Exhibit 10.1
SETTLEMENT AGREEMENT AND RELEASE
THIS SETTLEMENT AGREEMENT AND RELEASE, dated as of April 12, 2002 (this
"Agreement"), by and among (i) The Cornerhouse Limited Partnership, a New York
limited partnership ("Cornerhouse"), (ii) The Winsome Limited Partnership, a New
York limited partnership ("Winsome"), (iii) Xxxxx X. Xxxxxxx, an individual
("DHP"), (iv) Thorn Tree Resources LLC, a Delaware limited liability company
("Thorn Tree," and together with Cornerhouse, Winsome and DHP, the "Thorn Tree
Parties"), (v) Xxxxxxx X. Xxxxxxxx, an individual ("Xxxxxxxx"), (vi) Xxxxxx X.
Xxxxxxx, an individual ("Stanson"), (vii) Universal Equities Consolidated LLC, a
Nevada limited liability company ("Universal" and together with Xxxxxxxx and
Xxxxxxx, the "Universal Parties"), on its own behalf and as successor to the
obligations of Universal Equities Ltd., a Delaware corporation, (viii) Equistar
Consolidated Holdings LLC, a Nevada limited liability company ("Equistar"), (ix)
Sixth Avenue Associates LLC, a Delaware limited liability company and assignee
of Xx. Xxxxxxx Xxxxxx ("Sixth Avenue"), (x) Xx. Xxxxxxx X. Xxxxxx, an individual
("Ms. Eweson"), and (xi) Emex Corporation, a Nevada corporation ("Emex").
R E C I T A L S
WHEREAS, Thorn Tree and Universal are the sole members of Equistar and each
owns half of the membership interests of Equistar;
WHEREAS, Universal is the record holder of 11,110,938 shares (the
"Universal Original Shares") of the common stock, par value $0.01 per share (the
"Common Stock"), of Emex and stock dividends paid or payable thereon which, as
of the date hereof, total 1,146,162 shares of Common Stock (the "Universal
Dividend Shares") for an aggregate of 12,257,100 shares of Common Stock
(collectively, the "Universal Shares");
WHEREAS, Thorn Tree is the record owner of 11,110,938 shares of the Common
Stock (the "Thorn Tree Original Shares") and stock dividends paid or payable
thereon which, as of the date hereof, total 1,146,162 shares of Common Stock
(the "Thorn Tree Dividend Shares") for an aggregate of 12,257,100 shares of
Common Stock (collectively, the "Thorn Tree Shares");
WHEREAS, as of February 15, 2002, Xxxxxxxx and Xxxxxxx, jointly and
severally, owed the aggregate amount as set forth on Schedule A to Cornerhouse,
Winsome and DHP, and issued promissory notes therefor (plus all interest accrued
thereon after February 15, 2002, the "DHP Debt");
WHEREAS, as of February 15, 2002, the Universal Parties owed the aggregate
amount as set forth on Schedule B to Equistar (plus all interest accrued thereon
after February 15, 2002, the "Equistar Debt");
WHEREAS, Universal and Thorn Tree pledged the Universal Shares and the
Thorn Tree Shares, respectively, and any dividend shares subsequently paid in
respect thereof (such shares pledged by Thorn Tree, the "Thorn Tree Pledged
Shares") and any and all stock dividends paid and payable thereon to X.X. Xxxxxx
Xxxxx Bank and HSBC Bank USA as security for the debt owed to such banks by
Equistar, in the aggregate amount as set forth on Schedule C (plus all interest
accrued thereon after February 15, 2002, the "Bank Debt"), and Sixth Avenue was
subsequently subrogated to the rights of such banks under (i) the Stock Pledge
Agreement, dated as of September 19, 2000, from Universal and Thorn Tree, as
Grantors, to HSBC USA, as Secured Party, (ii) the Collateral Agreement by and
between The Chase Manhattan Bank and Thorn Tree, dated as of September 29, 2000,
and (iii) the Collateral Agreement by and between Universal and The Chase
Manhattan Bank, dated as of September 29, 2000 (collectively, the "Bank Pledge
Agreements"), and is currently the secured party thereunder;
WHEREAS, Thorn Tree and Universal are entering into an Amended and Restated
Pledge Agreement (the "Standstill Pledge Agreement") concurrently herewith and
attached hereto as Exhibit F, which amends and restates the Bank Pledge
Agreements providing for the pledge (the "Pledge") of the Universal Shares, any
and all stock dividends paid and payable thereon, and the Thorn Tree Pledged
Shares, first, to Sixth Avenue as security for the portion of the Sixth Avenue
Debt which constitutes a Universal Obligation or is attributable to the Thorn
Tree Parties, as applicable, and second, with respect to the Universal Shares,
to DHP as security for the DHP Debt and the Equistar Debt;
WHEREAS, as of February 15, 2002, Equistar owed the aggregate amount set
forth on Schedule D to Ms. Eweson, and Equistar issued to Ms. Eweson promissory
notes therefor, which notes were assigned to Sixth Avenue (plus all interest
accrued thereon after February 15, 2002, the "Eweson Debt," and collectively
with the Bank Debt, the "Sixth Avenue Debt");
WHEREAS, as of February 15, 2002, the Universal Parties owed to
Cornerhouse, Winsome, DHP, Equistar, Ms. Eweson and Sixth Avenue the aggregate
amount as set forth on Schedule E hereto (plus all interest accrued thereon
after February 15, 2002, the "Universal Obligations");
WHEREAS, as of February 15, 2002, Equistar owed to the Thorn Tree Parties
the aggregate amount as set forth on Schedule F hereto (plus all interest
accrued thereon after February 15, 2002, the "Thorn Tree Debt");
WHEREAS, in May 2001, Universal loaned to Emex the aggregate principal
amount of $200,000, and as of the date hereof, Emex owes such amount plus all
interest accrued thereon, and issued a promissory note therefor (such note, the
"Universal Note");
WHEREAS, in May and June 2001, Thorn Tree loaned to Emex the aggregate
principal amount of $1,065,040, and as of the date hereof, Emex owes such amount
plus
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all interest accrued thereon, and issued a promissory note therefor (such note,
the "Thorn Tree Note," and together with the Universal Note, the "Emex Notes");
WHEREAS, as of September 30, 2001, Emex owed to Equistar the aggregate
amount of $1,699,000, and as of the date hereof, Emex owes such amount plus all
interest accrued thereon (the "Emex Debt"); and
WHEREAS, the parties hereto desire to settle all disputes among them
arising from or relating to, among other things, the November Agreements (as
defined herein) the DHP Debt, the Equistar Debt, the Thorn Tree Debt and the
Sixth Avenue Debt;
NOW THEREFORE, for good and valuable consideration, including their mutual
promises, releases, representations, covenants and obligations contained herein
or contemplated hereby, the sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1. Settlement of Dispute.
(a) Covenant Not to Xxx. (i) Each of the parties, except Emex, agrees that,
beginning on the date hereof and continuing until the earlier of (x) the
satisfaction in full in cash in accordance with this Agreement of the Universal
Obligations and (y) the date that is three (3) years from the date hereof (as
may be extended pursuant to Section 1(a)(iii) hereof, the "Standstill Period"),
it shall not commence, maintain, prosecute or participate in any action, charge,
complaint, proceeding, litigation or foreclosure (it being understood that any
sale of shares of Common Stock or the exercise of voting or other consensual
rights with respect to the shares of Common Stock in accordance with the terms
of this Agreement shall not be deemed a foreclosure) of any kind (on its own
behalf and/or on behalf of any other person and/or on behalf of or as a member
of any alleged class of persons, including as a shareholder of Emex) in any
court, or before any administrative or investigative body or agency (whether
public, quasi-public or private), against any of the other parties, except Emex,
to this Agreement that in any way relates to the matters covered by this
Agreement, including, without limitation, the DHP Debt, the Equistar Debt, the
Pledge, the Sixth Avenue Debt, the Universal Obligations, the Universal Note,
the Thorn Tree Debt and the November Agreements.
(ii) Each of the parties hereto agrees that in the event of any future
action, charge, complaint, proceeding, litigation or foreclosure of any
kind by and between any of the parties hereto, each waives any claim or
defense it ever had, now has or hereafter can, shall or may have, based
solely on the passage of time during the Standstill Period, including,
without limitation, any defense based on a statute of limitations or
laches.
(iii) If less than 50% of the Universal Obligations remain outstanding
as of the date that is three (3) years from the date hereof, the Standstill
Period shall be extended and continue for one (1) additional year, until
the date that is four (4) years from the date hereof.
