writing by Unifide) on or prior to the Closing Date, or the occurrence of any
event which results in the failure of a condition set forth in Article “11” of
this Agreement to be satisfied on or prior to the Closing Date; provided
however, that, Unifide may not terminate this Agreement prior to the Closing
Date if Industrial Enterprises has not had an adequate opportunity to cure such
failure, pursuant to Article “17” of this Agreement; or
D. by
Industrial Enterprises if there is a material breach of any representation or
warranty set forth in Article “6” of this Agreement or any covenant or agreement
to be complied with or performed by Unifide pursuant to the terms of this
Agreement, including, but not limited to, the covenants set forth in Article “9”
of this Agreement, or the failure of a condition set forth in Article “11” of
this Agreement to be satisfied (and such condition is not waived in writing by
Industrial Enterprises) on or prior to the Closing Date, or the occurrence of
any event which results in the failure of a condition set forth in Article “11”
of this Agreement to be satisfied on or prior to the Closing Date; provided
however, that, Industrial Enterprises may not terminate this Agreement prior to
Closing Date if Unifide has not had an adequate opportunity to cure such
failure, pursuant to Article “17” of this Agreement.
49
16. Effect
of Termination. If this
Agreement is terminated pursuant to the provisions set forth in Article “15” of
this Agreement, this Agreement shall become null and void and shall have no
further effect, and no party shall have any liability with respect to this
Agreement, except with respect to any provisions of this Agreement which are
intended to survive or be performed after the termination of this Agreement,
including, but not limited to, Articles “10” and Paragraphs “B,” “C” and “D” of
Article “13” of this Agreement; provided, however, nothing herein shall prevent
Unifide from continuing to offer , sell or distribute products of the type it
presently manufactures, markets, offers, sells or distributes, including any
products related or ancillary thereto, provided however that Unifide shall be
bound by the confidentiality provisions of Article“10” of this
Agreement.
17. Cooperation;
Notice; Cure. Subject
to compliance with applicable law, from the date of this Agreement until the
Closing Date, each of the parties shall confer on a regular and frequent basis
with one or more representatives of the other party to report on the general
status of ongoing operations. Industrial Enterprises shall promptly provide
Unifide or its counsel with copies of all of its filings made with the SEC or
with any governmental entity in connection with this Agreement, the transactions
contemplated hereby and thereby. Each of the parties shall notify the other of,
and will use all commercially reasonable efforts to cure before the Closing
Date, any event, transaction
or circumstance, as soon as practical after it becomes known to such party, that causes or will cause any covenant or agreement of the parties pursuant to this Agreement to be breached or that renders or will render untrue any representation or warranty of the parties contained in this Agreement. Each of the parties shall also notify the other in writing of, and will use all commercially reasonable efforts to cure, before the Closing Date, any violation or breach, as soon as practical after it becomes known to such party, of any representation, warranty, covenant or agreement made by the parties. No notice given pursuant to this paragraph shall have any effect on the representations, warranties, covenants or agreements contained in this Agreement for purposes of determining satisfaction of any condition contained herein.
50
or circumstance, as soon as practical after it becomes known to such party, that causes or will cause any covenant or agreement of the parties pursuant to this Agreement to be breached or that renders or will render untrue any representation or warranty of the parties contained in this Agreement. Each of the parties shall also notify the other in writing of, and will use all commercially reasonable efforts to cure, before the Closing Date, any violation or breach, as soon as practical after it becomes known to such party, of any representation, warranty, covenant or agreement made by the parties. No notice given pursuant to this paragraph shall have any effect on the representations, warranties, covenants or agreements contained in this Agreement for purposes of determining satisfaction of any condition contained herein.
18. Survival
of Representations, Warranties and Covenants. All
covenants, agreements, representations and warranties made in or in connection
with this Agreement shall survive the Closing Date hereof for a period of two
(2) years, with the exception of any tax liabilities, which shall survive for
the duration of the applicable statute of limitations, and shall continue in
full force and effect for such periods, it being understood and agreed that each
of such covenants, agreements, representations and warranties is of the essence
of this Agreement and the same shall be binding upon and shall inure to the
benefit of the parties hereto, its successors and assigns.
