UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
SEPTEMBER 8, 2003
PALWEB CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OKLAHOMA 000-26331 75-2954680
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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1607 WEST COMMERCE STREET, DALLAS, TEXAS 75208
(Address of principal executive offices) (Zip Code)
(214) 698-8330
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Also on September 8, 2003, PalWeb completed a sale and leaseback transaction whereby it sold its Dallas plant for $1,350,000 and certain production equipment located in its Dallas plant for $5,650,000 to a company owned by Paul Kruger, a major stockholder of PalWeb, in exchange for the cancellation of debt in the amount of $7,000,000 owed by PalWeb Corporation to Paul Kruger. The assets were sold at the assets' approximate net book value. The lease agreement for the plant is a three year triple net lease with a monthly rental of $17,720. The equipment lease is for 130 months with a monthly rental of $48,000 beginning six months after the first day of the lease. The material terms and conditions of these transactions are set forth in the agreements included as exhibits to this Form 8-K.
(b) Greystone Plastics, Inc. was engaged in the business of manufacturing and selling plastic pallets to one large customer in the beverage industry. Through its wholly-owned subsidiary, Greystone Plastics, L.L.C., PalWeb Corporation intends to continue to use the assets acquired from Greystone Plastics, Inc. to supply Greystone Plastics, Inc.'s customer and to use such assets in combination with PalWeb's existing assets to expand sales to other participants in the beverage industry.
voting rights so that such holder has the right to elect a majority of the Board of Directors of PalWeb. The material terms and conditions of this 2003 Preferred Stock are set forth in the Certificate of Designation relating to such 2003 Preferred Stock included as an exhibit to this Form 8-K. The offer and sale of the shares of the 2003 Preferred Stock was not registered under the Securities Act of 1933, as amended, in reliance upon the exemption from the registration requirements of that act provided by Section 4(2) thereof and Regulation D promulgated by the Securities and Exchange Commission thereunder. Paul Kruger is a sophisticated accredited investor with the experience and expertise to evaluate the merits and risks of an investment in PalWeb Corporation stock and the financial means to bear the risks of such an investment. Paul Kruger was provided access to all of the material information regarding PalWeb Corporation that he would have received if the offer and sale of the securities had been registered.
(c) EXHIBITS.
4.1 Certificate of the Designation, Preferences, Rights and
Limitations of PalWeb Corporation's Series 2003
Cumulative Convertible Senior Preferred Stock
10.1 Asset Purchase Agreement between Greystone Plastics, Inc.
and Greystone Manufacturing, L.L.C. dated September 3,
2003
10.2 Senior Secured Promissory Note in the amount of
$5,000,000 payable to Greystone Plastics, Inc.
10.3 Real Estate Note in the amount of $2,500,000 payable to
Greystone Plastics, Inc.
10.4 Wraparound Promissory Note in the amount of $799,454.06
payable to Bill Hamilton
10.5 Security Agreement between Greystone Plastics, Inc. and
Greystone Manufacturing, L.L.C. dated September 3, 2003
10.6 Employment Agreement between Greystone Manufacturing,
L.L.C. and Bill Hamilton dated September 3, 2003
10.7 Asset Purchase Agreement between Plastic Pallet
Production, Inc. and 1607 Commerce Limited Partnership
dated September 8, 2003
10.8 Letter Agreement between Plastic Pallet Production, Inc.
and 1607 Commerce Limited Partnership dated September 8,
2003 10.9 Sale Agreement between Plastic Pallet
Production, Inc. and 1607 Commerce Limited Partnership
dated September 8, 2003
10.10 Equipment Lease between 1607 Commerce Limited Partnership
and Plastic Pallet Production, Inc. dated September 8,
2003
2
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10.11 Lease Agreement between 1607 Commerce Limited Partnership
and Plastic Pallet Production, Inc. dated September 8,
2003
10.12 Security Agreement among PalWeb Corporation, Plastic
Pallet Production, Inc., Greystone Manufacturing, L.L.C.
and 1607 Commerce Limited Partnership dated September 8,
2003
10.13 Guaranty of Obligations of Tenant Pursuant to Equipment
Lease by PalWeb Corporation and Greystone Manufacturing,
L.L.C. dated September 8, 2003
10.14 Guaranty of Obligations of Tenant Pursuant to Lease by
PalWeb Corporation and Greystone Manufacturing, L.L.C.
dated September 8, 2003
10.15 Stock Pledge Agreement between PalWeb Corporation and
1607 Commerce Limited Partnership dated September 8, 2003
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PALWEB CORPORATION
Date: September 23, 2003 By: /s/ Warren F. Kruger
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Warren F. Kruger
President, Chief Financial Officer and
Principal Executive Officer
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CERTIFICATE OF THE DESIGNATION, PREFERENCES,
RIGHTS AND LIMITATIONS OF PALWEB CORPORATION
SERIES 2003 CUMULATIVE CONVERTIBLE SENIOR PREFERRED STOCK
OF
PALWEB CORPORATION
(FILED PURSUANT TO SECTION 1032 OF THE OKLAHOMA GENERAL CORPORATION ACT)
We, Warren F. Kruger, President, and Bryan R. Kirchmer, Secretary, of
PalWeb Corporation (the "Company"), a corporation organized and existing under
the Oklahoma General Corporation Act, in accordance with the provisions of
Section 1032 thereof, do hereby certify:
That pursuant to authority conferred upon the Board of Directors of the Company by the Certificate of Incorporation of the Company, said Board of Directors duly authorized and adopted, by unanimous written consent dated September 8, 2003, the following resolution providing for the issuance of the Company's Series 2003 Cumulative Convertible Senior Preferred Stock, par value $.0001 per share.
"RESOLVED, that the issue of a series of preferred stock of the Company, designated `Series 2003 Cumulative Convertible Senior Preferred Stock', (herein referred as `Senior Preferred Stock'), par value $.0001 per share with a stated value of $100.00 per share and consisting of a maximum of 50,000 shares, are hereby provided for and the powers, preferences and relative and other special rights, and qualifications, limitations and restrictions thereof, are hereby fixed as follows:
1. Priority; Number of Shares.
Shares of Senior Preferred Stock shall be prior to the Company's Common Stock, $.0001 par value per share ("Common Stock") with respect to the payment of dividends and the distribution of assets. The number of shares which shall constitute Senior Preferred Stock shall be 50,000.
2. Dividends.
(a) The holders of the Senior Preferred Stock shall be entitled to receive, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend (payable other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock ) on the Common Stock or any other securities issued by the Company that are junior to the Senior Preferred Stock ("Junior Securities"), an amount equal to the Dividend Rate (as defined below) of the Stated Value (as defined below) per annum. Dividends shall accrue daily and shall be payable quarterly on the last day of March, June, September and December (each a "Dividend Date"). Dividends not paid on a Dividend Date shall cumulate. Unpaid
cumulated dividends shall compound quarterly at the applicable dividend rate for the unpaid dividend. At the election of the holder, dividends may be paid in shares of Common Stock valued at the Fair Market Value (as defined below) on the dividend payment date. In the absence of a specific election by a holder, dividends shall be paid in cash.
(b) The "Dividend Rate" for each quarter shall be equal to the "prime rate" in effect from time to time during such quarter as published in the Wall Street Journal plus 3.25%. The amount of the dividend per share for any quarterly period shall be calculated by dividing the Dividend Rate by four and multiplying such rate by the Stated Value per share, except that the dividend for any period that is less than one quarter shall be calculated on the basis of a 90 day quarter and the actual number of days elapsed.
(c) The "Stated Value" of the Senior Preferred Stock shall be One Hundred Dollars ($100.00).
(d) The "Fair Market Value" of the Common Stock shall be determined as follows: If the Common Stock is traded on the over-the-counter market, the average of the highest closing bid and lowest closing asked prices for a share of the Common Stock as reported by the National Association of Securities Dealers Automated Quotation System, or if not reported by that system, the mean between the closing bid and asked prices as quoted by a source designated by the Board of Directors; if the Common Stock is listed on a national or regional stock exchange, the closing sales price per share on such exchange; or if the Common Stock is neither traded in the over-the-counter market nor listed on an exchange, the per share value determined in good faith by the Board of Directors.
(e) So long as any shares of the Senior Preferred Stock shall remain outstanding, no dividend whatsoever (other than a dividend payable in Common Stock) shall be declared or paid upon any Common Stock or Junior Securities, nor shall any shares of any Common Stock or Junior Securities be redeemed or purchased by the Company or any subsidiary thereof, nor shall any monies be paid to or made available for a sinking fund for the redemption or purchase of any shares of Common Stock or Junior Securities, unless in each instance full cumulative cash dividends on all outstanding shares of the Senior Preferred Stock payable on all previous Dividend Dates (excluding dividends for which Common Stock have been issued) and the cash dividend on all outstanding shares of the Senior Preferred Stock for the then current quarterly dividend period shall have been paid or declared and sufficient funds set apart therefor.
(f) No dividend shall be declared or paid on any share or shares of any class of stock or series thereof ranking on a parity with the Senior Preferred Stock in respect of payment of dividends for any dividend period unless there shall have been paid on all shares then outstanding of the Senior Preferred Stock for the same dividend period and all prior periods.
3. Preference On Liquidation.
(a) In the event of any voluntary or involuntary liquidation, distribution of assets (other than the payment of dividends), dissolution or winding up of the Company, before any payment or distribution of the assets of the Company (whether capital or surplus) shall be made to or set apart for the holders of Common Stock or any Junior Securities, the holders of shares of the Senior Preferred Stock shall each be entitled to receive payment of the Stated Value per share held by them plus any accrued and unpaid dividends and interest thereon to the date of final distribution to such holders, but they shall be entitled to no further payment with respect to such shares.
(b) Neither the merger nor consolidation of the Company into or with any other corporation, nor the merger or consolidation of any other corporation into or with the Company, nor a sale, transfer or lease of all or any part of the assets of the Company, shall be deemed to be a liquidation, dissolution or winding up of the Company within the meaning of this Paragraph 3.
(c) Written notice of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, stating a payment date and the place where the distributable amounts shall be payable and containing a statement of or reference to the conversion, if any, right set forth in Paragraph 5, shall be given, by not less than thirty (30) days prior to the payment date stated therein, to the holders of record of the Senior Preferred Stock.
(d) No payment on account of such liquidation, dissolution or winding up of the affairs of the Company shall be made to the holders of any class or series of stock ranking on a parity with the Senior Preferred Stock in respect to the distribution of assets, unless there shall likewise be paid at the same time to the holders of the Senior Preferred Stock like proportionate distributive amounts, ratably, in proportion to the full distributive amounts to which they and the holders of such parity stock are respectively entitled with respect to such preferential distributions.
4. Voting Rights.
Except as set forth herein or as otherwise required by law, the holder of each share of Senior Preferred Stock shall be entitled to that number of votes allotted by law and hereunder equal to the number of shares of Common Stock into which such share of Senior Preferred Stock could be converted at the record date for determination of the shareholders entitled to vote on such matters, or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited, such votes to be counted together with all other shares of capital stock of the Corporation having general voting power and not counted separately as a class, except as set forth in this Certificate or as otherwise required by law. For so long as the shares of Common Stock issuable upon the conversion of the outstanding Senior Preferred Stock represent at least 10% of the Corporation's outstanding Common Stock (treating the outstanding Common Stock and shares of Common Stock issuable upon the conversion of the Senior Preferred Stock as outstanding in the aggregate), the holders of the Senior Preferred Stock shall be entitled to vote as a single voting group for the election of a number of members of the board of directors of the Corporation such that the number of directors so elected by the holders of the Senior Preferred Stock as a group represents a majority of the number of directors then in office. One such director elected by the holders of
the Senior Preferred Stock shall serve as Chairman of the Board. This voting right of the Senior Preferred Stock shall not limit the right of the holders of the Senior Preferred Stock to vote their shares of Senior Preferred Stock or any other voting shares of the Company held by them as to any other matter as to which the shareholders of the Company are entitled to vote, including in connection with a shareholder vote for the election of directors generally. Holders of Senior Preferred Stock shall be entitled to notice of any shareholders' meeting in accordance with the Bylaws of the Company.
For so long as the shares of Common Stock issuable upon the conversion of the outstanding Senior Preferred Stock represent at least 10% of the Company's outstanding Common Stock (treating the outstanding Common Stock and shares of Common Stock issuable upon the conversion of the Senior Preferred Stock as outstanding in the aggregate), the Company shall not, without first obtaining the affirmative vote or written consent of the holders of at least a majority of the outstanding shares of Senior Preferred Stock, voting separately as a single class:
(a) amend, repeal or waive any provision of the Company's Certificate of Incorporation or Bylaws;
(b) alter or change the rights, preferences or privileges of the Senior Preferred Stock;
(c) redeem any shares of the Company's capital stock (except for the Senior Preferred Stock in accordance with Section 6);
(d) authorize or issue any class or series of capital stock, other than the issuance of Common Stock in satisfaction of dividends, and including any new options or awards pursuant to employee benefit plans;
(e) adopt, amend or modify (including modification by the repricing of existing awards, except and only to the extent resulting from a stock split or similar transaction) any stock option plan or employee stock ownership plan or issue any shares of capital stock of the Company to its or its subsidiaries' employees or directors, except pursuant to existing outstanding options on the date hereof;
(f) pay or declare any dividend or other distribution on Junior Securities;
(g) authorize, or take any action to effect, or otherwise permit a sale or other disposition of all or substantially all of the assets of the Company or any subsidiary, or a merger, acquisition, recapitalization, other corporate reorganization or sale of control of the Company or any subsidiary, or a license of a substantial portion of the assets of the Company or any subsidiary;
(h) undertake or effect any liquidation, dissolution or winding up of the Company or any material subsidiary, any assignment for the benefit of creditors, or any bankruptcy or similar filing;
(i) create any new subsidiary of the Company or permit any subsidiary of the Company to sell or otherwise issue any capital stock or any right to acquire any of its capital stock to any party other than the Company;
(j) change the size of the Company's board of directors;
(k) take any action which results in the Company making, or permitting any subsidiary to make, any loan to, or investment in, another entity, other than a subsidiary of the Company;
(l) take any action to incur or assume, or permit any subsidiary to incur or assume, more than $100,000 of indebtedness, or encumber, mortgage or pledge any assets of the Company or any subsidiary to secure any obligation or enter into any factoring arrangement for more than $100,000, either individually or on a cumulative basis, in excess of the amount of the Company's and its subsidiaries' existing indebtedness and availability at such time under loans that exist as of the date hereof, excluding the extension of trade credit in the ordinary course of business consistent with past practices;
(m) take any action which results in the Company and its subsidiaries making, or becoming obligated to make, any capital expenditures in excess of $100,000 in the aggregate in any fiscal year;
(n) approve any material change in any line of business of the Company or any subsidiary;
(o) enter into any acquisition or series of related acquisitions, directly or through a subsidiary, involving an aggregate transaction value in excess of $100,000; or
(p) enter into any employment or consulting arrangement providing for compensation or fees in excess of $5,000 per month.
5. Convertibility.
Subject to subparagraph 5(m) below, shares of Senior Preferred Stock shall be convertible into Common Stock on the following terms and conditions:
(a) Subject to and upon compliance with the provisions of this paragraph 5, the holder of any shares of Senior Preferred Stock shall have the right, at such holder's option, at any time or from time to time before the close of business on the business day next preceding the date fixed for redemption or repurchase of such shares of Senior Preferred Stock (unless the Company shall default in payment due upon such redemption or repurchase), to convert any of such shares into such number of fully paid and nonassessable shares of Common Stock at the Conversion Price (as hereafter defined) therefor in effect at the time of conversion.
(b) Each share of Senior Preferred Stock shall be convertible into the number of shares of Common Stock that results from dividing the aggregate Stated Value of the shares of Senior Preferred Stock being
converted by the Conversion Price, as hereinafter defined. The Conversion Price as of the original date of issuance of the Senior Preferred Stock shall be $1.50 per share of Common Stock subject to adjustment from time to time as provided herein.
(c) The holder of any shares of Senior Preferred Stock may exercise the conversion right as to any part thereof by surrendering to the Company at the office of any transfer agent of the Company for Senior Preferred Stock or at the principal office of the Company, the certificate or certificates for the shares to be converted, accompanied by written notice stating that the holder elects to convert all or a specified portion of the shares represented thereby and stating the name or names (with addresses) in which the certificate or certificates for the shares of Common Stock are to be issued. Subject to the provisions of this paragraph 5, every such notice of election to convert shall constitute a contract between the holder of such shares and the Company whereby such holder shall be deemed to subscribe for the number of shares of Common Stock which he will be entitled to receive upon such conversion and, in payment and satisfaction of such subscription, to surrender such shares of Senior Preferred Stock and to release the Company from all obligations thereon and whereby the Company shall be deemed to agree that the surrender of such shares and the extinguishment of obligations thereon shall constitute full payment for Common Stock so subscribed for and to be issued upon such conversion. Conversion shall be deemed to have been effected on the date when delivery of such notice and such shares is made, and such date is referred to herein as the "Conversion Date." As promptly as practicable thereafter the Company shall issue and deliver, to or upon the written order of such holder, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled and a check or cash with respect to any fractional interest in a share of Common Stock as provided in subparagraph 5(j). The person in whose name the certificate or certificates for Common Stock are to be issued shall be deemed to have become a holder of record of such Common Stock on the applicable Conversion Date. Upon conversion of only a portion of the number of shares covered by a certificate representing shares of Senior Preferred Stock surrendered for conversion, the Company shall issue and deliver to or upon the written order of the holder of the certificate so surrendered for conversion, at the expense of the Company, a new certificate covering the number of shares of Senior Preferred Stock representing the unconverted portion of the certificate so surrendered.
(d) If the Company shall at any time or from time to time after the original issue date of Senior Preferred Stock effect a subdivision or combination of any outstanding Common Stock, including a dividend payable in Common Stock, the Conversion Price then in effect immediately before such subdivision or combination shall be proportionately adjusted by multiplying the then effective Conversion Price by a fraction, (i) the numerator of which shall be the number of shares of Common Stock issued and outstanding immediately prior to such subdivision or combination, and (ii) the denominator of which shall be the number of shares of Common Stock issued and outstanding immediately after such subdivision or combination. Any adjustment under this resolution shall become effective at the close of business on the date the subdivision or combination becomes effective. At least 15 days advance notice of events which would give rise to an adjustment in the Conversion Price shall be given to holders of Senior Preferred Stock,
but failure to give such notice shall not affect the validity or effectiveness of such event. No adjustment of the Conversion Price shall be made for the issuance of shares of Common Stock to employees pursuant to the Company's or any subsidiary's stock ownership, stock option or other benefit plan. No adjustment of the Conversion Price will be required to be made in any case until cumulative adjustments amount to one percent or more of the Conversion Price. The Company reserves the right to make such changes in the Conversion Price in addition to those required in the foregoing provisions as the Company in its discretion shall determine to be advisable in order that certain stock-related distributions hereafter made by the Company to its shareholders shall not be taxable.