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(b) Releases. Except as set forth in Section 1(n) of this Agreement, and
effective at the conclusion of the Standstill Period, each of the parties,
except Emex, for itself and its respective officers, directors, affiliates,
parent and direct and indirect subsidiary corporations, stockholders, members,
partners or other equity holders, agents, representatives, employees, attorneys,
controlling persons, successors, heirs, executors, administrators and all
respective successors and assigns, and anyone claiming any right through it or
under it (each, a "Releasor," and collectively, the "Releasors"), mutually,
irrevocably and unconditionally releases and forever discharges each of the
other parties, except Emex, and their present and former officers, directors,
affiliates, parent and direct and indirect subsidiary corporations,
stockholders, members, partners or other equity holders, agents,
representatives, employees, attorneys, controlling persons, successors, heirs,
executors, administrators and all respective successors and assigns (each, a
"Releasee," and collectively, the "Releasees"), from any and all claims,
actions, causes of action, suits, liabilities, losses, costs, debts, rights,
offsets, demands, sums of money, accounts, damages, judgments and any other
obligations of any nature whatsoever, in law or in equity, whether known or
unknown, suspected or unsuspected, fixed or contingent, which the Releasors ever
had, now have or hereafter can, shall or may have, from the beginning of the
world until the date hereof, based on, relating or with respect to, or arising
out of any matters covered by this Agreement, including, without limitation:
(A) the DHP Debt;
(B) the Equistar Debt;
(C) the Thorn Tree Debt;
(D) the Sixth Avenue Debt;
(E) the Agreement, dated as of November 1, 2000, between Universal and
Thorn Tree (the "Chase Take Out Agreement") with respect to the pledge of
the Universal Original Shares to The Chase Manhattan Bank;
(F) the Agreement, dated as of November 1, 2000, between Universal and
Thorn Tree (the "HSBC Take Out Agreement") with respect to the pledge of
the Universal Original Shares to HSBC Bank USA;
(G) the Management Agreement, dated as of November 1, 2000, by and
between The Buckingham Management Group, LLC and Thorn Tree (the
"Buckingham Agreement," and together with the Chase Take Out Agreement and
the HSBC Take Out Agreement, the "November Agreements"); and
(H) the Bank Pledge Agreements;
but excluding any rights and obligations arising under this Agreement.
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(c) Retention of Shares. As of the date hereof, each of Universal and Thorn
Tree has delivered to Sixth Avenue all Universal Dividend Shares and Thorn Tree
Dividend Shares in accordance with the Standstill Pledge Agreement. On the date
hereof, Sixth Avenue shall release from the Pledge, and reassign and deliver
certificates to Universal for 300,000 of the Universal Dividend Shares (the
"Universal Retained Shares"). Solely for the convenience of the members of
Universal, 150,000 of the Universal Dividend Shares shall be issued in the name
of Xxxxxxxx, and 150,000 of the Universal Dividend Shares shall be issued in the
name of Stanson. Subject to Section 1(d)(ii) below, Sixth Avenue shall continue
to hold the remaining 11,957,100 Universal Shares and any dividend shares
subsequently paid with respect to the remaining Universal Shares (the "Universal
Pledged Shares," and together with the Thorn Tree Pledged Shares, the "Pledged
Shares") pursuant to the Standstill Pledge Agreement as security for the Sixth
Avenue Debt.
(d) Irrevocable Proxies. (i) On the date hereof, each of Thorn Tree and
Universal shall execute and deliver to Sixth Avenue an irrevocable proxy,
coupled with an interest, substantially in the form attached hereto as Exhibit A
and Exhibit B, respectively (together, the "Proxies"), for the purpose of
enabling Sixth Avenue to exercise the voting and/or consensual rights and powers
accruing to an owner of the Pledged Shares. The Proxies shall (A) grant Sixth
Avenue the full power to exercise any and all voting and/or other consensual
rights and powers accruing to an owner of the Pledged Shares throughout the
Standstill Period, subject to Section 1(d)(ii) hereof, and (B) terminate as to
Sixth Avenue, (1) with respect to Thorn Tree, upon the full satisfaction in cash
(for the purposes of this Agreement and the Standstill Pledge Agreement, cash
shall be deemed to include any Pledged Shares retained in satisfaction of any
outstanding obligations in accordance with Section 1(o) hereof) of the portion
of the Sixth Avenue Debt attributable to the Thorn Tree Parties, and (2) with
respect to Universal, upon the full satisfaction in cash of the portion of the
Sixth Avenue Debt that constitutes a Universal Obligation. Notwithstanding
anything contained elsewhere in this Agreement but subject to its fiduciary
duties under applicable law, if any, Sixth Avenue may vote the Pledged Shares in
its sole discretion, including, without limitation, with respect to any
corporate transaction proposed by the Board (as defined herein).
(ii) Notwithstanding the terms set forth in Section 1(d)(i) hereof,
upon the full satisfaction in cash in accordance with this Agreement of the
portion of the Sixth Avenue Debt that constitutes a Universal Obligation,
the right to exercise the voting and/or consensual rights and powers
accruing to an owner of the Universal Pledged Shares will inure to the
benefit of DHP until the DHP Debt, the Thorn Tree Debt and the Equistar
Debt are satisfied in full in cash in accordance with this Agreement. Each
of Thorn Tree and Universal shall execute and deliver to DHP on the date
hereof an irrevocable proxy, coupled with an interest, substantially in the
form attached hereto as Exhibit C and Exhibit D, respectively, which
proxies shall become effective (A) with respect to Thorn Tree, upon the
satisfaction in full in cash of the portion of the Sixth Avenue Debt
attributable to the Thorn Tree Parties, and (B) with respect to Universal,
upon the satisfaction in full in cash of the Sixth Avenue Debt that
constitutes a Universal Obligation. The Proxy granted by Universal to DHP
shall terminate upon the full
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satisfaction in cash of the DHP Debt, the Equistar Debt and the Thorn Tree
Debt. Notwithstanding anything contained elsewhere in this Agreement, but
subject to the preceding sentence and his fiduciary duties under applicable
law, if any, after the portion of the Sixth Avenue Debt attributable to
Thorn Tree or that constitutes a Universal Obligation is paid in full, DHP
may vote the Thorn Tree Pledged Shares and the Universal Pledged Shares, as
the case may be, in his sole discretion, including, without limitation,
with respect to any corporate transaction proposed by the Board.
(e) Registration Rights. (i) Promptly, and in any event within 120 days of
the date hereof, Emex agrees to file a shelf registration statement (the
"Registration Statement") for an offering to be made on a continuous basis
pursuant to Rule 415 under the Securities Act of 1933, as amended ("Securities
Act"), covering the Pledged Shares (which term, as used herein, shall include
any Released Shares as defined in Section 1(h)(ii) below) and the Universal
Retained Shares, to become effective (the "Effective Date") under the Securities
Act on the day next following the date such Registration Statement is declared
effective by the United States Securities Exchange Commission (the
"Commission"), or at the earliest possible time thereafter. The foregoing
Registration Statement shall be on Form S-3 under the Securities Act or another
appropriate form permitting registration of such Pledged Shares and the
Universal Retained Shares for resale by the pledgees or holders thereof, as
appropriate, in the manner or manners reasonably designated by them (including,
without limitation, one or more underwritten offerings, within the time periods
and otherwise in accordance with the provisions hereof). Concurrently herewith,
the appropriate parties will execute the Registration Rights Agreement attached
hereto as Exhibit E.
(ii) Emex shall pay any and all expenses arising from or incident to
its performance of, or compliance with, its obligation to file the
Registration Statement, including, without limitation, (A) Commission and
stock exchange, if any, registration and filing fees, (B) all fees and
expenses incurred in complying with securities or "blue sky" laws
(including reasonable fees, charges and disbursements of counsel to any
underwriter incurred in connection with "blue sky" qualifications of the
Pledged Shares and the Universal Retained Shares as may be set forth in any
underwriting agreement), (C) all printing messenger and delivery expenses,
(D) the fees, charges and disbursements of counsel to Emex and of its
independent public accountants and any other accounting fees, charges and
expenses incurred by Emex (including, without limitation, any expenses
arising from any "cold comfort" letters or any special audits incident to
or required by any registration or qualification) and any charges and
expenses incurred by Emex, (E) any liability insurance or other premiums
for insurance, if any, obtained by Emex in connection with any registration
pursuant to the terms of this Agreement, regardless of whether such
Registration Statement is declared effective, and (F) in an amount up to
and including $5,000, the fees, charges and disbursements of one counsel on
behalf of each of (x) the Universal Parties and (y) the Thorn Tree Parties
(provided, that, their Pledged Shares, Released Shares or Retained Shares
are being sold pursuant to such Registration Statement).
