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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C, 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 30, 1998
Commission File Number 0-14973
UNICO, INC.
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(Exact name of registrant as specified in its charter)
New Mexico 85-0270072
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(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
48507 Milmont Drive, Suite B, Fremont, California 94583
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 668-4990
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) With respect to the transaction described in Item 2 of this report,
there has been a change in control of the Registrant represented by
5,476,200 new common shares issued by the Registrant.
In conjunction with the transaction, there were certain changes to
the Registrants Board of Directors. William N. Hagler ("Hagler"),
Chairman of the Board, President and CEO of the Registrant has
resigned but as described in Item 2 will continue to serve as
Executive Vice President for a limited time and a limited purpose.
Rick, L. Hurt ("Hurt"), Secretary, Treasurer and a director has
resigned as a director, Secretary and Treasurer but as described in
Item 2 will continue to serve as Assistant Secretary of the
Registrant for a limited time and a limited purpose. Mr. William J.
Hickey and Mr. Joe G. Watson, independent directors also resigned.
Prior to his resignation, Rick Hurt, as the last remaining director,
appointed Dr. Roger Sykes, Mr. Augustine Fung as independent
directors, and Mr. Wing Po Szeto an officer of Starlicon
International Corporation. Dr. Sykes and Mr. Fung have been
appointed to serve as independent members of the Audit and
Compensation Committees. Additionally, after closing, the Board
appointed John Hwang as a Director and President.
(b) Beneficial owners of more than 5% of the outstanding common stock of
the Registrant, after giving effect to the transactions described in
Item 2 of this report, are as follows:
<TABLE>
<CAPTION>
Name and Address Amount and Percentage
of Nature of of
Beneficial Owner Beneficial Ownership Ownership(1)
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<S> <C> <C>
Jin Lee Lim 367,740 shares common 5.14%
15 N. Laurel Ave. 385 shares preferred
Iselin, NJ 08830 Of record and beneficially
</TABLE>
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<TABLE>
<S> <C> <C>
Carol Maurer 367,740 shares common 5.14%
264 S. La Cienega Blvd. 385 shares preferred
Beverly Hills, CA 90221 of record and beneficially(3)
William N. Hagler 560,397 shares common, 7.84%
603 Merino Kraal of record and beneficially
Farmington, NM 87401
John Hwang 697,500 shares common 9.75%
45541 Claret Court 710 shares preferred.,
Fremont CA 94539 of record and beneficially
Kelvin Li 697,500 shares common 9.75%
1803 Napa Court 710 shares preferred,
Fremont, CA 94539 of record and beneficially
Maurer Trust 697,500 shares common, 9.75%
264 S. La Cienega Blvd. 710 shares preferred,
Beverly Hills, CA 90221 of record and beneficially(3)
Ike Suri 1,245,119 shares common 17.42%
1601 N. Sepulveda Blvd. 710 shares preferred.
Suite 243 of record and beneficially(2)
Manhattan Beach, CA
90266
</TABLE>
(1) Percentage of ownership based on voting rights associated with a 7,149,428
(excluding 3,699 held by Registrant for resale) common shares and 5,474 Series A
Preferred shares issued and outstanding after giving effect to the transaction
described in Item 2 of this report and assuming a purchase price for the
transaction described in Item 2 of $4,380,884.
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(2) Holdings attributed to Mr. Suri consist of shares issued to two Company's of
which Mr. Suri is the owner or holds a controlling interest. Shares issued to
the two entities include 697,500 common shares and 710 Series A Preferred shares
to Corinthian Partners, and 547,619 common shares to Azemuth, Inc. Both
companies report the same address as that shown for Mr. Suri.
(3) Carol Maurer is the Trustee of the Maurer Trust.
ITEM 2. ACQUISITION OF ASSETS
(a) On February 21, 1998 the Registrant entered into a Stock Purchase
Agreement ("the Agreement") with Starlicon Group, Inc. ("SGI") to
acquire 100% of the outstanding stock of privately held Starlicon
International Corporation ("SI"). Based in Fremont, California, SI
markets computer peripherals under the Paradise brand name as well
as certain generic computer components. The effective date of the
transaction was to have been November 30, 1997.
A preliminary audit of SI's books as of November 30, 1997 revealed
that SI failed to meet certain financial criteria. As a result,
Registrant notified SGI and SI on May 20, 1998 of its unilateral
rescission of the transaction. In addition, on May 21, 1998,
Registrant filed a Complaint in the United States District Court for
the Central District of California entitled Unico, Inc. v. Starlicon
Group, Inc., Starlicon International Corporation, et al., Case No.
CV 98-3990 DT (Shx), seeking the Court's confirmation of
Registrant's unilateral rescission.
Pursuant to subsequent negotiations which led to a Novation
Agreement, SGI has agreed to certain modifications to the terms of
the original transaction and the Registrant has agreed to withdraw
its Complaint.
Under terms of the Novation Agreement, Unico issued 5,476,200 shares
of $0.20 par value restricted Common Stock and 5,474 shares of
Series A Convertible Preferred Stock to the shareholders
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of SGI in exchange for 100% of the outstanding stock of SI. Each
share of Preferred stock is convertible to 1,000 shares of Common
Stock in stages through August 1, 1999 and will have voting rights
on all matters submitted to shareholders equal to 1 vote per
preferred share. In addition, at any time subsequent to May 31, 1999
where the bid price of the Registrants common stock exceeds $5.50
for 30 consecutive days, the Registrant may, at its option and upon
60 days notice, cancel the conversion rights of the Preferred Stock.
The Series A Preferred stock provides for a non-cumulative dividend,
if such is declared by the Board of Directors of the Registrant, and
such dividend shall not exceed 6% per annum of the $400.00 par
value. The Series A Preferred Stock, has both dividend and
liquidation preference over the Common Stock of the Registrant.
The effective date of the transaction will be June 1, 1998. While
most documents necessary to effectuate the closing of the
transaction were executed and delivered on June 26, 1998, certain
necessary documents were not executed and delivered until June 30,
1998 and, therefore, the actual Closing occurred on June 30, 1998.
As part of the Novation Agreement, all of Unico's assets not
currently owned by Intermountain Refining Co., Inc. ("IRC"), Unico's
wholly-owned subsidiary, will be transferred to IRC in satisfaction
of certain inter-company obligations and as a contribution to IRC's
capital. IRC will be operated and managed at the sole discretion of
IRC's present management with a nominee holding Unico's proxy to
vote IRC's shares. For the purposes of accomplishing the transfer of
assets to IRC, certain member of Unico's former management has been
appointed to new management posts. Hagler has been appointed
Executive Vice President and Hurt has been appointed Assistant
Secretary. Upon the completed transfer of the assets, Messrs. Hagler
and Hurt will resign these positions.
Upon the occurrence of certain events relating to Unico seeking and
obtaining a new listing with Nasdaq, but no sooner than November 30,
1998 and no later than April 1, 1999, the Board of Directors of IRC,
may, at their sole discretion consider a transaction involving IRC's
stock, assets or business prospects. In the event such a transaction
contemplates a distribution of IRC's stock or assets to
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holders of shares of Unico Common Stock, such distribution would be
at the Record Date and as defined below.
A. The Record Date to determine which holders of shares of Unico
Common Stock shall be entitled to the distribution is the
earliest applicable date of November 30, 1998 or April 1,
1999.
B. All shareholders of record on the Record Date shall entitled
to participate, pro rata, in any such distribution except
those shareholders acquiring shares through and as a result of
the Stock Purchase Agreement, as modified by the Novation
Agreement, and holders of shares issued by Unico between June
1, 1998 and the Record Date.
C. If it is subsequently determined by New Mexico counsel to IRC
or Unico that approval of the New Unico shareholders is
required to effect any such distribution, the Record Date for
determining the shareholders entitled to vote shall be the
Record Date. For purposes of such vote, the shareholders
receiving shares pursuant to the Stock Purchase Agreement as
modified by the Novation Agreement and all shares issued
between June 1, 1998 and the Record Date by Unico. will be
voted by proxy in favor of such distribution or at the
discretion of the IRC Board of Directors.
In order to provide orderly implementation of the transaction
Hagler and Hurt have agreed to consult for Unico, as requested by
new management, up to 10 hours per month, each, at the hourly rate
of $60.00 and $40.00, respectively, including travel time and
reasonable expenses, for a period of six months. The terms and
conditions of an agreement for consulting services with Hagler and
Hurt have been memorialized in a separate agreement. As additional
consideration for providing these consulting services the Unico
granted to Hagler a warrant to purchase 100,000 shares of Common
Stock and to Hurt a warrant to purchase 50,000 shares of Common
Stock both of these at $1.40 per share. The Warrant, executed at
the closing of the transaction provided for "Piggy Back"
registration right and anti-dilution provisions in the event of a
stock split, acquisition, merger, or other change of control.
Unico issued 547,619 shares of restricted Common Stock to Azemuth,
Inc.,a company controlled by Mr. Ike Suri and an affiliate of SGI,
as compensation for consulting services performed in connection
with the transaction. At closing, all current members of Unico's
management and Board of Directors resigned, with certain exceptions
as set forth below.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired - Financial statements of
Starlicon required to be filed with this Form 8-K are not presently
available and will be filed as an amendment to the Form 8-K as they
become available, but not later than 60 days from the due date for
the filing of this report.
(b) Pro Forma Financial Information - The pro forma financial
information will be filed as an amendment to this Form 8-K as soon
as it becomes available but not later than 60 days from the due date
for the filing of this report.
(c) Exhibits - Exhibits filed in conjunction with this report in
accordance with Item 601 Regulation S-K are as follows:
2.1 Stock Purchase Agreement dated as of November 30, 1997
2.2 Novation Agreement dated June 26, 1998
4.1 Instrument Defining Rights of holders of Series A Preferred
Stock
4.2 Warrant issued to William N. Hagler
4.3 Warrant issued to Rick L. Hurt
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNICO, INC. (Registrant)
Date: July 10, 1998
By: /s/ JOHN HWANG
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John Hwang
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UNICO, INC.
FORM 8-K
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
2.1 Stock Purchase Agreement dated as of November 30, 1997
2.2 Novation Agreement dated June 26, 1998
4.1 Instrument Defining Rights of holders of Series A Preferred Stock
4.2 Warrant issued to William N. Hagler
4.3 Warrant issued to Rick L. Hurt
</TABLE>
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AGREEMENT made as of November 30, 1997, by and between Unico, Inc., a
New Mexico corporation (UNICO); Starlicon Group, Inc., a Nevada Corporation
("Seller or SGI"); and Starlicon International Corporation, a California
corporation ("SI").
WHEREAS, Seller desires to sell, and UNICO desires to purchase and
acquire from Seller all outstanding shares of SI, upon the terms and subject to
the conditions set forth herein; and,
WHEREAS, SGI owns 100% of the issued and outstanding shares of SI;
NOW, THEREFORE, in consideration of the mutual agreements recited
herein, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, and in reliance upon the representations and warranties set forth
herein, on the Closing Date, as defined herein, Seller will issue, sell,
transfer and deliver to UNICO, and UNICO shall acquire from Seller, 100% of the
issued and outstanding Capital Stock of SI, free and clear of all liens,
pledges, encumbrances, charges, and claims thereon ("the Shares"). Within 30
days thereafter the UNICO shares paid to SGI as consideration pursuant to
Section 1.2 of this Agreement shall be distributed to the shareholders of SGI.
1.2 Base Purchase Price. The purchase price for the Shares shall be
an amount equal to SI's Total Revenue (defined as "Sales," less "Sales Returns,"
(including return merchandise authorizations ("RMAs") less "Interest Income") as
reported in SI's audited financial statements for the twelve month period ending
November 30, 1997 ("Base Purchase Price" and "Base Total Revenue"). One-third of
the Base Purchase Price shall be paid in the form of UNICO common stock and
two-thirds of the Base Purchase Price shall be paid in the form of UNICO Series
A Preferred Stock. No fractional shares of either class of stock will be issued.
1.2.1 Unico Common Stock For the purpose of this Agreement, UNICO
common stock shall be deemed to have a value of $1.40 per share.
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1.2.2 Unico Series A Preferred Stock
a. Number of Shares Issued. The number of UNICO
Series A Preferred Shares to be issued pursuant
to Section 1.2 of this Agreement shall be
determined by multiplying the number of common
shares issued pursuant to Section 1.2 times
0.002.
b. The rights and preferences of the Series A
Preferred Shares are as set forth on Exhibit
1.2.2
1.3 Supplemental Purchase Price. As soon as reasonably practical
after SI's audited Total Revenue Statements for the 12 month period ending
November 30, 1998 are available, a Supplemental Purchase Price shall be
determined in accordance with the following formula:
SPP= (NTR - BTR) X0.5
Where:
SPP= Supplemental Purchase Price in dollars
NTR= New Total Revenue - 12 months ending November 30, 1998
as defined in Section 1.2.
BTR= Base Total Revenue as defined in Section 1.2.
In the event the value of SPP as determined above is 0 or a negative number, no
further payments shall be due. Payments of the Supplemental Purchase Price, if
any, shall be in the form of shares of UNICO Series A Preferred Stock. The
number of such shares shall be determined by the following formula:
Number of Preferred Shares= SPP
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(1000) x (1.4)
No fractional shares will be issued.
ARTICLE II
ADDITIONAL TRANSACTIONS
2.1 Confidentiality and Non-Competition Agreement. At the Closing,
UNICO and the officers of SI, will enter into an agreement with UNICO agreeing
not to disclose to any third party (other than their attorneys, accountants and
advisers) any confidential information relating to SI or its business, except as
required to be disclosed by law, and agreeing not to compete with SI for a
period of three years following the Closing Date. Such agreement
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shall be in form and substance reasonably satisfactory to SGI, SI
and UNICO.
2.2 Constitution of the Board of Directors. On Closing the Board of
Directors will be satisfactory to both UNICO and Seller and will comply as of
February 22, 1998 with the new NASD requirements under the Small Cap Market
System.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SGI AND SI
SGI, and to the extent applicable SI, jointly make the following
representations and warranties to UNICO, each of which shall be deemed material,
and UNICO, in executing, delivering and consummating this Agreement, has relied
and will rely upon the correctness and completeness of each of such
representation and warranty:
3.1 Valid Corporate Existence; Qualifications. SGI and SI ("the
Companies") are corporations duly organized, validly existing and in good
standing under the laws of the State of California and Nevada, respectively.
Each of the Companies has the corporate power to carry on its business as now
conducted and to own its assets. Each company is duly qualified to conduct
business and is in good standing as a foreign corporation in those jurisdictions
set forth in Exhibit 3.1, which are the only jurisdictions in which the
Companies are required to qualify in order to own their assets or properties or
to carry on its business as now conducted, and there has not been any claim by
any other jurisdiction to the effect that either Company is required to qualify
or otherwise be authorized to do business as a foreign corporation therein which
could reasonably be expected to have a materially adverse effect upon the
business of SI. The copies of the Companies' Certificates of Incorporation
(certified by the Corporation's secretary), as amended to date, which have been
exhibited to UNICO with respect to SGI and delivered to UNICO with respect to
SI, are true and complete copies of those documents as now in effect. The minute
books of SGI and SI contain accurate records of all material meetings of its
Board of Directors, Executive Committee of the Board, if any, and shareholders
since its incorporation, and accurately reflect all transactions authorized
therein.
3.2 Capitalization. The authorized capital stock of SI consists of
1,000 shares of Common Stock, no par value, of which 1,000 shares of Common
Stock are issued and outstanding. All of such shares of Common Stock are duly
authorized and validly issued and outstanding, fully paid and non assessable.
3.3 Subsidiaries. Except as set forth in Exhibit 3.3, there are no
corporations, partnerships and other business entities controlled by SI. As used
herein, "controlled by" means (i) the
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ownership of not less than 50% of the voting securities or other interests of a
corporation, partnership or other business entity, or (ii) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a corporation, partnership or other business entity,
whether through the ownership of voting shares, by contract or otherwise.
3.4 Consents. All requisite consents of governmental and other
regulatory agencies, foreign or domestic, and of other parties required to be
received by or on the part of SGI and/or SI to enable them to enter into and
carry out this Agreement in all material respects have been, or prior to the
Closing will have been, obtained.
3.5 Corporate Authority; Binding Nature of Agreement; Title to
Shares. SGI and SI have the corporate power to enter into this Agreement and to
carry out their respective obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by their Boards of Directors and, except for the approval
of SGI's shareholders, no other corporate proceedings on the part of SGI or SI
are necessary to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement constitutes
Sellers valid and binding obligation and is enforceable in accordance with its
terms. At the Closing, SGI will be the sole record and beneficial owner of the
Shares, free and clear of all manner of liens, charges, encumbrances, and
claims, will have good and marketable title to the Shares, and will have, the
absolute and unqualified right to sell, transfer and deliver such Shares to
UNICO. The delivery of the Shares to UNICO at the Closing pursuant to the
provisions of this agreement will transfer valid title thereto, free and clear
of all manner of liens, charges, encumbrances and claims.
3.6 Financial Statements. The books of accounts of SI, taken as a
whole, fairly reflect its income, expenses, assets and liabilities in all
material respects. The unaudited financial statements of SI for the period
ending November 30, 1997 fairly present the financial position of SI as of said
date and the results of their operations for such period and were prepared in
conformity with generally accepted accounting principles. Such financial
statements will be audited within sixty (60) days following the Closing Date.
3.7 Liabilities. As at November 30, 1997 (the "Balance Sheet Date"),
SI had no material debts, liabilities or obligations, contingent or absolute,
other than those debts, liabilities and obligations reflected or reserved
against on SI's balance sheet as at November 30, 1997 (the "Balance Sheet") or
in the footnotes thereto or in the exhibits to this Agreement.
3.8 Action Since Balance Sheet Date. Except as otherwise
expressly provided or set forth in, or required by this Agreement,
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since the Balance Sheet date, SI has not (and will not have as of the Closing
Date): (i) issued or sold, or agreed to issue or sell any of its capital stock,
options, warrants, rights or calls to purchase such stock, any securities
convertible or exchangeable into such capital stock or other corporate
securities, or effected any subdivision or other recapitalization affecting its
capital stock; (ii) incurred any material obligation or liability, absolute or
contingent, except those arising in the ordinary and usual course of its
business; (iii) discharged or satisfied any lien or encumbrances, except in the
ordinary and usual course of business, or paid or satisfied any liability,
absolute or contingent, other than liabilities as of the Balance Sheet Date and
current liabilities incurred since the Balance Sheet Date in the ordinary and
usual course of business; (iv) made any wage or salary increases or granted any
bonuses other than wage and salary increases and bonuses granted in accordance
with its normal salary increase and bonus policies; (v) mortgaged, pledged or
subjected to any lien or other encumbrance any of its properties or assets, or
permitted any of its property or assets to be subjected to any liens or other
encumbrance, except in the ordinary and usual course of business; (vi) sold,
assigned or transferred any of its properties or assets, except in the ordinary
and usual course of business; (vii) entered into any transaction except in the
ordinary and usual course of business; (viii) waived any rights of substantial
value, or canceled, modified or waived any indebtedness for borrowed money held
by it, except in the ordinary and usual course of business; (ix) declared, paid
or set aside any dividends or other distributions or payments on its capital
stock, or redeemed or repurchased, or agreed to redeem or repurchase, any shares
of its capital stock; (x) made any loans or advances to any person, or assumed,
guaranteed, endorsed or otherwise became responsible for the obligations of any
person; or (xi) incurred any indebtedness for borrowed money (except for
endorsement, for collection or deposit of negotiable instruments received in the
ordinary and usual course of business).
3.9 Adverse Developments. Except as otherwise expressly provided or
set forth in, or required by, this Agreement, since the Balance Sheet Date,
there have been no changes in the properties, operations or financial condition
of SI, and no event has occurred other than in the ordinary and usual course of
business which could be reasonably expected to have a materially adverse effect
upon the business of SI, SI and SGI do not know of any development or threatened
development of a nature that is, or which could be reasonably expected to have a
materially adverse effect upon the business of SI or upon any of its assets or
properties, including, without limitation, the loss of any licenses or permits,
suppliers, customers or employees, which loss would be of a materially adverse
nature. This representation will also be true on the Closing date.
3.10 Taxes. All taxes, including, without limitation, income,
property, sales, use, franchise, capital stock, excise, added value, employee's
income withholding, social security and
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unemployment taxes imposed by the United States, any state or any foreign
county, or by any other taxing authority, which have or may have become due or
payable by SI and all interest and penalties thereon, whether disputed or not,
have been paid in full or adequately provided for by reserves shown in its books
of account; all deposits required by law to be made by SI with respect to
estimated income, franchise and employees' withholding taxes have been duly
made; and all tax returns, including estimated tax returns, required to be filed
have been duly filed. No extension of time for the assessment of deficiencies
for any year is in effect. No deficiency is proposed or, to the knowledge of SGI
or SI, threatened against SI.