(e) In the event the Company at any time or from time to time after the original issue date of Senior Preferred Stock shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in (i) evidences of indebtedness of the Company, (ii) assets of the Company (other than cash dividends or distributions paid out of retained earnings), or (iii) securities of the Company other than Common Stock, then and in each such event provision shall be made so that the holders of Senior Preferred Stock shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of such evidences, assets or securities that they would have received had they held, on such record date, the maximum number of shares of Common Stock into which their Senior Preferred Stock could then have been converted. The Company reserves the right to make such changes in the Conversion Price in addition to those required in the foregoing provisions as the Company in its discretion shall determine to be advisable in order that certain stock-related distributions hereafter made by the Company to its shareholders shall not be taxable.
(f) If Common Stock issuable upon the conversion of Senior Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Paragraph 5), then and in each such event the holders of Senior Preferred Stock shall have the right thereafter to convert each such share into the kind and amounts of shares of stock and other securities and property receivable upon such reorganization, reclassification or other change, by holders of the maximum number of shares of Common Stock into which such Senior Preferred Stock could have been converted immediately prior to such reorganization, reclassification or change, all subject to further adjustment as provided herein.
(g) If at any time or from time to time there shall be a capital
reorganization of Common Stock (other than a subdivision, combination,
reclassification or exchange of shares provided for in this Paragraph
5) or a merger or consolidation of the Company with or into another
corporation, or the sale of all or substantially all the Company's
properties and assets or capital stock to any other person, then, as a
part of such reorganization, merger, consolidation or sale, provision
shall be made so that each holder of Senior Preferred Stock shall
thereafter be entitled to receive, upon conversion of Senior Preferred
Stock, the number of shares of stock or other securities or property of
the Company, or of the successor corporation resulting from such merger
of consolidation or sale as though conversion of Senior Preferred Stock
had occurred immediately prior to such event, provided such holder (x)
is not the entity with which the Company consolidated or into which the
Company merged or which merged into the Company or to which such sale
or transfer was made, as the case may be, or an affiliate of such an
entity and (y) failed to exercise its rights of election, if any, as to
the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer. In any such case,
appropriate adjustment shall be made in the application of the
provisions of this Paragraph 5 with respect to the rights of the
holders of Senior Preferred Stock after the reorganization, merger,
consolidation or sale to the end that the provisions of this Paragraph
5 (including adjustment of the Conversion Price then in effect and the
number of shares purchasable upon conversion of Senior Preferred Stock)
shall be applicable after that event as nearly equivalent as may be
practicable.
(h) Intentionally omitted.
(i) In each case of an adjustment or readjustment of a Conversion Price for Common Stock issuable upon conversion of Senior Preferred Stock, the Company shall compute such adjustment or readjustment in accordance herewith and prepare a certificate showing such adjustment or readjustment, and shall provide a copy of such certificate to each registered holder of. that Senior Preferred Stock in the manner in which notices are to be given hereunder. The certificate shall set forth such adjustment or readjustment and show in detail the facts upon which such adjustment or readjustment is based.
(j) No fractional shares of Common Stock or scrip shall be issued upon conversion of shares of Senior Preferred Stock. If more than one share of Senior Preferred Stock shall be surrendered for conversion at any one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Senior Preferred Stock so surrendered. Instead of any fractional share of Common Stock which would otherwise be issuable upon conversion of any shares of Senior Preferred Stock, the Company shall pay a cash adjustment in respect of such fractional interest in an amount equal to that fractional interest of the then Current Market Price. The "Current Market Price" at any date shall mean the price per share of Common Stock on such date determined by the Board of Directors as provided below. The Current Market Price shall be the average of the daily closing prices per share of Common Stock for thirty (30) consecutive business days ending no more than fifteen (15) business days before the day in question (as adjusted for any stock dividend, split, combination or reclassification that took effect during such thirty (30) business day period). The closing price for each day shall be the last reported sales price regular way or, in case no such reported sales take place on such day, the average of the last reported bid and asked prices regular way, in either case on the principal national securities exchange on which Common Stock is listed or admitted to trading, or if not listed or admitted to trading on any national securities exchange, the average of the highest bid and the lowest asked prices quoted on The Nasdaq Stock Market; provided, however, that if Common Stock is not traded in such
manner that the quotations referred to above are available for the period required hereunder, Current Market Price per share of Common Stock shall be deemed to be the fair value as determined by the Board of Directors, irrespective of any accounting treatment.
(k) Intentionally omitted.
(l) The Company shall pay any tax in respect of the issue of stock certificates on conversion of shares of Senior Preferred Stock. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of stock in a name other than that of the holder of the shares converted, and the Company shall not be required to issue or deliver any such stock certificate unless and until the person or persons requesting the issuance thereof shall have paid to the Company the amount of any such tax or shall have established to the satisfaction of the Company that such tax has been paid.
(m) The Company shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Senior Preferred Stock and shall take all such action as may be required from time to time in order that it may validly and legally issue fully paid and nonassessable shares of Common Stock upon conversion of Senior Preferred Stock. If the Company at any time lacks a sufficient number of authorized but unissued shares of Common Stock to permit the conversion of all outstanding shares of Senior Preferred Stock, the Company shall, as soon as reasonably practicable, propose to its shareholders approval of an amendment to the Company's certificate of incorporation increasing the number of authorized shares of Common Stock to an amount which is at least sufficient to have available the full number of shares of Common Stock that would be issuable upon an exercise in full of all of the outstanding shares of Senior Preferred Stock. As a condition precedent to the taking of any action which would cause an adjustment to the Conversion Price for Senior Preferred Stock, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to authorize such number of shares of Common Stock as shall be issuable pursuant to such adjusted Conversion Price.
(n) Shares of Senior Preferred Stock converted shall not be reissued as shares of Senior Preferred Stock, but shall assume the status of authorized but unissued shares of preferred stock of the Company.
(o) If any shares of Common Stock to be reserved for the purpose of conversion of shares of Senior Preferred Stock require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued or delivered upon conversion, then the Company will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. If, and so long as, any shares of Common Stock into which the shares of Senior Preferred Stock are then convertible are listed on any national securities exchange or The Nasdaq Stock Market, the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange or The Nasdaq Stock Market, as the case may be, upon official notice of issuance, all shares of Common Stock issuable upon conversion.
(p) All shares of Common Stock which may be issued upon conversion of the shares of Senior Preferred Stock will upon issuance by the Company be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof and the Company shall take no action which will cause a contrary result.
6. Redemption.
(a) The shares of Senior Preferred Stock shall not be redeemable without the consent of the holders of the shares to be redeemed. Upon the occurrence of a Change in Control Event (as defined below) the Company shall promptly notify the holders of records of the Senior Preferred Stock of the occurrence of such Change in Control Event and of their right to compel the Company to redeem their shares of Senior Preferred Stock at a price equal to the Stated Value per share plus all accrued and unpaid dividends thereon accrued to the redemption date. The holders of record of the Senior Preferred Stock shall then have 60 days from the receipt of such notice in which to notify the Company of their election (the "Election Notice") to compel the redemption of their shares of Senior Preferred Stock. If such holder of record shall deliver the Election Notice to the Company within such period, then the Company shall redeem the electing holder's shares of Senior Preferred Stock at the Redemption Price within 60 days of its receipt of the Election Notice. As used herein, the term "Change in Control Event" shall be deemed to have occurred (i) whenever any person or group (other than Paul Kruger or any of his affiliates or associates (the "Existing Shareholders")) acquires beneficial ownership of 40% or more of the Company's voting securities, or (ii) whenever any person or group (other than any Existing Shareholder) acquires 30% or more of the Company's voting securities and during any 12 month period thereafter at least a majority of the directors of the Company cease to be either persons who were serving as directors at the beginning of such period or persons elected as directors by at least two-thirds of the directors then still in office who were directors at the beginning of such period, or (iii) any change of control required to be reported as such in any filing by the Company with the Securities and Exchange Commission occurs (other than by reason of any acquisition of securities by an Existing Shareholder), or (iv) the Company ceases to be a publicly-owned corporation (unless the Existing Shareholders continue to beneficially own at least 40% or more of the Company's voting securities) or (v) the Company is merged or consolidated with another corporation and as a result of such merger or consolidation, less than 70% of the outstanding voting securities of the surviving or resulting corporation are owned in the aggregate by the former stockholders of the Company, or (vi) the Company sells all or substantially all of its assets to another entity (other than an Existing Shareholder), which is not a wholly-owned subsidiary of the Company. Beneficial ownership shall be determined for the purposes of this Agreement pursuant to the provisions of Rule 13d-3 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
(b) Shares of the Senior Preferred Stock redeemed or otherwise purchased or acquired by the Company shall not be reissued as shares of Senior Preferred Stock, but shall assume the status of authorized but unissued preferred stock of the Company.
7. General Provisions.
(a) Any notice required by the provisions of this resolution to be given to holders of record of the Senior Preferred Stock shall be deemed given when personally delivered to such holder or five business days after the same has been deposited in the United States mail, certified or registered mail, return receipt requested, postage prepaid, and addressed to that holder of record at its address appearing on the books of the Company.
(b) The Company shall not amend the certificate of incorporation of the Company or participate in any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company.
IN WITNESS WHEREOF, said PalWeb Corporation has caused this Certificate to be signed by Warren F. Kruger, as President, and attested by Bryan R. Kirchmer, as Secretary, this 8th day of September, 2003, and each of said persons by his signature hereto affirms that this Certificate is his act and deed and the act and deed of said Company, and that the facts stated therein are true.
PALWEB CORPORATION
By: /s/ Warren F. Kruger
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, President
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Attest:
/s/ Bryan R. Kirchmer
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, Secretary
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") dated this 3rd day of September, 2003 by and among Greystone Plastics, Inc., ("Seller"), an Iowa corporation, and Greystone Manufacturing, L.L.C., a limited liability company ("Buyer").
WHEREAS, Seller owns and operates a beverage pallet business out of facilities located at 28439 Great River Road, Princeton, Iowa 52768 ("the "Business").
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell its business assets (the "Business") to Buyer, subject to the terms and conditions of this Agreement,
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties hereto, intending to be legally bound, agree as follows:
Section 1.1 Sale of Assets. On the Closing Date, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of all liens, encumbrances and adverse claims of any kind (as defined below), all assets, properties, rights, or claims owned by Seller or used by Seller in connection with the operation of the Business, of every kind and description, whether tangible or intangible, real, personal or mixed (the "Assets") including without limitation the following:
(a) All equipment, machinery, furniture, and fixtures;
(b) Manufacturing Facility, building and all related real property;
(c) All rights to the name "Greystone Plastics, Inc." ("Greystone") and all other intangible property of Seller, including without limitation, technology, patents, license agreements, trade secrets, contract rights, and customer lists; and
(d) All raw materials, work-in-process, account receivables (accruing after 6:00 a.m., Thursday, September 4, 2003) and other inventory of Seller.
(e) All licenses, permits, orders, certificates, trademarks, service marks, trade names, prospect lists, proprietary information and all other intangible property, necessary or incidental to the ownership, operation or maintenance of the Business or the Assets;
(f) All books and records, customer lists, contract files, software programs, supplier lists, invoices, government filings, drawings and specifications, and all other documents and information relating to the ownership, operation or maintenance of the Business or the Assets; and
(g) All goodwill associated with the Business.
Section 1.1.1 Change of Name. In addition to the sale of
intellectual property Greystone Plastics, Inc., agrees to change its name and
file an amendment with the Iowa Secretary of State evidencing same within thirty
(30) days of Closing.
Section 1.2 Excluded Assets. Notwithstanding the foregoing, Seller shall not sell and transfer to Buyer the following assets (the "Excluded Assets"):
(a) All of Seller's rights to payment for services performed or property sold as existing at the Closing (the "Receivables"); and
(b) All currency in the possession of Seller on the Closing Date and all of Seller's bank deposits (net of any valid claims against such deposits), certificates of deposit, securities and rights to payment for credit extended as existing on the Closing Date (the "Cash").
(c) Seller retains the right to use the name "Greystone Plastics, Inc." for trucking purposes only;
(d) All finished product made before 6:00 a.m., September 4, 2003; and
(e) Notwithstanding Section 1.1, Seller retains the exclusive rights in the "Tonya" lawsuit and the "Mel Foster/Eldridge Development" lawsuit. Seller shall pay all costs, attorney fees, incurred in said lawsuits, and Seller shall be entitled to any judgment in its favor and the monetary award resulting from said judgment. Buyer shall have no interest or involvement in said law suits since the facts of both cases arose prior to this sale.
Section 1.3 Assumption of Liability. In connection with the acquisition of the Assets, Buyer shall not assume any debt, expense, liability or obligation heretofore arising out of the Business or Seller's ownership of the Assets, except that at the Closing Buyer shall assume and agree to pay, perform or otherwise discharge the following obligations and liabilities (the "Assumed Obligations"):
(a) Seller's obligations under the Assigned Contracts, but only insofar as the performance of such obligations arise after the Closing Date.
Section 1.4 Closing. Closing of the purchase and sale provided for herein (the "Closing") shall take place at 7:00 p.m., local time, on Wednesday, September 3, 2003 at the offices of Hall, Estill, Hardwick, Gable, Golden & Nelson, 320 South Boston Avenue, Suite 400, Tulsa, Oklahoma 74103 or at such other time, date and place as may be mutually agreed upon in writing by Buyer and Seller (such time and date being referred to herein as the "Closing Date").
At the Closing, Seller shall deliver to Buyer the following:
(a) duly executed deeds, bills of sale, assignments and other instruments of conveyance conveying the Assets to Buyer in such form and substance as Buyer shall reasonably request;
(b) certified copies of resolutions duly adopted by Seller's Board of Directors and shareholders approving this Agreement, any related agreements or documents and the sale of the Assets to Buyer as contemplated hereby;
(c) all tangible Assets; and
(d) a certificate of an officer of Seller dated the Closing Date to the effect that each of their representations contained herein is true and correct as of the Closing Date as if made on and as of the Closing Date and that each of them has complied with all covenants imposed on it through the Closing Date.
At the Closing, Buyer shall deliver to Seller the Purchase Price (as defined below) in the form of a wire transfer in the amount of $4,250,000 ("Wire Transfer Payment"), assumption of certain equipment debt owed to US BANCORP in the amount of approximately $750,000 and a note payable to Bill Hamilton and his assigns and in the amount of $7.5 million dollars in the form of a Senior Secured Promissory Note ("Note") and Security Agreement in the amount of $5 million dollars and a Real Estate Note and Mortgage in the amount of $2.5 million dollars as set forth in Schedule 1.4 hereof. The Security Agreement shall provide the Note holders with a 1st lien/mortgage interest in those assets listed in Section 1.1(a)(b) hereof. The actual balance of the US BANCORP note and the wire transfer payment will be adjusted as of the Closing Date.
Section 2.1 Purchase Price. The Purchase Price ("Purchase Price") for the Assets shall be: TWELVE MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO/100 ($12,500,000)[based on $495,000 of inventories which will be counted on the Closing Date and an adjustment made to the purchase price, up or down] payable in cash at the Closing.
Section 2.2 Risk of Loss. The risk of loss or destruction or damage to any or all of the Assets from any cause whatsoever at all times prior to the date of Closing, shall be borne by Seller. Subsequent to the date of Closing, the risk of loss or destruction of or damage to any or all the Assets from any cause whatsoever shall be borne by Buyer.
Section 2.3 Allocation of Purchase Price. An allocation of the Purchase Price in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended ("Code"), and regulations thereunder, is attached as Schedule 2.3 hereto. After the date of Closing, Seller and Buyer shall each file Form 8594 as required under Code Section 1060. Seller and Buyer shall prepare their respective federal, state and local tax returns in a manner consistent with such allocation.
Except as specifically set forth on Schedule 3.0 hereto, Seller hereby represents and warrants to Buyer, and covenants with Buyer, as follows:
Section 3.1 Corporate Existence; Authority. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Iowa. The execution, delivery and performance of this Agreement by Seller has been duly authorized by all necessary corporate and other action; and no further corporate or other action is necessary for Seller to execute and deliver this Agreement and to consummate and perform its obligations hereunder.
Section 3.2 Consents. No consent, approval, waiver or authorization of, or the making of any declaration or filing with, any governmental authority or any other person is necessary in connection with the execution, delivery or performance by Seller of this Agreement, including without limitation the assignment of any contract right of Seller to Buyer, and the consummation of the transactions contemplated by this Agreement will not require the approval of any entity or person in order to prevent the breach or termination of any agreement or other right, privilege, license or agreement of Seller.
Section 3.3 No Conflicting Agreements. Neither the execution and delivery of this Agreement by Seller nor the fulfillment of or compliance with the terms or provisions hereof will:
(a) result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in a violation of, (i) the Certificate of Incorporation or Bylaws of Seller, or (ii) any other agreement, mortgage, lease, license or other instrument or obligation to which Seller is a party or by which any of the Assets are bound, or (iii) any provision of any applicable law, rule, regulation or ordinance or any order, decree, writ or injunction of any court, administrative agency or governmental authority by which Seller is bound; or
(b) result in the creation or imposition of any lien, charge, restriction, security interest or encumbrance of any nature whatsoever upon the Assets or render void or ineffective the execution, delivery or performance of this Agreement or the transactions contemplated hereunder.
Section 3.4 Validity and Binding Effect. Seller has all requisite power and authority to enter into this Agreement, to sell the Assets to Buyer and to consummate the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by or on behalf of Seller and constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as the same may be limited by insolvency, bankruptcy or other laws of general application affecting the enforcement of creditors' rights and by general equitable principles.
Section 3.5 Creditors and Liabilities. Set forth as Schedule 3.5 hereto is a true and complete listing of all the creditors and claimants of the Seller (the "Creditors") together with the amounts owed to each such creditor or claimant. Seller does not have any liability or obligation of any nature (whether absolute, accrued, contingent or otherwise), and will likewise at the Closing have no liabilities or obligations except for those liabilities or obligations set forth on said Schedule 3.5. Seller shall promptly pay, perform and discharge all liabilities or obligations of Seller of any nature (whether absolute, accrued, contingent or otherwise) other than the Assumed Obligations.
Section 3.6 Taxes. All federal, state, county, local and foreign taxes, including without limitation income, gross receipts, excise, import, ad valorem, property, franchise, license, sales, use, payroll, severance and windfall profits taxes, including any penalty, addition to tax, interest, assessment or other charge imposed thereon (collectively, "Taxes"), due and payable by Seller related to the Business for any period ending prior to the Closing Date have been paid in full. There are no federal, state or local tax liens upon any Assets. All returns and reports of Taxes required to be filed by or with respect to Seller prior to the Closing Date have been filed and all Taxes due as shown thereon have been paid. No issues have been raised (or are currently pending) by any governmental authority in connection with any of such returns or reports. In the event that there is an extension of the filing date of any return or report of Taxes disclosed (or which should have been disclosed) on Schedule 3.0 hereto, Seller shall timely file or cause to be filed all such returns contemplated by such extension and pay all Taxes due as shown thereon. No waivers of statutes of limitations as to any tax matters have been given or requested with respect to Seller.