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(f) Sale of Pledged Shares by Sixth Avenue and DHP. (i) Subject to the
provisions of this Section 1(f), from and after the date that is six months
following the date hereof, Sixth Avenue may, in accordance with the provisions
and terms of the Registration Statement or in arms length private transactions,
sell the Pledged Shares at any time, and DHP, the Thorn Tree Parties and the
Universal Parties shall cooperate with Sixth Avenue to make the Pledged Shares
available for such sale; provided, however, subject to Section 1(f)(vi) hereof,
that the price per share of Common Stock in any such sale shall not be less than
$4.00 per share (the "Floor Price").
(ii) Any sale of all or a portion of the Pledged Shares by Sixth
Avenue shall be made equally from the Universal Pledged Shares and the
Thorn Tree Pledged Shares.
(iii) Subject to the provisions of Section 1(f)(iv) hereof, (A) 70% of
the proceeds of any sale of all or any portion of the Universal Pledged
Shares by Sixth Avenue shall be applied to satisfy in cash the portion of
the amounts outstanding under the Sixth Avenue Debt that constitute
Universal Obligations and (B) 70% of the proceeds of any sale of all or any
portion of the Thorn Tree Pledged Shares by Sixth Avenue shall be applied
to satisfy in cash the portion of the amounts outstanding under the Sixth
Avenue Debt attributable to the Thorn Tree Parties. The remaining 30% of
the proceeds of any sale of all or any portion of the Universal Pledged
Shares or the Thorn Tree Pledged Shares, as the case may be, by Sixth
Avenue shall be paid to the Universal Parties or the Thorn Tree Parties, as
applicable.
(iv) Upon full satisfaction in cash of the portion of the Sixth Avenue
Debt attributable to the Thorn Tree Parties, the Thorn Tree Pledged Shares
shall be released from the Pledge and delivered to Thorn Tree. Upon full
satisfaction in cash of the portion of the Sixth Avenue Debt that
constitutes a Universal Obligation, Sixth Avenue shall transfer all of the
remaining Universal Pledged Shares, with stock powers executed by Universal
in blank, to DHP to hold in accordance with the terms of this Agreement and
the Standstill Pledge Agreement. Upon full satisfaction in cash of the
portion of the Sixth Avenue Debt that constitutes a Universal Obligation,
and subject to the provisions of this Section 1(f), from and after the date
that is six months following the date hereof, DHP may, in accordance with
the provisions and terms of the Registration Statement or in arms length
transactions, sell the Universal Pledged Shares at any time, and Sixth
Avenue, the Thorn Tree Parties and the Universal Parties shall cooperate
with DHP to make the Universal Pledged Shares available for such sale;
provided, however, that, subject to Section 1(f)(vi) hereof, the price per
share of Common Stock in any such sale shall not be less than the Floor
Price. Sixty-five percent (65%) of the proceeds of a sale of all or a
portion of the Universal Pledged Shares by DHP shall be, first, applied to
satisfy in full in cash the amounts outstanding under the DHP Debt and,
second, to satisfy in full in cash the amounts outstanding under the
Equistar Debt. The remaining 35% of the proceeds of any sale of all or any
portion of the Universal Pledged Shares by DHP shall be paid to the
Universal Parties.
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(v) In the event that Sixth Avenue, pursuant to Section 1(f)(i) above,
or DHP, pursuant to Section 1(f)(iv) above, elects to sell the Universal
Pledged Shares, Sixth Avenue or DHP, as the case may be, shall be required
to notify Universal in writing (the "Sale Notice") of the estimated number
of Universal Pledged Shares to be sold, the estimated price per share and
any other proposed substantive terms of such sale. Universal shall have a
period of five business days in the case of a private sale and two business
days in the case of a sale pursuant to the Registration Statement (the
"Notice Period") from the date of its receipt of such Sale Notice to (x)
arrange a sale for the number of Universal Pledged Shares for at least the
same price and on comparable terms as set forth in the Sale Notice or (y)
make a payment for the number of Universal Pledged Shares set forth in the
Sale Notice pursuant to Section 1(h)(i) below; provided, that, Universal
has given notice within one business day that it will attempt to arrange a
sale of the Universal Pledged Shares or make a payment during the Notice
Period (it being understood, however, that such notice of intent does not
obligate Universal to effectuate such sale or to make such payment if its
attempt shall not be successful). If Universal makes such an arrangement or
such payment within the Notice Period, then no Universal Pledged Shares
shall be included in the sale by Sixth Avenue or DHP, as the case may be.
If Universal is not able to make such an arrangement or such payment or
does not respond by the end of the Notice Period, then the sale by Sixth
Avenue or DHP, as the case may be, may include the Universal Pledged Shares
as set forth in the Sale Notice.
(vi) In the event of any spin-off or distribution (the "Emex
Spin-Off") of the stock of any subsidiary or business of Emex to the
existing stockholders of Emex ("Newco"), the Floor Price following the Emex
Spin-Off shall be adjusted to a price per share equal to the product of (A)
$4.00, multiplied by (B) a fraction with (x) a numerator equal to the
Average Trading Price of Emex, and (y) a denominator equal to the sum of
the Average Trading Price of Emex plus the Average Trading Price of Newco.
The shares of capital stock of Newco (the "Newco Stock") distributed to
Emex stockholders pursuant to the Emex Spin-Off will remain subject to the
Pledge and all the terms and conditions of this Agreement. The Floor Price
of Newco Stock following the Emex Spin-Off shall be a price per share equal
to the product of (A) $4.00, multiplied by (B) a fraction with (x) a
numerator equal to the Average Trading Price of Newco, and (y) a
denominator equal to the sum of the Average Trading Price of Emex plus the
Average Trading Price of Newco. The "Average Trading Price of Emex" shall
mean the average of the closing prices of the Common Stock on the Nasdaq
National or SmallCap Market (or if not listed thereon, on such other
over-the-counter market or national securities exchange, as applicable)
over the twenty (20) trading day period following the consummation of the
Emex Spin-Off. The "Average Trading Price of Newco" shall mean the average
of the closing prices of the Newco Stock on the Nasdaq National or SmallCap
Market (or if not listed thereon, on such other over-the-counter market or
national securities exchange, as applicable) over the twenty (20) trading
day period following the consummation of the Emex Spin-Off. The Floor Price
will also be adjusted pursuant to the provisions of this Section 1(f)(vi)
in the event of any spin-off or distribution of the stock of any subsidiary
or business of Newco to the existing stockholders of Newco.
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(g) Sale of the Universal Shares by the Universal Parties. From and after
the date hereof, the Universal Parties may direct Sixth Avenue or DHP, as the
case may be, to sell or cause the sale of the Universal Shares in a private,
arms length transaction or in accordance with the provisions and terms of a
Registration Statement, provided, that (A) any such sale shall be made for
purposes of paying the Universal Obligations, (B) the cash proceeds from such
sale (net of expenses of the sale) shall be sufficient to pay in full in cash
the Universal Obligations, and (C) notwithstanding anything to the contrary
contained herein, the cash proceeds from such sale (net of expenses of the sale)
shall be applied exclusively to the payment of the Universal Obligations until
such Universal Obligations are paid in full in cash. In the event that the
proceeds (net of expenses of the sale) from such sale exceed the amount of the
Universal Obligations, the remaining proceeds shall be paid to the Universal
Parties.
(h) Payment of the Universal Obligations. (i) The Universal Parties may, at
any time, pay, in cash, any portion of the Universal Obligations.
(ii) Subject to Article XX of the Standstill Pledge Agreement, upon
payment of all or a portion of the Universal Obligations, there shall be
released from the Pledge and the Standstill Pledge Agreement and delivered
to Universal that number of Universal Pledged Shares which bears the same
proportion to the total amount of Universal Pledged Shares as the amount of
the repayment bears to the total amount of Universal Obligations
outstanding as of the date payment is tendered by Universal (the "Released
Shares"). The Released Shares shall be released and delivered to the
Universal Parties in accordance with Section 1(h)(iii) hereof.
(iii) Upon payment of all or a portion of the Universal Obligations,
Sixth Avenue or DHP, as the case may be, shall execute and deliver to
Universal such documents as Universal shall reasonably request to evidence
the termination of the Pledge with respect to the Released Shares. Subject
to Article XX of the Standstill Pledge Agreement, Sixth Avenue, the Thorn
Tree Parties and DHP shall cooperate with Universal and use reasonable
efforts to effect the timely release of the Universal Pledged Shares (and
shall take all actions required by it to release such Universal Pledged
Shares within three (3) business days of the date of payment) in connection
with any Universal sale pursuant to Section 1(g) or any payment of
Universal Obligations pursuant to this Section 1(h).
(i) Equistar's Payment of the Sixth Avenue Debt and the Thorn Tree Debt.