3.11 Ownership of Assets. SI owns outright, and has good and
marketable title to all of its assets, properties and business (including all
assets reflected in the Balance Sheet, except as the same may have been disposed
of in the ordinary course of business since the Balance Sheet Date), free and
clear of all liens, mortgages, pledges, conditional sales agreements,
restrictions on transfer or other encumbrances or charges, except those listed
on Exhibit 3.11. Exhibit 3.11 sets forth a true and complete list and brief
description of all patents, copyrights, trademarks, trade names and other
similar intangible assets which are either owned by SI or in which SI has an
interest. Except as set forth in Exhibit 3.11, no other person, firm or
corporation has any proprietary or other interest in any such intangible assets.
Such assets so owned or leased are, in the reasonable business judgment of SGI
and/or SI, sufficient to permit SI to conduct its business as now conducted.
Except as set forth in Exhibit 3.11, SI is not a party to or bound by any
license or agreement requiring the payment to any person, firm or corporation of
any royalty. SGI and SI do not know, or have reasonable grounds to know of, any
violation by others of the trademark, trade name or patent rights of SI. SI is
not infringing upon any patent, copyright, trade name or trademark or otherwise
violating the rights of any third party with respect thereto, and no proceedings
have been instituted or, to the knowledge of SGI and SI are threatened, and no
claim has been received by SGI or SI alleging any such violation.
3.12 Insurance. Exhibit 3.12 sets forth a list and brief description
of all policies of fire, liability and other forms of insurance held by SI as of
the date hereof. Except as set forth in Exhibit 3.12, such policies are valid,
outstanding and enforceable policies, as to which premiums have been paid
currently. Except as set forth in said Exhibit 3.12, neither SGI, nor SI, know
of any state of facts, or of the occurrence of any event which might reasonably
or form the basis for any claim against SI not fully covered by insurance for
liability on account of any express or implied warranty or tortious omission or
commission.
3.13 Litigation, Compliance with Law. Except as set forth in Exhibit
3.13, there are no actions, suits, proceedings or governmental investigations
relating to SI or to any of its
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properties, assets or business pending or, to the knowledge of SGI or SI,
threatened, or any order, injunction, award or decree outstanding against SI or
against or relating to any of its respective properties, assets or business; and
SGI and SI know of no basis for any such action, suits or proceedings within the
past two years or any such governmental investigation, orders, injunctions or
decrees. SI is in not in violation of any law, regulation, ordinance, order,
injunction, decree, award or other requirement of any governmental body, court
or arbitrator relating to its properties, assets or business which could be
reasonably expected to have a materially adverse effect upon the business of SI.
3.14 Real Property. Exhibit 3.14 sets forth a brief description of
all real property which is owned by, or leased to SI. SI owns outright the fee
simple title in and to the real properties shown on said Exhibit 3.14 as being
owned by SI, free and clear of all claims, liens, mortgages, charges, or
encumbrances of any nature whatsoever, except as otherwise described in Exhibit
3.14. The real property leases described in Exhibit 3.14 that relate to the
leased properties described therein are now in full force and effect, and all
amounts payable thereunder have been paid. Except as set forth in Exhibit 3.14,
none of such leases could reasonably be expected to result in material liability
for restoration of premises. All uses of such owned or leased property by SI
conform, in all material respects, to all applicable building and zoning
ordinances, laws, and regulations and, in the case of leased property, to all
terms of the leases relating thereto.
3.15 Agreements and Obligations, Performance. Except as listed and
briefly described in Exhibit 3.15 (the "Listed Agreements") SI , is not a party
to, or bound by any: (i) written or oral agreement or other contractual
commitment, understanding or obligation which involves aggregate payments or
receipts in excess of $5,000 that cannot be canceled on thirty (30) days or less
notice without penalty; (ii) contract, arrangement, commitment or understanding
with its customers or any officer, employee, shareholder, director,
representative or agent thereof for the repurchase of products, sharing of fees,
the rebating of charges to such customers, bribes, kickbacks from such customers
or other similar arrangements; (iii) contract for the purchase or sale of any
materials, products or supplies for a fixed term; (iv) contract of employment
with any officer or employee not terminable at will without penalty or premium
or any continuing obligation of liability; (v) deferred compensation, bonus or
incentive plan or agreement not cancelable at will without penalty or premium or
any continuing obligation or liability; (vi) management or consulting agreement
not terminable at will without penalty or premium or any continuing obligation
or liability; (vii) lease for real or personal property (including borrowings
thereon), license or royalty agreement; (viii) union or other collective
bargaining agreement; (ix) agreement, commitment or understanding relating to
indebtedness for borrowed money; (x) contract which, by its terms,
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requires the consent of any party thereto to the consummation of the
transactions contemplated hereby; (xi) contract containing covenants limiting
the freedom of SI to engage or compete in any line or business with any person
in any geographical area; (xii) contract or option relating to the acquisition
or sale of any business; (xiii) voting trust agreement or similar shareholders'
agreement; (xiv) other contract, agreement, commitment or understanding which
materially affects any of SI's properties, assets or business, whether directly
or indirectly, or which was entered into other than in the ordinary course of
business. A true and correct copy of each of the written Listed Agreements has
been delivered to UNICO. SI has in all material respects performed all
obligations required to be performed by it to date under all of the Listed
Agreements, is not in default in any material respect under any of the Listed
Agreements and has received no notice of any default or alleged default
thereunder which has not heretofore been cured or which notice has not
heretofore been withdrawn. SGI and SI know of no material default under any of
the Listed Agreements by any other party thereto or by any other person, firm or
corporation bound thereunder.
3.16 Condition of Assets. All machinery and equipment regularly used
by SI in the conduct of its business is in operating condition and repair,
ordinary wear and tear excepted. The inventories of SI are substantially in
usable and saleable condition and in reasonable balance, and such inventory in
the aggregate is saleable at least at the value at which it is carried on SI's
books.
3.17 Accounts Receivable. To the knowledge of SGI and SI, all of the
accounts receivable reflected in the books of account of SI are valid and arose
in the ordinary course of its business, from the sale of services or goods, and
SGI and SI do not know, or have reason to know, of any valid defense or right of
set-off to the rights of SI to collect such accounts receivable in the full
amounts shown on such books of account less any reserves on the Balance Sheet.
3.18 Permits and Licenses. Exhibit 3.18 sets forth all permits,
licenses, orders, franchises and approvals from all federal, state, local and
foreign governmental regulatory bodies held by SI. SI has all permits, license,
orders and approvals of all federal, state, local and foreign governmental or
regulatory bodies required of it to carry on its business as presently
conducted; all such permits, licenses, orders, franchises and approvals are in
full force and effect, and to the knowledge of SGI and SI, no suspension or
cancellation of any of such permits, licenses, etc., is threatened; and SI is in
compliance in all material respects with all requirements, standards and
procedures of the federal, state, local and foreign governmental bodies which
have issued permits, licenses, orders, franchises and approvals. Exhibit 3.18
also sets forth a brief description of all motor vehicles owned or leased by SI
and the state of title thereof.
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3.19 Banking Arrangements. Exhibit 3.19 sets forth the name of each
bank in or with which SI has an account, credit line or safety deposit box, and
a brief description of each such account, credit line or safety deposit box
including the names of all persons currently authorized to draw thereon or
having access thereto, and the names of all persons, if any, now holding powers
of attorney from SI and a summary statement of the terms thereof.
3.20 Interest in Assets. Except as set forth in Exhibit 3.20, neither
SGI nor any of SI's shareholders or affiliates, owns any property or rights,
tangible or intangible, used in or related, directly or indirectly, to the
business of SI.
3.21 Salary Information. Exhibit 3.21 contains a list of the names
and current salary rates of and bonus commitments to all present officers of SI,
and the names and current annual salary rates of all other persons employed by
SI whose annual salaries exceed $25,000.00.
3.22 Employee Benefit Plans. SI maintains no "pension" and "welfare"
benefit plans (within the respective meanings of sections 3(2) and 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), nor does
it make employer contributions with respect to its employees. SI acquired no
such plans and assumed no such contribution obligations in connection with the
acquisition of its existing business.
3.23 No Breach. Neither the execution and delivery of this Agreement
by SGI and/or SI nor compliance by SGI and/or SI with any of the provisions
hereof nor the consummation of the transactions contemplated hereby, will:
(a) violate or conflict with any provision of the
Certificate of Incorporation or By-Laws of SGI or SI;
(b) violate, or with the passage of time, result in the
material breach or termination of, or otherwise give any contracting party the
right to terminate, or declare a material default under, the terms of any
agreement or other document or undertaking, oral or written to which SGI or SI
is a party or by which either its properties or assets may be bound (except for
such violations, conflicts, breaches or defaults as to which required waivers or
consents by other parties have been, or will, prior to the Closing, be,
obtained);
(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of SI pursuant to the
terms of any such agreement or instrument;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon, SGI or SI or upon their respective properties or
assets; or
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(e) violate any law or regulation of any jurisdiction
relating to SGI or SI or any of their respective securities, assets or
properties.
3.24 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly between SGI and
UNICO without the intervention of any broker, finder, investment banker or other
third party except one party, to be paid by SGI, and another party, to be paid
by UNICO. Except for such parties, neither UNICO or SGI have engaged, consented
to, or authorized any broker, finder, investment banker or other third party to
act on its behalf, directly or indirectly, as a broker or finder in connection
with the transaction contemplated by this Agreement.
3.25 Labor Discussions. Except with respect to the agreements listed
in Exhibit 3.15 pursuant to Section 3.15(viii), SI is not, and has not, during
the past three years, been involved in any labor discussions with any unit or
group seeking to become the bargaining unit for any of its employees. With
respect to said Agreements, Exhibit 3.15 sets forth a description of the status
thereof, including any demands or proposals with respect to the renewal,
extension or replacement thereof.
3.26 Change of Name. SI has not conducted business under any name
during the past three (3) years except those set forth on Exhibit 3.26.
3.27 Backlog. Exhibit 3.27 sets forth as of November 30, 1997 the
name, aggregate contract price, revenues received to date and balance remaining
upon all orders then in progress or under contract. The aggregate backlog of SI
as at November 30, 1997 is set forth in Exhibit 3.27.
3.28 Environmental. Except as previously disclosed or set forth on
Exhibit 3.28, neither SI nor any previous owner, tenant, occupant or user of any
real property of SI, used, generated, manufactured, installed, released,
discharge, stored or disposed of any "Hazardous Materials," as defined below,
on, under, in or about the side of any such property. The term "Hazardous
Materials" shall mean any waste material which is regulated by any state or
local governmental authority in the states in which SI and its subsidiaries, if
any, conduct business, or the United States Government, including, but not
limited to, any material or substance which is (i) defined as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous
waste," or "restricted hazardous waste" under any provision of California Law,
(ii) petroleum, (iii) asbestos, (iv) designated as a "hazardous substance"
pursuant to Section 311 of the Clean Water Act, 33 U.S.C. 1251 et seq. (33
U.S.C. 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C.
1317), (v) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C.
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<PAGE> 11
6903), or (vi) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
6901 et seq. (42 U.S.C. 9601). The current operations of SI and its current and
past use comply and then complied; with all applicable laws and governmental
regulations including all applicable federal, state and local laws, ordinances,
and regulations pertaining to air and water quality, Hazardous Materials, waste,
disposal or other environmental matters, including the Clean Water Act, the
Clean Air Act, the Federal Water Pollution Control Act, the Solid Waste Disposal
Act, the Resource Conservation Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, and the statutes, rules, regulations
and ordinances of the state, city and country in which such property is located.
All sewage and waste discharge at such property is and has been discharged in
compliance with applicable federal, state and local law. No wells of any kind
which may exist on such property have or have been receiving any discharges.
There are no underground storage tanks of any kind at any such property.
3.29 Untrue or Omitted Facts. No representation, warranty or
statement by SGI or SI in this Agreement contains any untrue statement of a
material fact, or omits or will omit to state a fact necessary in order to make
such representations, warranties or statements not materially misleading.
Without limitation of the foregoing, there is no fact known to SGI or SI, that
has had, or which may be reasonably expected to have, a materially adverse
effect on SI or any of its assets, properties and business and that has not been
disclosed in writing to UNICO.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF UNICO
UNICO makes the following representations and warranties to SGI,
each of which shall be deemed material, and SGI, in executing this Agreement,
has relied and will rely on the correctness and completeness of such
representations and warranties:
4.1 Valid Corporate Existence; Qualification. UNICO is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Mexico. UNICO has the corporate power to carry on its business as
now conducted and to own its assets. UNICO is duly qualified to conduct business
and is in good standing as a foreign corporation in those jurisdictions set
forth in Exhibit 4.1, which are the only jurisdictions in which UNICO is
required to qualify in order to own its assets or properties or to carry on its
business as now conducted, and there had not been any claim by any other
jurisdiction to the effect that UNICO is required to qualify or otherwise be
authorized to do business as a foreign corporation therein which could
reasonably be expected to
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have a materially adverse effect upon the business of UNICO. The copies of
UNICO's Certificate of Incorporation (certified by the Secretary of State of New
Mexico) and By-Laws (certified by UNICO's secretary), as amended to date, which
have been delivered to SGI, are true and complete copies of those documents as
now in effect. The minute books of UNICO contain accurate records of all
material meetings of its Board of Directors, Executive Committee of the Board,
if any, and shareholders since its incorporation, and accurately reflect all
transactions authorized therein.
4.2 Capitalization. The authorized capital stock of UNICO consists of
50,000,000 shares of Common Stock, par value $.20 per share, and 8,000,000
shares of Preferred Stock of which 986,590 shares of Common Stock are issued and
outstanding. None of the Preferred Shares are issued and outstanding. All of
such shares of Common Stock and Preferred Stock are duly authorized and, in the
case of the Common Stock, validly issued and outstanding, fully paid and
nonassessable. Except as set forth on Exhibit 4.2, there are no subscriptions,
options, warrants, rights or calls or other commitments or agreements to which
UNICO is a party or by which any person is bound, calling for the issuance,
transfer, sale or other disposition of securities of UNICO convertible or
exchangeable, actually or contingently, into shares of Common Stock or any other
securities of UNICO.
4.3 Subsidiaries. Except as set forth on Exhibit 4.3, there are no
corporations, partnerships and other business entities controlled by UNICO. As
used herein, "controlled by" has the meaning set forth in Section 3.3 of this
Agreement.
4.4 Consents. The consent of all requisite governmental and other
regulatory agencies, foreign or domestic, and of other parties required to be
received by, or on the part of UNICO to enable it to enter into and carry out
this Agreement, have been, or prior to the Closing will have been, obtained.
4.5 Corporate Authority; Binding Nature of Agreement; Title to
Shares. UNICO has the corporate power to enter into this Agreement and to carry
out its obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by its Board of Directors and no other corporate proceedings on the
part of UNICO are necessary to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement constitutes UNICO's valid and binding obligation and is enforceable in
accordance with its terms. At the Closing, UNICO will have the absolute and
unqualified right to issue, transfer and deliver its common and preferred shares
to SGI. The delivery of the Common and Preferred Stock to SGI at the Closing
pursuant to the provisions of this Agreement will transfer valid title thereto,
free and clear of all manner of liens, charges, encumbrances and claims.
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4.6 Financial Statements. The books of accounts of UNICO taken as a
whole, fairly reflect its income, expenses, assets and liabilities in all
material respects. The unaudited financial statements of UNICO for the period
ending November 30, 1997 fairly present the financial position of UNICO as of
said date and the results of its operations for such period and were prepared in
conformity with generally accepted accounting principles. Such financial
statements will be audited within sixty (60) days following the end of UNICO's
fiscal year ending February 28, 1998.
4.7 Liabilities. Except as set forth in Exhibit 4.7, as of November
30, 1997 (the "Balance Sheet Date"), UNICO had no material debts, liabilities or
obligations, contingent or absolute, other than those debts, liabilities and
obligations reflected or reserved against on UNICO's balance sheet as at
November 30, 1997 (the "Balance Sheet Date") or in the footnotes thereto or in
the exhibits to this Agreement.
4.8 Action Since Balance Sheet Date. Except as otherwise expressly
provided or set forth in, or required by this Agreement, since the Balance Sheet
date, UNICO has not (and will not have as of the Closing Date): (i) issued or
sold, or agreed to issue or sell any of its capital stock, options, warrants,
rights or calls to purchase such stock, any securities convertible or
exchangeable into such capital stock or other corporate securities, or effected
any subdivision or other recapitalization affecting its capital stock; (ii)
incurred any material obligation or liability, absolute or contingent, except
those arising in the ordinary and usual course of its business; (iii) discharged
or satisfied any lien or encumbrances, except in the ordinary and usual course
of business, or paid or satisfied any liability, absolute or contingent, other
than liabilities as of the Balance Sheet Date and liabilities incurred since the
Balance Sheet Date in the ordinary and usual course of business; (iv) made any
wage or salary increases or granted any bonuses other than wage and salary
increases and bonuses granted in accordance with its normal salary increase and
bonus policies; (v) mortgaged, pledged or subjected to any lien or other
encumbrance any of its properties or assets, or permitted any of its property or
assets to be subjected to any liens or other encumbrance, except in the ordinary
and usual course of business; (vi) sold, assigned or transferred any of its
properties or assets, except in the ordinary and usual course of business; (vii)
entered into any transaction except in the ordinary and usual course of
business; (viii) waived any rights of substantial value, or canceled, modified
or waived any indebtedness for borrowed money held by it, except in the ordinary
and usual course of business; (ix) declared, paid or set aside any dividends or
other distributions or payments on its capital stock, or redeemed or
repurchased, or agreed to redeem or repurchase, any shares of its capital stock;
(x) made any loans or advances to any person, or assumed, guaranteed, endorsed
or otherwise became responsible for the obligations of any person; or (xi)
incurred any indebtedness for borrowed money (except for endorsement, for
collection or
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deposit of negotiable instruments received in the ordinary and usual course of
business).
4.9 Adverse Developments. Except as otherwise expressly provided or
set forth in, or required by, this Agreement, since the Balance Sheet Date,
there have been no changes in the properties, operations or financial condition
of UNICO, and no event has occurred other than in the ordinary and usual course
of business which could be reasonably expected to have a materially adverse
effect upon the business of UNICO, and UNICO does not know of any development or
threatened development of a nature that is, or which could be reasonably
expected to have a materially adverse effect upon the business of UNICO or upon
any of its assets or properties, including, without limitation, the loss of any
licenses or permits, suppliers, customers or employees, which loss would be of a
materially adverse nature. This representation will also be true on the Closing
date.
4.10 Taxes. All taxes, including, without limitation, income,
property, sales, use, franchise, capital stock, excise, added value, employee's
income withholding, social security and unemployment taxes imposed by the United
States, any state or any foreign county, or by any other taxing authority, which
have or may have become due or payable by UNICO and all interest and penalties
thereon, whether disputed or not, have been paid in full or adequately provided
for by reserves shown in its books of account; all deposits required by law to
be made by UNICO with respect to estimated income, franchise and employees'
withholding taxes have been duly made; and all tax returns, including estimated
tax returns, required to be filed have been duly filed. No extension of time for
the assessment of deficiencies for any year is in effect. No deficiency is
proposed or, to the knowledge of UNICO, threatened against UNICO.
4.11 Ownership of Assets. UNICO owns outright, and has good and
marketable title to all of its assets, properties and business (including all
assets reflected in the Balance Sheet, except as the same may have been disposed
of in the ordinary course of business since the Balance Sheet Date), free and
clear of all liens, mortgages, pledges, conditional sales agreements,
restrictions on transfer or other encumbrances or charges, except those listed
on Exhibit 4.11. Exhibit 4.11 sets forth a true and complete list and brief
description of all patents, copyrights, trademarks, trade names and other
similar intangible assets which are either owned by UNICO or in which UNICO has
an interest. Except as set forth in Exhibit 4.11, no other person, firm or
corporation has any proprietary or other interest in any such intangible assets.
Such assets so owned or leased are, in the reasonable business judgment of
UNICO, sufficient to permit UNICO to conduct its business as now conducted.