Section 3.7 Records. All books of account and other records of Seller related to the Business are complete and correct in all material respects, and there have been no transactions involving the Business which properly should have been set forth therein and which have not been accurately so set forth.
Section 3.8 Compliance with Applicable Law. Seller is in full compliance with every applicable law, rule, regulation, ordinance, license, permit and other governmental action and authority and every order, writ, and decree of
every court, administrative agency or other governmental authority in connection with the ownership, operation and maintenance of its Assets and the Business. No violation exists in respect of any such governmental authorization; no claim or proceeding is pending or threatened against Seller with respect thereto; and there is no basis known to Seller after due investigation for any such claim or proceeding.
Section 3.9 Litigation. There are no claims, actions, proceedings, orders or investigations before any court or governmental or other regulatory or administrative agency or commission pending or threatened against Seller related to the Business. There is no valid basis for the assertion of any claim for damages of any kind against Seller relating to a product manufactured or sold by Seller related to the Business. Seller is not in default with respect to any judgment, order, writ, injunction, decree, or award from any court or other governmental instrumentality or arbitrator having jurisdiction over Seller. Seller is not in default with respect to any rule or regulation of any governmental department or other instrumentality having jurisdiction over Seller.
Section 3.10 Employee Matters. Seller is in full compliance with all laws relating to the employment of labor, including without limitation provisions thereof relating to wages, hours, equal opportunity and the payment of Social Security and other Taxes, and is not engaged in any unfair labor practice. Seller is not aware of any union organization effort, strike, walk-out, boycott, slow-down, sick-out, work-stoppage or similar labor relations problem relating to the business of Seller. Set forth on Schedule 3.10 is a list of all director, officer or employee retirement, welfare or other benefit plans, agreements, practices, programs or arrangements of Seller in which employees of the Business participate.
Section 3.11 Patents, Copyrights, Trademarks, Etc. There are no patents, trademarks, service marks, trade names, copyrights, know-how, processes, trade secrets and other intangible assets which are necessary for the conduct of the Business. The present conduct of the Business does not conflict with, infringe upon or violate the patents, trademarks, servicemarks, trade names, copyrights, know-how, processes, or trade secrets or other intangible assets of any other person or entity, and Seller has not received any notice of any infringement thereof.
Section 3.12 Transactions Pending Closing. From the date of this Agreement through the Closing, Seller shall:
(a) operate the Business only in the ordinary and usual course consistent with past practice;
(b) not (i) acquire or dispose of any assets or properties of the
Business, other than sales of inventory in the ordinary course of
business; (ii) waive or release any claim or right or cancel any
debt or claim held by it related to the Business; (iii) make any
change in any method of accounting or accounting practice; (iv) do
any act or omit to do any act, or permit any act or omission to
act, which will cause a material breach of any contract or
commitment, or any judgment, decree, award, order or instrument, to
which Seller is a party or is subject; (v) make any capital
expenditure or commitment related to the Business; (vi) make any
loan or advance to any person or entity (other than travel advances
for expenses consistent with past practice), or guarantee any
obligation or liability of any person or entity, or give any
indemnification of any person or entity related to the Business;
(vii) enter into any transaction inconsistent with this Agreement;
or (viii) commit or agree to take any of such actions;
(c) not (i) enter into any employment or services agreement for any
employee related to the Business; (ii) grant any increase in the
rate of compensation payable or to become payable to any of its
officers or employees related to the Business; (iii) grant or
increase any bonus, insurance, pension or other employee benefit to
or with respect to any employees related to the Business;
(iv)commit or agree to take any of such actions; and
(d) endeavor in good faith to preserve the Business, to preserve the good will of customers and others having business relations with the Business and to keep available to Seller and Buyer the services of the officers and individuals who currently are performing services for Seller, whether or not they are employees of Seller.
Section 3.13 Title to Assets. Seller has good and marketable title to, and is the owner of, each of the Assets, free and clear of all liens, mortgages, security agreements, leases, options, pledges, charges, covenants, conditions, restrictions and other encumbrances and claims of any kind or character whatsoever, and will convey the same to Buyer at the Closing.
Section 3.14 Assets Necessary to Conduct Business. The Assets constitute all the assets, rights and properties presently used in connection with the Business and necessary to carry on the Business as presently conducted.
Section 3.15 Tangible Personal Property. Schedule 1.1(b) attached hereto is a complete and correct list of all items of tangible personal property and fixtures of Seller.
Section 3.16 Environmental Matters.
(a) There are no "Hazardous Substances," as defined below, present upon, within or below any real property which is leased by Seller.
(b) There has been no spill, release, discharge, dispersal, deposit, storage or disposal of any Hazardous Substances by Seller related to the Business.
(c) Seller is not subject to any order, permit or directive relating to the generation, recycling, reuse, sale, storage, handling, transport or disposal of Hazardous Substances or directing cleanup of or payment of cleanup costs of Hazardous Substances.
(d) There are no notices, claims, orders, directives, litigation, administrative or other proceedings, whether actual or threatened, or judgments or orders relating to any Hazardous Substances or other forms of pollution relating in any way to the Assets or the Business as conducted by Seller.
(e) There is no basis for any such notice, claim, order, directive, litigation or proceeding.
(f) As used herein, the term "Hazardous Substances" means: asbestos and any other substance, product, chemical or chemical by-product, waste or material defined, or regulated or designated as hazardous, toxic, deleterious or dangerous by any federal, state or local statute, regulation or ordinance presently in effect or that may be promulgated in the future, as such statutes, regulations and ordinances may be amended from time to time, including, but not limited to, the following federal statutes as amended: Resource Conservation and Recovery Act of 1976; Comprehensive Environmental
Response, Compensation, and Liability Act of 1980; Clean Air Act; Hazardous Materials Transportation Act; Emergency Planning and Community Right-to-Know Act; Water Pollution Control Act; Clean Water Act of 1977; Insecticide, Fungicide, and Rodenticide Act; Pesticide Act of 1978; Toxic Substances Control Act; and Safe Drinking Water Act.
Section 3.17 No Broker's Fees. Buyer and Seller each represent to the other that no finder's or broker's fee or commission will be owed to any party in connection with the purchase and lease of the assets discussed herein.
Section 3.18 Delivery of Documents. True and complete copies of all written instruments described or listed on the Schedules hereto have been delivered to Buyer.
Section 3.19 Full Disclosure. No representation or warranty by Seller in this Agreement or in any of the Schedules hereto, or other statement in writing or certificate furnished or to be furnished to Buyer by or on behalf of Seller in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances in which they are made.
Except as specifically described on Schedule 4.0 hereto, Buyer hereby represents and warrants to Seller and covenants with Seller as follows:
Section 4.1 Corporate Existence. Buyer is a corporation, duly organized, validly existing and in good standing under laws of the State of Oklahoma and has all requisite power and authority to enter into and perform its obligations under this Agreement.
Section 4.2 Corporate Approvals. The execution, delivery and performance of this Agreement by Buyer have been duly authorized by all necessary corporate and other action; and no further corporate or other action is necessary on the part of Buyer for Buyer to execute, deliver and perform its obligations under this Agreement.
Section 4.3 Consents. No consent, approval or authorization of or the making of any declaration or filing with, any governmental authority or any other person is required in order for Buyer to consummate the purchase of the Assets in accordance herewith.
Section 4.4 No Conflicting Agreements. Neither the execution and delivery of this Agreement by Buyer nor the fulfillment of or compliance with the terms or provisions hereof will result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in a violation of, the Certificate of Incorporation or Bylaws of Buyer or any agreement or other instrument to which Buyer is a party or by which it is bound, or result in the violation of any provision of any applicable law, rule, regulation or ordinance or any order, decree, writ or injunction of any court, administrative agency or governmental authority by which Buyer is bound.
Section 4.5 Validity and Binding Effect. Buyer has all requisite power and authority to enter into this Agreement and to perform its obligations hereunder. This Agreement has been duly executed and delivered on behalf of Buyer and constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as the same may be limited by insolvency, bankruptcy or other laws of general application affecting the enforcement of creditors' rights or by general equitable principles.
Section 4.6 No Broker's Fees. Buyer has not incurred any liability for brokerage fees, finder's fees, agent's commissions, financial advisory forms, fees or other similar forms of compensation in connection with or in any way related to the transactions contemplated by this Agreement.
Section 4.7 Full Disclosure. No representation or warranty by Buyer in this Agreement, or other statement in writing or certificate furnished or to be furnished to Seller by or on behalf of Buyer in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances in which they are made.
Section 5.1 Confidentiality. Commencing upon execution hereof, Seller will afford Buyer and its representatives and agents, during normal business hours, access to all properties, books, contracts, files, documents and records pertaining to Seller and its business. If the transaction is not consummated, Buyer will return to Seller all written data so obtained. Buyer is subject to, and shall remain subject to, a confidentiality agreement with Seller.
Section 5.2 Reformation; Equitable Relief. In the event that the provisions of Section 5.1 above should ever be deemed to exceed the time, geographic or other limitations permitted by the laws of any applicable jurisdiction, then such provisions shall be deemed reformed as to such jurisdiction so as to provide for the maximum limitations provided by such laws. Seller specifically acknowledges and agrees that the remedy at law for any breach of any covenant set forth in Section 5.1 above, shall be inadequate and that Buyer, in addition to any other relief available to it, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damages.
Section 5.3 Employee Matters. Buyer may, at its sole discretion, extend offers of employment to any employees of Seller, and Seller shall not take any action to discourage any employees of Seller from entering into employment arrangements with Buyer or to retain any employees which Buyer desires to hire. The extension of offers of employment by Buyer, if any, shall be in Buyer's sole discretion; however, Buyer has expressed its intention to hire the employees of the Business subject to compliance with Buyer's hiring criteria. Seller shall, at Buyer's request, release any employees hired by Buyer from any non-compete or confidentiality agreements or commitments in favor of Seller. Buyer shall assume no obligation of Seller related to the employees of the Business. Seller shall retain any severance payment responsibilities with respect to its employees, whether or not such employees are hired by Buyer.
Section 5.4 Registrations, Filings and Consents. Seller will cooperate in good faith, at Buyer's request, to make all registrations, filings, applications and to give all notices and to obtain all governmental and other consents, transfers, approvals, orders, qualifications and waivers necessary or desirable for the consummation of the transactions contemplated hereby or which may thereafter be reasonably necessary or desirable to effect the transfer or renewal of any other Assets.
Section 5.5 Further Assurances. Seller agrees that from time to time, whether at or after the Closing Date, each of them will execute and deliver, and will cause their affiliates to execute and deliver, such further instruments of conveyance and transfer and take such other action as Buyer may reasonably request in order to more effectively convey and transfer to Buyer the Assets and to assist in completing the other transactions contemplated by this Agreement.
Section 5.6 Preservation of Business Relationships. Seller shall take all action reasonably requested by Buyer to attempt to preserve for Buyer the benefit of the Business and Seller's previous business relationship with suppliers and customers of the Business. Seller shall participate in any reasonable notice to third parties or other publicity regarding the sale of the Business to Buyer proposed by Buyer.
Section 5.7 Contracts Where Necessary Consent to Assignment Not Obtained. In the event any contract or agreement included in the Assets requires the consent of a third party to its assignment to Buyer and such consent has not been obtained at or prior to Closing, Seller shall use its best efforts to attempt to obtain such consent from such third party. At the Closing and until such time (if ever) as such third party consent is obtained, Seller shall take all action necessary in order that Buyer may obtain the full value and benefit of such contract or agreement and Seller shall enter into all such arrangements reasonably requested by Buyer which shall cause the value of such contract or agreement to be preserved and inure to the benefit of Buyer as though such contract or agreement were assigned to Buyer hereunder.
Section 6.1 Conditions Precedent to Obligation to Close of Buyers. Buyer's obligation to proceed with the discussed herein shall be subject to the satisfaction of the following conditions at or prior to the Closing:
(a) Buyer and Seller shall have executed the Agreement for the purchase and sale of the Assets that Buyer will acquire good title to the assets free and clear of all liens, encumbrances, and adverse claims that Seller will indemnify Buyer for all pre-closing liabilities of the business related to the Assets and confirming the accuracy of the financial statements of Seller. The effective date of the Agreement is the date of the Letter of Intent which is April 25, 2003 ("Effective Date") attached hereto as Schedule VI.
(b) Buyer shall have determined, to its satisfaction the accuracy of Seller's representations and warranties
(c) Buyer shall satisfy itself and its banks/investors as to the financial condition, assets, liabilities, obligations, and economic viability of Seller and its business.
(d) Absence of Legal Impediment. There shall be no legal impediment to the consummation of the transactions contemplated hereby.
(e) Satisfactory Due Diligence. Based on its due diligence efforts, the Buyer shall have determined that it is reasonably satisfied with the financial condition and prospects of the Assets.
(f) Absence of Material Adverse Change. Since the Effective Date there shall not have been any material adverse change in the financial condition, Assets, liabilities or business of Seller.
(g) Absence of Casualty Loss. There shall not have been any damage, destruction or loss (whether or not covered by insurance) adversely affecting the Assets or the Business.
(h) Consents. Seller shall have obtained the consent of all third parties to the assignment of the Assigned Contracts to Buyer on terms which are reasonably satisfactory to Buyer.
Section 6.2 Conditions Precedent to Obligation of Seller to Close. The obligation of Seller to consummate the transactions contemplated hereby shall be subject to the satisfaction, on or prior to the Closing Date, of the following conditions:
(a) Statements True. Each of the representations and warranties of the Buyer contained in this Agreement shall, in all material respects, be true when made and as of the Closing Date, with the same effect as though such representations and warranties had been made on and as of such date.
(b) Performance of Covenants. Each of the covenants and agreements of the Buyer to be performed on or prior to the Closing Date shall have been duly performed in all material respects.
(c) Governmental Approval. No governmental agency or body shall have taken action or made any request of Seller as a result of which Seller deems it inadvisable to proceed with the transactions hereunder and no further consent or order from any governmental agency or body shall be necessary in order to effectuate the transactions hereunder.
Section 7.1 Seller's Indemnity. Notwithstanding any investigation made by or on behalf of Buyer prior to or after the Closing, Seller agrees to indemnify and hold harmless Buyer, and its officers, directors and shareholders from and against and in respect of, and will reimburse such persons for:
(a) Any and all damages, deficiencies, claims, losses, expenses, obligations, indebtedness and liabilities (collectively, "Liabilities") resulting from any misrepresentation, breach of warranty or non-fulfillment of any covenant or agreement by or on the part of Seller hereunder;
(b) Any and all Liabilities of Seller incurred through the Closing Date, or which relate to any period ending, matter occurring or state of facts existing on or prior to the Closing Date (whether absolute, contingent or otherwise, and whether or not known or unknown) including without limitation, all Taxes related to such period and all Liabilities to third parties or to employees or agents of Seller for tort, negligence, personal injury, products liability, breach of contract, property damage or for other casualty loss or occurrence howsoever arising (including workmen's compensation and claims for strict liability in tort), whether or not any litigation or claim with respect thereto is now pending or has been threatened but excluding the Assumed Obligations; and
(c) Any and all actions, claims, suits, proceedings, demands, assessments, judgments and costs incident to any of the foregoing, including without limitation reasonable attorneys' fees, court costs and interest.
Section 7.2 Buyer's Indemnity. Notwithstanding any investigation made by or on behalf of Seller prior to or after the Closing, Buyer agrees to indemnify and hold harmless Seller and Seller's officers, directors and shareholders from and against, and in respect of, and will reimburse such persons for:
(a) Any and all liabilities resulting from any misrepresentation, breach of warranty or non-fulfillment of any covenant or agreement by or on the part of Buyer hereunder;
(b) Any and all liabilities of Buyer incurred after the Closing Date, or which relate to any period ending, matter occurring or state of facts existing after the Closing Date (whether absolute, contingent or otherwise, and whether or not known or unknown) including without limitation, all taxes related to such period and all Liabilities to third parties or to employees or agents of Buyer for tort, negligence, personal injury, products liability, breach of contract, property damage or for other casualty loss or occurrence howsoever arising (including workmen's compensation and claims for strict liability and tort), whether or not any litigation or claim with respect thereto is now pending or has been threatened but excluding Liabilities the existence or incurrence of which would constitute or cause a breach or violation of any agreement, representation or warranty of Seller herein; and
(c) Any and all actions, claims, suits, proceedings, demands, assessments, judgments and costs incident to any of the foregoing, including without limitation reasonable attorneys' fees, court costs and interest.
Section 8.1 Sales and Use Tax. Seller shall be responsible for any sales and use taxes which may become due and owing by reason of the sale of the Assets hereunder but only to the extent not exempt under the laws of the State of Iowa.
Section 8.2 Transfer Taxes. Seller shall bear all transfer, documentary and similar taxes and all other duties, levies or other governmental charges incurred by or imposed on the parties hereto with respect to the property transfers contemplated pursuant to this Agreement.
Section 8.3 Recording Fees. Buyer shall pay all recording fees relating to the filing of instruments transferring title to Buyer from Seller.
Section 8.3 Ad Valorem Taxes. Ad valorem, property and similar taxes and assessments with respect to the Assets for the assessment year in which the Closing occurs shall be prorated to the Closing Date, so that Seller shall be responsible for such taxes for the period prior to the Closing Date and Buyer shall be responsible for such taxes for the period on and after the Closing Date.
Section 8.4 Other Expenses. Each party will bear its respective costs and expenses incurred in connection with the transaction and neither shall incur any liability to the other for such costs and expenses.
Section 9.1 Survival of Representations, Warranties and Agreements. The representations, warranties, covenants and agreements made in this Agreement or in any certificate or instrument delivered in connection herewith shall be in full force and effect notwithstanding any investigation made by or disclosure made to any party hereto, whether before or after the date hereof, shall survive the Closing, and shall continue to be applicable and binding thereafter.
Section 9.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma. The parties agree that jurisdiction and venue for any matter arising out of or pertaining to this Agreement shall be proper only in the state courts located in Tulsa County, Oklahoma and the federal courts having jurisdiction over the Northern District of Oklahoma, and the parties hereby consent to such venue and jurisdiction.
Section 9.3 Entire Agreement. This Agreement, including any Exhibits and Schedules hereto, contains the entire agreement and understanding between the parties hereto, and supersedes any and all prior agreements, arrangements and understandings, relating to the subject matter hereof. There are no written or oral agreements, understandings, representations or warranties between the parties other than those set forth or referred to in this Agreement. No supplement, amendment, alteration, modification or waiver of this Agreement shall be binding unless consented to in writing by Buyer and Seller.
Section 9.4 Severability. If any term, covenant or condition of this Agreement or the application thereof to any person or circumstance (other than a term, covenant, condition or application which affects the essence of this Agreement) shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to those persons or circumstances other than those as to which it has been held invalid or unenforceable, shall not be affected thereby, and each term, covenant and condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
Section 9.5 Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given when delivered personally or when sent by facsimile or on the third day after being mailed by registered or certified mail, postage prepaid, addressed as follows:
Greystone Manufacturing, L.L.C.
c/o Warren F. Kruger, President
1613 East 15th Street
Tulsa, Oklahoma 74120
Any party may change its address for receiving notices by giving written notice of such change to the other party in accordance with this Section 9.5.