(i) Notwithstanding anything to the contrary contained in the Equistar Operating
Agreement, in the event that Equistar receives any proceeds or other assets
(including, without limitation, any Universal Pledged Shares) in repayment of
the Equistar Debt or any other revenues, repayment of debt or returns on its
investments, such proceeds or such other assets shall be first applied to
satisfy the Sixth Avenue Debt until such debt is paid in full in cash, and,
second, to satisfy the Thorn Tree Debt until such debt is paid in full in cash.
With respect to the repayment of the Thorn Tree Debt, such proceeds shall be
paid to each of the Thorn Tree Parties pro rata in the same proportion as (x)
the debt outstanding to each of the Thorn Tree Parties, respectively, bears to
(y) the total amount
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of the Thorn Tree Debt. Notwithstanding anything to the contrary in the
Equistar Operating Agreement, in the event that the Thorn Tree Debt is paid
in full in cash, any such proceeds shall be distributed to Universal and
Thorn Tree, pro rata in accordance with the respective ownership
percentages of Universal and Thorn Tree in Equistar at the time such
payment is made.
(ii) Pledge by Equistar. In consideration of the Thorn Tree Debt and
the agreements contained herein, Equistar hereby grants a first priority
security interest to each of the Thorn Tree Parties in any proceeds
Equistar receives from (A) Emex in partial or full satisfaction of the
amount outstanding under the Emex Debt, and (B) Universal in partial or
full satisfaction of the Equistar Debt. Such security interests shall inure
to each of the Thorn Tree Parties pro rata in the same proportion as (x)
the debt outstanding to each of the Thorn Tree Parties, respectively, bears
to (y) the total amount of Thorn Tree Debt. Such security interests shall
terminate upon the satisfaction of the Thorn Tree Debt in full in cash in
accordance with the terms of this Agreement.
(iii) Equistar hereby authorizes the Thorn Tree Parties to make,
execute, endorse, acknowledge and file, from time to time, such financing
statements, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take such further steps
relating to the security interest hereby granted, which the Thorn Tree
Parties deem appropriate or advisable to perfect, preserve or protect the
security interest. Equistar hereby constitutes the Thorn Tree Parties as
its attorneys-in-fact to execute and file in the name and on behalf of
Equistar such additional financing statements as the Thorn Tree Parties may
reasonably request, such acts of such attorneys being hereby ratified and
confirmed; such power, being coupled with an interest, is irrevocable until
the Thorn Tree Debt is paid in full in accordance with this Agreement.
Further, to the extent permitted by applicable law, Equistar authorizes the
Thorn Tree Parties to file any such financing statements without the
signature of Equistar, provided, that the Thorn Tree Parties notify
Equistar in writing prior to filing. Equistar will pay all applicable
filing fees and related expenses in connection with any such financing
statements. Notwithstanding anything to the contrary contained herein, to
the extent that any of the Universal Pledged Shares are retained in
satisfaction of all or part of the Equistar Debt in accordance with Section
1(o)(v) hereof, the Thorn Tree Debt shall be discharged pro tanto.
(j) Payment of the Universal Notes and the Thorn Tree Notes. (i) Universal
hereby agrees to extend the maturity date for the payment of all principal of
and interest on the Universal Note until the date of the completion of the
Standstill Period. Notwithstanding anything to the contrary in the Universal
Note, Universal hereby agrees that it shall only have the right to collect and
enforce any obligation to pay the principal and/or interest owed by Emex
pursuant to the Universal Note if Thorn Tree receives payment of the principal
and/or interest owed by Emex pursuant to the Thorn Tree Note in accordance with
the following sentence. Any such payment from Emex shall be paid to each of
Universal and Thorn Tree pro rata in the same proportion as (x) the debt
outstanding under the Universal Note and the Thorn Tree Note, respectively,
bears to (y) the total amount of debt outstanding under the Emex Notes;
provided, however, that until the Sixth Avenue Debt is paid in full in cash,
neither Universal nor Thorn Tree shall
10
exercise any of their respective rights to repayment of and Emex shall not
repay the Emex Notes and/or the Emex Debt without the prior written consent
of Sixth Avenue.
(ii) Equistar hereby agrees to extend the maturity date for the
payment of all principal or and interest in the Emex Debt until the date of
the completion of the Standstill Period.
(k) Transactions between Emex and Sixth Avenue and/or the Thorn Tree
Parties. Emex, on the one hand, and Sixth Avenue and/or any or all of the Thorn
Tree Parties, on the other hand, may not enter into any transaction or group of
related transactions with a value to Emex, Sixth Avenue and/or the Thorn Tree
Parties of greater than $750,000 unless such transaction is approved by a vote
of a majority of the independent directors of Emex, as that term is defined in
Section 4200(a)(14) of the NASD Marketplace Rules.
(l) Preemptive Rights. (i) Emex shall not issue or sell any Common Stock or
any shares convertible into common stock or any warrants or options exercisable
for common stock (collectively, the "Common Stock Equivalents") (other than (A)
in connection with or pursuant to an employee stock option plan, (B) in
connection with a transaction approved by the board of directors of Emex (the
"Board") in which the Common Stock to be issued represents no more than 10% of
the issued and outstanding Common Stock (calculated on a fully diluted basis
taking into account all outstanding Common Stock Equivalents), (C) in connection
with the conversion or exercise of Common Stock Equivalents by Thorn Tree, Sixth
Avenue or Universal, or (D) in connection with any other transaction approved by
the unanimous vote of all of the members of the Board then in office), unless
prior to the issuance or sale of such Common Stock or Common Stock Equivalents
each of Universal and Thorn Tree shall have been given the opportunity to
purchase (on the same terms as such shares of Common Stock or Common Stock
Equivalents are proposed to be sold) the same proportion of such shares of
Common Stock or Common Stock Equivalents being issued or offered for sale by
Emex as (x) the number of shares of Common Stock or Common Stock Equivalents
then held of record (including, without limitation, the Pledged Shares, whether
or not held of record) by Universal and Thorn Tree, respectively, bears to (y)
all of the shares of Common Stock and Common Stock Equivalents issued and
outstanding at the close of the NASDAQ National Market on that day (such
proportion, the "Basic Amount").
(ii) Prior to the issuance or sale by Emex of any Common Stock or
Common Stock Equivalents, where pre-emptive rights attach pursuant to
Section 1(l)(i) above, Emex shall give written notice thereof (the "Notice
of Preemptive Rights") to each of Universal and Thorn Tree which shall
specify the total aggregate number of shares of Common Stock or Common
Stock Equivalents to be issued, the price and other terms of their proposed
issuance and the Basic Amount that each of Universal and Thorn Tree is
entitled to purchase.
(iii) If Universal and/or Thorn Tree desires to purchase Common Stock
or Common Stock Equivalents, it shall notify Emex in writing (the "Notice
of
11
Acceptance") within (A) seven (7) days of receipt of the Notice of
Preemptive Rights or (B) such shorter period, if any (but not less than two
(2) business days), that the Board may fix, in its sole discretion, if it
believes that the timing of the Notice of Acceptance will interfere with
any proposed or potential financing of Emex. The Notice of Acceptance shall
state the proportion of the Basic Amount Universal and/or Thorn Tree wish
to purchase.
(iv) Any Common Stock or Common Stock Equivalent which is not
purchased in accordance with the provisions of this Section 1(l) may,
within a period of 90 days after the expiration of the time for making such
election, be sold by Emex to any person at not less than the price and upon
other terms and conditions not less favorable to Emex than those set forth
in the Notice of Preemptive Rights.
(m) Election of Directors. (i) During the Standstill Period, Universal
shall have the right to nominate one person, with the consent of each of Stanson
and Xxxxxxxx, reasonably acceptable to Sixth Avenue, to serve on the Board (such
person, the "Universal Designee"). Sixth Avenue shall have the right to nominate
all other members to serve on the Board until the portion of the Sixth Avenue
Debt that constitutes a Universal Obligation is satisfied in cash in full in
accordance with this Agreement. Upon the full satisfaction in cash in accordance
with this Agreement of the portion of the Sixth Avenue Debt that constitutes a
Universal Obligation, the right to nominate all other members to serve on the
Board will inure to the benefit of DHP until the DHP Debt, the Thorn Tree Debt
and the Equistar Debt are satisfied in full in cash in accordance with this
Agreement.
(ii) During the Standstill Period, at each annual stockholders'
meeting of Emex, the Board shall duly nominate for election to the Board
(A) the Universal Designee, and (B) those persons designated as nominees by
Sixth Avenue or DHP, as the case may be, as directors.
(iii) During the Standstill Period, Sixth Avenue or DHP, as the case
may be, shall vote all the Pledged Shares in favor of those persons
nominated in accordance with the terms hereto to serve as directors of
Emex.