Except as set forth in Exhibit 4.11, UNICO is not a party to or bound by any
license or agreement requiring the payment to any person, firm or corporation of
any royalty. UNICO does not know, or have reasonable grounds to know of, any
violation by
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<PAGE> 15
others of the trademark, trade name or patent rights of UNICO. UNICO is not
infringing upon any patent, copyright, trade name or trademark or otherwise
violating the rights of any third party with respect thereto, and no proceedings
have been instituted or, to the knowledge of UNICO are threatened, and no claim
has been received by UNICO alleging any such violation.
4.12 Insurance. Exhibit 4.12 sets forth a list and brief description
of all policies of fire, liability and other forms of insurance held by UNICO as
of the date hereof. Except as set forth in Exhibit 4.12, such policies are
valid, outstanding and enforceable policies, as to which premiums have been paid
currently. Except as set forth in said Exhibit 4.12, UNICO does not know of any
state of facts, or of the occurrence of any event which might reasonably form
the basis for any claim against UNICO not fully covered by insurance for
liability on account of any express or implied warranty or tortious omission or
commission.
4.13 Litigation, Compliance with Law. Except as set forth in Exhibit
4.13, there are no actions, suits, proceedings or governmental investigations
relating to UNICO or to any of its properties, assets or business pending or, to
the knowledge of UNICO, threatened, or any order, injunction, award or decree
outstanding against UNICO or against or relating to any of its respective
properties, assets or business; and UNICO knows of no basis for any such action,
suits or proceedings within the past two years or any such governmental
investigation, orders, injunctions or decrees. UNICO is in not in violation of
any law, regulation, ordinance, order, injunction, decree, award or other
requirement of any governmental body, court or arbitrator relating to its
properties, assets or business which could be reasonably expected to have a
materially adverse effect upon the business of UNICO.
4.14 Real Property. Exhibit 4.14 sets forth a brief description of
all real property which is owned by, or leased to UNICO. UNICO owns outright the
fee simple title in and to the real properties shown on said Exhibit 4.14 as
being owned by UNICO, free and clear of all claims, liens, mortgages, charges,
or encumbrances of any nature whatsoever, except as otherwise described in
Exhibit 4.14. The real property leases described in Exhibit 4.14 that relate to
the leased properties described therein are now in full force and effect, and
all amounts payable thereunder have been paid. Except as set forth in Exhibit
4.14, none of such leases could reasonably be expected to result in material
liability for restoration of premises. All uses of such owned or leased property
by UNICO conform, in all material respects, to all applicable building and
zoning ordinances, laws, and regulations and, in the case of leased property, to
all terms of the leases relating thereto.
4.15 Agreements and Obligations, Performance. Except as listed and
briefly described in Exhibit 4.15 (the "Listed Agreements") UNICO is not a party
to, or bound by any: (i) written
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<PAGE> 16
or oral agreement or other contractual commitment, understanding or obligation
which involves aggregate payments or receipts in excess of $5,000 that cannot be
canceled on thirty (30) days or less notice without penalty; (ii) contract,
arrangement, commitment or understanding with its customers or any officer,
employee, shareholder, director, representative or agent thereof for the
repurchase of products, sharing of fees, the rebating of charges to such
customers, bribes, kickbacks from such customers or other similar arrangements;
(iv) contract for the purchase or sale of any materials, products or supplies
for a fixed term; (v) contract of employment with any officer or employee not
terminable at will without penalty or premium or any continuing obligation of
liability; (vi) deferred compensation, bonus or incentive plan or agreement not
cancelable at will without penalty or premium or any continuing obligation or
liability; (vii) management or consulting agreement not terminable at will
without penalty or premium or any continuing obligation or liability; (viii)
lease for real or personal property (including borrowings thereon), license or
royalty agreement; (ix) union or other collective bargaining agreement; (x)
agreement, commitment or understanding relating to indebtedness for borrowed
money; (xi) contract which, by its terms, requires the consent of any party
thereto to the consummation of the transactions contemplated hereby; (xii)
contract containing covenants limiting the freedom of UNICO to engage or compete
in any line or business with any person in any geographical area; (xiii)
contract or option relating to the acquisition or sale of any business; (xiv)
voting trust agreement or similar shareholders' agreement; (xv) other contract,
agreement, commitment or understanding which materially affects any of UNICO's
properties, assets or business, whether directly or indirectly, or which was
entered into other than in the ordinary course of business. A true and correct
copy of each of the written Listed Agreements has been delivered to SGI. UNICO
has in all material respects performed all obligations required to be performed
by it to date under all of the Listed Agreements, is not in default in any
material respect under any of the Listed Agreements and has received no notice
of any default or alleged default thereunder which has not heretofore been cured
or which notice has not heretofore been withdrawn. UNICO knows of no material
default under any of the Listed Agreements by any other party thereto or by any
other person, firm or corporation bound thereunder.
4.16 Condition of Assets. All machinery and equipment regularly used
by UNICO in the conduct of its business is in operating condition and repair,
ordinary wear and tear excepted. The inventories of UNICO are substantially in
usable and saleable condition and in reasonable balance, and such inventory in
the aggregate is saleable at least at the value at which it is carried on
UNICO's books.
4.17 Accounts Receivable. To the knowledge of UNICO, all of the
accounts receivable reflected in the books of account of UNICO are valid and
arose in the ordinary course of its business, from
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the sale of services or goods, and UNICO does not know, or have reason to know,
of any valid defense or right of set-off to the rights of UNICO to collect such
accounts receivable in the full amounts shown on such books of account less any
reserves on the Balance Sheet.
4.18 Permits and Licenses. Exhibit 4.18 sets forth all permits,
licenses, orders, franchises and approvals from all federal, state, local and
foreign governmental regulatory bodies held by UNICO. UNICO has all permits,
license, orders and approvals of all federal, state, local and foreign
governmental or regulatory bodies required of it to carry on its business as
presently conducted; all such permits, licenses, orders, franchises and
approvals are in full force and effect, and to the knowledge of UNICO, no
suspension or cancellation of any of such permits, licenses, etc., is
threatened; and UNICO is in compliance in all material respects with all
requirements, standards and procedures of the federal, state, local and foreign
governmental bodies which have issued permits, licenses, orders, franchises and
approvals. Exhibit 4.18 also sets forth a brief description of all motor
vehicles owned or leased by UNICO and the state of title thereof.
4.19 Banking Arrangements. Exhibit 4.19 sets forth the name of each
bank in or with which UNICO has an account, credit line or safety deposit box,
and a brief description of each such account, credit line or safety deposit box
including the names of all persons currently authorized to draw thereon or
having access thereto, and the names of all persons, if any, now holding powers
of attorney from UNICO and a summary statement of the terms thereof.
4.20 Interest in Assets. Except as set forth in Exhibit 4.20, none of
UNICO'S officers, directors, or shareholders of greater than 5% of the
outstanding shares, owns any property or rights, tangible or intangible, used in
or related, directly or indirectly, to the business of UNICO.
4.21 Salary Information. Exhibit 4.21 contains a list of the names
and current salary rates of and bonus commitments to all present officers of
UNICO, and the names and current annual salary rates of all other persons
employed by UNICO whose annual salaries exceed $25,000.00.
4.22 Employee Benefit Plans. Except as set forth in Exhibit 4.22,
UNICO maintains no "pension" and "welfare" benefit plans (within the respective
meanings of sections 3(2) and 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), nor does it make employer contributions with
respect to its employees. UNICO acquired no such plans and assumed no such
contribution obligations in connection with the acquisition of its existing
business.
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4.23 No Breach. Neither the execution and delivery of this Agreement
by UNICO nor compliance by UNICO with any of the provisions hereof nor the
consummation of the transactions contemplated hereby, will:
(a) violate or conflict with any provision of the
Certificate of Incorporation or By-Laws of UNICO;
(b) violate, or with notice or the passage of time, result\
in the material breach or termination of, or otherwise give any contracting
party the right to terminate, or declare a material default under, the terms of
any agreement or other document or undertaking, oral or written to which UNICO
is a party or by which either its properties or assets may be bound (except for
such violations, conflicts, breaches or defaults as to which required waivers or
consents by other parties have been, or will, prior to the Closing, be,
obtained);
(c) result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of UNICO pursuant to
the terms of any such agreement or instrument;
(d) violate any judgment, order, injunction, decree or award
against, or binding upon, UNICO or upon its properties or assets; or
(e) violate any law or regulation of any jurisdiction
relating to UNICO or any of its securities, assets or properties.
4.24 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly between SGI and
UNICO without the intervention of any broker, finder, investment banker or other
third party except one party, to be paid by SGI, and another party, to be paid
by UNICO. Except for such parties, neither UNICO or SGI have engaged, consented
to, or authorized any broker, finder, investment banker or other third party to
act on its behalf, directly or indirectly, as a broker or finder in connection
with the transaction contemplated by this Agreement.
4.25 Labor Discussions. Except with respect to the agreements listed
in Exhibit 4.15 pursuant to Section 4.15(ii), UNICO is not, and has not, during
the past three years, been involved in any labor discussions with any unit or
group seeking to become the bargaining unit for any of its employees. With
respect to said Agreements, Exhibit 4.15 sets forth a description of the status
thereof, including any demands or proposals with respect to the renewal,
extension or replacement thereof.
4.26 Change of Name. UNICO has not conducted business under any name
during the past three (3) years except those set forth on Exhibit 4.26.
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4.27 Backlog. Exhibit 4.27 sets forth as of November 30, 1997 the
name, aggregate contract price, revenues received to date and balance remaining
upon all orders then in progress or under contract. The aggregate backlog of
UNICO as at November 30, 1997 is set forth in Exhibit 4.27.
4.28 Environmental. Except as previously disclosed or set forth on
Exhibit 4.28, neither UNICO nor any previous owner, tenant, occupant or user of
any real property of UNICO, used, generated, manufactured, installed, released,
discharge, stored or disposed of any "Hazardous Materials," as defined below,
on, under, in or about the side of any such property. The term "Hazardous
Materials" shall mean any waste material which is regulated by any state or
local governmental authority in the states in which UNICO and its subsidiaries,
if any, conduct business, or the United States Government, including, but not
limited to, any material or substance which is (i) defined as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous
waste," or "restricted hazardous waste" under any provision of California Law,
(ii) petroleum, (iii) asbestos, (iv) designated as a "hazardous substance"
pursuant to Section 311 of the Clean Water Act, 33 U.S.C. 1251 et seq. (33
U.S.C. 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C.
1317), (v) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903),
or (vi) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
6901 et seq. (42 U.S.C. 9601). The current operations of UNICO and its current
and past use comply and then complied; with all applicable laws and governmental
regulations including all applicable federal, state and local laws, ordinances,
and regulations pertaining to air and water quality, Hazardous Materials, waste,
disposal or other environmental matters, including the Clean Water Act, the
Clean Air Act, the Federal Water Pollution Control Act, the Solid Waste Disposal
Act, the Resource Conservation Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, and the statutes, rules, regulations
and ordinances of the state, city and country in which such property is located.
All sewage and waste discharge at such property is and has been discharged in
compliance with applicable federal, state and local law. No wells of any kind
which may exist on such property have or have been receiving any discharges.
There are no underground storage tanks of any kind at any such property.
4.29 Untrue or Omitted Facts. No representation, warranty or
statement by UNICO in this Agreement contains any untrue statement of a material
fact, or omits or will omit to state a fact necessary in order to make such
representations, warranties or statements not materially misleading. Without
limitation of the foregoing, there is no fact known to UNICO that has had, or
which may be reasonably expected to have, a materially adverse effect on UNICO
or any of
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<PAGE> 20
its assets, properties and business and that has not been disclosed in writing
to UNICO.
ARTICLE V
PRE-CLOSING COVENANTS
UNICO and SGI each hereby covenant to the other that, from and after
the date hereof, and until the Closing or earlier termination of this Agreement:
5.1 Access. It shall afford to the officers, attorneys, accountants
and other authorized representatives of the other free and full access, during
regular business hours and upon reasonable notice, to its books, records,
personnel and properties (including, without limitation, the work papers
prepared by its auditors) so that such other party may have full opportunity to
make such review, examination and investigation as it may desire of its
respective business and affairs. It will cause its employees, accountants and
attorneys to cooperate fully with said review, examination and investigation and
to make full disclosure to the other party of all material facts affecting their
respective financial conditions and business operations. All material disclosed
will be held in strict confidence by the recipient.
5.2 Conduct of Business. It will conduct its business only in the
ordinary and usual course and make no material change in any of its policies
without the prior written consent of the other, which shall not be unreasonably
withheld or delayed.
5.3 Insurance. It will maintain in force the insurance policies
listed in Exhibits 3.12 and 4.12 as the case may be, except to the extent that
they may be replaced with equivalent policies.
5.4 Liabilities. It shall not incur any obligation or liability,
absolute or contingent, except for those incurred in the ordinary and usual
course of its business; nor shall it pay any obligation or liability other than:
(i) the foregoing obligations and liabilities, (ii) debts, liabilities, and
obligations set forth in its Balance Sheet; (iii) debts, liabilities and
obligations arising after the Balance Sheet Date in the ordinary course of its
business; and (iv) debts, liabilities and obligations under the contracts,
agreements, past practices, arrangements, relationships, documents and
instruments listed, described or contained in this Agreement or in the Exhibits
annexed to this Agreement.
5.5 Preservation of Business. It will use its best efforts to
preserve its business organization intact, to keep available the services of its
present officers, employees and consultants, and to preserve its goodwill.
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<PAGE> 21
5.6 No Breach. It will (i) use its best efforts to assure that all of
its representations and warranties contained herein are true in all material
respects as at the Closing as if repeated at the Closing; (ii) not voluntarily
take any action or do anything which will cause a breach of or default
respecting such covenants, representations or warranties; and (iii) promptly
notify the other of any event or fact which represents or is likely to cause
such a breach or default.
5.7 No Negotiations. It will not enter into or conduct negotiations,
or enter into any agreement or understanding, for the sale or possible sale of
any of its securities or assets, with anyone other than the other unless the
Closing shall not have occurred by February 15, 1998.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UNICO TO CLOSE
The obligations of UNICO to enter into and complete the Closing, is
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions, any one or more of which may be waived by UNICO (except
when the fulfillment of such condition is a requirement of law).
6.1 Representations and warranties. All representations and
warranties of SGI contained in this Agreement and in any written statement
(including financial statements), exhibit, certificate, schedule or other
document delivered pursuant hereto or in connection with the transactions
contemplated hereby shall be true and correct in all material respects as at the
Closing Date, as if made at the Closing and as of the Closing date.
6.2 Covenants. SGI shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by it prior to or at the Closing.
6.3 No Actions. No action, suit, proceeding or investigation shall
have been instituted, and be continuing before a court or before or by a
governmental body or agency, and be unresolved, to restrain or to prevent or to
obtain damages in respect of, the carrying out of the transactions contemplated
hereby, or which might materially affect the right of UNICO to own the Shares or
to operate or control the assets, properties and business of SI after the
Closing Date, or which might have a materially adverse effect thereon.
6.4 Consents, Licenses and Permits. SGI shall have obtained all
consents, licenses and permits of third parties necessary for the performance by
it of all of its obligations under this Agreement, and such other consents, if
any, to prevent (i)
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<PAGE> 22
agreements of SGI from terminating, the termination of which, in the aggregate,
would have a material adverse effect on the business, financial condition or
assets of SGI, or (ii) any material indebtedness of SGI from becoming due or
being subject to becoming due with the passage of time or on notice as a result
of the performance of this Agreement, any other provisions of this Agreement to
the contrary notwithstanding.
6.5 Certificate. UNICO shall have received a certificate dated the
Closing Date, signed by the President and Secretary of SGI as to the
satisfaction of the conditions contained in Sections 6.1, 6.2, 6.3, 6.4 and 6.6.
6.6 No Material Adverse Change. There shall have been no material
adverse change at the Closing Date in the business, assets and properties,
financial status or prospects of SGI since the Balance Sheet Date.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATION OF
SGI TO CLOSE
The obligation of SGI to enter into and complete the Closing is
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions, any one or more of which may be waived by SGI (except when
the fulfillment of such condition is a requirement of law).
7.1 Representations and warranties. All representations and
warranties of UNICO contained in this Agreement and in any written statement,
schedule or other document delivered pursuant hereto or in connection with the
transactions contemplated hereby shall be true and correct in all material
respects as at the Closing Date, as if made at the Closing and as of the Closing
Date.
7.2 Covenants. UNICO shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with by it prior to or at the Closing.
7.3 No Actions. No action suit, proceedings, or investigation shall
have been instituted, and be continuing, before a court or before or by a
governmental body or agency, or have been threatened, and be unresolved, to
restrain or prevent, or obtain damages in respect of, the carrying out of the
transactions contemplated hereby.
7.4 Consents, Licenses and Permits. UNICO shall have obtained all
consents, licenses and permits of third parties necessary for the performance by
UNICO of all of its obligations
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<PAGE> 23
under this Agreement, and such other consents, if any, to prevent; (i)
agreements of UNICO from terminating, the termination of which, in the
aggregate, would have a material adverse effect on the business, financial
condition or assets of UNICO, or (ii) any material indebtedness of UNICO from
becoming due or being subject to becoming due with the passage of time or on
notice as a result of the performance of this Agreement, any other provisions of
this Agreement to the contrary notwithstanding.
7.5 Certificate. SGI shall have received a certificate of UNICO,
dated the Closing Date, signed by the President and Secretary of UNICO as to the
satisfaction of the conditions contained in Sections 7.1, 7.2, 7.3 and 7.4 and
7.6.
7.6 No Material Adverse Change. There shall have been no material
adverse change at the Closing Date in the business, assets and properties,
financial status or prospects of UNICO since the Balance Sheet Date.
7.7 SEC and Nasdaq Compliance UNICO shall be in full compliance with
all reporting requirements of the Securities and Exchange Commission, including
required amendments to filings and reports, and UNICO's Common Stock shall be
listed for trading on Nasdaq.
ARTICLE VIII
CLOSING
8.1 Time and Location. The Closing provided for herein shall take
place at the offices of Tenzer Greenblatt LLP, effective 60 days from the date
hereof or at such other time and place as may be mutually agreed to by the
parties hereto. Such date is referred to in this Agreement as the "Closing
Date".
8.2 Items to be Delivered by SGI. At the Closing, SGI will deliver or
cause to be delivered to UNICO:
(a) Certificates representing the Shares in accordance with
Section 1.1 hereof, accompanied by all instruments and documents as in the
opinion of UNICO's counsel, shall be necessary to effect the transfer of and to
vest title in and to the Shares in UNICO, free and clear of all manner of liens,
pledges, encumbrances, charges and claims thereon;
(b) The certificates required by Section 6.5;
(c) Such other certified resolutions, documents and
certificates as are required to be delivered by SGI and UNICO pursuant to the
provisions of this Agreement.
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<PAGE> 24
8.3 Items to be Delivered by UNICO. At the Closing, UNICO will
deliver or cause to be delivered to SGI:
(a) The certificates required by Sections 7.5;
(b) Such other certified resolutions, documents and
certificates as are required to be delivered by UNICO pursuant to the provisions
of this Agreement.
(c) The preferred and common stock certificates to be
delivered hereunder.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 Survival. SGI, SI and UNICO and UNICO agree that their respective
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing for a term of three (3) years with the
exception of those regarding taxes which shall survive until the expiration of
the respective periods within which such taxes may be assessed.
9.2 Indemnification. SGI and UNICO each agree to save, defend and
indemnify the other against and hold it harmless from any and all liabilities,
of every kind, nature and description, fixed or contingent (including, without
limitation, counsel fees and expenses in connection with any action, claim or
proceeding relating to such liabilities) arising out of any misrepresentation
made by such indemnifying party or any transaction or event commencing or
occurring on or prior to the Closing Date, which is not fully disclosed or
provided for in UNICO's or UNICO's Balance Sheet, this Agreement or the exhibits
hereto, including, without limitation, any tax liabilities to the extent not so
reflected or reserved against in the respective Balance Sheets. Any valid claims
for indemnification shall be paid for with common shares, meaning if SGI must
indemnify, UNICO may cancel outstanding shares held by SGI and if UNICO must
indemnify it will issue additional shares to SGI. In either event, the shares
will be valued at market value at the time of cancellation or issuance, as the
case may be.
9.3 Defense of Claims. An indemnified party shall notify the
indemnifying party with reasonable promptness of any claim asserted against it
in respect of which the indemnifying party may be liable under this Agreement,
which notification shall be accompanied by a written statement setting forth the
basis of such claim and the manner of calculation thereof. The indemnifying
party shall have the right to defend any such claim at its own expense and with
counsel of its choice; provided, however, that such counsel shall have been
approved by the indemnified party prior to engagement; which approval shall not
be unreasonably withheld or delayed; and
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<PAGE> 25
provided further, that the indemnified party may participate in such defense, if
it so chooses, with its own counsel and at its own expense.