Section 9.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, this Agreement may not be assigned by either party without the written consent of the other.
Section 9.7 Parties In Interest. Nothing in this Agreement shall entitle any party other than Buyer or Seller to any claim, cause of action, remedy or right of any kind.
Section 9.8 Waiver. No waiver of any term, provision or condition of this Agreement shall be effective unless in writing, signed by the party against which such waiver is sought to be enforced, and no such waiver shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement, unless specifically so stated in such written waiver.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their duly authorized representatives on the day first above written.
"BUYER"
GREYSTONE MANUFACTURING, L.L.C.
By: /s/ Warren F. Kruger
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Name: Warren F. Kruger
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Title: Manager
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"SELLER"
GREYSTONE PLASTICS, INC.
By: /s/ Bill Hamilton
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Name: Bill Hamilton
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Title: President
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All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
SENIOR SECURED PROMISSORY NOTE
$5,000,000 September 3, 2003
FOR VALUE RECEIVED, the undersigned, Greystone Manufacturing, L.L.C., ("Maker") promise to pay to the order of Greystone Plastics, Inc., an Iowa corporation ("Payee") the principal sum of $5,000,000 to be paid on the due date hereunder as follows:
Interest Quarterly at 7.5% fixed per annum beginning on December 1, 2003, with monthly principal payments in equal monthly amounts of $83,333.33 payable over sixty (60) months beginning on November 1, 2003.
The Maker shall have the right to prepay this Note on any date prior to maturity hereof.
The Maker liable for payment of the indebtedness evidenced by this Note hereby agrees and consents that either before or after the maturity of the Note thereof, the time for its payment may be extended or this Note renewed from time to time by the holder hereof, without notice and that after such extension, extensions or renewals, it shall remain bound for the payment hereof, notwithstanding such extension or extensions.
If any principal due upon this Note shall not be paid within ten (10) days of when the same shall become due and payable (whether by extension, acceleration or otherwise) or if the Maker should make an assignment for the benefit of creditors, be granted relief under any bankruptcy or insolvency law, or any receiver, trustee or like officer should be appointed to the custody, possession or control of any property of the Maker, and any such involuntary adjudication or appointment is not vacated, set aside or discharged within thirty (30) days after the occurrence of such event, the holder hereof, may, without notice, declare all of the unpaid balance hereof to be immediately due and payable. Such right of acceleration is cumulative and in addition to any other right or rights of acceleration under any other writing now or hereafter evidencing or securing payment of any indebtedness evidenced hereby. If this Note be placed with attorneys upon any default, the holder hereof shall be entitled to recover all costs of collection (including reasonable attorneys' fees) from all parties liable hereon.
This Note is secured pursuant to a Security Agreement by and between Maker and Payee of this same date and in accordance with the attached UCC Financing Statement.
All rights and powers of the holder hereunder shall inure to the benefit of its successors and assigns and all agreements herein shall bind the successors and assigns of the undersigned.
No invalid provision hereof shall affect or impair any other provision of this Note. The undersigned and any endorser, surety, and guarantor hereof do hereby acknowledge receipt of a completed copy of this Note.
This Note shall be effective as of the date first above written, which the parties agree is the date from which the debt evidenced hereby is owed.
This Note shall be governed by and construed in accordance with the applicable laws of the State of Oklahoma.
"MAKER"
GREYSTONE MANUFACTURING, L.L.C.
By: /s/ Warren F. Kruger
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Name: Warren F. Kruger
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Title: Manager
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All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
REAL ESTATE NOTE
$2,500,000 September 3, 2003
FOR VALUE RECEIVED, the undersigned, Greystone Manufacturing, L.L.C., ("Maker") promise to pay to the order of Greystone Plastics, Inc., an Iowa corporation ("Payee") the principal sum of $2,500,000 to be paid on the due date hereunder as follows:
Interest Quarterly at 7.5% fixed per annum, beginning on December 1, 2003 with monthly principal payments amortized over 180 months payable in equal monthly amounts of $13,889 per month beginning November 1, 2003.
The Maker shall have the right to prepay this Note on any date prior to maturity hereof.
The Maker liable for payment of the indebtedness evidenced by this Note hereby agrees and consents that either before or after the maturity of the Note thereof, the time for its payment may be extended or this Note renewed from time to time by the holder hereof, without notice and that after such extension, extensions or renewals, it shall remain bound for the payment hereof, notwithstanding such extension or extensions.
If any principal due upon this Note shall not be paid within ten (10) days of when the same shall become due and payable (whether by extension, acceleration or otherwise) or if the Maker should make an assignment for the benefit of creditors, be granted relief under any bankruptcy or insolvency law, or any receiver, trustee or like officer should be appointed to the custody, possession or control of any property of the Maker, and any such involuntary adjudication or appointment is not vacated, set aside or discharged within thirty (30) days after the occurrence of such event, the holder hereof, may, without notice, declare all of the unpaid balance hereof to be immediately due and payable. Such right of acceleration is cumulative and in addition to any other right or rights of acceleration under any other writing now or hereafter evidencing or securing payment of any indebtedness evidenced hereby. If this Note be placed with attorneys upon any default, the holder hereof shall be entitled to recover all costs of collection (including reasonable attorneys' fees) from all parties liable hereon.
This Note is secured by the Mortgage instrument attached hereto as executed by Maker.
All rights and powers of the holder hereunder shall inure to the benefit of its successors and assigns and all agreements herein shall bind the successors and assigns of the undersigned.
No invalid provision hereof shall affect or impair any other provision of this Note. The undersigned and any endorser, surety, and guarantor hereof do hereby acknowledge receipt of a completed copy of this Note.
This Note shall be effective as of the date first above written, which the parties agree is the date from which the debt evidenced hereby is owed.
This Note shall be governed by and construed in accordance with the applicable laws of the State of Oklahoma.
"MAKER"
GREYSTONE MANUFACTURING, L.L.C.
By: /s/ Warren F. Kruger
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Name: Warren Kruger
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Title: Manager
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All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
WRAPAROUND PROMISSORY NOTE
$799,454.06 September 3, 2003
FOR VALUE RECEIVED, the undersigned, Greystone Manufacturing, L.L.C., an Oklahoma limited liability company residing at 1613 East 15th Street, Tulsa, Oklahoma 74120 ("Maker") promise to pay to the order of Bill Hamilton, an individual ("Payee") the principal sum of $799,454.06 to be paid in accordance with the terms of the attached US BANCORP Note which has a principal balance of $799,454.06 and monthly payments of $16,929.93. No payment is due Hamilton as long as the US BANCORP Note is paid current by Maker and when US BANCORP is paid off, the Note shall be deemed to be paid in full.
The Maker shall have the right to prepay this Note on any date prior to maturity hereof.
In the event that a portion of the attached US BANCORP Note is unpaid and in default ("Unpaid Portion") then the Maker will be liable hereunder for the payment to Payee of an amount equal to the Unpaid Portion.
If this Note be placed with attorneys upon any default, the holder hereof shall be entitled to recover all costs of collection (including reasonable attorneys' fees) from Maker.
This Note is an unsecured obligation of Maker.
All rights and powers of the holder hereunder shall inure to the benefit of its successors and assigns and all agreements herein shall bind the successors and assigns of the undersigned.
No invalid provision hereof shall affect or impair any other provision of this Note. The undersigned and any endorser, surety, and guarantor hereof do hereby acknowledge receipt of a completed copy of this Note.
This Note shall be effective as of the date first above written, which the parties agree is the date from which the debt evidenced hereby is owed.
This Note shall be governed by and construed in accordance with the applicable laws of the State of Oklahoma.
"MAKER"
GREYSTONE MANUFACTURING, L.L.C.
By: /s/ Warren F. Kruger
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Name: Warren F. Kruger
--------------------------
Title: Manager
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") dated as of the 3rd day of September, 2003, between GREYSTONE MANUFACTURING, L.L.C., an Oklahoma limited liability company ("Borrower," which term shall be construed to include its successors-in-interest and assigns), and GREYSTONE PLASTICS, INC., an Iowa corporation ("Creditor," which term shall be construed to include its successors-in-interest and assigns).
RECITALS
A. Borrower is or shall be in the future indebted to Creditor under a promissory note dated September 3, 2003 (the "Note").
B. All present and future obligations of Borrower to Creditor are to be secured by a security interest in favor of Creditor in the "Collateral" as such term is defined in Section 3 of this Agreement and as set forth in Schedule 3 hereof.
C. The purpose of this Agreement is to evidence the security interest granted Creditor in the Collateral.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms.
(a) The following terms shall have the following meanings, (such terms to be equally applicable to both singular and plural forms of the terms defined):
(i) "Code" shall mean the Uniform Commercial Code as the same may from time to time be in effect in the State of Iowa.
(ii) "Collateral" shall have the meaning set forth in Section 3 of this Agreement.
(iii) "Event of Default" shall mean any default in the timely payment or performance by Buyer of any of Borrower's Obligations (as defined in Section 2 hereof) to Creditor.
(b) The following terms shall have the meanings set forth in the
Code (such terms to be equally applicable to both singular and
plural forms of the terms defined): (i) "Accounts," (ii)
"Chattel Payer," (iii) "Document," (iv) "Equipment," (v)
"Fixtures," (vi) "General Intangible," (vii) "Inventory,"
(viii) "Investment Property," (ix) "Instrument" (x) "Goods" and
(xi) "Proceeds."
2. Obligations Secured by the Agreement. The security interest herein granted is given to secure all indebtedness of Borrower to Creditor, whether the same is incurred under an open account, is evidenced by a promissory note (including the Note) or otherwise and whether such indebtedness is now existing or is hereafter incurred, and all obligations of Borrower to Creditor under this Agreement (hereinafter collectively referred to as the "Obligations"), and all expenditures by Creditor involving the performance of or enforcement of any agreement, covenant or warranty provided for by this Agreement or under the Obligations, including all costs, attorneys' fees (whether incurred in connection with bankruptcy, appellate, probate or nonjudicial proceedings or otherwise) and other expenditures of Creditor in the collection and enforcement of any obligation or liability of Borrower to Creditor under this Agreement or under the Obligations and in the collection and enforcement of or realization upon any of the Collateral.
3. Assignment and Grant of Security Interest. Borrower hereby assigns, transfers and conveys to Creditor and grants to Creditor a security interest in, to and under all assets of both in Schedule 3 hereof (all of which are hereinafter collectively called the "Collateral").
4. Continuing Liability. Borrower hereby expressly agrees that, anything herein to the contrary notwithstanding, it shall remain liable under each contract, agreement and instrument, assigned by it to Creditor hereunder to observe and perform all the conditions and obligations to be observed and performed by it thereunder, and covenants and agrees to observe and perform all such conditions and obligations, all in accordance with and pursuant to the terms and provisions thereof. Creditor shall have no obligation or liability under any such contract, agreement or instrument, or the Accounts, by reason of or arising out of this Agreement or the assignment thereof to Creditor or the receipt by Creditor of any payment relating to any such contract, agreement or instrument, or the Accounts pursuant hereto, nor shall Creditor be required or obligated in any manner to perform or to fulfill any of the obligations of Borrower thereunder or pursuant thereto, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any such contract, agreement or instrument, or the Accounts, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.
5. Representations, Warranties and Covenants of Borrower.
(a) Borrower hereby represents and warrants to Creditor that:
(i) this Security Agreement constitutes and shall at all times constitute the only lien on the Collateral except for the lien of US BANCORP ("Bank Lien") (in the amount of $_________) which shall have priority over the lien granted pursuant to this Agreement;
(ii) Borrower is the absolute owner of the Collateral, free and clear of any and all claims or liens in favor of others (except as noted in (i) above), with full right to pledge, sell, assign, transfer and create a security interest therein;
(iii) The Borrower is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Oklahoma.
(iv) The Borrower has places of business at the following locations: 1613 East 15th Street, Tulsa, Oklahoma 74120;
(v) If the Borrower has more than one place of business, the Borrower has its chief executive office at: 1613 East 15th Street, Tulsa, Oklahoma 74120.
(b) Borrower shall at its expense forever warrant and, at Creditor's request, defend the Collateral from any and all claims and demands of any other person and it shall not grant, create or permit to exist any lien upon or security interest in the Collateral in favor of any other person (except for the Bank Lien).
(c) Borrower shall not sell, transfer, lease or otherwise dispose of any of the Collateral (except for sales of Inventory in the ordinary course of business) without obtaining the prior written consent of Creditor to such sale, transfer, lease or other disposition.
(d) Borrower shall not move any item of Equipment from the 2601 Shoreline Drive, Bettendorf, Iowa 52722 where it is now located, locate at a new place of business, remove from a place of business as set forth above, establish a new chief executive office, change its corporate name or state of incorporation or use a trade name not listed above until the lien has been released or otherwise approved by the Creditor giving written notice of such intended relocation, removal, establishment, change or use.
(e) Borrower shall not merge, consolidate, dissolve, liquidate, convert or otherwise engage in any restructuring or reorganization without obtaining the prior written consent of Creditor to such transaction.
(f) Borrower shall not agree to do anything which it is prohibited from doing under subsections (b), (c) or (e) above.
(g) No other lien on the Equipment other than the lien of Bank Lien.
6. Creditor Appointed as Attorney-in-Fact.
(a) Borrower hereby irrevocably constitutes and appoints Creditor and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Borrower and in the name of Borrower or in its own name, from time to time in Creditor's discretion, for the purpose of carrying out the terms of this Agreement, such power and authority to be exercisable upon the occurrence of an Event of Default, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, including, without limiting the generality of the foregoing, the power and right, without notice to or assent by Borrower to do the following:
(i) upon the occurrence and continuance of any Event of Default, to ask, demand, collect, receive and give acquittances and receipts for any and all moneys due and to become due, or any performance to be rendered, under any Account or any contract, agreement or instrument included in the Collateral and, in the name of Borrower or its own name or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Account, or any other contract, agreement or instrument included in the Collateral and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Creditor for the purpose of collecting any and all such moneys due or securing any performance to be rendered under any such contract, agreement or instrument pledged and assigned hereby;
(ii) upon the occurrence and continuance of any Event of Default, to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral; and
(iii) upon the occurrence and continuance of any Event of Default (A) to direct any party liable for any payment or performance under any of the Accounts included in the Collateral to make payment of any and all moneys due and to become due thereunder or to render any performance provided for therein directly to Creditor or as Creditor shall direct; (B) to receive payment of and receipt for any and all moneys, claims and other amounts due and to become due at any time in respect of or arising out of any Collateral; (C) to sign and endorse any invoices, freight or express bills, bills of lading, drafts against debtors, assignments, verifications and notices in connection with Accounts and other documents relating to the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any Proceeds thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against Borrower with respect to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described above and, in connection therewith, to give such discharges or releases as Creditor may deem appropriate; and (G) generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Creditor was the absolute owner thereof for all purposes, and to do, at Creditor's option and Borrower's expense, at any time, or from time to time, all acts and things which Creditor deems necessary to protect, preserve or realize upon the Collateral and Creditor's security interest therein in order to effect the intent of this Agreement, all as fully and effectively as Borrower might do.
Borrower hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power-of-attorney is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on Creditor and the other attorneys appointed hereunder are solely to protect the interests of Creditor in the Collateral and shall not impose any duty upon them to exercise any such powers. Creditor and the other attorneys appointed hereunder shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to Borrower for any act or failure to act, except for their gross negligence or willful misconduct.
(c) Borrower also authorizes Creditor, at any time and from time to time, (i) to communicate in its own name with any party to any contract, agreement or Account included in the Collateral with regard to the assignment thereof hereunder and other matters relating thereto; and (ii) to execute, in connection with the sale provided for in Section 9 of this Agreement, any endorsements, assignments, bills of sale or other instruments of conveyance or transfer with respect to the Collateral.
7. Performance by Creditor of Borrower's Obligations. If Borrower fails to perform or comply with any of its agreements contained herein, under the obligations or in any contract, agreement or instrument included in the Collateral, and Creditor, as provided for by the terms of this Agreement, shall itself perform or comply, or otherwise cause performance or compliance, with such agreement, the expenses of Creditor incurred in connection with such performance or compliance, together with interest thereon at the maximum lawful interest rate permitted under the laws of the State of Oklahoma shall be payable by Borrower to Creditor on demand and until such payment shall constitute Obligations secured hereby. Creditor shall have the right to pay off any lien, security interest or other encumbrance on the Collateral, regardless of whether the obligations secured by such lien, security interest or other encumbrance are due and owing, and such amount shall constitute obligations secured hereby.
8. Inspection Rights. Creditor is hereby given the right and privilege, during regular business hours, of making such inspections of the Collateral and records thereof as it deems necessary and of auditing or causing an audit or verification of the books and records of Borrower relating to the Collateral at any time and from time to time, including the contacting of customers or suppliers of Borrower in connection with such audit or verification. Borrower agrees to assist Creditor in every way necessary to facilitate such audits, verifications and inspections.
9. Remedies. If an Event of Default hereunder or under the obligations has occurred and is continuing, Creditor may exercise, in addition to all other rights and remedies granted to it in this Agreement, all rights and remedies of a secured party under the Code or any other applicable law. Creditor, at its option, may proceed as to all or any part of the Collateral in accordance with its rights or remedies hereunder. Without limiting the generality of the foregoing, Borrower expressly agrees that in any such event Creditor, without demand of performance or other demand, advertisement or notice of any kind to or upon Borrower or any other person (all and each of which demands, advertisements and/or notices are hereby expressly waived), may forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, license, assign, give option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at public or private sale or sales, at any exchange, broker's board or at any of Creditor's offices or the Borrower's offices or elsewhere at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk, and Creditor shall apply the net proceeds (after expenses) of any such sale, lease, license, assignment or other disposition against the indebtedness secured hereby in such order as Creditor in its sole discretion shall determine, Borrower remaining liable for any deficiency therein. Creditor shall have the right upon any such public sale or sales to purchase the whole or any part of the Collateral so sold. To the extent permitted by applicable law, Borrower waives all claims, damages and demands against Creditor arising out of the repossession, retention, sale or license of the Collateral. In the event Creditor is required by law to give written notice to Borrower of any disposition of the Collateral, Borrower agrees that five (5) days' prior written notice by Creditor to Borrower shall be deemed to be reasonable notice.
10. Grant of License to Use Intangibles. For the purpose of enabling Creditor to exercise rights and remedies under this Agreement at such time as Creditor shall be lawfully entitled to exercise such rights and remedies and for no other purpose, Borrower hereby grants to Creditor an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to Borrower) to use, assign or sublicense any of the Collateral, now owned or hereafter acquired by Borrower and wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof. Until such time as Creditor is entitled to exercise such rights and remedies Borrower is entitled to use the Collateral without payment of royalty or other compensation to Creditor.