(iv) During the Standstill Period, Sixth Avenue or DHP, as the case
may be, shall vote all the Pledged Shares in favor of removal of the
Universal Designee, if such removal is approved by the mutual agreement of
Stanson and Xxxxxxxx.
(n) Retention of Certain Claims. (i) Notwithstanding Section 1(b) hereof,
after the completion of the Standstill Period, Sixth Avenue and the Thorn Tree
Parties shall retain their claims, actions, causes of action, rights and demands
with respect to any outstanding principal of and interest on the Universal
Obligations, if any, as of that date (the "Universal Outstanding Obligations");
provided, that any such claims shall be without recourse to the Universal
Parties beyond satisfaction from the proceeds from the sale of the Universal
Pledged Shares in accordance with the Standstill Pledge Agreement.
12
(ii) After the completion of the Standstill Period and subject to
compliance in all material respects with this Agreement by the Thorn Tree
Parties, Ms. Eweson, Sixth Avenue and DHP, the Universal Parties shall
waive any and all of their claims, actions, causes of action, rights and
demands, if any, with respect to the November Agreements.
(o) Valuation of the Pledged Shares and Payment of Obligations at the
Completion of the Standstill Period. (i) Upon the completion of the Standstill
Period, if principal or interest remains outstanding on the Universal
Obligations or the portion of the Sixth Avenue Debt attributable to the Thorn
Tree Parties, the fair market value (the "Appraised Value") of the Pledged
Shares that have not been otherwise released as of the completion of the
Standstill Period (as applicable, the "Remaining Universal Pledged Shares" and
the "Remaining Thorn Tree Pledged Shares," and collectively, the "Remaining
Pledged Shares") shall be determined in accordance with this Section 1(o). The
Universal Parties, on the one hand, and the Thorn Tree Parties, Sixth Avenue and
Ms. Eweson, on the other hand, shall attempt in good faith for a period of ten
(10) days to agree on the Appraised Value.
(ii) If the parties are unable to agree upon the Appraised Value
within such ten (10) day period, the Universal Parties, on the one hand,
and the Thorn Tree Parties, Sixth Avenue and Ms. Eweson, on the other hand,
shall attempt in good faith for a period of five (5) days to agree on a
nationally recognized investment banking firm (an "Investment Bank") to
serve as the appraiser and advise the parties of its determination of the
Appraised Value.
(iii) If the parties are unable to agree upon an Investment Bank to
determine the Appraised Value within such five (5) day period, the
Universal Parties, on the one hand, and the Thorn Tree Parties, Sixth
Avenue and Ms. Eweson, on the other hand, shall each select, within a
period of five (5) days, one Investment Bank, and such Investment Banks
together shall choose a third Investment Bank to serve as the appraiser and
advise the parties of its determination of the Appraised Value.
(iv) The Appraised Value shall be based upon the Investment Bank's
determination of the fair market value of Emex (and its subsidiaries) as a
going concern after taking into account all indebtedness and any
outstanding preferred capital stock of Emex, without regard to public
market price (the "Emex Value"). In order to determine the appraised fair
market value per share of Common Stock, the Investment Bank shall divide
the Emex Value by the number of outstanding shares of Common Stock as of
the date of the appraisal (the "Per Share Value"). The Appraised Value
shall equal the Per Share Value multiplied by the number of Remaining
Pledged Shares outstanding as of the date of the appraisal.
(v) At the completion of the Standstill Period, (A) Sixth Avenue and
Ms. Eweson, (B) DHP, Cornerhouse and Winsome and (C) Equistar, as
applicable, shall each retain, as satisfaction in full of the portion of
the Sixth Avenue Debt that constitutes a Universal Obligation, the DHP Debt
and the Equistar Debt, respectively, that number of Universal Pledged
Shares equal to the quotient of (x) the amount outstanding on the
13
portion of the Sixth Avenue Debt that constitutes a Universal Obligation,
the DHP Debt and the Equistar Debt, as the case may be, divided by the (y)
the Per Share Value (the "Universal Payment Shares"). If the number of
Remaining Universal Pledged Shares is less than the number of Universal
Payment Shares, (1) first, that number of the Remaining Universal Pledged
Shares sufficient to satisfy in full (based on the Per Share Value) the
outstanding portion of the Sixth Avenue Debt that constitutes a Universal
Obligation, or such lesser Remaining Universal Pledged Shares, shall be
retained by Sixth Avenue, (2) second, that number of the Remaining
Universal Pledged Shares sufficient to satisfy in full (based on the Per
Share Value) the outstanding DHP Debt, or such lesser Remaining Universal
Pledged Shares, if any, shall be retained by DHP, Cornerhouse and Winsome,
and (3) lastly, that number of Remaining Universal Pledged Shares
remaining, if any, shall be retained by Equistar, if any portion of the
Equistar Debt is outstanding at such time. In the event that the number of
Remaining Universal Pledged Shares exceeds the number of Universal Payment
Shares, the difference between (a) the Remaining Universal Pledged Shares
and (b) the Universal Payment Shares shall promptly be released and
delivered to the Universal Parties. Notwithstanding anything to the
contrary contained herein, to the extent that any of the Universal Pledged
Shares are retained in satisfaction of all or part of the Equistar Debt,
the Thorn Tree Debt shall be discharged pro tanto.
(vi) At the completion of the Standstill Period, Sixth Avenue and Ms.
Eweson, shall retain, as satisfaction in full of the portion of the Sixth
Avenue Debt attributable to the Thorn Tree Parties, that number of Thorn
Tree Pledged Shares equal to the quotient of (x) the amount outstanding on
the portion of the Sixth Avenue Debt attributable to the Thorn Tree Parties
divided by the (y) the Per Share Value (the "Thorn Tree Payment Shares"),
or if the number of Remaining Thorn Tree Pledged Shares is less than the
number of Thorn Tree Payment Shares, the Remaining Thorn Tree Pledged
Shares. In the event that the number of Remaining Thorn Tree Pledged Shares
exceeds the number of Thorn Tree Payment Shares, the difference between (a)
the Remaining Thorn Tree Pledged Shares and (b) the Thorn Tree Payment
Shares shall promptly be released and delivered to the Thorn Tree Parties.
(p) Interest Rates. Commencing February 15, 2002, the DHP Debt, the
Equistar Debt, the Eweson Debt, the Bank Debt and the Thorn Tree Debt shall
accrue interest at the rates set forth in the Schedules attached hereto.
(q) Payments to Universal. (i) Any payments made or delivery of the
Released Shares to Universal or the Universal Parties pursuant to this
Agreement, the Registration Rights Agreement or the Standstill Pledge Agreement
shall be made as follows: 50% of such payment or delivery to Xxxxxxxx and 50% of
such payment or delivery to Stanson.
(ii) Any distributions of cash or Shares to Stanson (including but not
limited to such distributions pursuant to Section 1(c), 1(f)(iii),
1(f)(iv), 1(g), 1(h), 1(j), 1(l), 1(m)(i) or 1(o)(v) of this Agreement or
pursuant to the Registration Rights Agreement) shall be made as follows:
14
If cash, by wire transfer as follows:
XX Xxxxxx Xxxxx
Account Number: 060-053026565
ABA #: 000-000-000
If Shares, by deposit into the applicable account:
Xxxxxx X. Xxxxxxx
Account Number: 353-28208
T.D. Waterhouse Securities, Inc.
Tax ID Number: 00-000-0000
(i) For DTC eligible securities:
National Investor Services Corp.
Deliver to DTC Clearing Code 0044, Code 40
All deliveries must include client name and TD
Waterhouse Account Number
(ii) For physical delivery of securities:
National Investor Services Corp.
or deliver through NSCC Clearing #0044
Attention: Cashiers Department
00 Xxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(iii) Any such distributions of cash or Shares to Xxxxxxxx (including
but not limited to such distributions pursuant to Section 1(c), 1(f)(iii),
1(f)(iv), 1(g), 1(h), 1(j), 1(l), 1(m)(i) or 1(o)(v) of this Agreement or
pursuant to the Registration Rights Agreement) shall be made in accordance
with such written instructions as Xxxxxxxx shall furnish.
(iv) Notwithstanding anything to the contrary contained herein, any
options received by either Stanson or Xxxxxxxx in their capacity as a
director of Emex, whether as the Universal Designee or otherwise, shall be
retained solely by Xxxxxxxx or Stanson, as the case may be.