19. Indemnification.
51
A. Indemnification
by Unifide and the Unifide Members. In
order to induce Industrial Enterprises to enter into and perform this Agreement,
Unifide and the Unifide Members do hereby, jointly and severally, indemnify,
protect, defend and save and hold harmless Industrial Enterprises and each of
its shareholders, affiliates, officers, directors, control persons, employees,
attorneys, agents, partners and trustees and personal representatives of any of
the foregoing ("Indemnified Parties"), from and against any loss resulting to
any of them from any material loss, liability, cost, damage, or expense which
the Indemnified Parties may suffer, sustain or incur arising out of or due to a
breach by Unifide or the Unifide Members of the representations, warranties and
covenants set forth in Article “6” of this Agreement or in any documents
delivered pursuant hereto or of a breach by Unifide or the Unifide Members of
any obligation pursuant to this Agreement or in any documents delivered pursuant
hereto.
B. Indemnification
by Industrial Enterprises. In
order to induce Unifide and the Unifide Members to enter
into and perform this Agreement, Industrial Enterprises hereby indemnifies,
protects, defends and saves and holds harmless Unifide and each of its members,
affiliates, officers, control persons, employees, attorneys, agents, partners
and trustees and personal representatives of any of the foregoing ("Indemnified
Parties"), from and against any loss resulting to any of them from any material
loss, liability, cost, damage, or expense which the Indemnified Parties may
suffer, sustain or incur arising out of or due to a breach by Industrial
Enterprises of the representations, warranties and covenants set forth in
Article “5” of this Agreement or in any documents delivered pursuant hereto or
of a breach by Industrial Enterprises of any obligation pursuant to this
Agreement or in any documents delivered pursuant hereto or the failure of
Industrial Enterprises to obtain the release of the guarantees pursuant to
subparagraph (vii) of Paragraph “B” of Article “11” of this
Agreement.
52
C. Reasonable
Costs, Etc. The
indemnification, which is set forth in this Article “19” of this Agreement shall
be deemed to include not only the specific liabilities or obligation with
respect to which such indemnity is provided, but also all counsel fees,
reasonable costs, expenses and expenses of settlement relating thereto, whether
or not any such liability or obligation shall have been reduced to
judgment.
D. Third
Party Claims. If any
demand, claim, action or cause of action, suit, proceeding or investigation
(collectively, the “Claim”) is brought against an Indemnified Party for which
the Indemnified Party intends to seek indemnity from the other party hereto (the
"Indemnifying Party"), then the Indemnified Party within twenty-one (21) days
after such Indemnified Party's receipt of the Claim, shall notify the
Indemnifying Party pursuant to Paragraph “C” of Article “20” of this Agreement
which notice shall contain a reasonably thorough description of the nature and
amount of the Claim (the "Claim Notice"). The Indemnifying Party shall have the
option to undertake, conduct and control the defense of such claim or demand.