11. Limitation on Creditor's Duty in Respect of Collateral. Beyond the use of reasonable care in the custody and preservation thereof, Creditor shall not have any duty as to any Collateral in its possession or control or in the possession or control of its agent or nominee or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.
12. Further Assurances, Etc. Borrower authorizes Creditor to sign and file financing statements, continuation statements and any other forms, filings or other statements required or permitted under the Code at any time and from time to time with respect to the Collateral without Borrower's signature and on Borrower's behalf. Borrower will, however, at any time upon Creditor's request, sign financing statements, continuation statements, trust receipts, security agreements or other agreements, forms, filings or other statements with respect to the Collateral. Upon the failure of Borrower to do so, Creditor is authorized as Borrower's agent to sign any such instrument or agreement. Borrower agrees that at any time and from time to time upon the written request of Creditor, Borrower will promptly execute and deliver any and all such further instruments and documents and do such further acts as Creditor may reasonably request in order to carry out more effectively the purposes of this Agreement and obtain for Creditor the full benefits of the security interests granted to Creditor hereby.
13. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including telegraph, cable, telex, facsimile or similar transmissions or writing) and shall be given to such party at its address, or telex, cable or facsimile number set forth below or such other address or telex, cable or facsimile number as such party may hereafter specify by written notice to the other parties hereto.
14. Partial Invalidity. If any term, covenant or condition of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Agreement shall be held valid and be enforced to the fullest extent permitted by law.
15. No Waiver; Cumulative Remedies. Creditor shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by Creditor, and then only to the extent therein set forth. A waiver by Creditor of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Creditor would otherwise have had on any future occasion. No failure to exercise nor any delay in exercising on the part of Creditor any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative with any rights and remedies under the Note or any other loan document and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law or equity.
16. Limitations by Law. All rights, remedies and powers provided by this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Agreement are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Agreement invalid, unenforceable in whole or in part or not entitled to be recorded, registered or filed under the provisions of any applicable law.
17. Binding Effect. This Agreement and all the covenants and agreements herein will be binding upon and inure to the benefit of the parties hereto and their respective successors in interest and assigns. The Creditor shall at all times have the right to assign its rights and interest under this Agreement.
18. Applicable Law. This Agreement shall be governed by, and be construed and interpreted in accordance with, the laws of the State of Oklahoma and the United States.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the day and year first set forth above.
"GREYSTONE PLASTICS, INC."
By: /s/ Bill Hamilton
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Name: Bill Hamilton
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Title: President
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"GREYSTONE MANUFACTURING, L.L.C.
By: /s/ Warren F. Kruger
--------------------
Name: Warren F. Kruger
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Title: Manager
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All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
THIS EMPLOYMENT AGREEMENT shall be effective on 3rd day of September, 2003 (Effective Date) between Greystone Manufacturing, L.L.C. (the "Company") and Bill Hamilton ("Hamilton").
WHEREAS, the Company has determined that Hamilton's services to the Company will be of great value to the Company, and accordingly, the Company desires to enter into this Agreement with Hamilton as set forth herein in order to secure such services;
WHEREAS, Hamilton hereby represents and warrants to the Company that he is free to work for the Company without violation of any other agreements to which Hamilton is a party;
WHEREAS, Hamilton desires to serve as an employee of the Company on the terms set forth herein;
NOW THEREFORE, for and in consideration of Hamilton's employment by the Company, the promises and the mutual agreements set forth herein, Hamilton and the Company agree as follows:
1. Employment Duties.
(a) The Company agrees to employ Hamilton as the Manager and person in charge of the Company's beverage pallet operations in Princeton, Iowa, operating as Greystone Pallet Company ("Greystone") a wholly owned subsidiary of the Company with the duties and responsibilities generally associated with such position, and such other reasonable additional responsibilities as may be added to Hamilton's duties from time-to-time by the Company's Board of Directors (the "Board"). Hamilton shall report directly to Warren F. Kruger (the "President") of the Company.
(b) Hamilton shall (i) diligently follow and implement all policies and decisions communicated by the President; (ii) timely prepare and forward to the President all reports and accountings as may be requested; and, (iii) devote all of his professional time, attention and efforts to the business and affairs of the Company, subject to vacations and to reasonable periods of illness and/or disability consistent with the Company's policy and applicable law. Hamilton may continue his trucking business, but only as it relates to providing trucking services to the Company at the same rates previously charged to Greystone Plastic, Inc.
(c) The work product to be produced hereunder by Hamilton shall be considered a work made for hire as defined in the Copyright Act of 1976, and is therefore owned exclusively by the Company which vests copyright ownership of works for hire in the Company for whom the work is prepared. If any works hereunder shall be found not to be works made for hire, or ownership does not otherwise automatically vest in the Company, Hamilton shall immediately disclose and assign to Company any right, title and interest in any inventions, models, processes,
patents, copyrights and improvements thereon relating to services or processes or products of Company that Hamilton conceives or acquires during the employment relationship with Company or that Hamilton may conceive or acquire, during the period of (1) one year after termination of this Agreement.
2. Term. The initial term of employment shall be five (5) years ("Initial Term") with three (3) automatic five (5) year renewal periods ("New Terms"); however, the New Terms shall not renew in the event that either party gives the other party at least ninety (90) days prior written notice of non-renewal prior to the end of the then-current term. In the event either party provides notice of non-renewal or terminates their Agreement pursuant to Section 4, Hamilton shall jointly and severally diligently assist the Company in transitioning all matters and work for which he was responsible as the Company shall direct.
3. Compensation.
(a) Upon Closing the purchase of the Greystone assets of the Company, Hamilton shall be paid a total annual cash compensation as salary totaling $170,000 per year (the "Base Salary"). The company shall split the Base Salary between Hamilton as directed by Hamilton and the payments shall accrue and be due and payable in equal, or as nearly equal as practicable, semi-monthly installments.
(b) At Closing, Hamilton will receive an option from the Company's parent company, PalWeb Corporation ("PalWeb") to purchase up to 60,000 shares of the PalWeb Common Stock each year for a period of five (5) years for a total of up to 300,000 shares. The option price and related terms and conditions shall be set in accordance with the Company's stock option plan.
(c) Conditioned upon the beverage pallets assembled with the in-house manufactured fiberglass rods maintaining a net revenue margin (pre-tax) of at least $4.00 per pallet, the Company agrees to pay Hamilton for a period of three (3) years from the date hereof an annual bonus equal to 50% of the net cash savings resulting from the in-house manufacturing of the fiberglass rods ("In-House Rods") utilized in the beverage pallet of Greystone. (Example: the current cost is $1.50 per fiberglass rod and the actual cost (fully burdened) of producing a comparable or better In-House Rods by the Company is $0.50 per fiberglass rod, then the net cash savings would equal $1.00 per fiberglass and each year 50% of the annual savings (12 months of accumulated savings) would be bonused out to Hamilton in single or split amounts as designated by Hamilton so long as the combined split did not exceed 50% of the annual savings).
(d) Hamilton will also be entitled to related benefits provided by the Company to other Managers and Operations officers such as:
(i) The Company will provide health insurance benefits for Hamilton and dependents on the same basis of the other Company employees.
(ii) Hamilton shall, upon submission of written documentation of business related expenses incurred, be reimbursed for any and all necessary, customary and usual expenses, as approved by the President and incurred by Hamilton on behalf of Company in the normal course of business.
(iii) Hamilton shall receive three (3) weeks of paid vacation. Accrued unused vacation time shall expire at the end of each calendar year.
(iv) The Base Salary and any bonuses, allowance payments, and all other payments shall be subject to withholding for all applicable taxes as required under applicable federal and state laws.
4. Termination. This Agreement and Hamilton's employment can be terminated by the President of the Company as follows:
(a) Upon the death of Hamilton; or
(b) Upon Hamilton's permanent disability (which shall mean his inability to perform his duties and responsibilities under this Agreement for a period of at least six (6) consecutive months); or
(c) By the Company for Cause immediately and without notice. Cause
means either the joint or several conduct of Hamilton which amounts to
(i) fraud, dishonesty or breach of fiduciary duty against the Company;
(ii) willful misconduct, insubordination, repeated refusal to follow
the reasonable directions of the President or violation of law in the
course of performance of duties with the Company; (iii) repeated
absences from work without a reasonable excuse; (iv) intoxication with
alcohol or drugs while on the Company's premises during regular
business hours; (v) having a primary residence located more than twenty
(20) miles from the Greystone plant; (vi) a conviction or plea of
guilty or NOLO CONTENDERE to a felony or a crime involving dishonesty:
(vii) a material breach or violation of the terms of his Agreement, the
Company's general employment policies or any other agreement to which
Hamilton and the Company are party; or (viii) any malfeasance or
misfeasance by Hamilton of his duties to the Company that is not
corrected within ten (10) calendar days after notice thereof to
Hamilton.
5. Effects of Termination.
Upon termination:
(a) Pursuant to Section 4 (a)(b), the Company shall pay Hamilton the Base Salary through the effective date of termination and thereafter at a rate of 25% of the Base Salary through the conclusion of the then current term of the Agreement. All other benefits, bonuses and obligations of the Company to Hamilton shall terminate upon the effective date of termination.
(b) Pursuant to Section 4 (c), Hamilton shall be entitled to no further payments of the Base Salary or any other amounts or any benefits under his Agreement and all then accrued but unpaid amounts and benefits shall be immediately paid, and no further amounts or benefits shall accrue.
6. Covenant Not to Compete and Non-Circumvention. The undersigned parties understand and agree that a substantial portion of the value of the assets being sold by Hamilton to the Company by separate agreement is based on the goodwill, know-how and customer relationships ("Intangible Assets") held and maintained by Hamilton. The undersigned parties further understand and agree that the tangible assets have a greatly diminished value if these Intangible Assets are denied to Company or otherwise circumvented or diverted by Hamilton, then material damages would result to the detriment of the Company.
Accordingly, as further consideration for this Agreement and the purchase of Hamilton's interest in Greystone Plastics, Inc., by the Company, Hamilton covenants and agrees that he will not directly or indirectly run, advise or otherwise participate in the plastic pallet business in the U.S. during this agreement and for a period of three (3) years thereafter.
7. Severability. The parties agree that each of the provisions included in this Agreement is separate, distinct, and severable from the other provisions of these Agreement, and that the invalidity or unenforceability of any Agreement provision shall not affect the validity or enforceability of any other provision of these Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and any applicable law or public policy, the provision shall be redrawn to make the provision consistent with and valid and enforceable under the law or public policy.
8. Assignment. This Agreement and the rights and obligations of the hereunder may not be assigned by either party hereto without the prior written consent of the other party hereto. Notwithstanding the foregoing, this Agreement shall be binding on and inure to the benefit of the Company's successors.
9. Notices. Except as otherwise specifically provided herein, any notice required or permitted to be given by, or to, either party pursuant to this Agreement shall be given in writing, and shall be personally delivered, or mailed by certified mail, return receipt requested, or provided by electronic transmission with a copy sent contemporaneously by certified mail, return receipt requested, at the address set forth below or at such other address as either party shall designate by written notice to the other given in accordance with this Section. Any notice complying with their Section shall be effective immediately upon personal delivery or electronic transmission, and if mailed only, on the third business day after mailing.
10. Waiver. The waiver by either party hereto of any breach of this Agreement by the other party hereto shall not be effective unless in writing, and no such waiver shall operate or be construed as the waiver of the same or another breach on a subsequent occasion.
11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma. The parties agree that jurisdiction and venue for any matter arising out of or pertaining to this Agreement shall be proper only in the state courts located in Tulsa County, Oklahoma, and the federal courts having jurisdiction over the Northern District of Oklahoma, and the parties hereby consent to such venue and jurisdiction.
12. Beneficiary. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and his respective successors, heirs, executors, administrators and permitted assigns.
13. Entire Agreement. This Agreement executed contemporaneously herewith embody the entire agreement of the parties on the subject matter stated in the Agreement. No amendment or modification of this Agreement shall be valid or binding upon the Company or Employee unless made in writing and signed by both parties. All prior understandings and agreements relating to the subject matter of this Agreement are hereby expressly terminated.
14. Confidentiality. The terms, conditions and existence of this Agreement shall be confidential.
IN WITNESS WHEREOF, Hamilton and the Company have executed and delivered this Agreement as of the date first shown above.
THE COMPANY: EMPLOYEE:
GREYSTONE MANUFACTURING, L.L.C.
By: /s/ Warren F. Kruger By: /s/ Bill Hamilton
--------------------------- -----------------------
WARREN F. KRUGER, PRESIDENT BILL HAMILTON
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This ASSET PURCHASE AGREEMENT (the "Agreement"), by and between PLASTIC PALLET PRODUCTION, INC. (the "Seller") and 1607 COMMERCE LIMITED PARTNERSHIP (the "Buyer").
RECITALS:
A. Seller is the owner of assets located at 1607 West Commerce Street, Dallas, Texas (the "Premises"), which are subject to a security interest in favor of Paul A. Kruger ("Kruger") to secure a loan in the original principal sum of Seven Million Dollars ($7,000,000.00), which has been assigned to F&M Bank (the "Lender").
B. Buyer desires to purchase from Seller and Seller desires to sell to Buyer all of Seller's assets located at the Premises.
C. Buyer and Seller desire to effect such acquisition upon the terms and conditions set forth in this Agreement.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Purchase and Sale of Assets. Seller hereby agrees to sell, and Buyer hereby agrees to purchase, upon the terms and subject to the representations, warranties, covenants and conditions hereinafter set forth, all of Seller's right, title and interest in and to the following assets (the "Property"):
1.1 Equipment. All equipment located in the Premises as of the date of this Agreement including, without limitation, that described on Exhibit A hereto and all manuals and maintenance records related thereto (the "Equipment");
1.2 Leasehold Improvements. Any equipment that is attached to the Premises in such a manner as to be characterized as fixtures (the "Leasehold Improvements").
2. Purchase Price. Subject to the adjustments and prorations hereinafter described, the total purchase price to be paid by the Buyer to the Seller for the Property shall be Five Million Six Hundred Fifty Thousand and no/100 Dollars ($5,650,000.00) (the "Purchase Price"), which said sum shall be paid at Closing. The parties agree that such purchase price has been negotiated at arms length and represents the agreed fair market value of the Property.
3. Representations and Warranties of Seller. Seller represents and warrants to Buyer as follows:
3.1 Title to Property. As of the Closing Date, Seller shall have and deliver good, valid and marketable title to all of the Property, free and clear of all liens, pledges, security interests, charges, claims, restrictions and other encumbrances and defects of title of any nature whatsoever other than the liens of Kruger and Lender. Kruger has agreed to release his security interest in the Property, so it can be conveyed to Buyer free and clear of the existing encumbrances.
3.2 Condition of Equipment. The Equipment is in good operating
condition and repair, subject to normal wear and tear and maintenance
and conforms to all applicable laws, ordinances, codes, rules and
regulations relating to their use, operation and maintenance. EXCEPT
FOR THE FOREGOING REPRESENTATION, BUYER AGREES THAT SELLER HAS MADE AND
MAKES NO REPRESENTATIONS OR WARRANTIES OF WHATSOEVER NATURE, DIRECTLY
OR INDIRECTLY, EXPRESS OR IMPLIED, AS TO THE SUITABILITY, DURABILITY,
FITNESS FOR USE, MERCHANTABILITY, CONDITION, OR QUALITY OF THE
EQUIPMENT AND OF ANY UNIT THEREOF. BUYER SPECIFICALLY WAIVES ALL RIGHTS
TO MAKE CLAIM AGAINST SELLER FOR BREACH OF ANY WARRANTY OF ANY KIND
WHATSOEVER; AND WITH RESPECT TO BUYER, SELLER TRANSFERS THE EQUIPMENT
"AS IS".
3.3 Solvency. Seller is solvent, and there are no outstanding judgments, executions or attachments against Seller, nor is there any petition in bankruptcy or arrangement of creditors filed against Seller.
3.4 Litigation or Defenses. There are no suits, actions, or other legal or administrative proceedings or governmental investigations pending or threatened (to the Seller's knowledge) against or affecting the Property or relating to the transactions contemplated by this Agreement.
3.5 Contracts. Seller has delivered to Buyer true and correct copies of all contracts, leases and agreements relating to or affecting the Property. All such contracts are valid and binding, enforceable in accordance with their respective terms, in full force and effect, and validly assignable to Buyer without the consent of any other party so that, after the execution and delivery of this Agreement and the consummation of the transaction contemplated hereby, Buyer will be entitled to the full benefits thereof. There is not under any such contract any existing default, or event which, after notice or lapse of time, or both, would constitute a default or result in a right to accelerate or loss of rights.
3.6 Compliance with Laws. To Seller's knowledge, Seller has complied with each, and is not in material violation of any, law, rule or regulation to which it or the Property are subject and has not failed to obtain or adhere to the requirements of any license, permit or authorization necessary to the ownership of the Property, which noncompliance, violation or failure to obtain or adhere might adversely affect the Property. Seller has not been charged or threatened with, and is not under any investigation, and has not received any notice, with respect to any charge concerning any violation of any provision of any federal, state, local or foreign law, regulation, ordinance, order or administrative ruling, and Seller is not in default with respect to any such order, writ, injunction, decree of any court, agency or instrumentality.
3.7 No Breach or Violation; Consents. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereunder will not contravene, violate or breach; (a) any law, rule or regulation to which Seller is subject; (b) any judgment, order, writ, injunction, decree or award of any court or arbitrator or governmental or regulatory official, body or authority which is applicable to Seller; (c) the Certificate of Incorporation; or (d) any indenture, agreement, commitment, lease, plan, license, permit, authorization or other instrument, document or understanding , oral or written, to which Seller is a party, by which Seller may have rights or by which any of the Seller's assets may be bound or affected. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby by Seller shall not require the consent of any other party (other than Kruger or Lender) or give any party under any of the agreements or instruments described above the right to terminate, modify, accelerate or otherwise change the existing rights or obligations of Seller thereunder. No authorization, approval, or consent and no registration or filing with any governmental or regulatory official, body or authority is required in connection with the execution, delivery and performance of this Agreement.
3.8 Insurance. Seller has maintained, and now maintains, general liability insurance and casualty insurance on the Property. All policies of insurance carried by Seller are in full force and effect, and Seller has not done or omitted to do or suffered anything to be done which has or might render such policies void or voidable.
4. Representations and Warranties of Buyer. Buyer represents and warrants to Seller as follows:
4.1 Solvency. Buyer is solvent, and there are no outstanding judgments, executions or attachments against Buyer, nor is there any petition in bankruptcy or arrangement of creditors filed against Buyer.
4.2 Authority. Buyer has the power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.
5. No Assumption of Liabilities. Buyer shall not assume, nor shall the Buyer be liable for, any debts, liabilities or obligations of any kind, whether accrued, contingent or absolute, due or to become due, known or unknown, asserted or unasserted, of Seller or arising out of Seller's use or operation of
the Property or out of the acts, omissions, transactions or occurrences involving the Property or the operation of the Seller's business prior to the Closing Date. Seller hereby indemnifies and agrees to hold Buyer harmless from and against (and shall pay Buyer on demand for) any and all such debts, losses, liabilities, claims, demands, suits, expenses and damages suffered or incurred by Buyer, including attorney's fees for the defense of such actions to be paid as incurred by Buyer.