2. Representations and Warranties.
(a) Each of the parties hereto represents and warrants to each other party
hereto as follows:
(i) It has the full power and authority (including under its governing
documents if the party is not a natural person and under applicable laws),
to execute and deliver this Agreement and any agreements to which it is a
party (the "Related Agreements") and to enter into any transactions
contemplated hereunder and to perform its obligations hereunder and
thereunder. The execution, delivery and performance by it
15
of this Agreement and the Related Agreements to which it is a party, if
any, have been duly authorized by all necessary action (including corporate
or organizational action, if necessary) on its part, and this Agreement and
each of the Related Agreements to which it is a party constitutes a valid
and binding obligation of it, enforceable against it in accordance with its
terms, and no consent, approval or authorization of any party or
governmental entity which is not a party to this Agreement is necessary to
consummate the transactions contemplated by this Agreement.
(ii) Universal and Thorn Tree own and are the sole legal and
beneficial owners of the Universal Shares and the Thorn Tree Shares,
respectively, free and clear of any lien, except for the lien created under
the Bank Pledge Agreements, which agreements shall be superceded by the
Standstill Pledge Agreement and this Agreement.
(iii) Each party has carefully read this Agreement and has decided to
enter into this Agreement based upon its analysis of the matters described
in this Agreement and the advice of its counsel.
(iv) Each party represents and warrants that it has not transferred,
assigned or hypothecated any claim or cause of action it may have, had or
may have had, against any other party to this Agreement.
3. Notices. All notices, requests, demands, consents and other communications
required or permitted under this Agreement (collectively, "Notice") shall be
effective only if given in writing and shall be considered to have been duly
given when (A) delivered by hand, (B) sent by telecopier (with receipt confirmed
otherwise than by the sender's fax machine), provided that a copy is mailed (on
the same date) by certified or registered mail, return receipt requested,
postage prepaid, or (C) received by the addressee, if sent by Express Mail,
Federal Express or other reputable express delivery service (receipt requested),
or by first class certified or registered mail, return receipt requested,
postage prepaid. Notice shall be sent in each case to the appropriate addresses
or telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may from time to time designate as to itself by notice
similarly given to the other parties in accordance herewith, which shall not be
deemed given until received by the addressee). Notice shall be given:
if to any of the Thorn Tree Parties:
Thorn Tree Resources LLC
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
16
with a copy to:
Kronish Xxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
if to Universal:
Universal Equities Consolidated LLC
Twin Bridges Closters Dock Road
Alpine, New Jersey 07620
Attn: Xxxxxxx Xxxxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
Xxxxxx X. Xxxxxxx
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: 000-000-0000
Telecopier: 000-000-0000
with copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
Xxxxxxxx Xxxxxx & Xxxx
000 Xxxxxxxx Xxxxxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxxx Xxxx, Esq.
Telephone: 000-000-0000
Telecopier: 973-514-1660
if to Xxxxxxxx:
Xxxxxxx X. Xxxxxxxx
Twin Bridges Closters Xxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
17
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
if to Stanson:
Xxxxxx X. Xxxxxxx
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: 000-000-0000
Telecopier: 000-000-0000
with a copy to:
Xxxxxxxx Xxxxxx & Xxxx
000 Xxxxxxxx Xxxxxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxxx Xxxx, Esq.
Telephone: 000-000-0000
Telecopier: 973-514-1660
if to Sixth Avenue or Ms. Eweson:
c/o Keswick Management Inc.
1330 Avenue of the Xxxxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Reade X. Xxxx, Xx., Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
18
if to Emex:
00000 Xxxx Xxxxxx Xxxxxx, Xxxxx X-000
Xxxxxxxx, Xxxxxxxx 00000
Attn: President
Telephone: 000-000-0000
Telecopier: 000-000-0000
with a copy to:
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000- 000-0000
4. No Admission of Liability. Neither this Agreement nor any of the terms
hereof, nor any negotiations, proceedings or agreements in connection herewith
shall constitute, or be construed as or be deemed to be evidence of, an
admission on the part of any party of any liability or wrongdoing whatsoever, or
of the truth or untruth of any of the claims or counterclaims made by any party,
or of the merit or any lack of merit of any of the defenses thereto; nor shall
this Agreement, or any of the terms hereof, or any negotiations or proceedings
in connection herewith, be offered or received in evidence, or used in any
proceeding against any of the parties, or used in any proceeding for any purpose
whatsoever, except with respect to the effectuation and enforcement of this
Agreement and any of the agreements or transactions contemplated by this
Agreement.
5. Further Assurances. Each of the parties hereto shall, at any time and from
time to time after the date hereof, fairly and in good faith, do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney, receipts, acknowledgments, acceptances and assurances as may
be reasonably required to procure for each of the parties and their respective
successors and assigns, the consideration to be delivered to them as provided
for herein or otherwise to carry out the intent and purposes of this Agreement
or to consummate any of the transactions contemplated hereby.
6. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
7. Miscellaneous Provisions.
(a) This Agreement may not be amended, modified, discharged or terminated,
nor may the rights of any party hereunder be waived, unless in writing and
executed by each party hereto. No waiver of any provision of this Agreement
shall be
19
deemed to constitute a waiver of any other provision hereof, nor shall
any waiver constitute a continuing waiver.
(b) This Agreement may be executed in any number of counterparts, each of
which when executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.
(c) None of the parties hereto may assign its rights or delegate its
obligations under this Agreement without the written consent of the other
parties hereto; provided, however, that Universal may assign any and all of its
rights and obligations hereunder, other than the Universal Obligations, to
Stanson or Xxxxxxxx. This Agreement and all of the provisions hereof shall be
binding upon and inure only to the benefit of the parties hereto and their
respective heirs, executors, personal representatives and successors.
(d) The Exhibits and Schedules referred to herein are part of this
Agreement for all purposes. Terms used in this Agreement shall have the same
meanings when used in such Exhibits and Schedules.
(e) Captions and headings are employed herein for convenience of reference
only and shall not affect the construction or interpretation of any provision
hereof.
(f) This Agreement is made under and shall be governed by and construed in
accordance with the substantive laws of the State of New York applicable to
contracts made and to be performed entirely within that state. Each party agrees
that any action, suit or proceeding in respect of or arising out of this
Agreement shall be initiated and prosecuted in the state or federal courts, as
the case may be, located in the city of New York.
(g) This Agreement, together with all Schedules and Exhibits attached
hereto, shall supercede all settlement agreements and discussions relating to
the subject matter hereof.
(h) Party Representatives. (i) Universal hereby appoint and designate
Xxxxxxxx and Stanson to act on its behalf and Xxxxxxxx and Xxxxxxx will each act
on their own behalf; Sixth Avenue and Ms. Eweson each hereby appoint and
designate Sixth Avenue to act on its behalf; and DHP and the Thorn Tree Parties
each hereby appoint and designate DHP to act on its behalf (each designee, a
"Party Representative"), respectively, as such party's attorney(s)-in-fact and
representative(s) to do any and all things and to execute any and all documents
in such party's name, place and stead in any way which such party could do if
personally present, in connection with this Agreement and the transactions
contemplated hereby, including (A) to accept on such party's behalf any
deliveries to such party under this Agreement or (B) to amend, cancel or extend,
or waive the terms of, this Agreement.
20
(ii) Each party hereto shall be entitled to rely, as being binding
upon such party, upon any document or other paper believed by such party to
be genuine and correct and to have been signed by the party in question's
Party Representative.
(iii) By executing and delivering this Agreement, each party hereby
ratifies and confirms, and hereby agrees to ratify and confirm, any action
taken by such party's Party Representative in exercise of the
powers-of-attorney granted to the Party Representatives pursuant to this
Section 7(h), which powers-of-attorney, being coupled with an interest of
the Party Representatives, are irrevocable and will survive the death,
incapacity or incompetence of any party who is a natural person.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, and intending to be legally bound thereby, the parties
hereto have duly executed and delivered this Agreement or caused this Agreement
to be duly executed and delivered by their duly authorized officers as of the
day and year first above written.
THE CORNERHOUSE
LIMITED PARTNERSHIP
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Xxxxx X. Xxxxxxx
General Partner
THE WINSOME
LIMITED PARTNERSHIP
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx
General Partner
XXXXX X. XXXXXXX, individually
/s/ Xxxxx X. Xxxxxxx
-------------------------------
THORN TREE RESOURCES LLC
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Xxxxx X. Xxxxxxx
Manager
UNIVERSAL EQUITIES
CONSOLIDATED LLC, on its
own behalf and as successor
to the obligations of
Universal Equities Ltd.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Manager
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Manager
XXXXXXX X. XXXXXXXX, individually
/s/ Xxxxxxx X. Xxxxxxxx
_______________________________
XXXXXX X. XXXXXXX, individually
/s/ Xxxxxx X. Xxxxxxx
_______________________________
SIXTH AVENUE ASSOCIATES LLC
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
By: /s/ Xxxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager
XXXXXXX X. XXXXXX
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name:
Title:
EMEX CORPORATION
By: /s/ Xxxxxx Xxxxx
---------------------------
Name: Xxxxxx Xxxxx
Title: President
EQUISTAR CONSOLIDATED HOLDINGS LLC
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Manager
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Manager
SCHEDULE A
The DHP Debt
Each of the following loans were made to Xxxxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxxxxx, as individuals. The total amount due includes principal and interest
(at the rate listed below) accrued until February 15, 2002.