Such option to undertake, conduct and control the defense of such claim or
demand shall be exercised by notifying the Indemnified Party within ten (10)
days after receipt of the Claim Notice pursuant to Paragraph “C” of Article “20”
of this Agreement (such notice to control the defense is hereinafter referred to
as the “Defense Notice”). The failure of the Indemnified Party to notify the
Indemnifying Party of
53
the Claim shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have pursuant to this Article “19” of this Agreement except to the extent that such failure to notify the Indemnifying Party prejudices the Indemnifying Party. The Indemnified Party shall use all reasonable efforts to assist the Indemnifying Party in the vigorous defense of the Claim. All costs and expenses incurred by the Indemnified Party in defending the Claim shall be paid by the Indemnifying Party. If, however, the Indemnified Party desires to participate in any such defense or settlement, it may do so at its sole cost and expense (it being understood that the Indemnifying Party shall be entitled to control the defense). The Indemnified Party shall not settle the Claim. If the Indemnifying Party does not elect to control the defense of the Claim, within the aforesaid ten (10) day period by proper notice pursuant to Paragraph “C” of Article “20” of this Agreement, then the Indemnified Party shall be entitled to undertake, conduct and control the defense of the Claim (a failure by the Indemnifying Party to send the Defense Notice to the Indemnified Party within the aforesaid ten (10) day period by proper notice pursuant to Paragraph “C” of Article “20” of this Agreement shall be deemed to be an election by the Indemnifying Party not to control the defense of the Claim); provided, however, that the Indemnifying Party shall be entitled, if it so desires, to participate therein (it being understood that in such circumstances, the Indemnified Party shall be entitled to control the defense). Regardless of which party has undertaken to defend any claim, the Indemnifying Party may, without the prior written consent of the Indemnified Party, settle, compromise or offer to settle or compromise any such claim or demand; provided however, that if any settlement would result in the imposition of a consent order, injunction or decree which would restrict the future activity or conduct of the Indemnified Party, the consent of the Indemnified Party
54
shall be a condition to any such settlement. Notwithstanding the foregoing provisions of this Article “19” of this Agreement, as a condition to the Indemnifying Party either having the right to defend the Claim, or having control over settlement as indicated in this Article “19” of this Agreement, the Indemnifying Party shall execute an agreement, in the form annexed to, and made a part of, this Agreement as Exhibit “X” (Article “19.D.”), acknowledging its liability for indemnification pursuant to this Article “19” of this Agreement. Whether the Indemnifying Party shall control and assume the defense of the Claim or only participate in the defense or settlement of the Claim, the Indemnified Party shall give the Indemnifying Party and its counsel access, during normal business hours, to all relevant business records and other documents, and shall permit them to consult with its employees and counsel.
E. Neither
party shall not be entitled to indemnification from the other party pursuant to
the provisions of this Article “19” of this Agreement until such time as the
Claims subject to indemnification exceed, in aggregate, the sum of eighty
thousand ($80,000) dollars (the “Threshold Amount”), at which time such party
may seek to recover any Claim in excess of the Threshold Amount; provided
however that the foregoing shall not be applicable to the obligation of
Industrial Enterprises to pay the purchase price pursuant to Paragraph “B” of
Article “1” of this Agreement and the compensation required to be paid pursuant
to the Employment Agreements with the Unifide Members.
55
20. Miscellaneous.
A. Headings.
Headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement
B. Enforceability. If any
provision which is contained in this Agreement, should, for any reason, be held
to be invalid or unenforceable in any respect under the laws of any State of the
United States, such invalidity or unenforceability shall not affect any other
provision of this Agreement and in this Agreement shall be construed as if such
invalid or unenforceable provision had not been contained herein.
C. Notices. Any
notice or other communication required or permitted hereunder shall be
sufficiently given if sent by (i) mail by (a) certified mail, postage prepaid,
return receipt requested and (b) first class mail, (ii) overnight delivery with
confirmation of delivery or (iii) facsimile transmission with an original mailed
by first class mail, postage prepaid, addressed as follows:
If to
Unifide: Unifide Industries,
Limited Liability Company
000
Xxxxxxx 00
Xxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention:
Xx. Xxxxx X. Xxxxxxxx, Member
Facsimile
No.: (000) 000-0000
56
with a
copy to: Xxxxxx
Xxxxxx & Lamparello, PC
000
Xxxxxx Xxxxxx Xxxx. - Xxxxx000
Xxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxx, Esq.
Facsimile
No.: (000) 000-0000
If to
Xxxxx: Xx. Xxxxx
X. Xxxxxxxx
0000
Xxxxx Xxx, Xxxx 0
Xxx
Xxxxxx, XX 00000
Facsimile
No.: (000) 000-0000
with a
copy to: Xxxxxx
Xxxxxx & Xxxxxxxxxx, PC
000
Xxxxxx Xxxxxx Xxxx. - Xxxxx000
Xxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxx, Esq.
Facsimile
No.: (000) 000-0000
If to
Xxxxx: Xx. Xxxxx
X. Xxxxxxxx
00 Xxxx
Xxxxx
Xxxxxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
57
with a
copy to: Xxxxxx
Xxxxxx & Lamparello, PC
000
Xxxxxx Xxxxxx Xxxx. - Xxxxx000
Xxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxx, Esq.