6. Indemnification. Seller shall defend, indemnify and hold harmless the Buyer and Buyer's officers, managers, members, agents, servants and employees, and their respective heirs, personal representatives, successors and assigns, from and against (and shall on demand reimburse Buyer for) any and all claims, debts, demands, actions, causes of action, suits, contracts, agreements, obligations, accounts, defenses, offsets against indebtedness, liens, losses, costs, expenses and liabilities of any kind or character whatsoever (including attorney's fees), known or unknown, suspected or unsuspected, in contract or in tort, at law or in equity, arising out of, resulting from, or in connection with: (a) any misrepresentation or breach by Seller of any representations and warranties contained in this Agreement; (b) any claim by a creditor of Seller; and (c) any failure to comply with any covenant, promise or agreement of Seller contained in this Agreement.
7. Closing. Buyer and Seller agree that this transaction will be closed (the "Closing") in the offices of Seller or a title company selected by Buyer in Dallas, Texas, on the date of this Agreement (the "Closing Date").
8. Conditions. This Agreement and the obligation of the Buyer and Seller to close are conditional upon satisfaction of the following conditions prior to the Closing Date:
8.1 Contemporaneous Closing. Contemporaneous closing of a Sale Agreement covering the Premises.
8.2 Kruger and Lender. Approval of this transaction by Kruger and Lender and a release of their security interests in the Property.
8.3 Buyer Financing. Buyer's lender on the Premises agreeing that the Equipment and Leasehold Improvements are personal property and not subject to the terms of the Deed of Trust covering the Premises.?
8.4 PalWeb Preferred Stock. Conversion of all outstanding preferred stock of PalWeb Corporation ("PalWeb") into common stock and the sale and issuance of new preferred stock of PalWeb.
8.5 Equipment Lease. Buyer and Seller shall enter into an Equipment Lease for the Property.
8.6 Greystone Acquisition. Greystone Manufacturing, L.L.C., a wholly-owned subsidiary of PalWeb shall have acquired the assets of Greystone Plastics, Inc.
In the event these conditions are not satisfied within the time period provided, this Agreement shall be null and void and the Escrow Deposit refunded to Buyer.
9. Seller's Deliveries at Closing. At closing, Seller shall deliver, and, where applicable, execute the following:
9.1 Bill of Sale. A bill of sale conveying title to the Equipment and Leasehold Improvements and subject to the representations and warranties of Seller set forth in this Agreement.
9.2 Other Instruments. Such other instruments of conveyance, assignment and transfer, in form acceptable to Buyer, as shall be effective to vest in Buyer good and marketable title to the Property.
10. Buyer's Deliveries at Closing. At closing, Buyer shall deliver the Purchase Price to Seller and Seller shall extinguish all security interests against the Property.
11. Possession. Exclusive possession of the Property shall be given to the Buyer on the Closing Date subject to the lease in favor of Seller.
12. Sales and Transfer Taxes. Seller assumes responsibility for any sales tax that is due and owing as a consequence of this transaction and agrees that the indemnity in Section 6 of this Agreement shall apply to this covenant.
13. Prorations. All general and personal property taxes, equipment repair costs, and any other cost or expense associated with the Property for any year prior to the year of closing shall be paid by the Seller at or before closing. All personal property taxes on the Property for the year of closing shall be prorated between the parties to the Closing Date. If personal property taxes for the current year cannot be ascertained, those of the previous year shall be used. If taxes are prorated using the prior year's taxes, Buyer and Seller agree that they will prorate the taxes after Closing upon the written request of either party as soon as the actual taxes for the year of closing shall have been ascertained and, in such event, an appropriate adjustment shall be made between the parties. All special assessments, whether past, current or matured, shall be paid by Seller at Closing.
14. Brokerage Commission. Seller and Buyer each represent and warrant to the other that the warranting party has not used the services of any real estate broker, agent or finder in connection with this Agreement, and each agrees to indemnify and hold the other harmless from all claims of any broker, agent or finder arising by reason of the indemnifying party's breach of this representation and warranty.
15. Default. If Buyer fails to close the sale of the Property, unless excused by a condition hereof, Seller may sue for damages or specific performance. If Seller wrongfully fails to close, unless excused by a condition hereof, Buyer shall have the option to sue for damages or specific performance.
16. Miscellaneous. It is further understood and agreed as follows:
16.1 Time. Time is of the essence of this Agreement.
16.2 Notices. Whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be hand delivered in person or sent by mail, registered or certified, return receipt requested, postage prepaid, or by Federal Express Mail or other overnight delivery service providing evidence of receipt of delivery to the addresses as set forth below:
As to Buyer: 1607 COMMERCE LIMITED PARTNERSHIP
Attn: Paul A. Kruger
2500 S. McGee, Suite 147
Norman, OK 73072
As to Seller: PLASTIC PALLET PRODUCTION, INC.
1607 West Commerce Street
Dallas, TX 75208
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Any notice, demand or request that shall be served upon either of the parties in the manner aforesaid shall be deemed sufficiently given for all purposes hereunder (a) at the time such notices, demands or requests are hand delivered in person, or (b) on the fourth day after the mailing of such notices, demands or requests in accordance with the preceding portion of this paragraph, or (c) on the date a receipt for the delivery of such notice from Federal Express or other overnight delivery service is executed.
Either Buyer or Seller shall have the right from time to time to designate by written notice to the other party such other person or persons, and such other place or places, as Buyer or Seller may desire written notices to be delivered or sent in accordance herewith; provided, however, at no time shall either party be required to send more than an original and two (2) copies of any such notice, demand or request required or permitted hereunder.
16.3 Severability. If any provision of this Agreement shall be held to be void or unenforceable for any reason, the remaining terms and provisions hereof shall not be affected thereby.
16.4 Governing Law. This Agreement and all of its provisions shall be construed in accordance with and governed by the laws of the State of Oklahoma.
16.5 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective executors, administrators, successors and assigns.
16.6 Effective Date of Covenants. All covenants, representations and warranties contained herein shall be true and correct as of this date and on the Closing Date, and shall survive the closing of this transaction.
16.7 Entire Agreement. This instrument constitutes the entire agreement of the parties. It supersedes any and all other agreements, either oral or in writing, between the parties hereto. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or otherwise, have been made by any party or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this agreement shall be valid or binding. This agreement may not be modified or amended by oral agreement, but only by an agreement in writing, signed by the parties hereto.
16.8 Captions and Section Headings. Captions and section headings contained in this Agreement are for reference only and shall not affect, in any way, the meaning or interpretation of this Agreement.
16.9 Attorney's Fees. In the event either party hereto files suit in order to enforce or interpret the terms and provisions of this Agreement, the prevailing party in such litigation shall be entitled to recover from the other its reasonable attorney's fees and expenses incidental to the litigation.
IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase Agreement the date and year hereinafter indicated.
"SELLER" PLASTIC PALLET PRODUCTION, INC.
By: /s/ Warren F. Kruger
---------------------------
Warren F. Kruger, President
Date of Execution: September 8, 2003
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"BUYER" 1607 COMMERCE LIMITED PARTNERSHIP
A Texas Limited Partnership
By: 1607 COMMERCE, L.L.C.,
An Oklahoma Limited Liability Company,
General Partner
By: /s/ Paul A. Kruger
Paul A. Kruger, Manager
Date of Execution: September 9, 2003
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All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
PLASTIC PALLET PRODUCTION, INC.
September 8, 2003
1607 Commerce Limited Partnership
1607 West Commerce
Dallas, Texas 75208
Attn: Paul A. Kruger
Dear Paul:
The purpose of this letter is to confirm our agreement that, notwithstanding the language of that certain Asset Purchase Agreement (the "Agreement") between Plastic Pallet Production, Inc. as "Seller" and 1607 Commerce Limited Partnership as "Buyer" dated September 8, 2003, the sale of assets to Buyer pursuant to the Agreement will not include the equipment described on Exhibit A attached hereto. Such equipment will be retained by PPP and will be subject to the security interest granted in that certain Security Agreement among PalWeb Corporation, Plastic Pallet Production, Inc., Greystone Manufacturing, LLC and 1607 Commerce Limited Partnership dated as of September 8, 2003.
If you are in agreement with the matters stated in this letter, please execute the acceptance block provided below and return one fully-executed copy of this letter to the undersigned.
Very truly yours,
PLASTIC PALLET PRODUCTION, INC.
By: /s/ Warren F. Kruger
Warren F. Kruger, President
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Agreed and accepted this
8th day of September, 2003.
1607 COMMERCE LIMITED
PARTNERSHIP
By:______________________
All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
THIS SALE AGREEMENT is entered into as of the 8th day of September, 2003, by and between PLASTIC PALLET PRODUCTION, INC., hereinafter referred to as "Seller", and 1607 COMMERCE LIMITED PARTNERSHIP, hereinafter referred to as "Buyer",
For and in consideration of the mutual covenants hereinafter contained, the parties agree as follows:
1. Sale Agreement. Seller hereby agrees to sell, and Buyer hereby agrees to purchase, upon the terms hereinafter stated, the real property described on Exhibit A hereto and the improvements affixed thereto (the "Property").
2. Purchase Price. Subject to the adjustments and prorations hereinafter described, the total purchase price for the Property shall be One Million Three Hundred Fifty Thousand and no/100 Dollars ($1,350,000.00), all of which shall be due and payable at closing, except as is hereinafter provided. The parties agree that such purchase price has been negotiated at arms length and represents the agreed fair market value of the Property.
3. F&M Consent. This Agreement and the obligation of the parties is conditional upon the approval of this transaction by F&M Bank, including its agreement to release the Property from the Deed of Trust assigned to it upon receipt of the sum of One Million Three Hundred Fifty Thousand and no/100 Dollars ($1,350,000.00).
4. Optional Assumption. Buyer shall have the option to purchase the Property and assume One Million Three Hundred Fifty Thousand and no/100 Dollars ($1,350,000.00) of the Seven Million and no/100 Dollars ($7,000,000.00) on the principal obligation Seller owes to Paul A. Kruger ("Kruger") secured by a first deed of trust on the Property in lieu of paying Seller cash at closing and in the event it does so, it shall provide Seller with a release from Kruger and F&M Bank in that amount, which payment will not, however, change the payment terms on the note, i.e., it will be deemed a prepayment on principal and will not reduce the present obligation to make monthly payments as provided in the note. If such a release cannot be obtained, this Agreement shall be null and void.
5. Other Agreements. This Agreement and the obligation of the Seller and Buyer to close are made conditional upon all other transactions between the parties, including the sale and lease back of equipment located on the Property, a conversion of all outstanding preferred stock of PalWeb Corporation ("PalWeb"), the sale and issuance of new preferred stock of PalWeb closing on or prior to the closing of this Agreement, and the purchase of assets of Greystone Plastics, Inc. by Greystone Manufacturing, L.L.C., a wholly-owned subsidiary of PalWeb. In the event this does not occur, this Agreement will be null and void.
6. Warranties of Seller. Seller represents, covenants and warrants the following as of the date of this Agreement and as of the Closing Date:
6.1 Ownership. Seller is the owner of the Property and is authorized to enter into this Agreement.
6.2 Validity of Documents. This Agreement has been duly executed and delivered by the Seller, and is a legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms.
6.3 Condemnation. To Seller's knowledge, there is no condemnation or similar proceeding pending or threatened against the Property or any part thereof.
6.4 Assessments. Seller has not received, nor does it have actual knowledge of, any notification from any governmental or private agency, authority or instrumentality of any pending or threatened assessments on or against the Property for the cost of public or private improvements to be made with respect to the Property.
6.5 Environmental. To Seller's knowledge, there are not any underground storage tanks located on the Property. To the best of Seller's knowledge, the Property has not been contaminated or otherwise subjected to the storage of or pollution from any source of hazardous waste or chemicals, including petroleum products, as defined by federal, state or local laws, statutes, ordinances, rules and regulations.
6.6 Soil Conditions. Seller has no knowledge of any settling, flooding, drainage or soil problems in regard to the Property.
6.7 Rights in Subject Property. There are and will, on the Closing Date, be no options, purchase contracts, leases or other agreements of any kind or nature, written or oral, whereunder or whereby any person has or could claim or assert any right, title or interest in any of the Property other than a lease by Buyer to Seller. After the date hereof, Seller shall not grant any leases, easements or rights of way in, on, over or across the Property without obtaining the prior written consent of Buyer.
6.8 Adverse Change. From the date hereof until the Closing Date, the Property shall not be materially adversely affected in any way as the result of a legislative or regulatory change not consented to by Buyer, or by any flood, earthquake, condemnation, act of God, act of public enemy, criminal act or otherwise, whether or not insured against.
6.9 Governmental Regulations. At the present time, and on the Closing Date, Seller knows of no violations that exist, or will exist, with respect to any portion of the Property, of any statute, ordinance, regulation, or administrative or other judicial order or holding, whether or not appearing in the public record.
6.10 Litigation. There is no action, suit, proceeding or investigation pending or, to the knowledge of Seller, threatened against the Property.
7. Brokerage. Seller and Buyer each represent and warrant to the other that the warranting party has not used the services of any real estate broker, agent or finder in connection with this Agreement. Each party agrees to hold the other harmless by reason of any breach of this representation and warranty.
8. Closing. Buyer and Seller agree that the purchase will be consummated as follows:
8.1 Closing Date. This transaction will be closed upon execution of this Agreement (the "Closing Date").
8.2 Transfer of Title. Seller agrees to convey title of record to the Property to Buyer by general warranty deed on the date of closing.
8.3 Payments at Closing. At closing, Buyer shall pay Seller the purchase price required under Section 2.
8.4 Possession. Exclusive possession of the Property free and clear of all leases and tenancies, written or otherwise, shall be given to Buyer on the date of closing subject to the lease in favor of Seller.
8.5 Real Property Taxes. All matured and unmatured special assessments, and all property taxes for years preceding the year of closing on the Property, if any, shall be paid by Seller. The property taxes on the Property for the year of closing shall be prorated between the parties to the date of closing.
8.6 Closing Costs. Seller shall pay all closing costs incurred in this transaction excluding fees and expenses of Buyer's counsel, but including, title work to be done after closing.
9. Buyer Acknowledgements. Buyer acknowledges that any improvements to the Property are being transferred "AS IS, WHERE IS, WITH ALL FAULTS" without any representation or warranty as to their condition. Buyer further acknowledges that Seller shall have no liability to Buyer or any of Buyer's successors in title to the Property for defects in title occurring prior to January 10, 2003. Buyer shall indemnify and hold Seller harmless for any claims by successors in title to the Property related to title defects occurring while previously owned by Onward, L.L.C.
10. Default. If Buyer wrongfully fails to close the sale of the Property, unless excused by a condition hereof, Seller may sue for damages or it may pursue an action for specific performance. If Seller wrongfully fails to close, unless excused by a condition hereof, or breaches the terms and conditions hereof, Buyer shall have the right to sue for damages or specific performance.
11. Miscellaneous. It is further understood and agreed as follows:
11.1 Time. Time is of the essence of this Agreement.
11.2 Notices. Whenever any notice, demand or request is required or permitted hereunder, such notice, demand or request shall be hand delivered in person or sent by mail, registered or certified, return receipt requested, postage prepaid, or by Federal Express Mail or other overnight delivery service providing evidence of receipt of delivery to the addresses as set forth below:
As to Buyer: 1607 Commerce Limited Partnership
c/o Paul A. Kruger
2500 S. McGee, Suite 147
Norman, Oklahoma 73072
As to Seller: Plastic Pallet Production, Inc.
1607 West Commerce Parkway
Dallas, Texas 75208
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Any notice, demand or request that shall be served upon either of the
parties in the manner aforesaid shall be deemed sufficiently given for
all purposes hereunder (i) at the time such notices, demands or
requests are hand delivered in person, or (ii) on the date the Federal
Express or other overnight delivery service receipt was signed; or
(iii) on the fourth day after the mailing of such notice.
Either Buyer or Seller shall have the right from time to time to designate by written notice to the other party such other person or persons, and such other place or places, as Buyer or Seller may desire written notices to be delivered or sent in accordance herewith; provided, however, at no time shall either party be required to send more than an original and two (2) copies of any such notice, demand or request required or permitted hereunder.
11.3 Severability. If any provision of this Agreement shall be held to be void or unenforceable for any reason, the remaining terms and provisions hereof shall not be affected thereby.
11.4 Binding Effect. The provisions of this Agreement shall inure to the benefit of and bind the successors and assigns of the parties hereto.
11.5 Effective Date of Covenants; Survival. All covenants and warranties contained herein shall be true and correct as of this date and on the date of closing, and, except as specifically provided, shall survive the closing of this transaction.
11.6 Entire Agreement. This instrument constitutes the entire agreement of the parties. It supersedes any and all other agreements, either oral or in writing, between the parties hereto. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or otherwise, have been made by any party or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. This Agreement may not be modified or amended by oral agreement, but only by an agreement in writing, signed by the parties hereto.
11.7 Section Headings. Section headings contained in this Agreement are for reference only and shall not affect, in any way, the meaning or interpretation of this Agreement.
11.8 Attorney's Fees. In the event either party hereto files suit in order to enforce or interpret the terms and provisions of this Agreement, the prevailing party in such litigation shall be entitled to recover from the other its reasonable attorney's fees and expenses incidental to the litigation.
11.9 Date of Agreement. For all purposes, the date of this Agreement shall be the latest date of execution shown below the parties' signatures.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year hereinafter indicated.
"SELLER" PLASTIC PALLET PRODUCTION, INC.
By: /s/ Warren F. Kruger
Warren F. Kruger, President
"BUYER" 1607 COMMERCE LIMITED PARTNERSHIP
A Texas Limited Partnership
By: 1607 COMMERCE, L.L.C.,
An Oklahoma Limited Liability Company,
General Partner
By: /s/ Paul A. Kruger
Paul A. Kruger, Manager
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All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
This Equipment Lease is made and entered into effective this 8th day of September, 2003, by and between 1607 COMMERCE LIMITED PARTNERSHIP, hereinafter referred to as "Lessor", and PLASTIC PALLET PRODUCTION, INC., hereinafter referred to as "Lessee", having its principal office at 1607 W. Commerce Street, Dallas, Texas 75208.
For and in consideration of the mutual covenants hereinafter contained, the parties agree as follows:
1. Grant. Lessor does hereby lease unto Lessee, and Lessee does hereby take and hire from Lessor all equipment located at 1607 West Commerce Street, Dallas, Texas 75208 (the "Premises"), including, without limitation, that described on Exhibit A, which is attached hereto and made a part hereof by this reference and all leasehold improvements on the Premises ("Equipment"). The Equipment shall be used by Lessee at the Premises.