9.4 Rights Without Prejudice. The rights of UNICO and SGI under this
Article IX are without prejudice to any other rights or remedies that either may
have by reason of this Agreement or as otherwise provided by law.
ARTICLE X
TERMINATION AND WAIVER
10.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the transactions provided
for herein abandoned at any time prior the Closing Date:
(a) By mutual consent of the Board of Directors of UNICO
and SGI;
(b) By UNICO if any of the conditions set forth in Article
VI hereof shall not have been fulfilled on or prior to the Closing Date, or
shall become incapable of fulfillment at any time, and shall not have been
waived;
(c) By SGI if any of the conditions set forth in Article
VII hereof shall not have been fulfilled on or prior to the Closing Date, or
shall have become incapable of fulfillment at any time, and shall not have been
waived;
(d) By SGI or UNICO if any material legal action or
proceedings shall have been instituted or threatened seeking to restrain,
prohibit, invalidate or otherwise affect the consummation of the transactions
contemplated by this Agreement which makes it inadvisable, in the judgment of
SGI or UNICO, to consummate same.
In the event that the Agreement is terminated as described above,
this Agreement shall be void and of no force and effect, without any liability
or obligation on the part of any of the parties hereto.
10.2 Waiver. Any condition to the performance of either party which
legally may be waived on or prior to the Closing Date may be waived at any time
by the party entitled to the benefit thereof by action taken or authorized by an
instrument in writing executed by the relevant party. The failure of any party
at any time or times to require performance of any provision hereto shall in no
manner effect the right of such party at a later time to enforce the same. No
waiver by any party of the breach of any term, covenant, representation or
warranty contained in this Agreement shall release or affect any liability
resulting from such breach, and no
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<PAGE> 26
waiver of any nature, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or of any breach of any other term, covenant,
representation or warranty of this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Expenses. Each of the parties hereto shall bear its own expenses
in connection herewith.
11.2 Confidential Information. Each party agrees that such party and
its representatives will hold in strict confidence all information and documents
received from the other parties and, if the transactions herein contemplated
shall not be consummated, each party will continue to hold such information and
documents in strict confidence and will return to such other party all such
documents (including the documents annexed to this Agreement) then in such
receiving party's possession without retaining copies thereof; provided,
however, that each party's obligations under this Section 11.2 to maintain such
confidentiality shall not apply to any information or documents that are in the
public domain at the time furnished by the others or that become in the public
domain thereafter through any means other than as a result of any act of the
receiving party or of its agents, officers, directors or shareholders which
constitutes a breach of this Agreement, or that are required by applicable law
to be disclosed.
11.3 Modification, Termination or Waiver. This Agreement may be
amended, modified, superseded or terminated, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, but only by a
written instrument executed by the party waiving compliance. The failure of any
party at anytime or times to require performance of any provision hereof shall
in no manner affect the right of such party at a later time to enforce the same.
11.4 Publicity. The parties agree that no publicity release or other
public announcement concerning the transactions contemplated by this Agreement
shall be issued by either party without the advance approval of both the form
and substance of the same by the other party and its counsel, which approval, in
the case of any publicity, release or other public announcement required by
applicable law, shall not be unreasonably withheld or delayed.
11.5 Notices. Any notice or other communication required or which may
be given hereunder shall be in writing and either be delivered personally or by
reputable overnight delivery service, or be mailed, certified or registered
mail, postage prepaid, as follows:
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<PAGE> 27
If to UNICO, to:
Mr. William Hagler
P.O. Box 35
Farmington, NM 87499
With a copy to:
Mr. Thad H. Turk, Esq.
P.O. Box 27560
Albuquerque, NM 87125
and if to SGI, to:
Mr. Ike Suri
Starlicon Group, Inc.
48507 Milmont Drive, Suite B
Fremont, CA 94538
With a copy to:
Mr. Benjamin Raphan, Esq.
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, NY 10174
The parties may change the persons and addresses to which the notices
or other communications are to be sent by giving written notices of any such
change in the manner provided herein for giving notice.
11.6 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the parties
hereto; provided, however, that no assignment of any rights or delegation of any
obligations provided for herein may be made by any party without the express
consent of the other parties.
11.7 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof.
11.8 Exhibits. All Exhibits annexed hereto and the documents and
instruments referred to herein or required to be delivered simultaneously
herewith or at the Closing are expressly made a part of this Agreement as fully
as though completely set forth herein, and all references to this Agreement
herein or in any of such Exhibits, documents or instruments shall be deemed to
refer to and include all such Exhibits, documents and instruments.
11.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California
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<PAGE> 28
applicable to agreements made and to be performed entirely within that state,
excluding the choice of law rules thereof.
11.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but which together shall
constitute one and the same instrument.
11.11 Section Headings. The section headings contained in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.
11.12 Exhibit. This Agreement may be executed prior to the
preparation of all Exhibits. If such occurs, this shall not be deemed a
completed Agreement until the Exhibits have been prepared, exchanged, accepted
and initialed or signed by SGI and UNICO.
11.13 Continued Nasdaq Listing. The parties acknowledge that the
transaction contemplated by this Agreement will constitute a change in control,
business or financial structure as defined by Nasdaq. Accordingly, after
Closing, UNICO will be required to meet Nasdaq's Small Cap Market Entry
Standards. The parties agree to use their best efforts to assure UNICO's
continued Nasdaq listing.
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<PAGE> 29
WITNESS the execution of this Agreement as of the date first above
written.
UNICO, INC. STARLICON GROUP,INC.
BY: /s/ WILLIAM M. HAGLER BY: /s/ IKE SURI
--------------------------------- --------------------------------
NAME: Mr. William Hagler NAME: Mr. Ike Suri
------------------------------- ------------------------------
TITLE: CEO, Chairman TITLE: President
----------------------------- -----------------------------
STARLICON INTERNATIONAL,INC.
BY: /s/ SZETO, WING PO
---------------------------------
NAME: Szeto, Wing Po
-------------------------------
TITLE: Vice President
-------------------------------
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<PAGE> 1
EXHIBIT 2.2
NOVATION AGREEMENT
This NOVATION AGREEMENT ("the Agreement") is made and entered
into on June 26, 1998 by and between Unico, Inc., a New Mexico corporation
("Unico") and Intermountain Refining Co., Inc. ("IRC"), a New Mexico
corporation, on the one hand, and Starlicon Group, Inc. ("SGI"), a Nevada
corporation and Starlicon International ("SI"), a California corporation, on the
other hand. SGI and SI will be collectively referred to herein as "Starlicon".
W I T N E S S E T H
WHEREAS, on February 21, Unico and SGI entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement"), wherein and whereby Unico
was to acquire all of the issued and outstanding shares of stock of SI in
exchange for 5,476,190 shares of Unico common stock and 10,952 shares of Unico
convertible preferred stock, convertible into 10,952,000 shares of common stock
("the Transaction");
WHEREAS, as part of fulfilling the requirements of the Agreement,
a dispute arose between Unico and Starlicon;
WHEREAS, on May 21, 1998, Unico filed a Complaint in the United
States District Court for the Central District of California entitled Unico,
Inc. v. Starlicon Group, Inc., Starlicon International Corporation, et al., Case
No. CV 98-3990 DT(SHx);
WHEREAS, the parties desire to resolve their differences in a
mutually beneficial and amicable way;
NOW THEREFORE, in consideration of the covenants contained
herein, and other good and valuable consideration, receipt of which is hereby
acknowledge, the parties agree as follows:
1. The effective date of the Transaction is changed to June 1, 1998
and Closing will be as of 12:00 a.m. June 26, 1998.
2. The following sections of the Stock Purchase Agreement are
amended for purposes of this Agreement:
1
<PAGE> 2
A. Various dates which occur throughout the Stock Purchase
Agreement are amended in accordance with the following
table:
<TABLE>
<CAPTION>
Paragraph Description Date Deleted Amended Date
--------- ----------- ------------ ------------
<S> <C> <C>
First Line Effective Date Nov. 30, 1997 June 01, 1998
3.6 SI Financials Nov. 30, 1997 June 30, 1998
3.6 Audit Date 60 days June 30, 1998
3.7 SI Bal. Sheet Date Nov. 30, 1997 June 30, 1998
(Two references)
3.27 Backlog Nov. 30, 1997 June 30, 1998
4.6 Unico Financials Nov. 30, 1997 Feb. 28, 1998
4.7 Unico Balance
Sheet Date Nov. 30, 1997 Feb. 28, 1998
(Two references)
4.27 Backlog Nov. 30, 1997 Feb. 28, 1998
5.7 Negotiations Feb. 15, 1998 July 01, 1998
</TABLE>
B. Paragraph 2.1 is deleted and replaced with the
following: "Confidentiality Agreement. At the closing,
or as soon thereafter as practicable, Unico's former
officers will enter into a confidentiality agreement in
which they agree not to disclose to any third party any
confidential information related to SI or its business
except as required to be disclosed by law. Such
agreement shall be prepared by the New Unico, as defined
below, shall be in form and substance reasonably
satisfactory to such former officers and New Unico, and
shall contain customary provisions."
C. Paragraph 2.2 is deleted and replaced with the
following: "on Closing, all current officers and
directors of Unico (excluding officers and directors of
Intermountain Refining Co., Inc.) shall resign from such
positions and as employees of Unico except as provided
in Paragraph 18, below. The replacement board of
directors of the New Unico, as defined below, will
comply fully with the new Nasdaq requirements under the
SmallCap Market System."
D. All references to "Unico" in the Stock Purchase
Agreement shall be deemed to mean "Unico and its
wholly-owned subsidiary, Intermountain Refining Co.,
Inc.", where appropriate, and all representations and
warranties of Unico shall be interpreted in the context
of this Agreement.
E. The number 986,590 on the third line of Paragraph 4.2 is
deleted and replaced with the number 1,129,308.
F. The phrase "will be" in the last sentence of Paragraph
4.6 is deleted and replaced with "were."
G. The first sentence of Paragraph 8.1 is deleted and
replaced with the following: "The closing provided for
herein shall take place at the offices of Kristin M.
Cano on June 26, 1998.
H. Paragraph 9.1 is amended by striking the words "SGI, SI
and Unico" and inserting "SGI and SI".
2
<PAGE> 3
I. Paragraph 9.2 is amended by deleting the second reference
to Unico on line 9 and inserting "SI" in its place. IRC is
specifically excluded from the operation of this
paragraph.
J. At Paragraph 11.5, all references to "Mr. Thad H. Turk and
Mr. Benjamin Raphan" are deleted and replaced with Kristin
M. Cano, One Corporate Plaza, Suite 110, Newport Beach,
California and Mr. Jeffrey M. Howard, One Corporate Plaza,
Suite 110, Newport Beach, California.
3. The following sections of the Stock Purchase Agreement are
amended unilaterally by SGI.
A. Paragraph 1.2 Base Purchase Price is deleted and replaced
with the following: "Purchase Price. The purchase price
for the shares shall consist of 5,476,190 shares of Unico
$0.20 par value Common Stock and 5,476 shares of Unico
Series A Preferred Stock. No fractional shares of either
class of stock will be issued."
B. Paragraph 1.2.1 is deleted and replaced with the
following: "For the purpose of this [Stock Purchase]
Agreement, Unico Common and Series A Preferred Stock shall
be deemed to have values of $0.40 and $400.00 per share
respectively."
C. Paragraph 1.2.2(a) is deleted.
D. Paragraph 1.3 is deleted.
4. The following provisions of the Certificate of Designation for
Unico Series A Convertible Preferred Stock are amended for
purposes of this Agreement.
A. The date "September 1, 1998" on the last line of Section
4(C) is deleted and replaced with the date "January 1,
1999."
B. Section 4(c)(i) is amended to reflect the following
conversion dates and share amounts.
<TABLE>
<CAPTION>
Dates Maximum Shares Converted
----- ------------------------
<S> <C>
January 1, 1999-May 31, 1999 1825
June 1, 1999-August 31, 1999 3650
After September 1, 1999 5476
</TABLE>
5. The following provisions of the Certificate of Designation for
Unico Series A Convertible Preferred Stock are amended
unilaterally by SGI.
A. The value of "$1,400 par value" in the Resolution is
deleted and replaced with "$400 par value".
B. The figure "15,000" on the last line in Section 1 is
deleted and replaced with the figure "5,476".
3
<PAGE> 4
C. The last two lines of the first paragraph of Section 3 are
deleted and replaced with the following" "their ownership
thereof, an amount equal to Four Hundred Dollars ($400)
per share."
D. Section 4(c)(ii) is deleted.
6. In repayment of an inter-company note and/or other debt reflected
in the Unico internal financial statements dated May 31, 1998 and
also as a contribution to capital, Unico will deliver good and
marketable title to all of the assets listed in Exhibit A attached
hereto, to Unico's wholly owned subsidiary Intermountain Refining
Co., Inc.("IRC"), a New Mexico corporation. From and after
closing, the management of IRC and its assets shall be at the sole
discretion of its current officers and a board of directors, to be
appointed.
7. Starlicon and Unico each covenant and agree that Unico or
Starlicon will not, in any way, directly or indirectly, encumber,
pledge, lien, offer as security, enter into any security
agreement, affecting any of the assets or stock of IRC. Starlicon
and Unico each further covenant and agree that Unico or Starlicon
will not, in any way, directly or indirectly, cause or permit any
third party to encumber, pledge, lien, offer as security, enter
into any security agreement, affecting any of the assets or stock
of IRC. Upon the execution of this Agreement, Intermountain will
file a UCC-1 information statement, for the purpose of effecting
notice of this provision.
8. Prior to the execution of this Agreement, Unico will deliver its
shares of IRC stock to and grant to Michael M. McGloin its
irrevocable proxy to vote the shares of IRC in accordance with
instructions from IRC's Board of Directors. Starlicon acknowledges
and agrees that after the execution of this Agreement, Starlicon,
as controlling shareholder or shareholders of Unico, relinquishes
all right to vote the shares of IRC stock or in any way attempt to
control the business and affairs of IRC.
9. It is contemplated that Unico's current filing on Form 10K will be
made on or about June 12, 1998. The Stock Purchase Agreement and
this Agreement will be described in the Form 10K in the manner set
forth in Exhibit B, attached hereto. A copy of Note Q to Unico's
financial statements is attached as Exhibit B to this Agreement.
10. Upon execution of this Agreement, Starlicon and the Starlicon
controlled Board of Directors of Unico ("the New Unico") will
assume full responsibility for applying to Nasdaq for the new
Small Cap listing or maintenance of the current listing, all as
required by Nasdaq due to the Stock Purchase Agreement and this
Agreement. The existing management of Unico and its Board of
Directors make no representations that such new listing or
continued maintenance will be obtained by the New Unico. Unico's
former officers will cooperate with the management of the New
Unico, if requested, pursuant to Paragraph 19 below, to apply for
the new Nasdaq listing.
11. William N. Hagler ("Hagler") will grant to Kristin M. Cano his
irrevocable proxy to vote his shares in favor of this Agreement
and the Stock Purchase Agreement as amended herein, should
shareholder approval be required in order to apply for and obtain
a new listing on Nasdaq.
4
<PAGE> 5
12. As soon as is practicable for a diligent party, but not later than
November 30, 1998, the New Unico shall commence the Nasdaq listing
application process by filing an application that meets the Nasdaq
quantitative listing standards (without inclusion of any assets or
liabilities of IRC as of the date of such application) and,
thereafter, prosecute it to conclusion. Following the successful
conclusion of such listing application process, but no later than
April 1, 1999, the directors of IRC may, at their sole discretion,
consider a transaction involving IRC's stock, assets or business
prospects. However, if as of November 30, 1998, the New Unico
shall not have commenced the listing application process in the
manner described above, then no later than December 1, 1998, the
directors of IRC may, at their sole discretion, consider a
transaction involving IRC's stock, assets or business prospects.
In the event such a transaction contemplates a distribution of
IRC's stock or assets to holders of shares of Unico Common Stock,
such distribution would be at the Record Date and as defined
below.
A. The Record Date to determine which holders of shares of
Unico Common Stock shall be entitled to the distribution is
the earliest applicable date set forth in this Paragraph
12, above.
B. All shareholders of record on the Record Date shall
entitled to participate, pro rata, in any such distribution
except those shareholders acquiring shares through and as a
result of the Stock Purchase Agreement, as modified by this
Agreement, and holders of shares issued by the New Unico
between June 1, 1998 and the Record Date.
C. If it is subsequently determined by New Mexico counsel to
IRC or Unico that approval of the New Unico shareholders is
required to effect any such distribution, the Record Date
for determining the shareholders entitled to vote shall be
the Record Date. For purposes of such vote, only Kristin M.
Cano shall hold the irrevocable proxy of the shareholders
receiving shares pursuant to the Stock Purchase Agreement
as modified by this Agreement and all shares issued between
June 1, 1998 and the Record Date by the New Unico. Ms. Cano
shall vote such shares in favor of such distribution or at
the discretion of the IRC Board of Directors.
13. It is contemplated that any distribution of IRC shares held by
Unico will be tax free pursuant to Section 355 of the Internal
Revenue Code of 1986. Management of IRC will require a tax opinion
from a tax attorney or tax accountant of their choice that such
distribution will be tax free. The New Unico will pay for or
otherwise reimburse IRC for the cost of obtaining such tax
opinion. Should it be determined that the transaction is not tax
free then, at the sole discretion of IRC's Board of Directors, IRC
may change or modify the transaction or require the New Unico to
pay any tax liability associated with the distribution in an
amount up to, and including, $200,000. In the event IRC's Board of
Directors determines, in its sole discretion, that such
distribution is not in the best interest of the shareholders
entitled to participate pursuant to Paragraph 12, they may
structure any other transaction favorable to such shareholders. If
it is determined that a shareholder vote is required for such
other transaction, then the requirements of Paragraph 12 C shall
apply.
14. In order to accomplish any distribution that may be contemplated
in Paragraph 12, the shares of IRC stock to be distributed will
require registration with the United States Securities and
Exchange Commission and qualification with various state
securities
5
<PAGE> 6
regulators. The New Unico will pay for all required audits, state
and federal filing fees, attorneys fees, printing and other fees
and expenses associated with such registration estimated to be
$125,000. The obligation of the New Unico and/or SI to pay the
fees and expenses set forth herein above shall be guaranteed
jointly and severally by Carol Mauer, Ike Suri and Mr. John Hwang
("the Guarantors") , in a form attached hereto as Exhibit C. The
execution of such guarantee by the Guarantors shall be a condition
to closing this Agreement.
15. At such time as IRC is prepared to commence the registration
process described in Paragraph 14 above, an estimate of costs will
be submitted to the New Unico/SI solely for information purposes.
IRC will consider lower cost means of achieving such a
registration that may be suggested by Unico/SI, but is under no
obligation to adopt such suggestions.
16. Upon execution of this agreement, Starlicon will deliver a check
to IRC in the amount of $25,000 payable to Kristin M. Cano Clients
Fund representing partial payment of attorney's fees incurred in
the matter that is the subject of this Novation Agreement. The
balance of such fees, estimated to be $30,000 shall be due and
payable in 30 days. Such $30,000 will be paid to Kristin M. Cano
Clients Fund at that time. Should the remaining fees be less than
$30,000, Kristin M. Cano will tender a refund to New
Unico/Starlicon. Should the remaining fees exceed $30,000, IRC
will bill New Unico/Starlicon for the balance. Copies of
attorney's statements shall be furnished by IRC, upon request;
however, only Kristin M. Cano, and no others, will review and
approve the bill of McGloin, Davenport, Severson & Snow for
fairness. If Kristin M. Cano approves the bill, such amount will
be paid to McGloin, Davenport, Severson & Snow.
17. Upon execution of this Agreement, the New Unico will enter into a
retainer Agreement with Kristin M. Cano providing that it will use
the services of Ms. Cano for a minimum period of 12 months after
the closing for matters of corporate governance, SEC matters and
Nasdaq matters. The terms of this relationship will be
memorialized in a separate agreement satisfactory to the New Unico
and Kristin M. Cano. By executing this Agreement, Starlicon,
Unico, the New Unico, and IRC acknowledge that they will waive any
claim of conflict of interest as to Kristin M. Cano's
representation of SI and IRC in a separate agreement. In the event
that the new relationship between Kristin M. Cano and the New
Unico is terminated for any reason, the New Unico shall within 10
business days engage counsel reasonably acceptable to IRC to
perform the serviced contemplated by this Paragraph.
