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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:
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A. Various dates which occur throughout the Stock Purchase
Agreement are amended in accordance with the following
table:
Paragraph Description Date Deleted Amended Date
--------- ----------- ------------ ------------
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
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 Xxxxxxx X.
Xxxx on June 26, 1998.
H. Paragraph 9.1 is amended by striking the words "SGI, SI
and Unico" and inserting "SGI and SI".
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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 "Xx. Xxxx X. Xxxx and
Xx. Xxxxxxxx Xxxxxx" are deleted and replaced with Xxxxxxx
X. Xxxx, Xxx Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx and Xx. Xxxxxxx X. Xxxxxx, Xxx Xxxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx.
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.
Dates Maximum Shares Converted
----- ------------------------
January 1, 1999-May 31, 1999 1825
June 1, 1999-August 31, 1999 3650
After September 1, 1999 5476
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".
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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 Xxxxxxx X. XxXxxxx 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. Xxxxxxx X. Xxxxxx ("Xxxxxx") will grant to Xxxxxxx X. Xxxx 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.
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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 Xxxxxxx X.
Xxxx 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. Xx. Xxxx
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
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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 Xxxxx Xxxxx, Xxx Xxxx and Xx. Xxxx Xxxxx
("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 Xxxxxxx X. Xxxx 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 Xxxxxxx X. Xxxx
Clients Fund at that time. Should the remaining fees be less than
$30,000, Xxxxxxx X. Xxxx will tender a refund to New
Unico/Starlicon. Should the remaining fees exceed $30,000, IRC
will xxxx New Unico/Starlicon for the balance. Copies of
attorney's statements shall be furnished by IRC, upon request;
however, only Xxxxxxx X. Xxxx, and no others, will review and
approve the xxxx of McGloin, Davenport, Xxxxxxxx & Snow for
fairness. If Xxxxxxx X. Xxxx approves the xxxx, such amount will
be paid to McGloin, Davenport, Xxxxxxxx & Snow.
17. Upon execution of this Agreement, the New Unico will enter into a
retainer Agreement with Xxxxxxx X. Xxxx providing that it will use
the services of Xx. Xxxx 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 Xxxxxxx X. Xxxx. By executing this Agreement, Starlicon,
Unico, the New Unico, and IRC acknowledge that they will waive any
claim of conflict of interest as to Xxxxxxx X. Xxxx'x
representation of SI and IRC in a separate agreement. In the event
that the new relationship between Xxxxxxx X. Xxxx 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, Xxxxxx 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 Xxxxxx
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, Xxxxxx and Xxxxxx will
resign their positions on Unico's Board of Directors.
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19. In order to provide orderly implementation of the transaction
contemplated herein, Xxxxxx 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 xxxx from Xxxxxx and Hurt. The terms and conditions of an
agreement for consulting services with Xxxxxx and Hurt will be
memorialized in a separate agreement. As additional consideration
for providing these consulting services the New Unico grants to
Xxxxxx 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. Xxxxxx, 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 Xx. Xxxx 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.
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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/ XXXXXXX X. XXXXXX
------------------------------------
Xxxxxxx X. Xxxxxx, President
Dated: June 25, 1998 Intermountain Refining Co., Inc.
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxx, President
Dated: June 26, 1998 Starlicon Group, Inc.
By: /s/ XXX XXXX
-----------------------------------
Xxx Xxxx, President
Dated: June 26, 1998 Starlicon International Corporation
By: /s/ WING PO XXXXX
-----------------------------------
Wing Po Xxxxx, President
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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 xxxxx,
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, Xxxxxxxxx Xxxx Co.,
Inc. currently owned by Unico, Inc.
4. Land, building and office furniture and equipment, 0000 Xxxxxxxxxx
Xxxx., Xxxxxxxxxx, Xxx Xxxxxx. 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
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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.
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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 Xxxxx Xxxxx ("Xxxxx"), Xxx Xxxx
("Suri") and Xxxx Xxxxx ("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
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(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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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.
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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.
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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.
-------------------------------------- ------------------------------------
Xxx Xxxx, Guarantor Xxxx Xxxxx, Guarantor
Address: 0000 X. Xxxxxxxxx Xxxx., #000 Address: 00000 Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000 Xxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000 x0000
SSN: ###-##-#### SSN: ###-##-####
--------------------------------------
Xxxxx Xxxxxx, Guarantor
Address: 0000 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Phone: (000) 000-0000
SSN: ###-##-####
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