2. Term. This agreement shall be for a term of one hundred thirty (130) months, commencing on September 8, 2003 (the "Term").
3. Rental. Lessee shall pay Lessor as rental for the use of the Equipment Forty-Eight Thousand Dollars ($48,000) per month, together with any applicable sales tax, commencing six (6) months after the first day of the Term. All succeeding monthly rentals are due and payable in advance on the same day of the month as the first month's rental.
4. Ownership and Use. The parties agree to the following provisions in regard to the ownership and usage of the Equipment:
4.1 Title. The Equipment shall at all times be the sole and exclusive property of Lessor. Lessee shall have no rights or property interest therein, except for the right to use same in the normal operation of the business maintained by it at the Premises.
4.2 Personal Property and Installation. The Equipment is and shall remain personal property, even if installed in or attached to real property. Lessee shall provide, at its expense, suitable facilities and utilities for the proper installation and operation of the Equipment.
4.3 Liens. Lessee shall keep the Equipment at all times free and clear from all claims, levies, liens or encumbrances of any nature whatsoever other than the liens of Paul Kruger and F&M Bank. Lessee shall give Lessor immediate notice of any such attachment or other judicial process affecting any article of Equipment leased hereunder.
4.4 Disposition of Equipment. Lessee shall not pledge, lend, create a security interest in, sublet or part with possession of the Equipment, or any part thereof, or attempt in any other manner to dispose thereof or remove the Equipment, or any part thereof, from the Premises other than Equipment which is obsolete or has no use and which Lessor concurs in writing may be removed from the Premises.
4.5 Alterations; Taxes. Lessee will make no alteration to the Equipment, and will pay all taxes and assessments levied against the Equipment for the use thereof during the term of the rental period.
4.6 Equipment Failure. Lessee shall repair all mechanical failures of the Equipment components, and, if necessary, replace components.
4.7 Inspection. After giving reasonable notice, Lessor shall have the right during Lessee's normal business hours to inspect the Equipment.
4.8 Liens; Taxes. Lessee shall keep the Equipment free and clear of all levies, liens and security interests, and shall give Lessor immediate notice of any attachment or other judicial process affecting any item of Equipment. Lessee shall pay all charges and local, state and Federal taxes (and reimburse Lessor for any such payments made by Lessor) which may now or hereafter be imposed upon the ownership, leasing, rental, sale, purchase, possession or use of the Equipment (and Lessee shall file all tax returns in connection therewith), excluding, however, all taxes on or measured by Lessor's net income. Further, Lessor may in its sole discretion require Lessee to make payments in amounts and at intervals satisfactory to Lessor to be held by Lessor in a non-interest bearing tax reserve account as security for Lessee's faithful performance of its obligations herein. The obligations of the Lessee to pay such sums shall be in addition to all other obligations of Lessee under this Lease and shall continue in full force and effect notwithstanding the termination of this Lease whether by expiration of time, by operation of law or otherwise.
4.9 Insurance. Lessee at its expense shall keep the Equipment insured against all risks of loss or damage from any cause whatsoever in amounts and on terms consistent with those historically maintained by Lessee; but no less than $6,000,000.00 according to a schedule approved in writing by Lessor; and Lessee shall carry adequate public liability insurance, both personal and injury including death and property damage, covering the Equipment in amounts and on terms consistent with those historically maintained by Lessee. All said insurance shall be in form and amount and with companies satisfactory to Lessor. All insurance for loss or damage shall provide that losses, if any, shall be payable to Lessor; and all such liability insurance shall include Lessor as named insured. Lessee shall pay the premiums therefor and deliver to Lessor the policies of insurance or duplicates thereof or other evidence satisfactory to Lessor of such insurance coverage. Each insurer shall agree by endorsement upon the policy or policies issued by it or by independent instrument furnished to Lessor that it will give Lessor thirty (30) days prior written notice of the effective date of any alteration or cancellation of such policy.
Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact to make claim for, receive payment of, and execute and endorse all documents, checks or drafts received in payment for loss or damage under any said insurance policy. In case of the failure of lessee to procure or maintain said insurance, Lessor shall have the right, but shall not be obligated, to effect such insurance or compliance on behalf of Lessee. In that event, all moneys spent by and expenses of Lessor in effecting such insurance or compliance shall be deemed to be additional rent, and shall become due and owed forthwith with interest at 18% per annum or such other maximum lawful contract rate as is otherwise allowed by law if less than 18%, and Lessee will pay the same with the periodic payment of rent next due after receipt of notice from Lessor.
4.10 Risk of Loss and Damage. Lessee shall bear the entire risk of loss, theft, damage or destruction of the Equipment from any cause whatsoever. In the event that any item of the Equipment is lost, stolen or destroyed beyond repair, Lessee shall pay to Lessor the value of such Equipment immediately prior to the loss, theft or destruction, as reasonably determined by the Lessor. Upon payment of such sum, Lessee shall be relieved from liability for any further rent with respect to the Equipment involved and the rent shall be adjusted by the Lessor accordingly. If Lessee is not then in default hereunder, Lessee shall receive as a credit against sums to be paid by reason of this paragraph the proceeds of any insurance actually received by Lessor on policies of insurance maintained by Lessee under the lease covering the Equipment involved to the extent that Lessor does not in its sole discretion use such proceeds to repair such Equipment. If Lessee is in default hereunder, such insurance proceeds shall first be applied to satisfy such default in whole or in part.
4.11 Indemnification. The Lessee does indemnify, protect, save and keep harmless the Lessor, its agents, servants, successors and assigns from and against all losses, damages, injuries, claims, demands and expenses, including legal expenses and attorney's fees, of whatsoever nature, arising out of the use, misuse, condition, repair, storage, return of operation (including, but not limited to, latent and other defects, whether or not discoverable by it) of any unit of Equipment, regardless of where, how and by whom operated, and arising out of negligence, whether of Lessor, its agents, servants, successor or assigns, tort, strict liability in tort, warranty, contract or any other cause of action with respect to Lessee or a party herein indemnified. The Lessee is liable for the expenses of the defense or the settlement of any suit or suits or other legal proceedings brought to enforce any such losses, damages, injuries, claims, demands and expenses and shall pay all judgments entered in any such suit or suits or other legal proceedings. The indemnities and assumptions of liabilities and obligations herein provided for shall continue in full force and effect notwithstanding the termination of this Lease whether by expiration of time, by operation of law or otherwise. With respect to Lessor, Lessee is an independent contractor, and nothing contained herein authorizes the Lessee or any other person to operate the Equipment so as to impose or incur any liability or obligation for or on behalf of Lessor.
5. Surrender. Lessee covenants to surrender the Equipment to Lessor upon the expiration of this Lease, in as good a condition as it now is, reasonable wear and tear excepted. If upon termination of this Lease, Lessee fails or refuses to return and deliver the Equipment to Lessor, Lessor shall have the right, without notice or demand, to enter the Premises or any other premises where the Equipment may be found and take possession of and remove the Equipment without legal process.
6. Default. In the event Lessee shall default in the payment of any Rent, or any other sums due hereunder for a period of ten (10) days or in the event of any default or breach of the terms and conditions of this Lease or any other agreement between the parties hereto and Lessee shall fail to cure same within thirty (30) days of receiving written notice thereof, or in the event of a misrepresentation or breach of warranty by the Lessee or any guarantor hereof or if any execution or other writ or process shall be issued in any action or proceedings, against the Lessee, whereby the Equipment may be taken or distrained, or if a proceeding in bankruptcy, receivership or insolvency shall be instituted by or against the Lessee or its property, or if the Lessee shall enter into any agreement of composition with its creditors or if the Lessee ceases doing business or transfers a major part in value of its assets, then in any such event the Lessor, at its option may: (a) proceed by appropriate court action or actions either at law or in equity to enforce performance by Lessee of the applicable covenants and terms of this Lease or to recover damages for the breach thereof and/or (b) retake immediate possession of the Equipment without any Court Order or other process of law and for such purpose the Lessee consents that the Lessor, directly or by its agents, may enter upon any premises where the Equipment may be and may remove the same therefrom with or without notice of its intention to do same without being liable to any suit or action or other proceeding by the Lessee and/or (c) declare all sums owing hereunder and/or all rentals immediately due and payable and/or (d) by notice in writing to Lessee terminate this Lease, whereupon all right and interest of Lessee in or to the possession or use of the Equipment shall absolutely cease and determine but Lessee shall remain liable as hereinafter provided and Lessor shall have the right under the preceding subsection (a), (b) and (c) of this section.
Further, Lessor: (i) shall be entitled to retain all rents and
additional sums paid by Lessee hereunder in respect of the Equipment as well as
all resale proceeds, refunds and other sums, if any, paid or received by Lessor
prior to or after default, including any such then in its possession which, had
this Lease not been declared in default, would otherwise be payable to lessee
hereunder and any other money or property of Lessee in Lessor's possession, and
(ii) may, but shall not be obligated to, re-let all or any part of the Equipment
for such rentals and upon such terms as Lessor shall elect or may, but shall not
be obligated to, sell the Equipment at public or private sale and either for
cash or upon credit, and (iii) shall be entitled to recover from Lessee all
rents and additional sums accrued and unpaid under the terms hereof prior to
Lessor's retaking possession of the Equipment, and as partial damages for
breach, a sum equal to the present value of the total unpaid rental which would
have accrued for the balance of the rental term less only the net proceeds of
any such reletting or sale, and (iv) shall be entitled to recover from Lessee
any and all damages which Lessor, shall sustain by reason of any such default,
failure or breach by Lessee, together with a reasonable sum for attorney's fees
and such expenses as shall be expended or incurred in the seizure, rental
storage, transportation, sale of Equipment, enforcement of any right or
privilege hereunder, collection of any sums due hereunder or in any consultation
or action in such connection.
The remedies herein provided in favor of Lessor in the event of default as hereinabove set forth shall not be deemed to be exclusive, but shall be cumulative and shall be in addition to all other remedies in its favor existing in law, in equity or in bankruptcy.
If any sum due to Lessor hereunder is unpaid after its due date, Lessor may at Lessor's option collect a delinquency charge, of up to the greater of ten dollars or interest at the rate of 18% per annum or at the highest rate permitted by law if less than 18%; provided, however, that the Lessor may not charge any amounts in excess of those permitted by law. All such charges shall be payable forthwith as Additional Rent hereunder.
7. Assignment. Neither this Lease, nor any interest created hereby, may be assigned by Lessee without the written consent of Lessor. This Lease, the Equipment or any rent due or to become due, may be assigned or sold by Lessor without consent of Lessee; provided, that, the successor to Lessor shall assume Lessor's obligations under this Lease.
8. No Warranties. LESSEE ACKNOWLEDGES THAT LESSOR IS NOT THE MANUFACTURER, THE AGENT OF THE MANUFACTURER, OR THE DISTRIBUTOR OF THE EQUIPMENT. LESSEE AGREES THAT LESSOR HAS MADE AND MAKES NO REPRESENTATIONS OR WARRANTIES OF WHATSOEVER NATURE, DIRECTLY OR INDIRECTLY, EXPRESS OR IMPLIED, AS TO THE SUITABILITY, DURABILITY, FITNESS FOR USE, MERCHANTABILITY, CONDITION, OR QUALITY OF THE EQUIPMENT AND OF ANY UNIT THEREOF. LESSEE SPECIFICALLY WAIVES ALL RIGHTS TO MAKE CLAIM AGAINST LESSOR AND ANY ASSIGNEES OF LESSOR FOR BREACH OF ANY WARRANTY OF ANY KIND WHATSOEVER; AND WITH RESPECT TO LESSOR OR LESSOR'S ASSIGNEE, LESSEE LEASES EQUIPMENT "AS IS". LESSOR AND LESSOR'S ASSIGNEE SHALL NOT BE LIABLE TO LESSEE FOR ANY LOSS, DAMAGE, OR EXPENSE OF ANY KIND OR NATURE CAUSED DIRECTLY OR INDIRECTLY BY ANY EQUIPMENT LEASED HEREUNDER, OR BY THE USE OR MAINTENANCE THEREOF, OR BY THE REPAIRS, SERVICE OR ADJUSTMENT THERETO OR ANY DELAY OR FAILURE TO PROVIDE ANY THEREOF, OR BY ANY INTERRUPTION OF SERVICE OR LESS OF USE THEREOF, OR FOR ANY LOSS OF BUSINESS OR DAMAGE WHATSOEVER AND HOWSOEVER CAUSED, WITHOUT IN ANY WAY IMPLYING THAT ANY SUCH WARRANTY EXISTS AND WITHOUT MAKING ANY REPRESENTATIONS AS TO THE EXTENT OF ANY SUCH WARRANTY, LESSOR AGREES, TO THE EXTENT OF ITS LEGAL POWER TO MAKE SUCH ASSIGNMENT AND WITHOUT INCREASING ITS LIABILITY HEREUNDER, TO ASSIGN TO LESSEE UPON LESSEE'S REQUEST THEREFOR ANY WARRANTY OF A MANUFACTURER OR SELLER RELATING TO THE EQUIPMENT THAT MAY HAVE BEEN GIVEN TO LESSOR.
9. Miscellaneous. It is further understood and agreed as follows:
9.1 Severability. If any provision of this Agreement shall be held to be void or unenforceable for any reason, the remaining terms and provisions hereof shall not be affected thereby.
9.2 Notices. Except as may be otherwise specifically provided herein, all notices required or permitted hereunder shall be in writing, and shall be deemed to be delivered when delivered personally, or when deposited with the United States Postal Service, postage prepaid, registered or certified mail, return receipt requested, addressed to the parties at the respective addresses set forth hereunder, or at such other address as may have been theretofore specified by written notice delivered in accordance herewith.
9.3 Binding Effect. The provisions of this Agreement shall inure to the benefit of and bind the successors and assigns of the parties hereto.
9.4 Paragraph Headings. Paragraph headings contained in this Agreement are for reference only, and shall not affect in any way the meaning or interpretation of this Agreement.
9.5 Entire Agreement. This instrument constitutes the entire agreement between the parties, and there are no agreements, understandings, restrictions, warranties or representations other than those set forth herein. This Agreement cannot be amended except in writing executed by each of the parties hereto.
9.6 Attorney's Fees. In the event either party hereto files suit in order to enforce or interpret the terms and provisions of this Agreement, the prevailing party in such litigation shall be entitled to recover from the other its reasonable attorney's fees and expenses incidental to the litigation.
9.7 Further Assurances. The parties hereto, and each of them, will take whatever action or actions as are deemed by counsel to the Lessor to be reasonably necessary or desirable from time to time to effectuate the provisions or intent of this Agreement, and to that end they will execute and deliver any further instruments or documents which may be necessary to give force and effect to this Agreement, or any of the provisions hereof, to give notice of Lessor's ownership of the Equipment, or to carry out the intent of this Agreement, or any of the provisions hereof.
9.8 Entire Agreement. This instrument constitutes the entire agreement of the parties. It supersedes any and all other agreements, either oral or in writing, between the parties hereto. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or otherwise, have been made by any party or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. This Agreement may not be modified or amended by oral agreement, but only by an agreement in writing, signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
"LESSOR" 1607 COMMERCE LIMITED PARTNERSHIP
A Texas Limited Partnership
By: 1607 COMMERCE, L.L.C.,
An Oklahoma Limited Liability Company,
General Partner
By: /s/ Paul A. Kruger
Paul A. Kruger, Manager
"TENANT" PLASTIC PALLET PRODUCTION, INC.,
a Texas corporation
By: /s/ Warren F. Kruger
Warren F. Kruger, President
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All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
LEASE AGREEMENT
THIS LEASE AGREEMENT, entered into effective the 8th day of September, 2003, by and between 1607 COMMERCE LIMITED PARTNERSHIP, a Texas limited partnership ("Landlord"), and PLASTIC PALLET PRODUCTION, INC., a Texas corporation ("Tenant").
In consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. LEASED PREMISES. Landlord does hereby lease, demise and let unto Tenant and Tenant does hereby lease from Landlord, the real property described on Exhibit "A" attached hereto and made a part hereof, located at 1607 West Commerce Street, Dallas, Texas, together with all buildings and leasehold improvements being hereinafter collectively referred to as the "Leased Premises").
2. LEASE TERM. This Lease shall be for a term of three (3) years, commencing on the 8th day of September, 2003, and terminating on the 7th day of September, 2006 (the "Term").
3. RENTAL. During the Term, Tenant hereby covenants and agrees to pay Landlord as rent for the Leased Premises, the sum of Two Hundred Twelve Thousand Six Hundred Forty and no/100 Dollars ($212,640.00) per year, in equal monthly installments of Seventeen Thousand Seven Hundred Twenty and no/100 Dollars ($17,720.00), each without demand, payable in advance on the first day of each and every calendar month during the term of this Lease. All rent and other amounts to be paid to the Landlord hereunder shall be payable and mailed to Landlord at Landlord's address set forth in the notice paragraph below, unless Landlord designates in writing a different mailing address or a different payee for said rent. Rent for any partial month shall be pro-rated based upon the number of days during such month that this Lease is in effect.
4. LATE CHARGE. If Tenant fails to make any installment of Rent, or any other sum due Landlord hereunder, within ten (10) days after such amount is due, then the Landlord may make or assess a late charge of five percent (5%) of the amount of each delinquent payment. Any assessment of late charges by Landlord shall be considered for all purposes as additional rent under the terms of this Lease, and shall be added to and payable with the next maturing monthly rental installment following such assessment. Assessment by Landlord of a late charge as herein provided shall be without prejudice to any remedies provided by law or under the provisions hereof. No assessment, payment or acceptance of a late charge shall operate as a waiver or estoppel of the right of Landlord to declare a default hereunder, or to pursue any default remedies provided by this Lease or by law.
5. TRIPLE NET LEASE. This Lease shall be considered a "triple net lease" in all respects and Landlord shall have no obligation or liability with respect to the Leased Premises, it being the intent of the parties that Landlord shall receive the rent reserved hereunder free from any charges, taxes, assessments, fees, impositions, expenses, deductions or offsets of every kind or nature.
6. PAYMENT OF REAL ESTATE TAXES AND ASSESSMENTS. Tenant shall pay all taxes and assessments against the Leased Premises during the Term of this Lease. The taxes and assessments shall be adjusted and prorated so that the Landlord shall pay its prorated share for the periods preceding and following the term of this Lease and the Tenant shall pay its prorated share for such term. The Tenant shall furnish to the Landlord for its inspection, within fifteen (15) days after the date any amount is payable by the Tenant, official receipts from the appropriate taxing authority or other proof satisfactory to the Landlord evidencing payment.
7. INSURANCE. Landlord shall keep the Leased Premises insured at all times during the Term of this Lease against loss or damage by fire and such other extended hazards as are embraced by the standard extended coverage endorsement approved for use in the State in which the Leased Premises are located covering the full insurable value of the improvements located on the Leased Premises in an amount and on terms consistent with the insurance coverage previously maintained on the Leased Premises, but no less than $1,500,000.00. During the Term of this Lease, Tenant shall reimburse Landlord for the cost of such insurance within fifteen (15) days after receipt of written notice from the Landlord setting forth the premium therefor. Landlord shall have no obligation to provide insurance covering the Tenant's contents, personal property, equipment, fixtures or alterations to the Leased Premises; however, Tenant shall have such an obligation pursuant to an Equipment Lease of even date herewith.