Facsimile
No.: (000) 000-0000
If to
Industrial Enterprises: Industrial
Enterprises of America, Inc.
000 Xxxxx
Xxxxxx, Xxxxx 0000
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xx. Xxxx Xxxxxxx, President
Facsimile
No.: (000) 000-0000
with a
copy to: Xxxxx
& Fraade, P.C.
000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxxxx X. Xxxxx, Esq.
Facsimile
No.: (000) 000-0000
or in
each case to such other address and facsimile number as shall have last been
furnished by like notice. If all of the methods of notice set forth in this
Paragraph “C” of this Article “20” of this
58
Agreement are impossible for any reason, notice shall be in writing and personally delivered to the aforesaid addresses. Each notice or communication shall be deemed to have been given as of the date so mailed or delivered as the case may be; provided, however, that any notice sent by facsimile shall be deemed to have been given as of the date so sent if a copy thereof is also mailed by first class mail on the date sent by facsimile. If the date of mailing is not the same as the date of sending by facsimile, then the date of mailing by first class mail shall be deemed to be the date upon which notice is given; provided further, however, that any notice sent by overnight delivery shall be deemed to have been given as of the date of delivery.
D. Governing
Law; Disputes. This
Agreement shall in accordance with Section 5-1401 of the General Obligations Law
of New York in all respects be construed, governed, applied and enforced under
the internal laws of the State of New York without giving effect to the
principles of conflicts of laws and be deemed to be an agreement entered into in
the State of New York and made pursuant to the laws of the State of New York.
The parties agree that they shall be deemed to have agreed to binding
arbitration with respect to the entire subject matter of any and all disputes
relating to or arising under this Agreement including, but not limited to, the
specific matters or disputes as to which arbitration has been expressly provided
for by other provisions of this Agreement and that any such arbitration shall be
commenced exclusively in New York, New York. Notwithstanding the foregoing,
either party may seek injunctive relief from a court of competent jurisdiction,
to avoid irreparable harm, but only to the extent of claims that are not
monetary in nature. Any such arbitration shall be by a panel of three
arbitrators and pursuant to the
59
commercial rules then existing of the American Arbitration Association in the State of New York, County of New York. In all arbitrations, judgment upon the arbitration award may be entered in any court having jurisdiction. The parties specifically designate the courts in the City of New York, State of New York as properly having jurisdiction for any proceeding to confirm and enter judgment upon any such arbitration award. The parties hereby consent to and submit to the exclusive jurisdiction of the courts of the State of New York in any action or proceeding and submit to personal jurisdiction over each of them by such courts. The parties hereby waive personal service of any and all process and specifically consent that in any such action or proceeding brought in the courts of the State of New York, any service of process may be effectuated upon any of them by certified mail, return receipt requested, in accordance with Paragraph “C” of this Article “20” of this Agreement. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
The
parties agree, further, that the prevailing party in any such arbitration as
determined by the arbitrators shall be entitled to such costs and attorney's
fees, if any, in connection with such arbitration as may be awarded by the
arbitrators. In connection with the arbitrators’ determination for the purpose
of which party, if any, is the prevailing party, they shall take into account
all of the factors and circumstances including, without limitation, the relief
sought, and by whom, and the relief, if any, awarded, and to whom. In addition,
and notwithstanding the foregoing sentence, a party shall not be deemed to be
the prevailing party in a claim seeking monetary damages, unless the amount of
the arbitration award exceeds the amount offered in a legally binding writing by
the other
60
party by fifteen percent (15%) or more. For example, if the party initiating arbitration (“A”) seeks an award of $100,000 plus costs and expenses, the other party (“B”) has offered A $50,000 in a legally binding written offer prior to the commencement of the arbitration proceeding, and the arbitration panel awards any amount less than $57,500 to A, the panel should determine that B has “prevailed”.
The
arbitration panel shall have no power to award non-monetary or equitable relief
of any sort. It shall also have no power to award (i) damages inconsistent with
any applicable agreement between the parties or (ii) punitive damages or any
other damages not measured by the prevailing party’s actual damages; and the
parties expressly waive their right to obtain such damages in arbitration or in
any other forum. In no event, even if any other portion of these provisions is
held invalid or unenforceable, shall the arbitration panel have power to make an
award or impose a remedy which could not be made or imposed by a court deciding
the matter in the same jurisdiction.