18. Upon execution of this Agreement, Hagler and Hurt shall resign as
President and Secretary/Treasurer, respectively of Unico, and
shall be appointed to the temporary posts of Executive Vice
President and Assistant Secretary for the sole and exclusive
purpose of transferring the property reflected on Exhibit A to
IRC. At closing, the New Unico will provide an appropriate
resolution from the Board of Directors approving such appointments
and authorizing an irrevocable power of attorney granting Hagler
and Hurt full authority to affect the asset transfers contemplated
by this Agreement. The management and board of directors of the
New Unico will cooperate fully and expeditiously and take all
steps required and requested of them to effect the asset transfers
to IRC. In addition, Messrs. Hagler, Hurt, Hickey and Watson will
resign their positions on Unico's Board of Directors.
6
<PAGE> 7
19. In order to provide orderly implementation of the transaction
contemplated herein, Hagler and Hurt will consult the New Unico,
as requested, up to 10 hours per month, each, at the hourly rate
of $60.00 and $40.00, respectively, including travel time and
reasonable expenses, for a period of six months. Payment for such
services and costs shall be within 10 calendar days of receipt of
a bill from Hagler and Hurt. The terms and conditions of an
agreement for consulting services with Hagler and Hurt will be
memorialized in a separate agreement. As additional consideration
for providing these consulting services the New Unico grants to
Hagler a warrant to purchase 100,000 shares of Common Stock and to
Hurt stock options to purchase 50,000 shares of Common Stock both
of these at $1.40 per share. A Warrant reflecting the granting of
these options will be executed by the New Unico contemporaneously
with the closing.
20. Hagler, Hurt and a representative of New Unico will meet and work
out an orderly transfer of the corporate records of Unico.
21. New Unico will be prohibited from filing any proceeding under the
United States Bankruptcy Code within one year of the execution of
this Agreement.
22. Except for the Stock Purchase Agreement, which shall remain in
full force and effect as modified by this Agreement, this
Agreement and the Agreements referred herein, sets forth the sole
and entire agreement between Unico, IRC and Starlicon, there are
no other agreements or understandings not set forth in this
Agreement between the parties and this Agreement supersedes any
and all prior or contemporaneous oral or written agreements or
understandings between the same parties concerning the subject
matter hereof. No modification, waiver or termination of this
Agreement, or any part thereof, shall be binding unless signed in
writing by all parties.
23. Unico's former management shall approve the press release prepared
by the New Unico to announce the transactions contemplated herein.
Such approval shall not be unreasonably withheld. The SEC Form 8-K
prepared by the New Unico shall be approved by Ms. Cano as to
form.
24. Concurrent with the execution of this Agreement, counsel for Unico
shall execute and deliver to counsel for Starlicon Dismissals with
Prejudice as to the entire action ("Dismissals") of all claims
asserted in Unico, Inc. v. Starlicon Group, Inc., Starlicon
International Corporation et al., Case No. CV 98-3990 DT (SHx).
25. This Agreement may be executed in its original version or in any
copies, counterparts, or other duplicates, and this all signatures
need not appear on the same document.
26. If any provision, paragraph, clause, or sentence in this Agreement
is found or declared to be illegal, void, invalid, or
unenforceable, the remaining provisions, paragraphs, clauses, and
sentences shall be severable and shall remain in full force and
effect. A void or invalid paragraph, clause, or provision shall be
severable from, and shall not affect the validity or
enforceability of, the remaining provisions of this Agreement.
27. This Agreement shall be construed and enforced under the laws of
the State of California without giving effect to the principles
relating to conflicts of law. Any litigation commenced under this
Agreement shall be commenced within the State of California,
County of Orange.
7
<PAGE> 8
28. Each of the undersigned agrees and represents that he or she has
read this Agreement from beginning to end and fully understands
all of it, and has executed it on the date indicated below on
behalf of the respective parties.
29. A photocopy of this document may be used with the same force and
effect as an original.
30. This Agreement may be executed in its original version or in any
copies, counterparts, or other duplicates, and all signatures
need not appear on the same document.
Unico, Inc.
Dated: June 25, 1998 By: /s/ WILLIAM N. HAGLER
------------------------------------
William N. Hagler, President
Dated: June 25, 1998 Intermountain Refining Co., Inc.
By: /s/ WILLIAM N. HAGLER
-----------------------------------
William N. Hagler, President
Dated: June 26, 1998 Starlicon Group, Inc.
By: /s/ IKE SURI
-----------------------------------
Ike Suri, President
Dated: June 26, 1998 Starlicon International Corporation
By: /s/ WING PO SZETO
-----------------------------------
Wing Po Szeto, President
8
<PAGE> 9
EXHIBIT A
ASSETS TO BE MAINTAINED IN OR TRANSFERRED
TO INTERMOUNTAIN REFINING CO., INC.
1. Land, buildings, refinery equipment, co-generation equipment,
inventories, cash accounts receivable and notes receivable. Currently
owned by Intermountain Refining Col, Inc., Fredonia, Arizona.
2. Kansas Gas Properties consisting of approximately 20 natural gas wells,
surface and subsurface equipment, leasehold interests, and related
accounts receivable and accounts payable. Currently owned by Unico, Inc.
3. Series A and Series B 7% Cumulative Preferred Stock, Chatfield Dean Co.,
Inc. currently owned by Unico, Inc.
4. Land, building and office furniture and equipment, 1921 Bloomfield
Blvd., Farmington, New Mexico. Currently owned by Unico.
5. Cash value life insurance. Currently owned by Unico.
6. Cash, accounts receivable (less accounts payable), notes receivable,
income tax refunds receivable, and deposits owned by Unico through the
closing date.
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
================================================================================
Disclosures About Segments: Also in June 1997, the FASB issued SFAS no. 131,
"Disclosures About Segments of an Enterprise and Related Information." This
Statement establishes standards for the way that public entities report
information about operating segments in annual financial statements and requires
that selected information about operating segments be reported in interim
financial reports as well. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. This
Statement is effective for fiscal years beginning after December 31, 1997.
NOTE Q -- STARLICON MERGER
On February 21, 1998 the Company entered into an agreement (the
"Agreement") with Starlicon Group Inc. ("SGI") to acquire 100% of the
outstanding stock of privately held Starlicon International Corporation ("SI").
Based in Fremont, California, SI markets computer peripherals under the Paradise
brand name as well as certain generic computer components. The effective date of
the transaction was to have been November 30, 1997.
A preliminary audit of SI's books as of November 30, 1997 revealed that
SI failed to meet certain financial criteria. As a result, the Company notified
SGI and SI on May 20, 1998 of its unilateral rescission of the transaction. In
addition, on May 21, 1998, the Company filed a Complaint in the United States
District Court for the Central District of California entitled Unico, Inc. v.
Starlicon Group Inc., Starlicon International Corporation, et al, Case No. CV
98-3990 DT (Shx), seeking the Court's confirmation of the Company's unilateral
rescission.
The parties have subsequently agreed that the Agreement executed on
February 21, 1998 did not close and are presently negotiating a novation
agreement which, among other things, would result in a subsequent effective date
for the merger. In connection with these negotiations, the Company has agreed to
withdraw its Complaint upon execution of the novation agreement.
================================================================================
<PAGE> 11
EXHIBIT C
GUARANTY AGREEMENT
This Agreement ("Guaranty") is entered into and made on June ___,
1998 by and between Intermountain Refining Co. ("IRC" or "Obligee"), a New
Mexico corporation, on the one hand, and Carol Mauer ("Mauer"), Ike Suri
("Suri") and John Hwang ("Hwang") (collectively referred to herein as,
"Guarantors") on the other hand.
W I T N E S S E T H
WHEREAS, on February 21, Unico, Inc., a New Mexico corporation
("Unico") and Starlicon Group, Inc. ("SGI"), a Nevada corporation entered into a
Stock Purchase Agreement (the "Stock Purchase Agreement"), wherein and whereby
Unico was to acquire all of the issued and outstanding shares of stock of
Starlicon International ("SI"), a California corporation, in exchange for
5,476,190 shares of Unico common stock and 10,952 shares of Unico convertible
preferred stock, convertible into 10,952,000 shares of common stock ("the
Transaction") (SGI and SI will be collectively referred to herein as
"Starlicon";
WHEREAS, during the course of closing the Transaction and as part
of fulfilling the requirements of the Agreement, a dispute arose between Unico
and Starlicon;
WHEREAS, on May 21, 1998, Unico filed a Complaint in the United
States District Court for the Central District of California entitled Unico,
Inc. v. Starlicon Group, Inc., Starlicon International Corporation, et al., Case
No. CV 98-3990 DT(SHx);
WHEREAS, Unico and Starlicon desired to settle and resolve their
differences and to that end entered into a Novation Agreement on this date,
wherein and whereby, shares of IRC, a wholly owned subsidiary of Unico may
eventually be distributed to certain shareholders of Unico;
WHEREAS, in order to settle the differences between Unico and
Starlicon the Novation Agreement provided in Paragraphs 14 and 16 for the
payment of certain obligations to IRC;
WHEREAS, it is the intent of the parties hereto to guarantee to
IRC payment of the obligations enumerated in Paragraphs 14 and 16 of the
Novation Agreement;
NOW THEREFORE, in consideration of the covenants contained
herein, and other good and valuable consideration, receipt of which is hereby
acknowledge, the parties agree as follows:
1. Obligation Guaranteed . For valuable consideration, receipt of
which is hereby acknowledged, the undersigned, Mauer, Suri, and
Hwang (hereinafter called" Guarantors") jointly and severally
unconditionally guarantee to IRC
-1-
<PAGE> 12
(hereinafter called "Obligee") the following obligation(s) of
the New Unico (as defined in Paragraph 10 of the Novation
Agreement (hereinafter called "the New Unico or "Obligor"): the
indebtedness of Obligor that arises under Paragraph 14 of the
Novation Agreement.
2. Insolvency or Bankruptcy of Obligor. Guarantors jointly and
severally unconditionally guarantee the payment of the
indebtedness of Obligor that arises under Paragraph 14 of the
Novation Agreement and any and all indebtedness of Obligors to
Obligee whether or not due or payable by Obligor, upon (a) the
dissolution, insolvency, or business failure of, or any
assignment for the benefit of creditors by, or commencement of
any bankruptcy, reorganization, arrangement, moratorium, or
other debtor relief proceedings by or against Obligors or
Guarantors, or (b) the appointment of a receiver for, or the
attachment, restraint of, or making or levying of any court
order or legal process affecting the property of Obligors or
Guarantors, and jointly and severally unconditionally promise to
pay this indebtedness to IRC, or order, on demand, in lawful
money of the United States.
3. Extent of Liability. The joint and several liability of
Guarantors is for the amounts set forth in Paragraph 14 of the
Novation Agreement, which is the principal sum. The foregoing
limitation, does not include interest, attorneys' fees, costs,
and expenses as provided in Paragraph 9 of this Guaranty. This
Guaranty may be terminated with regard to future transactions
provided Guarantors give written notice of termination to
Obligee. Notice shall be deemed effective as of noon of the next
succeeding business day following receipt of notice by Obligee.
No such notice shall release Guarantors, whether or not giving
such notice, from any liability as to any indebtedness
guaranteed hereunder that may be owing to or held by Obligee or
in which Obligee may have an interest or for which Obligee may
be obligated at the time of receiving notice, and all extensions
or renewals thereto.
The liability of Guarantors under this agreement is
exclusive and independent of any security for or other guarantee
of the indebtedness of Obligors, whether executed by Guarantors
or any other party, and the liability of Guarantors under this
Guaranty is not affected or impaired by (a) any indebtedness
exceeding Guarantor's liability; (b) any direction of
application by Obligors or any other party; (c) any other
continuing or other guaranty, undertaking, or maximum liability
of Guarantors or of any other party as to the indebtedness of
Obligors; (d) any payment on or in reduction of any other
guaranty or undertaking; (e) any notice of termination of this
agreement as to future transactions given by, or the death or
termination of, or the revocation or release of any obligations
under this agreement of, any other of the Guarantors; or (f) any
payment made to the Obligee on the indebtedness that Obligee
repays to Obligors pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium, or other debtor relief
proceeding; Guarantors waive any right to the deferral or
modification of Guarantor's obligations hereunder by virtue of
any such proceeding.
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<PAGE> 13
4. Joinder of Parties. The obligations of guarantors hereunder are
joint and several, and independent of the obligations of
Obligors, and a separate action or actions may be brought and
prosecuted against Guarantors whether action is brought against
Obligors or whether Obligors be joined in any such action or
actions. Guarantors waive, to the fullest extent permitted by
law, the benefit of any statute of limitations affecting their
liability under this agreement or the enforcement of this
agreement. Any payment by Obligors or other circumstance that
operates to toll any statute of limitations as to Obligors shall
also operate to toll the statute of limitations as to
Guarantors. Any Guarantor who is a married person agrees that
recourse may be had against his or her separate property and his
or her share of the community property for his or her
obligations under this agreement.
5. Change of Obligation. Guarantors authorize Obligee, (whether or
not after revocation or termination of this guaranty) without
notice or demand (except any notice or demand that is required
by statute and cannot be waived) and ,without affecting or
impairing their liability hereunder, from time to time to (a)
renew, compromise, extend, or otherwise change the time for
performance of, or otherwise change the terms of the obligation
or any part thereof; (b) take and hold security for the
performance of this guaranty or the obligation guaranteed, and
exchange, enforce, waive, and release any such security; (c)
apply such security and direct the order or manner of sale
thereof as Obligee in its discretion may determine; and (d)
release or substitute any one or more of the Guarantors. Obligee
may without notice assign this guaranty in whole or in part.
6. Capacity and Authority of Obligors. It is not necessary for
Obligee to inquire into the capacity or powers of Obligors or
the officers, directors, partners, or agents acting or
purporting to act on their behalf, and any indebtedness made or
created in reliance on the professed exercise of those powers
shall be guaranteed under this agreement. If one or more of the
Obligors is a partnership, the words "Obligors" and
"indebtedness" as used in this agreement include all successor
partnerships and their liabilities to Obligee.
7. Subordination. Any indebtedness of Obligors now or hereafter
held by Guarantors is hereby subordinated to the indebtedness of
Obligors to Obligee, and all such indebtedness of Obligors to
Guarantors, if Obligee so requests, shall be collected,
enforced, and received by Guarantors as trustees for Obligee and
be paid over to Obligee on account of the indebtedness of
Obligors to Obligee, without affecting or impairing in any
manner the liability of Guarantors under the other provisions of
this guaranty. Any instruments now or hereafter evidencing any
indebtedness of Obligors to the undersigned shall be marked with
a legend that they are subject to this guaranty, and, if Obligee
so requests, shall be delivered to Obligee.
-3-
<PAGE> 14
8. Waiver of Defenses. (a) Guarantors waive any right to require
Obligee to (1) proceed against Obligors; (2) proceed against or
exhaust any security held from Obligors; or (3) pursue any other
remedy in Obligee's power whatsoever ; (b) Guarantors waive any
defense based on or arising out of any defense of Obligors other
than payment in full of the indebtedness, including without
limitation any defense based on or arising out of the disability
of Obligors, the unenforceability of the indebtedness or any
part thereof from any cause, or the cessation from any cause of
the liability of Obligors other than payment in full of the
indebtedness; (c) Obligee may, at its election, foreclose on any
security held by Obligee by one or more judicial or non-judicial
sales, whether or not every aspect of any such sale is
commercially reasonable, or exercise any other right or remedy
Obligee may have against Obligors, or any security, without
affecting or impairing in any way the liability of Guarantors
under this agreement, except to the extent the indebtedness has
been paid; (d) Guarantor waives all rights and defenses arising
out of an election of remedies by Obligee;(e) Until all
indebtedness of Obligors to Obligee is paid in full, even though
that indebtedness is in excess of Guarantors' liability under
this agreement, Guarantors shall have no right of subrogation,
shall waive any right to enforce any remedy that Obligee now has
or may hereafter have against Obligors, and shall waive any
benefit of, and any right to, participation in any security now
or hereafter held by Obligor. Guarantors waive all presentments
and notices of acceptances of this guaranty; (g) Guarantors
assume all responsibility for keeping themselves informed of
Obligors' financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
indebtedness and the nature, scope, and extent of the risks that
Guarantors assume and incur under this agreement, and agree that
Obligee shall have no duty to advise Guarantors of information
known to it regarding those circumstances or risks.
9. Attorneys' Fees and Costs. In addition to the amounts guaranteed
under this agreement, Guarantors jointly and severally agree to
pay legal interest from the date of this Guaranty, reasonable
attorneys' fees and all other costs and expenses incurred by
Obligee in enforcing this guaranty in any action or proceeding
arising out of, or relating to, this guaranty.
10. Liens and Setoffs. In addition to all liens upon, and rights of
setoff against the moneys, securities, or other property of
Guarantors, if any, given to Obligee by law, Obligee shall have
a lien upon and a right of setoff against all moneys,
securities, and other property of Guarantors now or hereafter in
the possession of Obligee, whether held in a general or special
account, or for safekeeping or otherwise; and every such lien
and right of setoff may be exercised without demand upon or
notice to Guarantors.
11. Nonwaiver of Rights of Obligee. No right or power of Obligee
under this agreement shall be deemed to have been waived by any
act or conduct on the part of Obligee, or by any neglect to
exercise that right or power, or by any delay in so doing; and
every right or power shall continue in full force and effect
until specifically waived or released by an instrument in
writing executed by Obligee.
-4-
<PAGE> 15
12. Meaning of Terms. In all cases where there is but a single
Obligor or a single Guarantor, all words used herein in the
plural shall be deemed to have been used in the singular where
the context and construction so require; and when there is more
than one Obligor named herein, or when this guaranty is executed
by more than one Guarantor, the word "Obligors" and the word
"Guarantors" respectively shall mean all and any one or more of
them.
13. Effect on Heirs and Assigns. This guaranty and the liability and
obligations of Guarantors under this agreement are binding upon
Guarantors and their respective heirs, executors, and assigns,
and inure to the benefit of and are enforceable by Obligor and
its successors, transferees, and assigns.
14. Governing Law and Modification. This guaranty shall be deemed to
be made under, and shall be governed by, the laws of the State of
California in all respects, including matters of construction,
validity, and performance, and its terms and provisions may not
be waived, altered, modified, or amended except in writing duly
signed by an authorized officer of Obligee and by Guarantors.
15. Invalidity. If any provision of this guaranty contravenes or is
held invalid under the laws of any jurisdiction, this guaranty
shall be construed as though it did not contain that provision,
and the rights and liabilities of the parties to this agreement
shall be construed and enforced accordingly.
16. This Agreement may be executed in its original version or in any
copies, counterparts, or other duplicates, and all signatures
need not appear on the same document.
17. A photocopy or telefax copy of this document may be used with the
same force and effect as an original.
IN WITNESS WHEREOF, the undersigned Guarantors have executed this
Guaranty on June ___, 1998.
- -------------------------------------- ------------------------------------
Ike Suri, Guarantor John Hwang, Guarantor
Address: 1601 N. Sepulveda Blvd., #243 Address: 45541 Claret Court
Manhattan Beach, CA 90266 Fremont, CA 94539
Phone: (310) 396-9347 Phone: (510) 770-3990 x3110
SSN: ###-##-#### SSN: ###-##-####
- --------------------------------------
Carol Maurer, Guarantor
Address: 1952 Coldwater Canyon
Beverly Hills, CA 90210
Phone: (310) 859-8906
SSN: ###-##-####
-5-
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF DESIGNATION
OF
UNICO INC.
Certificate Pursuant to Section 53-11-16 of the
Business Corporation Act of the State of New Mexico
We, being, respectively, the President and Secretary of UNICO
INC., a corporation organized and existing under the Business Corporation Act of
the State of New Mexico (the "Corporation") DO HEREBY CERTIFY:
That, pursuant to authority expressly vested in the Board of
Directors of said Corporation by the provisions of its Articles of
Incorporation, said Board of Directors duly adopted the following resolution on
July 1, 1998:
RESOLVED, that the Board of Directors, pursuant to authority
expressly vested in it by the provisions of the Articles .of Incorporation of
the Corporation, hereby authorizes the issue from time to time of a series of
Preferred Stock, $400 par value, of the Corporation and hereby fixes the
designation, preferences and relative, participating, optional or other rights.
and the qualifications, limitations or restrictions thereof, as follows:
Section 1. Designation. The series of Preferred Stock shall be
designated and known as "Series A Convertible Preferred Stock" (the "Series A
Preferred Stock"). The number of shares constituting such series shall be 5,476.