-------------------------------------------------------------------------------------------------------------
Date of Principal Interest Rate Total Amount
------- --------- -------------- ------------
Loan Lender Amount (per annum) Due as of 2/15/02
---- ------ ----------- -----------------
-------------------------------------------------------------------------------------------------------------
4/29/93 Xxxxx X. Xxxxxxx $175,000 10% 329,000.00
-------------------------------------------------------------------------------------------------------------
6/17/93 Xxxxx X. Xxxxxxx $150,000 10% 278,794.52
-------------------------------------------------------------------------------------------------------------
7/28/93 Xxxxx X. Xxxxxxx $175,000 10% 324,684.93
-------------------------------------------------------------------------------------------------------------
9/15/95 Xxxxx X. Xxxxxxx $100,000 8% 151,353.42
-------------------------------------------------------------------------------------------------------------
9/25/95 Xxxxx X. Xxxxxxx $50,000 8% 75,567.12
-------------------------------------------------------------------------------------------------------------
9/28/95 Xxxxx X. Xxxxxxx $100,000 8% 151,068.49
-------------------------------------------------------------------------------------------------------------
11/02/95 Xxxxx X. Xxxxxxx $150,000 8% 225,452.05
-------------------------------------------------------------------------------------------------------------
11/08/95 Xxxxx X. Xxxxxxx $350,000 8% 525,594.52
-------------------------------------------------------------------------------------------------------------
11/20/95 Xxxxx X. Xxxxxxx $350,000 8% 524,673.97
-------------------------------------------------------------------------------------------------------------
12/27/95 Xxxxx X. Xxxxxxx $100,000 8% 149,095.89
-------------------------------------------------------------------------------------------------------------
1/05/96 Xxxxx X. Xxxxxxx $100,000 8% 148,898.63
-------------------------------------------------------------------------------------------------------------
9/14/93 Cornerhouse $500,000 10% 921,095.89
-------------------------------------------------------------------------------------------------------------
9/29/93 Cornerhouse $500,000 10% 919,041.09
-------------------------------------------------------------------------------------------------------------
3/21/95 Cornerhouse $75,000 8% 116,441.09
-------------------------------------------------------------------------------------------------------------
3/31/95 Cornerhouse $250,000 8% 387,589.04
-------------------------------------------------------------------------------------------------------------
6/23/95 Cornerhouse $100,000 8% 153,194.52
-------------------------------------------------------------------------------------------------------------
7/15/95 Cornerhouse $150,000 8% 229,068.49
-------------------------------------------------------------------------------------------------------------
8/10/95 Cornerhouse $75,000 8% 114,106.84
-------------------------------------------------------------------------------------------------------------
8/17/95 Cornerhouse $75,000 8% 113,991.78
-------------------------------------------------------------------------------------------------------------
9/29/93 Winsome $500,000 10% 919,041.09
-------------------------------------------------------------------------------------------------------------
TOTAL: 6,757,753.37
--------------------------------------------
The DHP Debt shall accrue interest on and after February 15, 2002 at the rate of
8.99% per annum, compounded annually.
SCHEDULE B
Equistar Debt
The following list sets forth the loans made by Equistar Consolidated
Holdings LLC to the Universal Parties. The total amount includes principal and
interest accrued at 8% per annum until February 15, 2002.
-------------------------------------------------------------------------------------------------------------
Date of Principal Interest Rate Total Amount
------- --------- ------------- ------------
Loan Borrowing Party Amount (per annum) Due as of 2/15/02
---- ------ ----------- -----------------
-------------------------------------------------------------------------------------------------------------
(prior to Dec Universal Equities
1999) Consolidated LLC(1) 1,949,000 8% 2,292,878.35
-------------------------------------------------------------------------------------------------------------
(prior to Universal Equities
12/31/00) Consolidated LLC 2,154,817.52 8% 2,348,928.20
-------------------------------------------------------------------------------------------------------------
(prior to
12/31/00) Xxxxxx X. Xxxxxxx 86,181.29 8% 93,944.68
-------------------------------------------------------------------------------------------------------------
(prior to
12/31/00) Xxxxxxx X. Xxxxxxxx 1,000.00 8% 1,090.08
-------------------------------------------------------------------------------------------------------------
(prior to Stanson and Xxxxxxxx
12/31/00) jointly 124,350.00 8% 135,551.72
-------------------------------------------------------------------------------------------------------------
TOTAL: 4,872,393.03
--------------------------------------------
The Equistar Debt shall accrue interest on and after February 15, 2002 at the
rate of 8% per annum, compounded annually.
-------------
(1) Any and all obligations of Universal Equities Ltd. have been replaced by the
obligations of Universal Equities Consolidated LLC undertaken in this Agreement.
SCHEDULE C
Bank Debt
Aggregate amount of Bank Debt outstanding as of December 27, 2001 (principal and
interest): $30,461,715.28
Universal Parties' portion of the Bank Debt is 50% of the aggregate amount of
the Bank Debt for a total of $15,230,857.64 at December 27, 2001.
The Bank Debt shall accrue interest on and after December 27, 2001 at the rate
stated in each of the loan documents.
SCHEDULE D
Eweson Debt
The following list sets forth the loans made by Ms. Eweson to Equistar
Consolidated Holdings LLC. The total amount includes principal and interest (at
the rate listed below) accrued until February 15, 2002.
-----------------------------------------------------------------------------------------------------
Date of Loan Principal Amount Interest Rate Total Amount Due as of
------------ ---------------- ------------- ----------------------
(per annum) 2/15/02
--------- -------
-----------------------------------------------------------------------------------------------------
2/25/99 2,000,000.00 9.0% 2,535,068.49
-----------------------------------------------------------------------------------------------------
5/6/99 1,000,000.00 7.75% 1,215,513.69
-----------------------------------------------------------------------------------------------------
6/10/99 1,000,000.00 7.75% 1,208,082.19
-----------------------------------------------------------------------------------------------------
10/18/99 1,000,000.00 9.0% 1,209,589.04
-----------------------------------------------------------------------------------------------------
11/5/99 300,000.00 7.75% 352,997.26
-----------------------------------------------------------------------------------------------------
1/12/00 700,000.00 7.75% 813,553.42
-----------------------------------------------------------------------------------------------------
1/26/00 300,000.00 7.75% 347,773.97
-----------------------------------------------------------------------------------------------------
TOTAL: 7,682,578.06
-------------------------------------------------
Total amount of Eweson Debt as of February 15, 2002: $7,682,578.06
Total amount of Bank Debt as of December 27, 2001: $30,461,715.28
Sixth Avenue Debt as of December 27, 2001: $38,144,293.34
The portion of the Sixth Avenue Debt that constitutes a Universal Obligation as
of 12/27/01: $19,072,146.67
The Eweson Debt shall accrue interest on and after February 15, 2002 at the rate
of 8.31% per annum, compounded annually.
SCHEDULE E
Universal Obligations
DHP Debt total from Schedule A: $6,757,753.37
Equistar Debt total from Schedule B: $4,872,393.03
50% of Bank Debt total from Schedule C: $15,230,857.64
50% of Eweson Debt from Schedule D: $3,841,289.03
Total of Universal Obligations: $30,702,293.07
SCHEDULE F
Thorn Tree Debt
The following list sets forth the loans made by the Thorn Tree Parties to
Equistar. The total amount includes principal and interest accrued at 8% per
annum until February 15, 2002.
-----------------------------------------------------------------------------------------------------------
Date of Principal Interest Rate Total Amount
------- --------- ------------- ------------
Loan Lender Amount (per annum) Due as of 2/15/02
---- ------ ----------- -----------------
-----------------------------------------------------------------------------------------------------------
(prior to
12/31/00) Xxxxx X. Xxxxxxx 975,000.00 8% 1,062,830.13
-----------------------------------------------------------------------------------------------------------
(prior to
12/31/00) Cornerhouse 540,000.00 8% 588,644.38
-----------------------------------------------------------------------------------------------------------
(prior to
12/31/00) Winsome 75,000.00 8% 81,756.16
-----------------------------------------------------------------------------------------------------------
(11/29/01) Thorn Tree 2,666,807.09 8% 2,844,597.27
-----------------------------------------------------------------------------------------------------------
TOTAL: 4,577,827.94
------------------------------------------
The Thorn Tree Debt shall accrue interest on and after February 15, 2002 at the
rate of 8% per annum, compounded annually.