Discovery
shall be permitted in connection with the arbitration only to the extent, if
any, expressly authorized by the arbitration panel upon a showing of substantial
need by the party seeking discovery.
All
aspects of the arbitration shall be treated as confidential. The parties and the
arbitration panel may disclose the existence, content or results of the
arbitration only as provided in the rules of the American Arbitration
Association in New York, New York. Before making any such disclosure, a party
shall give written notice to all other parties and shall afford such parties a
reasonable opportunity to protect their interest.
61
E. Expenses. Each
party to this Agreement shall bear and pay its own costs and expenses incurred
in connection with the preparation, execution, and delivery of this Agreement
and the transactions set forth in this Agreement.
F. Construction. Each of
the parties hereto hereby further acknowledges and agrees that (i) each has been
advised by counsel during the course of negotiations and (ii) each counsel has
had significant input in the development of this Agreement and (iii) this
Agreement shall not, therefore, be construed more strictly against any party
responsible for its drafting regardless of any presumption or rule requiring
construction against the party whose attorney drafted this
Agreement.
G. Entire
Agreement. The
parties have not made any representations, warranties or covenants with respect
to the subject matter hereof which is not set forth herein, and this Agreement
constitutes the entire agreement between them with respect to the subject matter
hereof. All understandings and agreements heretofore had between the parties
with respect to the subject matter hereof are merged in this Agreement which
alone fully and completely expresses their agreement.
62
H. Further
Assurances. The
parties agree to execute any and all such other further instruments and
documents, and to take any and all such further actions which are reasonably
required to effectuate this Agreement and the intents and purposes
hereof.
I. Binding
Agreement. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their heirs, executors, administrators, personal representatives, successors
and assigns.
J. Non-Waiver. Except
as otherwise expressly provided herein, no waiver of any covenant, condition, or
provision of this Agreement shall be deemed to have been made unless expressly
in writing and signed by the party against whom such waiver is charged; and (i)
the failure of any party to insist in any one or more cases upon the performance
of any of the provisions, covenants or conditions of this Agreement or to
exercise any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such provisions, covenants or conditions,
(ii) the acceptance of performance of anything required by this Agreement to be
performed with knowledge of the breach or failure of a covenant, condition or
provision hereof shall not be deemed a waiver of such breach or failure, and
(iii) no waiver by any party of one breach by another party shall be construed
as a waiver of any other or subsequent breach.
K. Counterparts. This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
63
L. Facsimile
Signatures. Any
signature which is delivered via facsimile shall be deemed to be an original and
have the same force and effect as if such facsimile signature were the original
thereof.
M. Modifications. This
Agreement may not be changed, modified, extended, terminated or discharged
orally, except by a written agreement specifically referring to this Agreement
which is signed by all of the parties to this Agreement.
N. Exhibits. All
Exhibits annexed or attached to this Agreement are incorporated into this
Agreement by reference thereto and constitute an integral part of this
Agreement.
O. Severability. The
provisions of this Agreement shall be deemed separable. Therefore, if any part
of this Agreement is rendered void, invalid or unenforceable, such rendering
shall not affect the validity or enforceability of the remainder of this
Agreement; provided, however, that if the part or parts which are void, invalid
or unenforceable as aforesaid shall substantially impair the value of this whole
Agreement to any party, that party may cancel and terminate this Agreement by
giving written notice to the other party.
[Signature
Page Follows]
64
IN
WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first
above written.
|
By:
/s/
Xxxx Xxxxxxx
Xxxx
Xxxxxxx, CFO, Secretary & Vice
Chairman |
Unifide
Industries, Limited Liability Company
By:
/s/
Xxxxx X. Xxxxxxxx
Xxxxx
X. Xxxxxxxx, Member |
|
/s/ Xxxxx X. Xxxxxxxx
Xxxxx
X. Xxxxxxxx |
/s/ Xxxxx X. Xxxxxxxx
Xxxxx
X. Xxxxxxxx |
65