Section 2. Dividend Rights. Dividends shall be paid on the series
A Preferred Stock, when and as declared by the Board of Directors in a
noncumulative amount not exceeding 6% of the par value thereof per annum on
December 31st of each year until conversion of the Series A Preferred Stock. No
dividends or other distributions shall be paid or set apart for payment on any
shares of Common Stock unless and until all declared and unpaid dividends on the
Series A Preferred Stock shall have been paid or set apart for payment.
1
<PAGE> 2
Section 3. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of each share of Series A Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Common Stock or
any other series of Preferred Stock of the Corporation by reason of their
ownership thereof, an amount equal to Four Hundred Dollars ($400) per share.
All of the preferential amounts to be paid to the holders of the
Series A Preferred Stock under this Section 3 shall be paid or set apart for
payment before the payment or setting apart for payment of any amount for, or
the distribution of any assets of the Corporation to, the holders of the Common
Stock or any other series of Preferred Stock in connection with such
liquidation, dissolution, or winding up. After the payment or the setting apart
of payment to the holders of the Series A Preferred Stock of the preferential
amounts so payable to them, the holders of Common Stock shall be entitled to
receive all remaining assets of the corporation.
If the assets or surplus funds to be distributed to the holders
of the Series A Preferred Stock are insufficient to permit the payment to such
holders of their preferential amount, the assets and surplus funds legally
available for distribution shall be distributed ratably among the holders of the
Series A Preferred Stock in proportion to the full preferential amount each such
holder is otherwise entitled to receive. Nothing herein shall affect the rights
of holders of Common Stock granted pursuant to the Novation Agreement dated June
26, 1998.
Section 4. Conversion. The holders of any shares of the Series A
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights,,):
(a) Right to Convert. Any outstanding shares of Series A
Preferred Stock may be converted by the holder thereof into fully paid and
nonassessable shares of the Corporation's Common Stock in the manner hereinafter
provided.
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<PAGE> 3
(b) Conversion Ratio. Each share of Series A Preferred Stock
shall be convertible into One Thousand (1,000) share of the Corporation's Common
Stock (the "Conversion Ratio"); provided, however, in the event of a stock
dividend, recapitalization reorganization, merger, consolidation, subdivision,
combination or reclassification of shares of the Corporation's Common Stock, or
any other change in the corporate structure or shares of the Corporation's
Common Stock collectively, a "Corporate Structure Change"), prior to the
conversion of the Series A Preferred Stock, the Corporation shall make such
adjustment as is necessary to give the holder of the Series A Preferred Stock
substantially the same rights as the holder of the Series A Preferred Stock had
immediately prior to the occurrence of such event. In the event of any
consolidation of the Corporation with, or merger of the Corporation into,
another corporation where the Corporation is not the successor entity, or in the
case of the sale or conveyance to another corporation of the property of the
Corporation, then the holder of the Series A Preferred Stock shall thereafter,
upon conversion of the Series A Preferred Stock in accordance with the terms
hereof, prior to the record date for such consolidation, merger, sale or
conveyance, have the right to purchase and receive the kind and number of shares
of stock and other securities or properties receivable upon such consolidation,
merger, sale or conveyance, that would have been issued to the holder of the
Series A Preferred Stock had the Series A Preferred Stock been converted
immediately prior to such event.
(c) Mechanics of Conversion. The right of the holders of the
Series A Preferred Stock to convert their shares shall be exercised by
transmitting to the Corporation or its agent, a notice of such conversion
together with certificates representing shares of the Series A Preferred Stock
to be converted, duly endorsed in blank and accompanied by such proper
instruments of transfer as may be requested by the Corporation. The Corporation
shall promptly, after receipt of the foregoing together with such other
documents and evidence of payments of any taxes on the part of the holder, it
may reasonably require, issue to the holder of the Series A Preferred Stock the
appropriate number of shares of the Corporation's Common Stock. No Series A
Preferred Stock may be converted into Common Stock prior to January 1, 1999.
3
<PAGE> 4
(i) Base Purchase Price Stock. The Series A Preferred Stock
received pursuant to Section 1.2 of the Stock Purchase Agreement dated as of
November 20, 1997 as modified by the Novation Agreement dated June 26, 1998
("the Agreement") is convertible into Common Stock, as follows: From January 1,
1999 through May 31, 1999, an aggregate of 1,825 shares of Series A Preferred
Stock is convertible into Common Stock. From June 1, 1999 through August 31,
1999, an aggregate of 3,650 shares of Series A Preferred Stock (including the
Series A Preferred Stock converted from January 1, 1999 through May 31, 1999) is
convertible into Common Stock and, Subsequent to September 1, 1999, all of the
outstanding Series A Preferred Stock, received pursuant to Section 1.2 of the
Agreement, is convertible into Common Stock. The Series A Preferred Stock shall
be convertible on the basis of the first Series A Preferred Stock received by
the Corporation for conversion. Shares received from different shareholders on
the same day will be converted on a pro rata basis.
(d) Termination of Conversion Rights. At any time subsequent to
May 31, 1999 that the Common Stock of the corporation shall be trading at a bid
price in the public market ,for at least $5.50, subject to adjustment in the
event of a Corporate Structure Change, for a consecutive period of 30 business
days, the Corporation shall have the right to notify all of the record holders
of the Series A preferred Stock that the conversion right of the Series A
Preferred Stock shall terminate 60 days after such notice is sent to such record
holders. Notice shall be sent to the record holders by certified mail, return
receipt requested, at the address of such record holders on the Corporation's
records.
(e) No Impairment. The Corporation shall not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series A Preferred Stock against impairment.
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<PAGE> 5
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment to the Conversion Ratio pursuant to this Section 4, the Corporation,
at its expense, shall promptly compute such adjustment in accordance with the
terms hereof and furnish to each holder of Series A Preferred Stock a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based. The Corporation shall, upon the written request
at any time of any holder of Series A Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments,
(ii) the Conversion Ratio at the time in effect, and (iii) the number of shares
of Common Stock and the amount, if any, of other property-which at the time
would be received upon the conversion of Series A Preferred Stock.
(g) Notice of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall mail to each
holder of Series A Preferred Stock at least thirty (30) days prior to the date
thereof, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend or distribution.
(h) Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of the Series A Preferred Stock.
Section 5. Voting Rights. Except as otherwise required by law the
holders of shares of Series A Preferred Stock shall be entitled to notice of all
stockholders' meetings and to vote upon any matter submitted to the stockholders
for a vote, on the basis of one vote for each share of outstanding Common Stock,
and one vote for each share of outstanding Series A Preferred Stock, voting
together.
Section 6. Covenants. So long as any shares of Series A Preferred Stock
shall be outstanding (as adjusted for all subdivisions and combinations), the
Corporation shall not, without first obtaining the affirmative vote or written
consent of not less than fifty-one percent (51%) of such outstanding shares of
Series A Preferred Stock:
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<PAGE> 6
(a) amend or repeal any provision of, or add any provision to,
the Corporation's Articles of Incorporation or By-Laws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of the Series A Preferred Stock; or (b)
reclassify any Common Stock into shares having any preference or priority as to
dividends or assets superior to or on a parity with such preference or priority
of the series A Preferred Stock.
Section 7. Residual Rights. All rights accruing to the outstanding
shares of the Corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock.
Section 8. Preemptive Rights. Under New Mexico Business Corporation Act
Section 53-11-26, holders of preferred shares are not entitled to any preemptive
rights.
IN WITNESS WHEREOF, This Certificate has been signed by the President of
UNICO, Inc., and attested by its Secretary this ______ day of _______________,
1998.
UNICO INC.
By: ______________________________________
Wing Po Szeto, President
[Seal]
ATTEST:
By: ______________________________________
Fynna Bernardez, Secretary
6
<PAGE> 1
EXHIBIT 4.2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
Warrant No._______ Warrant to Purchase 100,000 Shares of
Common Stock
WARRANT TO PURCHASE COMMON STOCK
of
UNICO, INC.
Void after December 1, 2006
This certifies that, for value received, William N. Hagler, or
registered assigns ("Holder") is entitled, subject to the terms set forth below,
to purchase from Unico, Inc. (the "Company" or "Unico"), a New Mexico
corporation, shares of Common Stock of the Company, as constituted on the date
hereof (the "Warrant Issue Date"), upon surrender hereof, at the principal
office of the Company referred to below, with the subscription form attached
hereto duly executed, and simultaneous payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below. The number, character and Exercise Price of such
shares of Common Stock are subject to adjustment as provided below. The term
"Warrant" as used herein shall include this Warrant, and any warrants delivered
in substitution or exchange therefor as provided herein.
1. Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in
part, during the term commencing on the Warrant Issue Date and
ending at 5:00 p.m., Pacific standard time, on December 1,
2006, and shall be void thereafter.
2. Exercise Price. The Exercise Price at which this Warrant may
be exercised shall be $1.40 per share of Common Stock, as
adjusted from time to time pursuant to Section 11 hereof.
3. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, but
not for less than 5,000 shares at a time (or such
lesser number of shares which may then constitute the
maximum number purchasable; such number being subject
to adjustment as provided in Section 11 below), at
any time, or from time to time, during the term
hereof as described in Section 1 above, by the
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<PAGE> 2
surrender of this Warrant and the Notice of Exercise
annexed hereto duly completed and executed on behalf
of the Holder, at the office of the Company (or such
other office or agency of the Company as it may
designate by notice in writing to the Holder at the
address of the Holder appearing on the books of the
Company), upon payment (i) in cash or by check
acceptable to the Company, (ii) by cancellation by
the Holder of indebtedness or other obligations of
the Company to the Holder, or (iii) by a combination
of (i) and (ii), of the purchase price of the shares
to be purchased.
(b) This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the
date of its surrender for exercise as provided
above, and the person entitled to receive the shares
of Common Stock issuable upon such exercise shall be
treated for all purposes as the holder of record of
such shares as of the close of business on such
date. As promptly as practicable on or after such
date and in any event within ten (10) days
thereafter, the Company at its expense shall issue
and deliver to the person or persons entitled to
receive the same a certificate or certificates for
the number of shares issuable upon such exercise. In
the event that this Warrant is exercised in part,
the Company at its expense will execute and deliver
a new Warrant of like tenor exercisable for the
number of shares for which this Warrant may then be
exercised.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the
exercise of this Warrant. In lieu of any fractional share to
which the Holder would otherwise be entitled, the Company
shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
5. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or
destruction, on delivery of an indemnity agreement reasonably
satisfactory in form and substance to the Company or, in the
case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver,
in lieu of this Warrant, a new warrant of like tenor and
amount.
6. Rights of Stockholders. Subject to Sections 9 and 11 of this
Warrant, the Holder shall not be entitled to vote or receive
dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on
the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of
stock, change of par
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<PAGE> 3
value, or change of stock to no par value, consolidation,
merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised as
provided herein.
7. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register
(the "Warrant Register") containing the names and
addresses of the Holder or Holders. Any Holder of this
Warrant or any portion thereof may change his or her
address as shown on the Warrant Register by written
notice to the Company requesting such change. Any notice
or written communication required or permitted to be
given to the Holder may be delivered or given by mail to
such Holder as shown on the Warrant Register and at the
address shown on the Warrant Register. Until this
Warrant is transferred on the Warrant Register of the
Company, the Company may treat the Holder as shown on
the Warrant Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to
the contrary.
(b) Warrant Agent. The Company may, by written notice to the
Holder, appoint an agent for the purpose of maintaining
the Warrant Register referred to in Section 7(a) above,
issuing the Common Stock or other securities then
issuable upon the exercise of this Warrant, exchanging
this Warrant, replacing this Warrant, Or any or all of
the foregoing. Thereafter, any such registration,
issuance, exchange, or replacement, as the case may be,
shall be made at the office of such agent.
(c) Transferability and Nonnegotiability of Warrant. This
Warrant may not be transferred or assigned in whole or
in part without compliance with all applicable federal
and state securities laws by the transferor and the
transferee (including the delivery of investment
representation letters and legal opinions reasonably
satisfactory to the Company, if such are requested by
the Company). Subject to the Provisions of this Warrant
with respect to compliance with the Securities Act of
1933, as amended (the "Act"), title to this Warrant may
be transferred by endorsement (by the Holder executing
the Assignment Form annexed hereto) and delivery in the
same manner as a negotiable instrument transferable by
endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of
this Warrant for exchange, properly endorsed on the
Assignment Form and subject to the provisions of this
Warrant with respect to compliance with the Act and with
the limitations on assignments and transfers contained
in this Section 7, the Company at its expense shall
issue to or on the order of the Holder a new warrant or
warrants of like tenor, in the name of the Holder or as
tile Holder (on payment by the Holder of any applicable
transfer taxes) may direct, for the number of shares
issuable upon exercise hereof.
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<PAGE> 4
(e) Compliance with Securities Laws
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Common Stock to
be issued upon exercise hereof or conversion thereof are being
acquired solely for the Holder's own account and not as a
nominee for any other party, and for investment, and that the
Holder will not offer, sell or otherwise dispose of this Warrant
or any shares of Common Stock to be issued upon exercise hereof
or conversion thereof except under circumstances that will not
result in a violation of the Act or any state securities laws.
Upon exercise of this Warrant, the Holder shall, if requested by
the Company, confirm in writing, in a form satisfactory to the
Company, that the shares of Common Stock so purchased are being
acquired solely for the Holder's own account and not as a
nominee for any other party, for investment, and not with a view
toward distribution or resale.
(ii) This Warrant and all Shares of B Preferred Stock or Common
Stock issued upon exercise hereof or conversion thereof shall be
stamped or imprinted with a legend in substantially the
following form (in addition to any legend required by state
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
SUCH SECURITIES AND ANY SECURITIES ISSUED HEREUNDER OR
THEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND
APPLICABLE LAWS. COPIES OF THE AGREEMENT COVERING THE PURCHASE
OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY
BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD HEREOF TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY.
8. Reservation of Stock. The Company covenants that during the term
this Warrant is exercisable, the Company will reserve from its
authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the
exercise of this Warrant and, from time to time, will take all
steps necessary to amend its Certificate of Incorporation (the
"Certificate") to provide sufficient reserves of shares of its
Common Stock for issuance. The Company further covenants that
all shares that may be issued upon the exercise of rights
represented by this Warrant and payment of the Exercise Price,
all as set forth herein, will be free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously or otherwise
specified herein). The Company agrees that its issuance of this
Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Common Stock
upon the exercise of this Warrant.
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<PAGE> 5
9. Notices. (a) Whenever the Exercise Price or number of shares
purchasable hereunder shall be adjusted pursuant to Section 11
hereof, the Company shall issue a certificate signed by its
Chief Financial Officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment,
the method by which such adjustment was calculated, and the
Exercise Price and number of shares purchasable hereunder after
giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first-class mail, postage prepaid)
to the Holder of this Warrant.
(b) In case:
(i) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon
the exercise of this Warrant) for the purpose of entitling them
to receive any dividend or other distribution, or any right to
subscribe for or purchase any shares of stock of any class or
any other securities, or to receive any other right, or
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of
the assets of the Company to another corporation, or
(iii) of any voluntary dissolution, liquidation or winding-up of
the Company, then, and in each such case, the Company will mail
or cause to be mailed to the Holder or Holders a notice
specifying, as the case may be, (A) the date on which a record
is to be taken for the purpose of such dividend, distribution Or
right, and stating the amount and character of such dividend,
distribution or right, or (B) the date on which such
reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such stock or securities
at the time receivable upon the exercise of this Warrant) shall
be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 15 days prior
to the date therein specified.
(c) All such notices, advices and communications shall be deemed
to have been received (i) in the case of personal delivery, on
the date of such delivery and (ii) in the case of mailing, on
the third business day following the date of such mailing.
10. Amendments. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
11. Adjustments. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to
time as follows:
12.
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<PAGE> 6
(a) Merger, Sale of Assets, etc. If at any time while this
Warrant, or any portion thereof, is outstanding and
unexpired there shall be (i) a reorganization (other
than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein),
(ii) a merger or consolidation of the Company with or
into another corporation in which the Company is not the
surviving entity, or a reverse triangular merger in
which the Company is the surviving entity but the shares
of the Company's capital stock outstanding immediately
prior to the merger are converted by virtue of the
merger into other property, whether in the form of
securities, cash, or otherwise, or (iii) a sale or
transfer of the Company's properties and assets as, or
substantially as, an entirety to any other person, then,
as a part of such reorganization, merger, consolidation,
sale or transfer, lawful provision shall be made so that
the holder of this Warrant shall thereafter be entitled
to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or
other securities or property of the successor
corporation resulting from such reorganization, merger,
consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would
have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Warrant
had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this
Section 11. The foregoing Provisions of this Section
11(a) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other
corporation that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration
payable to the holder hereof for shares in connection
with any such transaction is in a form other than cash
or marketable securities, then the value of such
consideration shall be determined in good faith by the
Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of
the provisions of this Warrant with respect to the
rights and interests of the Holder after the
transaction, to the end that the provisions of this
Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of
this Warrant.
(b) Reclassification, etc. If the Company, at any time while
this Warrant, or any portion hereof, remains outstanding
and unexpired by reclassification of securities or
otherwise, shall change any of the securities as to
which purchase rights under this Warrant exist into the
same or a different number of securities of any other
class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of
securities as would have been issuable as the result of
such change with respect to the securities that were
subject to the purchase rights under this Warrant
immediately prior to such reclassification or other
change and the Exercise Price therefor shall be
appropriately adjusted, all subject to further
adjustment as provided in
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<PAGE> 7
this Section 11.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant, or any portion
hereof, remains outstanding and unexpired shall split,
subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number
of securities of the same class, the Exercise Price for
such securities shall be proportionately decreased in
the case of a split or subdivision or proportionately
increased in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities
or Property. If while this Warrant, or any portion
hereof, remains outstanding and unexpired, the holders
of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or, on or
after the record date fixed for the determination of
eligible stockholders, shall have become entitled to
receive, without payment therefor, other or additional
stock or other securities or property (other than cash)
of the Company by way of dividend, then and in each
case, this Warrant shall represent the right to acquire,
in addition to the number of shares of the security
receivable upon exercise of this Warrant, and without
payment of any additional consideration therefor, the
amount of such other or additional stock or other
securities or property (other than cash) of the Company
that such holder would hold on the date of such exercise
had it been the holder of record of the security
receivable upon exercise of this Warrant on the date
hereof and had thereafter, during the period from the
date hereof to and including the date of such exercise,
retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving
effect to all adjustments called for during such period
by the provisions of this Section 11.
(e) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment pursuant to this Section
11, the Company at its expense shall promptly compute
such adjustment or readjustment in accordance with the
terms hereof and furnish to each Holder of this Warrant
a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Company
shall, upon the written request, at any time, of any
such Holder, furnish or cause to be furnished to such
Holder a like certificate setting forth: (i) such
adjustments and readjustments; (ii) the Exercise Price
at the time in effect; and (iii) the number of shares
and the amount, if any, of other property that at the
time would be received upon the exercise of the Warrant.
(f) No Impairment. The Company will not, by any voluntary
action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or
performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all
the provisions of this Section 11 and in the taking of
all such action as may be necessary Or
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<PAGE> 8
appropriate in order to protect the rights of the Holder
of this Warrant against impairment.
12. Registration Rights. Upon exercise of this Warrant, the Holder
shall have and be entitled to exercise registration rights as
set forth in Exhibit "A" to this Warrant except that Holder
will not have Demand Registration Rights.
13. Miscellaneous.
(a) Governing Law and Modification. This Warranty shall
be deemed to be made under, and shall be governed by,
the laws of the State of California in all respects,
including matters of construction, validity, and
performance, and its terms and provisions may not be
waived, altered, modified, or amended except in
writing duly signed by an authorized officer of the
Company and by the Holder.
(b) Attorneys' Fees and Costs. In addition to the amounts
guaranteed under this agreement, the Company agrees
to pay legal interest from the date of this Warrant,
reasonable attorneys' fees and all other costs and
expenses incurred by the Holder in enforcing this
Warrant in any action or proceeding arising out of,
or relating to, this Warrant.
(c) Saturdays, Sundays and Holidays. If the expiration
date for this Warrant falls on a Saturday, Sunday or
a Holiday, then the exercise date will be on the
following business day.
IN WITNESS WHEREOF, UNICO, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: June 26, 1998
UNICO, INC. HOLDER
By: /s/ WING PO SZETO By: /s/ WILLIAM N. HAGLER
-------------------------------- ------------------------------
Wing Po Szeto, President William N. Hagler
-8-
<PAGE> 9
NOTICE OF EXERCISE
To: UNICO, INC.