EXHIBIT A
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS:
For good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the undersigned, on behalf of Universal Equities
Consolidated LLC, indirectly owning 11,957,100 shares of the common stock, $0.01
par value per share, of Emex Corporation (the "Corporation") (such shares,
together with any shares issued as a dividend or otherwise distributed in
respect of or in exchange therefor, shall hereinafter be referred to as the
"Shares") and pursuant to that certain Settlement Agreement and Release (the
"Settlement Agreement"), between The Cornerhouse Limited Partnership, The
Winsome Limited Partnership, Xxxxx X. Xxxxxxx, Xxxxx Tree Resources LLC, Xxxxxxx
X. Xxxxxxxx, Xxxxxx X. Xxxxxxx, Universal Equities Consolidated LLC, on its own
behalf and as successor to the obligations of Universal Equities Ltd., Equistar
Consolidated Holdings LLC, Sixth Avenue Associates LLC, Xx. Xxxxxxx X. Xxxxxx
and the Corporation, dated as of April ______, 2002, does hereby constitute and
appoint Sixth Avenue Associates LLC, its successors and assigns, the true and
lawful substitute, attorney and proxy, with full power of substitution, of the
undersigned, for, and in the name, place and stead of the undersigned to vote
the Shares and to give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though Sixth Avenue Associates
LLC was the owner thereof, and with all the powers which the undersigned would
be entitled to exercise, if personally present, at any meeting of the
shareholders of the Corporation, or which the undersigned would be entitled to
exercise in regard to a written consent of the shareholders of the Corporation
in lieu of a meeting.
The foregoing Irrevocable Proxy is coupled with an interest, is given
pursuant to the terms of the Settlement Agreement and shall continue to be in
full force and effect until such time as the portion of the Sixth Avenue Debt
that constitutes a Universal Obligation (as such terms are defined in the
Settlement Agreement) is satisfied in full in cash in accordance with the terms
of the Settlement Agreement.
All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Settlement Agreement.
Dated: April _____, 2002
UNIVERSAL EQUITIES
CONSOLIDATED LLC
By: __________________
Name:
Title:
EXHIBIT B
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS:
For good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the undersigned, on behalf of Thorn Tree Resources LLC,
indirectly owning 12,257,100 shares of the common stock, $0.01 par value per
share, of Emex Corporation (the "Corporation") (such shares, together with any
shares issued as a dividend or otherwise distributed in respect of or in
exchange therefor, shall hereinafter be referred to as the "Shares") and
pursuant to that certain Settlement Agreement and Release (the "Settlement
Agreement"), between The Cornerhouse Limited Partnership, The Winsome Limited
Partnership, Xxxxx X. Xxxxxxx, Xxxxx Tree Resources LLC, Xxxxxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxxx, Universal Equities Consolidated LLC, on its own behalf and as
successor to the obligations of Universal Equities Ltd., Equistar Consolidated
Holdings LLC, Sixth Avenue Associates LLC, Xx. Xxxxxxx X. Xxxxxx and the
Corporation, dated as of April ______, 2002, does hereby constitute and appoint
Sixth Avenue Associates LLC, its successors and assigns, the true and lawful
substitute, attorney and proxy, with full power of substitution, of the
undersigned, for, and in the name, place and stead of the undersigned to vote
the Shares and to give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though Sixth Avenue Associates
LLC was the owner thereof, and with all the powers which the undersigned would
be entitled to exercise, if personally present, at any meeting of the
shareholders of the Corporation, or which the undersigned would be entitled to
exercise in regard to a written consent of the shareholders of the Corporation
in lieu of a meeting.
The foregoing Irrevocable Proxy is coupled with an interest, is given
pursuant to the terms of the Settlement Agreement and shall continue to be in
full force and effect until such time as the portion of the Sixth Avenue Debt
attributable to the Thorn Tree Parties (as such terms are defined in the
Settlement Agreement) is satisfied in full in cash in accordance with the terms
of the Settlement Agreement.
All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Settlement Agreement.
Dated: April _____, 2002
THORN TREE
RESOURCES LLC
By: ___________________
Name:
Title:
EXHIBIT C
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS:
For good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the undersigned, on behalf of Universal Equities
Consolidated LLC, indirectly owning 11,957,100 shares of the common stock, $0.01
par value per share, of Emex Corporation (the "Corporation") (such shares,
together with any shares issued as a dividend or otherwise distributed in
respect of or in exchange therefor, shall hereinafter be referred to as the
"Shares") and pursuant to that certain Settlement Agreement and Release (the
"Settlement Agreement"), between The Cornerhouse Limited Partnership, The
Winsome Limited Partnership, Xxxxx X. Xxxxxxx, Xxxxx Tree Resources LLC, Xxxxxxx
X. Xxxxxxxx, Xxxxxx X. Xxxxxxx, Universal Equities Consolidated LLC, on its own
behalf and as successor to the obligations of Universal Equities Ltd., Equistar
Consolidated Holdings LLC, Sixth Avenue Associates LLC, Xx. Xxxxxxx X. Xxxxxx
and the Corporation, dated as of April ______, 2002, does hereby constitute and
appoint Xxxxx X. Xxxxxxx, his successors and assigns, the true and lawful
substitute, attorney and proxy, with full power of substitution, of the
undersigned, for, and in the name, place and stead of the undersigned to vote
the Shares and to give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though Xxxxx X. Xxxxxxx was
the owner thereof, and with all the powers which the undersigned would be
entitled to exercise, if personally present, at any meeting of the shareholders
of the Corporation, or which the undersigned would be entitled to exercise in
regard to a written consent of the shareholders of the Corporation in lieu of a
meeting.
The foregoing Irrevocable Proxy is coupled with an interest, is given
pursuant to the terms of the Settlement Agreement and shall become effective
after payment in full in cash of the portion of the Sixth Avenue Debt that
constitutes a Universal Obligation and continue to be in full force and effect
until such time as the DHP Debt, the Thorn Tree Debt and the Equistar Debt (as
such terms are defined in the Settlement Agreement) are paid in full in cash in
accordance with the terms of the Settlement Agreement.
All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Settlement Agreement.
Dated: April _____, 2002
UNVIERSAL EQUITIES
CONSOLIDATED LLC
By: ____________________
Name:
Title:
EXHIBIT D
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS:
For good and valuable consideration, receipt and sufficiency of which is
hereby acknowledged, the undersigned, on behalf of Thorn Tree Resources LLC,
indirectly owning 12,257,100 shares of the common stock, $0.01 par value per
share, of Emex Corporation (the "Corporation") (such shares, together with any
shares issued as a dividend or otherwise distributed in respect of or in
exchange therefor, shall hereinafter be referred to as the "Shares") and
pursuant to that certain Settlement Agreement and Release (the "Settlement
Agreement"), between The Cornerhouse Limited Partnership, The Winsome Limited
Partnership, Xxxxx X. Xxxxxxx, Xxxxx Tree Resources LLC, Xxxxxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxxx, Universal Equities Consolidated LLC, on its own behalf and as
successor in interest to Universal Equities Ltd., Equistar Consolidated Holdings
LLC, Sixth Avenue Associates LLC, Xx. Xxxxxxx X. Xxxxxx and the Corporation,
dated as of April ______, 2002, does hereby constitute and appoint Xxxxx X.
Xxxxxxx, his successors and assigns, the true and lawful substitute, attorney
and proxy, with full power of substitution, of the undersigned, for, and in the
name, place and stead of the undersigned to vote the Shares and to give all
consents, waivers and ratifications in respect thereof and otherwise act with
respect thereto as though Xxxxx X. Xxxxxxx was the owner thereof, and with all
the powers which the undersigned would be entitled to exercise, if personally
present, at any meeting of the shareholders of the Corporation, or which the
undersigned would be entitled to exercise in regard to a written consent of the
shareholders of the Corporation in lieu of a meeting.
The foregoing Irrevocable Proxy is coupled with an interest, is given
pursuant to the terms of the Settlement Agreement and shall become effective
after payment in full of the portion of the Sixth Avenue Debt attributable to
the Thorn Tree parties and continue to be in full force and effect until such
time as the DHP Debt, the Thorn Tree Debt and the Equistar Debt (as such terms
are defined in the Settlement Agreement) are paid in full in cash in accordance
with the terms of the Settlement Agreement.
All capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Settlement Agreement.
Dated: April _____, 2002
THORN TREE
RESOURCES LLC
By: ____________________
Name:
Title:
EXHIBIT E
EXHIBIT F