By:
(1) The undersigned hereby: (A) elects to purchase shares of Common
Stock of UNICO, INC. pursuant to the provisions of Section 3(a) of the attached
Warrant, and tenders herewith payment of the purchase price for such shares in
full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock thereof are being acquired solely
for the account of the undersigned and not as a nominee for any other party, and
for investment, and that the undersigned will not offer, sell or otherwise
dispose of any such shares of Common Stock except under circumstances that will
not result in a violation of the Securities Act of 1933, as amended, or any
applicable state securities laws.
(3) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
WILLIAM N. HAGLER
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
---------------------------
(Name)
Dated: __________________
------------------------------------
William N. Hagler
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<PAGE> 10
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
<TABLE>
<S> <C> <C>
Name of Assignee Address No. of Shares
</TABLE>
and does hereby irrevocably constitute and appoint ____________________ to make
such transfer on the books of UNICO, INC., maintained for the purpose, with full
power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the
Assignee acknowledges that this Warrant and the shares of stock to be issued
upon exercise hereof are being acquired for investment and that the Assignee
will not offer, sell or otherwise dispose of this Warrant or any shares of stock
to be issued upon exercise hereof except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Further, the Assignee has acknowledged that upon exercise of
this Warrant, the Assignee shall, if requested by the Company, confirm in
writing, in a form satisfactory to the Company, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated: ____________________
------------------------------------
William N. Hagler
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<PAGE> 11
EXHIBIT A
Registration Rights.
1.1. As used in this Section 1:
(A) The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement
in compliance with the federal Securities Act of 1933, as amended (the
"Act") and the declaration or ordering of the effectiveness of such
registration statement.
(B) The term "Registrable Securities" means shares of (i) Common
Stock of the Corporation issuable upon exercise of this Warrant (the
"Securities"), (ii) stock issued in lieu of the Securities in any
reorganization which have not been sold to the public and (iii) stock
issued in respect of the stock referred in (i) and (ii) as a result of a
stock split, stock distribution, recapitalization or combination, which
have not been sold to the public.
(C) The terms "Holder" or "Holders" mean any person or persons to
whom shares of Registrable Securities or this Warrant was originally
issued or qualifying transferees under Section 1.9 hereof who hold
Registrable Securities.
(D) The term "Initiating Holders" means any Holder or Holders of
this Warrant of the Registrable Securities represented by this Warrant.
1.2 Demand Registration.
1.2.1 In case the Corporation shall receive from the
initiating Holder(s) a written request that the Corporation effect any
registration with respect to all or a part of the Registrable Securities, the
Corporation will:
(A) promptly give written notice of the proposed registration to
any other Holders that may affect; and
(B) as soon as practicable, use its best efforts to effect all
such registrations (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualifications
under the applicable blue sky or other state securities laws and
appropriate compliance with exemptive regulations issued under the
Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders'
Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any Holder or Holders
joining in such request as are specified in a written request given
within 30 days after receipt of such written notice from the Corporation;
provided that the Corporation shall not be obligated to take any action to
effect such registration pursuant to this Section 1.2:
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<PAGE> 12
(1) at any time prior to 180 days following an Underwritten Public
Offering;
(2) in any particular jurisdiction in which the Corporation would be
required to execute a general consent to service of process in effecting
such registration;
(3) after the Corporation has effected one such registration pursuant
to this Section 1.2.1 and such registration has been declared or ordered
effective; or
(4) if the Corporation represents its intention to effect a
registration on its own behalf within 90 days of receipt of the written
request and employs a good faith effort to do so.
Subject to the foregoing paragraphs (1) through (4), the Corporation shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practical, but in any event within 90 days after
receipt of the request or requests of the Initiating Holders; provided, however,
that if the Corporation shall furnish to such Holders a certificate signed by
the President of the Corporation stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to the Corporation and its
stockholders for such registration statement to be filed at the date filing
would be required and it is therefore essential to defer the filing of such
registration statement, the Corporation shall have an additional period of not
more than 90 days after the expiration of the initial 90 day period within which
to file such registration statement.
1.2.2 If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Corporation as a part of their request made pursuant to Section 1.2.1
and the Corporation shall include such information in the written notice
referred to in Section 1.2.1. In such event, if so requested in writing by the
Corporation, the Initiating Holders shall negotiate with an underwriter selected
by the Corporation with regard to the underwriting of such requested
registration; provided, however, that if a majority in interest of the
Initiating Holders have not agreed with such underwriter as to the terms and
conditions of such underwriting within 20 days following commencement of such
negotiations, a majority in interest of the Initiating Holders may select an
underwriter of their choice with the consent of the Corporation, which consent
shall not be unreasonably withheld, but if consent of the Corporation cannot be
obtained, then a majority in interest of the Initiating Holders may elect to
withdraw their request. The right of any Holder to registration pursuant to this
Section 1.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. The
Corporation shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, the Initiating Holders
shall so advise all holders of Registrable Securities, and the number of shares
of Registrable Securities that may be included in the registration and
underwriting shall be limited to the number advised by the underwriters and
shall be limited to the number advised by the underwriters and shall be
allocated among all holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registerable Securities held by such Holders. If any
Holder of Registrable Securities disapproves of the terms of the underwriting,
he may elect to withdraw therefrom by written notice to the Corporation, the
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<PAGE> 13
underwriter and the Initiating Holders. Any Registrable Securities which are
excluded from the underwriting by reason of the underwriter's marketing
limitation or withdrawn from such underwritings shall be withdrawn from such
registration.
1.3 "Piggy-Back" Registration.
1.3.1 If at any time or from time to time, the Corporation
shall determine to register any of its securities, for its own account or the
account of any of its stockholders, including a registration relating solely to
employee and/or consultant stock option or purchase plans or a registration
relating solely to a business combination transaction, the Corporation will:
(A) promptly give to each Holder a written notice thereof (which
shall include a list of the jurisdictions in which the Corporation intends
to attempt to qualify such securities under the applicable blue sky or
other state securities laws): and
(B) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 30 days after receipt of such written notice from the
Corporation, by any Holder or Holders, except as set forth in Section
1.3.2.
1.3.2 If the registration of which the Corporation gives notice is
for a registered public offering involving an underwriting, the Corporation
shall so advise the Holders as part of the written notice given pursuant to
Section 1.3.1. In such event the right of any Holder to registration pursuant to
this Section 1.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting must enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Corporation. Notwithstanding any other provision of
this Section 1.3, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, and (i) if such
registration is the first Underwritten Public Offering, the underwriter may
limit the number of Registrable Securities to be included in the registration
and underwriting, or may exclude Registrable Securities entirely from such
registration and underwriting, or (ii) if such registration is other than the
first Underwritten Public Offering, the underwriter may limit to 25% of the
total amount of the registration the amount of Registrable Securities to be
included in the registration. However, this underwriters' "cutback" right after
the first Underwritten Public Offering shall be restricted so that all shares
held by Company employees, officers and directors which are not Registrable
Securities shall be excluded from the registration before any Registrable
Securities are so excluded. The Corporation shall so advise all Holders of
Registrable Securities which would otherwise be registered and underwritten
pursuant hereto, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all of
the Holders of Registrable Securities, in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities requested to be included in
such registration held by such Holder at the time of filing the registration
statement. In such event, except for securities sold by the Corporation, no
securities of the Corporation held by anyone other than a Holder of Registrable
Securities may be included in the registration and underwriting. If any Holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Corporation and
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<PAGE> 14
the underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
1.4 The Corporation shall use its best efforts to qualify for
registration on Form S-3 or its successor form or may use Form S-8, where
applicable. After the Corporation has qualified for the use of Form S-3, Holders
of Registrable Securities shall have the right to request up to three
registrations on Form S-3 (such requests shall be in writing and shall state the
number of shares of Registrable Securities to be disposed of and the intended
method of disposition of shares by such Holders), subject only to the following:
(A) The Corporation shall not be required to effect a registration
pursuant to this Section 1.4 within 180 days of the effective date of any
registration referred to in Sections 1.2 and 1.3.
(B) The Corporation shall not be required to effect a registration
pursuant to this Section 1.4 within one year of the effective date of the
last such registration pursuant to this Section 1.4.
The Corporation shall give written notice to any other Holders of
Registrable Securities that may be affected, of the receipt of a request for
registration pursuant to this Section 1.4 and shall provide a reasonable
opportunity for other Holders to participate in the registration, provided that
if the registration is for an underwritten offering, the terms of Section 1.3.2
shall apply to all participants in such offering. Subject to the foregoing, the
Corporation will use its best efforts to effect promptly the registration of all
shares of Registrable Securities on Form S-3 or, where applicable, Form S-8 to
the extent requested by the Holder or Holders thereof for purposes of
disposition.
1.5 All expenses incurred in connection with any registration
pursuant to this Section 1, including, without limitation, all registration,
filing and qualification fees, printing expenses, fees and disbursements of
counsel for the Corporation, and expenses of any special audits of the
Corporation's financial statements incidental to or required by such
registration, shall be borne by the Corporation except as follows:
(A) If the Corporation is not registering any shares for its own
account pursuant to any registration effected under Section 1.2.1, then
the selling Holders shall bear all expenses incurred in connection with
any special audits of the Corporation's financial statements incidental to
or required by such registration.
(B) The Corporation shall not be required to pay for expenses of any
registration proceeding began pursuant to Section 1.2, the request for
which has been subsequently withdrawn by the Initiating Holders, in which
latter case, such expenses shall be borne by the Holders requesting such
withdrawal.
(C) The Corporation shall not be required to pay fees of legal
counsel of a Holder except for a single counsel whose fees are reasonable
and customary acting on behalf of all selling Holders, or underwriters
fees, discounts or commissions relating to Registrable Securities.
1.6 In the case of each registration effected by the Corporation
pursuant to this Section 1, the Corporation will keep each Holder participating
therein advised in writing as
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<PAGE> 15
to the initiation of each registration and as to the completion thereof. At
its expense the Corporation will:
(A) keep such registration pursuant to Section 1.2, 1.3 or 1.4
effective for a period of 180 days or until the Holder or Holders have
completed the distribution described in the registration statement
relating thereto, whichever first occurs; and
(B) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
1.7 Indemnification
1.7.1 To the extent permitted by law, the Corporation will
indemnify each Holder of Registrable Securities, each of its officers, directors
and partners, and each person controlling such Holder, with respect to which
such registration has been effected pursuant to this Section 1, and each
underwriter, if any, and each person who controls any underwriter of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Corporation of any rule or regulation promulgated under the Securities Act or
any state securities law applicable to the Corporation in connection with any
such registration, and will reimburse each such Holder, each of its officers,
directors and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any
reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, provided that the indemnity contained in this Section 1.7 shall not
apply to amounts paid in settlement of any such claim, loss, damage, liability
or action if such settlement is effected without the consent of the Corporation
(which consent will not be reasonably withheld) and provided further that the
Corporation will not be liable in any such case to the extent that any such
claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon written information furnished to the
Corporation by such Holder specifically for use therein.
1.7.2 Each holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration is being effected, indemnify the Corporation, each of its directors
and officers, each legal counsel and independent accountant of the Corporation,
each underwriter, if any, of the Corporation's securities covered by such a
registration statement, each person who controls the Corporation within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors and partners and each person controlling such Holder, against all
claims, losses, expenses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Corporation, such Holders, such directors, officers, partners, persons or
underwriters for any reasonable investigating, defending, or settling any such
claim, loss, damage, liability or action, in each case to the extent, but only
to
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<PAGE> 16
the extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Corporation by such Holder specifically for
use therein; and provided further that the indemnity contained in the paragraph
shall not apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent of the
Holder (which consent will not be unreasonably withheld).
1.7.3 Each party entitled to indemnification under this Section 1.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in actual detriment to
the Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation
1.8 The Holder or Holders of Registrable Securities included in any
registration shall promptly furnish to the Corporation such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Corporation may request in writing and as shall be required in
connection with any registration referred to herein.
1.9 The rights to cause the Corporation to register Registrable
Securities of a Holder, granted to a Holder by the Corporation under Sections
1.2, 1.3, and 1.4 may be assigned by a Holder to a transferee or assignee of
shares of the Registrable Securities not sold to the public, provided that the
Corporation is given written notice by the Holder at the time of or within a
reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned.
1.10 The Corporation may not grant to subsequent investors rights of
registration without the prior consent of the Holders of a majority (as measured
by the number of shares held) of the Registrable Securities.
1.11 Notwithstanding anything else in this Section 1, (i) if the
Corporation shall have obtained from the SEC a "no-action" letter in which the
SEC has indicated that it will take no action if, without registration under the
Securities Act, any Holder disposes of Registrable Securities covered by any
request for registration made under Section 1.2, 1.3 or 1.4 in the manner in
which such Holder proposes to dispose of the Registrable Securities included in
such request or (ii) if in the opinion of counsel for the Corporation no
registration under the Securities Act is required in connection with such
disposition, then in either such case the Registrable Securities included in
such request shall not be eligible for registration
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<PAGE> 17
under this Agreement.
1.12 Each Holder of Registrable Securities shall, if requested by
the Corporation and an underwriter of a registration, not sell or otherwise
transfer or dispose of any Common Stock (or other securities) of the
Corporation held by such Holder during the 180-day period following the
effective date of a registration statement of the Corporation filed under the
Act, provided that:
(A) all officers and directors and affiliates of the Corporation
enter into similar agreements.
Such agreement shall be in writing in the form satisfactory to the
Corporation and such underwriter. The Corporation may impose stop transfer
instructions with respect to the shares (or securities) subject to the
foregoing restriction until the end of said 180-day period.
1.13 The registration rights granted pursuant to this Section 1
shall terminate as to each Holder at such time as all Registrable Securities of
the Holder can, in the opinion of counsel to the Corporation be sold within a
given three-month period pursuant to Rule 144 or other applicable exemption.
1.14 No Holder shall have any right to take any action to
restrain, enjoin or otherwise delay any registration as the result of any
controversy that may arise with respect to the interpretation or implementation
of this Section 1.
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<PAGE> 1
EXHIBIT 4.3
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
Warrant No._______ Warrant to Purchase 50,000 Shares of
Common Stock
WARRANT TO PURCHASE COMMON STOCK
of
UNICO, INC.
Void after December 1, 2006
This certifies that, for value received, Rick L. Hurt, or
registered assigns ("Holder") is entitled, subject to the terms set forth below,
to purchase from Unico, Inc. (the "Company" or "Unico"), a New Mexico
corporation, shares of Common Stock of the Company, as constituted on the date
hereof (the "Warrant Issue Date"), upon surrender hereof, at the principal
office of the Company referred to below, with the subscription form attached
hereto duly executed, and simultaneous payment therefor in lawful money of the
United States or otherwise as hereinafter provided, at the Exercise Price as set
forth in Section 2 below. The number, character and Exercise Price of such
shares of Common Stock are subject to adjustment as provided below. The term
"Warrant" as used herein shall include this Warrant, and any warrants delivered
in substitution or exchange therefor as provided herein.
1. Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in
part, during the term commencing on the Warrant Issue Date and
ending at 5:00 p.m., Pacific standard time, on December 1,
2006, and shall be void thereafter.
2. Exercise Price. The Exercise Price at which this Warrant may
be exercised shall be $1.40 per share of Common Stock, as
adjusted from time to time pursuant to Section 11 hereof.
3. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, but
not for less than 5,000 shares at a time (or such
lesser number of shares which may then constitute the
maximum number purchasable; such number being subject
to adjustment as provided in Section 11 below), at
any time, or from time to time, during the term
hereof as described in Section 1 above, by the
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<PAGE> 2
surrender of this Warrant and the Notice of Exercise
annexed hereto duly completed and executed on behalf of
the Holder, at the office of the Company (or such other
office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the
Holder appearing on the books of the Company), upon
payment (i) in cash or by check acceptable to the
Company, (ii) by cancellation by the Holder of
indebtedness or other obligations of the Company to the
Holder, or (iii) by a combination of (i) and (ii), of
the purchase price of the shares to be purchased.
(b) This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date
of its surrender for exercise as provided above, and the
person entitled to receive the shares of Common Stock
issuable upon such exercise shall be treated for all
purposes as the holder of record of such shares as of
the close of business on such date. As promptly as
practicable on or after such date and in any event
within ten (10) days thereafter, the Company at its
expense shall issue and deliver to the person or persons
entitled to receive the same a certificate or
certificates for the number of shares issuable upon such
exercise. In the event that this Warrant is exercised in
part, the Company at its expense will execute and
deliver a new Warrant of like tenor exercisable for the
number of shares for which this Warrant may then be
exercised.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise
of this Warrant. In lieu of any fractional share to which the
Holder would otherwise be entitled, the Company shall make a
cash payment equal to the Exercise Price multiplied by such
fraction.
5. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or
destruction, on delivery of an indemnity agreement reasonably
satisfactory in form and substance to the Company or, in the
case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver,
in lieu of this Warrant, a new warrant of like tenor and amount.
6. Rights of Stockholders. Subject to Sections 9 and 11 of this
Warrant, the Holder shall not be entitled to vote or receive
dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on
the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock,
change of par
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<PAGE> 3
value, or change of stock to no par value, consolidation,
merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised as
provided herein.
7. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register
(the "Warrant Register") containing the names and
addresses of the Holder or Holders. Any Holder of this
Warrant or any portion thereof may change his or her
address as shown on the Warrant Register by written
notice to the Company requesting such change. Any notice
or written communication required or permitted to be
given to the Holder may be delivered or given by mail to
such Holder as shown on the Warrant Register and at the
address shown on the Warrant Register. Until this
Warrant is transferred on the Warrant Register of the
Company, the Company may treat the Holder as shown on
the Warrant Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to
the contrary.
(b) Warrant Agent. The Company may, by written notice to the
Holder, appoint an agent for the purpose of maintaining
the Warrant Register referred to in Section 7(a) above,
issuing the Common Stock or other securities then
issuable upon the exercise of this Warrant, exchanging
this Warrant, replacing this Warrant, Or any or all of
the foregoing. Thereafter, any such registration,
issuance, exchange, or replacement, as the case may be,
shall be made at the office of such agent.
(c) Transferability and Nonnegotiability of Warrant. This
Warrant may not be transferred or assigned in whole or
in part without compliance with all applicable federal
and state securities laws by the transferor and the
transferee (including the delivery of investment
representation letters and legal opinions reasonably
satisfactory to the Company, if such are requested by
the Company). Subject to the Provisions of this Warrant
with respect to compliance with the Securities Act of
1933, as amended (the "Act"), title to this Warrant may
be transferred by endorsement (by the Holder executing
the Assignment Form annexed hereto) and delivery in the
same manner as a negotiable instrument transferable by
endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of
this Warrant for exchange, properly endorsed on the
Assignment Form and subject to the provisions of this
Warrant with respect to compliance with the Act and with
the limitations on assignments and transfers contained
in this Section 7, the Company at its expense shall
issue to or on the order of the Holder a new warrant or
warrants of like tenor, in the name of the Holder or as
tile Holder (on payment by the Holder of any applicable
transfer taxes) may direct, for the number of shares
issuable upon exercise hereof.
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<PAGE> 4
(e) Compliance with Securities Laws
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Common Stock to
be issued upon exercise hereof or conversion thereof are being
acquired solely for the Holder's own account and not as a
nominee for any other party, and for investment, and that the
Holder will not offer, sell or otherwise dispose of this Warrant
or any shares of Common Stock to be issued upon exercise hereof
or conversion thereof except under circumstances that will not
result in a violation of the Act or any state securities laws.
Upon exercise of this Warrant, the Holder shall, if requested by
the Company, confirm in writing, in a form satisfactory to the
Company, that the shares of Common Stock so purchased are being
acquired solely for the Holder's own account and not as a
nominee for any other party, for investment, and not with a view
toward distribution or resale.
(ii) This Warrant and all Shares of B Preferred Stock or Common
Stock issued upon exercise hereof or conversion thereof shall be
stamped or imprinted with a legend in substantially the
following form (in addition to any legend required by state
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
SUCH SECURITIES AND ANY SECURITIES ISSUED HEREUNDER OR
THEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND
APPLICABLE LAWS. COPIES OF THE AGREEMENT COVERING THE PURCHASE
OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY
BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD HEREOF TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY.
8. Reservation of Stock. The Company covenants that during the term
this Warrant is exercisable, the Company will reserve from its
authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the
exercise of this Warrant and, from time to time, will take all
steps necessary to amend its Certificate of Incorporation (the
"Certificate") to provide sufficient reserves of shares of its
Common Stock for issuance. The Company further covenants that
all shares that may be issued upon the exercise of rights
represented by this Warrant and payment of the Exercise Price,
all as set forth herein, will be free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously or otherwise
specified herein). The Company agrees that its issuance of this
Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Common Stock
upon the exercise of this Warrant.
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<PAGE> 5
9. Notices. (a) Whenever the Exercise Price or number of shares
purchasable hereunder shall be adjusted pursuant to Section 11
hereof, the Company shall issue a certificate signed by its
Chief Financial Officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment,
the method by which such adjustment was calculated, and the
Exercise Price and number of shares purchasable hereunder after
giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first-class mail, postage prepaid)
to the Holder of this Warrant.
(b) In case:
(i) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon
the exercise of this Warrant) for the purpose of entitling them
to receive any dividend or other distribution, or any right to
subscribe for or purchase any shares of stock of any class or
any other securities, or to receive any other right, or
(ii) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of
the assets of the Company to another corporation, or
(iii) of any voluntary dissolution, liquidation or winding-up of
the Company, then, and in each such case, the Company will mail
or cause to be mailed to the Holder or Holders a notice
specifying, as the case may be, (A) the date on which a record
is to be taken for the purpose of such dividend, distribution Or
right, and stating the amount and character of such dividend,
distribution or right, or (B) the date on which such
reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such stock or securities
at the time receivable upon the exercise of this Warrant) shall
be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 15 days prior
to the date therein specified.
(c) All such notices, advices and communications shall be deemed
to have been received (i) in the case of personal delivery, on
the date of such delivery and (ii) in the case of mailing, on
the third business day following the date of such mailing.
10. Amendments. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
11. Adjustments. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to
time as follows:
12.
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<PAGE> 6
(a) Merger, Sale of Assets, etc. If at any time while this
Warrant, or any portion thereof, is outstanding and
unexpired there shall be (i) a reorganization (other
than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein),
(ii) a merger or consolidation of the Company with or
into another corporation in which the Company is not the
surviving entity, or a reverse triangular merger in
which the Company is the surviving entity but the shares
of the Company's capital stock outstanding immediately
prior to the merger are converted by virtue of the
merger into other property, whether in the form of
securities, cash, or otherwise, or (iii) a sale or
transfer of the Company's properties and assets as, or
substantially as, an entirety to any other person, then,
as a part of such reorganization, merger, consolidation,
sale or transfer, lawful provision shall be made so that
the holder of this Warrant shall thereafter be entitled
to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or
other securities or property of the successor
corporation resulting from such reorganization, merger,
consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would
have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Warrant
had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this
Section 11. The foregoing Provisions of this Section
11(a) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other
corporation that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration
payable to the holder hereof for shares in connection
with any such transaction is in a form other than cash
or marketable securities, then the value of such
consideration shall be determined in good faith by the
Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of
the provisions of this Warrant with respect to the
rights and interests of the Holder after the
transaction, to the end that the provisions of this
Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of
this Warrant.
(b) Reclassification, etc. If the Company, at any time while
this Warrant, or any portion hereof, remains outstanding
and unexpired by reclassification of securities or
otherwise, shall change any of the securities as to
which purchase rights under this Warrant exist into the
same or a different number of securities of any other
class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of
securities as would have been issuable as the result of
such change with respect to the securities that were
subject to the purchase rights under this Warrant
immediately prior to such reclassification or other
change and the Exercise Price therefor shall be
appropriately adjusted, all subject to further
adjustment as provided in
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<PAGE> 7
this Section 11.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant, or any portion
hereof, remains outstanding and unexpired shall split,
subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number
of securities of the same class, the Exercise Price for
such securities shall be proportionately decreased in
the case of a split or subdivision or proportionately
increased in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities
or Property. If while this Warrant, or any portion
hereof, remains outstanding and unexpired, the holders
of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or, on or
after the record date fixed for the determination of
eligible stockholders, shall have become entitled to
receive, without payment therefor, other or additional
stock or other securities or property (other than cash)
of the Company by way of dividend, then and in each
case, this Warrant shall represent the right to acquire,
in addition to the number of shares of the security
receivable upon exercise of this Warrant, and without
payment of any additional consideration therefor, the
amount of such other or additional stock or other
securities or property (other than cash) of the Company
that such holder would hold on the date of such exercise
had it been the holder of record of the security
receivable upon exercise of this Warrant on the date
hereof and had thereafter, during the period from the
date hereof to and including the date of such exercise,
retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving
effect to all adjustments called for during such period
by the provisions of this Section 11.
(e) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment pursuant to this Section
11, the Company at its expense shall promptly compute
such adjustment or readjustment in accordance with the
terms hereof and furnish to each Holder of this Warrant
a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Company
shall, upon the written request, at any time, of any
such Holder, furnish or cause to be furnished to such
Holder a like certificate setting forth: (i) such
adjustments and readjustments; (ii) the Exercise Price
at the time in effect; and (iii) the number of shares
and the amount, if any, of other property that at the
time would be received upon the exercise of the Warrant.
(f) No Impairment. The Company will not, by any voluntary
action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or
performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all
the provisions of this Section 11 and in the taking of
all such action as may be necessary Or
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<PAGE> 8
appropriate in order to protect the rights of the Holder
of this Warrant against impairment.
12. Registration Rights. Upon exercise of this Warrant, the Holder
shall have and be entitled to exercise registration rights as
set forth in Exhibit "A" to this Warrant except that Holder will
not have Demand Registration Rights.
13. Miscellaneous.
(a) Governing Law and Modification. This Warranty shall be
deemed to be made under, and shall be governed by, the
laws of the State of California in all respects,
including matters of construction, validity, and
performance, and its terms and provisions may not be
waived, altered, modified, or amended except in writing
duly signed by an authorized officer of the Company and
by the Holder.
(b) Attorneys' Fees and Costs. In addition to the amounts
guaranteed under this agreement, the Company agrees to
pay legal interest from the date of this Warrant,
reasonable attorneys' fees and all other costs and
expenses incurred by the Holder in enforcing this
Warrant in any action or proceeding arising out of, or
relating to, this Warrant.
(c) Saturdays, Sundays and Holidays. If the expiration date
for this Warrant falls on a Saturday, Sunday or a
Holiday, then the exercise date will be on the following
business day.
IN WITNESS WHEREOF, UNICO, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: June 26, 1998
UNICO, INC. HOLDER
By: /s/ WING PO SZETO By: /s/ RICK L. HURT
---------------------------- -------------------------------
Wing Po Szeto, President Rick L. Hurt
-8-
<PAGE> 9
NOTICE OF EXERCISE
To: UNICO, INC.
By:
(1) The undersigned hereby: (A) elects to purchase shares of Common
Stock of UNICO, INC. pursuant to the provisions of Section 3(a) of the attached
Warrant, and tenders herewith payment of the purchase price for such shares in
full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock thereof are being acquired solely
for the account of the undersigned and not as a nominee for any other party, and
for investment, and that the undersigned will not offer, sell or otherwise
dispose of any such shares of Common Stock except under circumstances that will
not result in a violation of the Securities Act of 1933, as amended, or any
applicable state securities laws.
(3) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
RICK L. HURT
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
---------------------------
(Name)
Dated: __________________
---------------------------------------
Rick L. Hurt
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<PAGE> 10
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
<TABLE>
<S> <C> <C>
Name of Assignee Address No. of Shares
</TABLE>
and does hereby irrevocably constitute and appoint ____________________ to make
such transfer on the books of UNICO, INC., maintained for the purpose, with full
power of substitution in the premises.
The undersigned also represents that, by assignment hereof, the
Assignee acknowledges that this Warrant and the shares of stock to be issued
upon exercise hereof are being acquired for investment and that the Assignee
will not offer, sell or otherwise dispose of this Warrant or any shares of stock
to be issued upon exercise hereof except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Further, the Assignee has acknowledged that upon exercise of
this Warrant, the Assignee shall, if requested by the Company, confirm in
writing, in a form satisfactory to the Company, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.
Dated: ____________________
---------------------------------------
Rick L. Hurt
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<PAGE> 11
EXHIBIT A
Registration Rights.
1.1. As used in this Section 1:
(A) The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement
in compliance with the federal Securities Act of 1933, as amended (the
"Act") and the declaration or ordering of the effectiveness of such
registration statement.
(B) The term "Registrable Securities" means shares of (i) Common
Stock of the Corporation issuable upon exercise of this Warrant (the
"Securities"), (ii) stock issued in lieu of the Securities in any
reorganization which have not been sold to the public and (iii) stock
issued in respect of the stock referred in (i) and (ii) as a result of a
stock split, stock distribution, recapitalization or combination, which
have not been sold to the public.
(C) The terms "Holder" or "Holders" mean any person or persons to
whom shares of Registrable Securities or this Warrant was originally
issued or qualifying transferees under Section 1.9 hereof who hold
Registrable Securities.
(D) The term "Initiating Holders" means any Holder or Holders of
this Warrant of the Registrable Securities represented by this Warrant.
1.2 Demand Registration.
1.2.1 In case the Corporation shall receive from the
initiating Holder(s) a written request that the Corporation effect any
registration with respect to all or a part of the Registrable Securities, the
Corporation will:
(A) promptly give written notice of the proposed registration to
any other Holders that may affect; and
(B) as soon as practicable, use its best efforts to effect all
such registrations (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualifications
under the applicable blue sky or other state securities laws and
appropriate compliance with exemptive regulations issued under the
Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders'
Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any Holder or Holders
joining in such request as are specified in a written request given
within 30 days after receipt of such written notice from the Corporation;
provided that the Corporation shall not be obligated to take any action to
effect such registration pursuant to this Section 1.2:
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<PAGE> 12
(1) at any time prior to 180 days following an Underwritten Public
Offering;
(2) in any particular jurisdiction in which the Corporation would be
required to execute a general consent to service of process in effecting
such registration;
(3) after the Corporation has effected one such registration pursuant
to this Section 1.2.1 and such registration has been declared or ordered
effective; or
(4) if the Corporation represents its intention to effect a
registration on its own behalf within 90 days of receipt of the written
request and employs a good faith effort to do so.
Subject to the foregoing paragraphs (1) through (4), the Corporation shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practical, but in any event within 90 days after
receipt of the request or requests of the Initiating Holders; provided, however,
that if the Corporation shall furnish to such Holders a certificate signed by
the President of the Corporation stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to the Corporation and its
stockholders for such registration statement to be filed at the date filing
would be required and it is therefore essential to defer the filing of such
registration statement, the Corporation shall have an additional period of not
more than 90 days after the expiration of the initial 90 day period within which
to file such registration statement.
1.2.2 If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Corporation as a part of their request made pursuant to Section 1.2.1
and the Corporation shall include such information in the written notice
referred to in Section 1.2.1. In such event, if so requested in writing by the
Corporation, the Initiating Holders shall negotiate with an underwriter selected
by the Corporation with regard to the underwriting of such requested
registration; provided, however, that if a majority in interest of the
Initiating Holders have not agreed with such underwriter as to the terms and
conditions of such underwriting within 20 days following commencement of such
negotiations, a majority in interest of the Initiating Holders may select an
underwriter of their choice with the consent of the Corporation, which consent
shall not be unreasonably withheld, but if consent of the Corporation cannot be
obtained, then a majority in interest of the Initiating Holders may elect to
withdraw their request. The right of any Holder to registration pursuant to this
Section 1.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. The
Corporation shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, the Initiating Holders
shall so advise all holders of Registrable Securities, and the number of shares
of Registrable Securities that may be included in the registration and
underwriting shall be limited to the number advised by the underwriters and
shall be limited to the number advised by the underwriters and shall be
allocated among all holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registerable Securities held by such Holders. If any
Holder of Registrable Securities disapproves of the terms of the underwriting,
he may elect to withdraw therefrom by written notice to the Corporation, the
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<PAGE> 13
underwriter and the Initiating Holders. Any Registrable Securities which are
excluded from the underwriting by reason of the underwriter's marketing
limitation or withdrawn from such underwritings shall be withdrawn from such
registration.
1.3 "Piggy-Back" Registration.
1.3.1 If at any time or from time to time, the Corporation
shall determine to register any of its securities, for its own account or the
account of any of its stockholders, including a registration relating solely to
employee and/or consultant stock option or purchase plans or a registration
relating solely to a business combination transaction, the Corporation will:
(A) promptly give to each Holder a written notice thereof (which
shall include a list of the jurisdictions in which the Corporation intends
to attempt to qualify such securities under the applicable blue sky or
other state securities laws): and
(B) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 30 days after receipt of such written notice from the
Corporation, by any Holder or Holders, except as set forth in Section
1.3.2.
1.3.2 If the registration of which the Corporation gives notice is
for a registered public offering involving an underwriting, the Corporation
shall so advise the Holders as part of the written notice given pursuant to
Section 1.3.1. In such event the right of any Holder to registration pursuant to
this Section 1.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting must enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Corporation. Notwithstanding any other provision of
this Section 1.3, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, and (i) if such
registration is the first Underwritten Public Offering, the underwriter may
limit the number of Registrable Securities to be included in the registration
and underwriting, or may exclude Registrable Securities entirely from such
registration and underwriting, or (ii) if such registration is other than the
first Underwritten Public Offering, the underwriter may limit to 25% of the
total amount of the registration the amount of Registrable Securities to be
included in the registration. However, this underwriters' "cutback" right after
the first Underwritten Public Offering shall be restricted so that all shares
held by Company employees, officers and directors which are not Registrable
Securities shall be excluded from the registration before any Registrable
Securities are so excluded. The Corporation shall so advise all Holders of
Registrable Securities which would otherwise be registered and underwritten
pursuant hereto, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all of
the Holders of Registrable Securities, in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities requested to be included in
such registration held by such Holder at the time of filing the registration
statement. In such event, except for securities sold by the Corporation, no
securities of the Corporation held by anyone other than a Holder of Registrable
Securities may be included in the registration and underwriting. If any Holder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Corporation and
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<PAGE> 14
the underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
1.4 The Corporation shall use its best efforts to qualify for
registration on Form S-3 or its successor form or may use Form S-8, where
applicable. After the Corporation has qualified for the use of Form S-3, Holders
of Registrable Securities shall have the right to request up to three
registrations on Form S-3 (such requests shall be in writing and shall state the
number of shares of Registrable Securities to be disposed of and the intended
method of disposition of shares by such Holders), subject only to the following:
(A) The Corporation shall not be required to effect a registration
pursuant to this Section 1.4 within 180 days of the effective date of any
registration referred to in Sections 1.2 and 1.3.
(B) The Corporation shall not be required to effect a registration
pursuant to this Section 1.4 within one year of the effective date of the
last such registration pursuant to this Section 1.4.
The Corporation shall give written notice to any other Holders of
Registrable Securities that may be affected, of the receipt of a request for
registration pursuant to this Section 1.4 and shall provide a reasonable
opportunity for other Holders to participate in the registration, provided that
if the registration is for an underwritten offering, the terms of Section 1.3.2
shall apply to all participants in such offering. Subject to the foregoing, the
Corporation will use its best efforts to effect promptly the registration of all
shares of Registrable Securities on Form S-3 or, where applicable, Form S-8 to
the extent requested by the Holder or Holders thereof for purposes of
disposition.
1.5 All expenses incurred in connection with any registration
pursuant to this Section 1, including, without limitation, all registration,
filing and qualification fees, printing expenses, fees and disbursements of
counsel for the Corporation, and expenses of any special audits of the
Corporation's financial statements incidental to or required by such
registration, shall be borne by the Corporation except as follows:
(A) If the Corporation is not registering any shares for its own
account pursuant to any registration effected under Section 1.2.1, then
the selling Holders shall bear all expenses incurred in connection with
any special audits of the Corporation's financial statements incidental to
or required by such registration.
(B) The Corporation shall not be required to pay for expenses of any
registration proceeding began pursuant to Section 1.2, the request for
which has been subsequently withdrawn by the Initiating Holders, in which
latter case, such expenses shall be borne by the Holders requesting such
withdrawal.
(C) The Corporation shall not be required to pay fees of legal
counsel of a Holder except for a single counsel whose fees are reasonable
and customary acting on behalf of all selling Holders, or underwriters
fees, discounts or commissions relating to Registrable Securities.
1.6 In the case of each registration effected by the Corporation
pursuant to this Section 1, the Corporation will keep each Holder participating
therein advised in writing as
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<PAGE> 15
to the initiation of each registration and as to the completion thereof. At
its expense the Corporation will:
(A) keep such registration pursuant to Section 1.2, 1.3 or 1.4
effective for a period of 180 days or until the Holder or Holders have
completed the distribution described in the registration statement
relating thereto, whichever first occurs; and
(B) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
1.7 Indemnification
1.7.1 To the extent permitted by law, the Corporation will
indemnify each Holder of Registrable Securities, each of its officers, directors
and partners, and each person controlling such Holder, with respect to which
such registration has been effected pursuant to this Section 1, and each
underwriter, if any, and each person who controls any underwriter of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Corporation of any rule or regulation promulgated under the Securities Act or
any state securities law applicable to the Corporation in connection with any
such registration, and will reimburse each such Holder, each of its officers,
directors and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any
reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, provided that the indemnity contained in this Section 1.7 shall not
apply to amounts paid in settlement of any such claim, loss, damage, liability
or action if such settlement is effected without the consent of the Corporation
(which consent will not be reasonably withheld) and provided further that the
Corporation will not be liable in any such case to the extent that any such
claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon written information furnished to the
Corporation by such Holder specifically for use therein.
1.7.2 Each holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration is being effected, indemnify the Corporation, each of its directors
and officers, each legal counsel and independent accountant of the Corporation,
each underwriter, if any, of the Corporation's securities covered by such a
registration statement, each person who controls the Corporation within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors and partners and each person controlling such Holder, against all
claims, losses, expenses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Corporation, such Holders, such directors, officers, partners, persons or
underwriters for any reasonable investigating, defending, or settling any such
claim, loss, damage, liability or action, in each case to the extent, but only
to
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<PAGE> 16
the extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Corporation by such Holder specifically for
use therein; and provided further that the indemnity contained in the paragraph
shall not apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent of the
Holder (which consent will not be unreasonably withheld).
1.7.3 Each party entitled to indemnification under this Section 1.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in actual detriment to
the Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation
1.8 The Holder or Holders of Registrable Securities included in any
registration shall promptly furnish to the Corporation such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Corporation may request in writing and as shall be required in
connection with any registration referred to herein.
1.9 The rights to cause the Corporation to register Registrable
Securities of a Holder, granted to a Holder by the Corporation under Sections
1.2, 1.3, and 1.4 may be assigned by a Holder to a transferee or assignee of
shares of the Registrable Securities not sold to the public, provided that the
Corporation is given written notice by the Holder at the time of or within a
reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned.
1.10 The Corporation may not grant to subsequent investors rights of
registration without the prior consent of the Holders of a majority (as measured
by the number of shares held) of the Registrable Securities.
1.11 Notwithstanding anything else in this Section 1, (i) if the
Corporation shall have obtained from the SEC a "no-action" letter in which the
SEC has indicated that it will take no action if, without registration under the
Securities Act, any Holder disposes of Registrable Securities covered by any
request for registration made under Section 1.2, 1.3 or 1.4 in the manner in
which such Holder proposes to dispose of the Registrable Securities included in
such request or (ii) if in the opinion of counsel for the Corporation no
registration under the Securities Act is required in connection with such
disposition, then in either such case the Registrable Securities included in
such request shall not be eligible for registration
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<PAGE> 17
under this Agreement.
1.12 Each Holder of Registrable Securities shall, if requested by
the Corporation and an underwriter of a registration, not sell or otherwise
transfer or dispose of any Common Stock (or other securities) of the
Corporation held by such Holder during the 180-day period following the
effective date of a registration statement of the Corporation filed under the
Act, provided that:
(A) all officers and directors and affiliates of the Corporation
enter into similar agreements.
Such agreement shall be in writing in the form satisfactory to the
Corporation and such underwriter. The Corporation may impose stop transfer
instructions with respect to the shares (or securities) subject to the
foregoing restriction until the end of said 180-day period.
1.13 The registration rights granted pursuant to this Section 1
shall terminate as to each Holder at such time as all Registrable Securities of
the Holder can, in the opinion of counsel to the Corporation be sold within a
given three-month period pursuant to Rule 144 or other applicable exemption.
1.14 No Holder shall have any right to take any action to
restrain, enjoin or otherwise delay any registration as the result of any
controversy that may arise with respect to the interpretation or implementation
of this Section 1.
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