Tenant shall, at its sole cost and expense, carry on its personal property including, without limitation, fixtures, equipment and inventory in the Lease Premises, fire and such other extended hazards as are embraced by the standard extended coverage policy approved for use in the State in which the Leased Premises are located in an amount and on terms consistent with the insurance coverage previously maintained on the Leased Premises. Tenant shall, at Tenant's sole cost and expense, obtain and keep in force during the term hereof comprehensive general public liability insurance and property damage insurance in an amount and on terms consistent with the insurance coverage previously maintained on the Leased Premises.
All policies of insurance provided for under this paragraph shall name Landlord, such mortgage lenders as Landlord shall designate, and Tenant as named insureds to the extent of their respective interests. All such policies of insurance shall provide that any loss shall be payable as therein provided notwithstanding any act or negligence of Landlord, Tenant or any other occupant of the Leased Premises which might otherwise result in a forfeiture of said insurance.
All such insurance carried by Tenant shall further contain a clause that the insurer thereof will not cancel or amend the policy without first giving Landlord thirty (30) days advance written notice. All insurance required to be obtained and maintained hereunder shall be with an insurance company approved by Landlord and a copy of the policy and/or certificate of insurance shall be delivered to Landlord. If Tenant refuses or neglects to secure and maintain insurance policies in compliance with the provisions of this Section, Landlord may, but shall not be required to, secure and maintain such insurance and Tenant shall immediately pay the cost thereof to Landlord as additional rent.
8. MUTUAL WAIVER OF SUBROGATION. Notwithstanding anything to the contrary contained in this Lease, Landlord and Tenant do each hereby release the other from any and all liability or responsibility (to the other or to anyone claiming through or under the other by way of subrogation or otherwise) for any loss or damage to property caused by fire, any of the extended coverage perils, or any other insured peril, even if such fire or other casualty shall have been caused by the negligence of the other party or of anyone for whom such party may be responsible. Such waiver of subrogation shall be effective with respect to such loss or damage and each policy hereunder shall contain a clause of endorsement to the effect that any release shall not adversely affect or impair said policies or prejudice the right of the releasing party to recover thereunder. Landlord and Tenant each agree that their policies shall include such a clause or endorsement.
9. LIMIT TO LANDLORD'S LIABILITY. The Landlord shall not be liable for any damage to property of Tenant or of others located on the Leased Premises, nor for the loss of or damages to any property of Tenant or of others by theft, and Landlord shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, smoke, rain, or snow, bursting of or leaks from any part of the Leased Premises or from the pipes, appliances, or plumbing works, or from the roof, street or subsurface, or from any other place or by dampness, stoppage or leakage from sewer pipes or from any other cause whatsoever, provided, that nothing herein shall exempt the Landlord from liability as a result of injury to persons or property resulting from latent defects in the construction of the improvements on the Leased Premises by Landlord or breach by Landlord of any of Landlord's obligations under this Lease or unless the foregoing shall be caused by the willful, intentional or negligent act or omission of Landlord. All property of Tenant kept or stored on the Leased Premises shall be so kept and stored at the risk of Tenant only and unless herein otherwise provided, Tenant shall hold Landlord harmless from any claim arising out of damage to the same except for any willful, intentional or negligent act or omission of Landlord in connection with or arising out of said property.
10. REPAIRS AND MAINTENANCE. Tenant represents and warrants to Landlord that it has had the opportunity to inspect the Leased Premises prior to the execution of this Lease and that the same are clean and in good repair. Tenant shall keep and maintain the interior and exterior of the Leased Premises in good order, condition and repair including, without limitation, (a) the roof, down spouts, gutters, sidewalks, walls, plate glass of windows and doors; (b) all mechanical, electrical and heating and air conditioning systems (including but not limited to all duct work and transmission conduits), and all plumbing pipes, fixtures and connections both in and under the Leased Premises; (c) all interior and exterior repairs of a structural nature or arising out of structural defect, of which plastered surfaces shall be considered a part; (d) the parking area (which shall include without limitation, keeping such area repaired, clear and free of debris, lighted and striped); (e) the landscaping on the Leased Premises; (f) all tubes and bulbs used in lighting in the Leased Premises; and
(g) all of Tenant's trade fixtures, equipment, furniture and other personal property placed in or about the Leased Premises, regardless of whether or not permanently affixed to the Leased Premises. Tenant shall make all repairs to said improvements when necessary. Tenant shall keep and maintain all portions of the Leased Premises and other improvements in a clean and orderly condition.
If Tenant fails to make the repairs required of Tenant herein, or in the event of an emergency, Landlord may, at its option, make the repairs in which event Tenant shall reimburse Landlord for the cost thereof, together with twenty percent (20%) of said cost for administrative fees, as additional rent hereunder within five (5) days of demand therefor.
11. USE OF LEASED PREMISES. Tenant shall at all times during the Term, occupy the Leased Premises and use the same solely for the design, development and manufacture of plastic pallets and related machinery and for no other use. Tenant shall not use the Leased Premises for any purpose that would constitute a nuisance or in any manner violate any ordinance, law, regulation or statute of any governmental authority.
12. EQUIPMENT, FIXTURES AND SIGNS. Tenant shall have the right, at Tenant's sole cost and expense to place, erect, install, maintain and operate on the Leased Premises, such equipment, fixtures, signs, awnings, advertising matter or other thing of any kind which Tenant may reasonably require for the purposes of its business so long as the same are not in violation of any existing laws, ordinances or governmental regulations. Upon termination or expiration of the Lease, any equipment, fixtures, signs, awnings advertising matter or other thing placed upon the Leased Premises by Tenant may be removed by Tenant at its sole cost and expense. In such event, Tenant shall repair any damage caused by such removal and shall restore the site to the same condition existing at the commencement of this Lease.
13. HAZARDOUS SUBSTANCES. Tenant shall not use or allow the Leased
Premises to be used for the Release, storage, use, treatment, disposal or other
handling of any Hazardous Substance, without the prior consent of Landlord. The
term "Release" shall have the same meaning as is ascribed to it in the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss.9601, et seq., as amended ("CERCLA"). The term "Hazardous Substance" means
(i) any substance defined as a "hazardous substance" under CERCLA, (ii)
petroleum, petroleum products, natural gas, natural gas liquids, liquefied
natural gas, and synthetic gas, and (iii) any other substance of material deemed
to be hazardous, dangerous, toxic, or a pollutant under any federal, state or
local law, code, ordinance or regulation.
Tenant shall: (a) give prior notice to Landlord of any activity or operation to be conducted by Tenant at the Leased Premises which involves the Release, use, handling, generation, treatment, storage or disposal of any Hazardous Substance ("Tenant's Hazardous Substance Activity"), (b) at its expense comply with all federal, state and local laws, codes, ordinances, regulations, permits and licensing conditions governing the use, storage, Release, discharge, emission or disposal of any Hazardous Substances, (c) at its own expense, promptly contain and remediate any Release of Hazardous Substances arising from or related to Tenant's Hazardous Substance Activity in the Premises, or the environment and remediate and pay for any resultant damage to
property, persons or environment, (d) give prompt notice to Landlord and all appropriate regulatory authorities of any Release of any Hazardous Substances in the Leased Premises or the environment arising from or related to Tenant's Hazardous Substance Activities, which Release is not made pursuant to and in conformance with the terms of any permit or license duly issued by appropriate governmental authorities, and such notice to include a description of measures taken or proposed to be taken by Tenant to contain and remediate the Release and any resultant damage to property, persons, or the environment, (e) at Landlord's request retain an independent engineer or other qualified consultant or expert acceptable to Landlord, to conduct an environmental audit of the Leased Premises and immediate surrounding areas, with the scope of work to be performed by such engineer, consultant or expert to be approved in advance by Landlord, and all of the engineer's, consultant's or expert's work product shall be made available to Landlord; provided that there is no more than one audit per calendar year, the cost of such audit shall be paid by Tenant; (f) at Landlord's request from time to time, execute affidavits, representations and the like concerning Tenant's best knowledge and belief regarding the presence of Hazardous Substances in the Leased Premises, (g) reimburse to Landlord, upon demand, the reasonable cost of any testing for the purpose of ascertaining if there has been any Release of Hazardous Substances in the Leased Premises, if such testing is required by any governmental agency or any Mortgagee of the Leased Premises, and (h) upon expiration or termination of this lease, surrender the Leased Premises to Landlord free from the presence and contamination of any Hazardous Substance.
14. TENANT ORGANIZATION; COMPLIANCE WITH LAWS, ORDERS, ORDINANCES. Tenant represents and warrants that Tenant is a Corporation duly organized, validly existing and in good standing under the laws of the State of Texas and has all requisite corporate power and authority to execute and fulfill the obligations of this Lease. Tenant shall observe and comply with the requirements of all policies of public liability, fire and all other policies of insurance at any time in force with respect to the Leased Premises or improvements or to the use or manner of use of the same.
15. ASSIGNMENT AND SUBLETTING. Tenant may not assign or sublet the Leased Premises, in whole or in part, or mortgage or otherwise encumber the Leased Premises, unless the prior written consent of Landlord is first obtained, which consent may be withheld in Landlord's sole and absolute discretion. Any such attempted assignment, sublease, mortgage, or other encumbrance without such consent shall be void and shall constitute a default under this Lease. Consent by Landlord to any assignment or sublease shall not be deemed to be consent to any further or other assignment or sublease. Landlord shall not sell or transfer the Leased Premises except to a buyer which agrees to be bound by the terms of this Lease Agreement.
16. INSPECTION OF LEASED PREMISES. Landlord shall have the right to enter upon the Leased Premises or any portion thereof during the regular business hours of Tenant upon giving reasonable notice for the purpose of inspecting the same or correcting any condition which may exist thereon which is or may be in violation of this Lease, but such rights shall be exercised in a manner so as not to interfere with the business of the Tenant. Nothing herein contained shall prevent Landlord from entering upon the Leased Premises at any time and under any condition for the purpose of correcting any emergency or the violation of any ordinance, statute or law by Tenant.
17. DAMAGE OR DESTRUCTION. In the event the Leased Premises should be partially destroyed (meaning less than twenty-five percent [25%]) as a result of fire or other casualty, regardless of the cause, then Landlord shall, at its sole cost and expense promptly, but only to the extent of insurance proceeds actually received, commence to build or place the same in as good condition as prior to such casualty, which rebuilding or replacement shall be completed within nine (9) months following such casualty. In the event the Leased Premises should be substantially (meaning twenty-five percent [25%] or more) destroyed as a result of fire or other casualty, or it should be untenable and unfit for occupancy, then, Landlord may at Landlord's sole option, expressed to Tenant in writing within thirty (30) days of such occurrence, (a) promptly commence to build or replace the same as aforesaid, which rebuilding and replacement shall be completed within twelve (12) months following such substantial destruction, or (b) terminate this Lease, effective on the date of such casualty. Monthly rent, but not taxes and insurance, shall equitably abate during such period any such portion of the Leased Premises are untenable or unfit for occupancy, based upon the area of such portion of the buildings rendered untenable or unfit for occupancy in the event of partial destruction, or substantial destruction subsequent to which this Lease is not terminated by Tenant pursuant to the terms of this Lease, divided by the total area of the buildings on the Leased Premises.
18. UTILITIES. The Leased Premises are presently served by gas, water, electric, sewer and other utilities commonly used by commercial buildings similar to the Leased Premises. Tenant shall be responsible for the repair, reconnection or replacement of any of the lines, conduits, connectors or plumbing which connect the Leased Premises to any such utilities and their common source of supply. At all times during the term of this Lease, Tenant shall pay all deposits and charges for water, sewer, electricity, gas, trash or refuse hauling and any other public or private utility service used or consumed by Tenant on the Leased Premises.
19. ADDITIONS, ALTERATIONS OR REMODELING. Tenant shall have the right, at Tenant's sole cost and expense and with the prior written consent of Landlord obtained in each instance, such consent to not be unreasonably withheld, to make any alterations, improvements or additions to the Leased Premises. Any such alterations, improvements or additions shall be made in compliance with all local ordinances and public authorities having jurisdiction thereof. All alterations, improvements or additions made by Tenant shall become the property of the Landlord.
20. CONDITION OF PROPERTY. Tenant has inspected the Leased Premises prior to the commencement of this Lease and accepts the same in its present condition. The Leased Premises are being leased to Tenant in an "AS IS, WHERE IS, WITH ALL FAULTS" condition as of the date first above written. Tenant's taking possession shall be conclusive evidence against Tenant that the Leased Premises were in good order, repair, and satisfactory condition on the effective date of this Lease. Landlord has made no promise to Tenant to alter, remodel, or improve the Leased Premises or any adjacent area, nor made any representation regarding the condition of the Leased Premises.
21. BROKERAGE FEES. The parties covenant, warrant, and represent to each other that no broker was instrumental in consummating this Lease and neither party had any conversation or prior negotiations with any broker concerning the renting of the Leased Premises. Each party shall protect, indemnify, save, and keep harmless the other against any brokerage commission allegedly due or attorney's fees, arising out of or from any claims for brokerage commissions and/or finders' fees resulting from any conversation or negotiations by such party with any broker or any other person.
22. EVENTS OF DEFAULT. The following events shall be deemed to be
events of default by Tenant hereunder: (a) Failure by Tenant to pay any portion
of the rent required to be paid hereunder or failure to pay any other financial
obligation imposed upon Tenant by the terms hereof within ten (10) days of when
due; (b) Failure by Tenant to comply with any term, covenant or provision of
this Lease, other than as referred to in subparagraph (a) above and failure to
correct such failure within ten (10) days after written notice thereof to Tenant
from Landlord specifying such failure and requesting that it be remedied, or if
such failure cannot with due diligence be corrected within ten (10) days,
failure to commence to correct the same and/or, having so commenced to correct
such failure, neglecting to prosecute such correction with due diligence to
completion; (c) If an order, judgment or decree shall be entered by any court
adjudicating the Tenant a bankrupt or insolvent, or approving a petition seeking
reorganization of the Tenant or any Guarantor of Tenant's obligations pursuant
to this Lease (the "Guarantor") or appointing a receiver, trustee or liquidator
of the Tenant or any Guarantor, or of all or a substantial part of its assets;
(d) Tenant shall file an answer admitting the material allegations of a petition
filed against the Tenant or any Guarantor in any bankruptcy, reorganization or
insolvency proceeding or under any laws relating to the relief of debtors,
readjustment or indebtedness, reorganization, arrangements, composition or
extension; (e) Tenant or any Guarantor shall make any assignment for the benefit
of creditors or shall apply for or consent to the appointment of a receiver,
trustee or liquidator of Tenant or any Guarantor, or any of the assets of Tenant
or any Guarantor; (f) Tenant or any Guarantor shall file a voluntary petition in
bankruptcy, or shall admit in writing its inability to pay its debts as they
come due or shall file a petition or an answer seeking reorganization or
arrangement with creditors or take advantage of any insolvency laws; (g) Tenant
materially defaults under its Equipment Lease with Landlord of even date
herewith; or (h) A decree or order appointing a receiver to the property of
Tenant or any Guarantor shall be made and such decree or order shall not have
been vacated within sixty (60) days from the date of entry or granting thereof.
Upon the occurrence of any of the aforesaid events of default Landlord shall have the option to pursue any one or more of the following remedies without any demand or notice whatsoever: (a) terminate this Lease, in which event Tenant shall immediately surrender the Leased Premises to Landlord; (b) without terminating this Lease, enter upon the Leased Premises and perform whatever Tenant is obligated to do under the terms of this Lease and Tenant shall reimburse Landlord upon demand for any expenses which Landlord may incur in effecting compliance with Tenant's obligations under this Lease; (c) whether or not Landlord terminates this Lease, recover the present value of all rent for a period equal to the remaining Term of this Lease without any obligation to re-let the Leased Premises; or (d) take any other action allowed by law.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided by law. Nothing provided by law or contained herein shall be deemed to obligate Landlord to expend any funds.
Failure or delay by Landlord to enforce any one or more of the remedies herein provided or provided by law upon any event of default shall not be deemed or construed to constitute a waiver thereof or preclude the exercise thereof during the continuation of any default hereunder or be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions and covenants herein contained.
In the event of default by Tenant of any of the terms and conditions of this Lease, and upon such default, interest at the highest rate allowed by law in the State in which the Leased Premises are situated shall accrue on all amounts due or which will become due, including costs and attorney's fees.
23. REDELIVERY OF LEASED PREMISES. Tenant shall, upon termination or expiration of this Lease, peacefully quit, surrender and deliver the Leased Premises unto Landlord empty, broom clean and in as good a condition as when received, normal wear and tear excepted. If Tenant shall leave any personal property in or on the Leased Premises for more than three (3) days after termination, Tenant shall be conclusively deemed to have abandoned such personal property and Landlord may dispose of such property as it sees fit, with no obligation to account to Tenant.
24. INDEMNIFICATION. During the term hereof, Tenant covenants and agrees to hold Landlord harmless from any claims, demands, judgments, losses, costs, expenses or damages of any character or nature regardless of by whom imposed including but not limited to claims for loss or damage to any property or injury to or death of any person asserted by or on behalf of any person, arising out of, resulting from or in any way connected with Tenant's occupancy and/or use of the Leased Premises or the condition, occupancy, use, possession, conduct or management or any work done in or about the Leased Premises or any portion thereof attributable to Tenant or its assignees or subtenant. Tenant further covenants and agrees, at Tenant's expense, to pay, indemnify and save Landlord harmless of, from and against all costs, counsel fees, expenses and liabilities incurred in any action or proceeding brought by reason of any such claim or demand.
25. CONDEMNATION. In the event the entire Leased Premises shall be taken in condemnation proceedings or by exercise of any right of eminent domain for public or quasi public use, this Lease shall terminate as of the date of said taking and all unearned rent and other charges paid in advance shall be refunded to Tenant after deducting any charges owed by Tenant to Landlord, and Tenant shall surrender possession of the Leased Premises to Landlord. In the event a portion of the Leased Premises shall be taken by such proceedings, either party may terminate this Lease within thirty (30) days after the taking, in which event Landlord and Tenant shall be relieved of all further liability hereunder, or Tenant may elect to continue this Lease in effect with an appropriate reduction of rent during the remainder of the lease term. The award for any such taking shall belong entirely to Landlord. The Tenant shall be
entitled to make a claim in its own name to the condemning authority for the value of any furniture, trade fixtures, trade equipment, merchandise or personal property of any kind belonging to the Tenant, and not forming a part of the Leased Premises, or for the cost of moving all of the same or for moving such business as is necessary or for lost profits; provided that such claim shall not reduce the award to the Landlord.
26. LIENS. Tenant shall at all times keep the Leased Premises free and clear of any liens, charges or claims arising from any act or omission to act on the part of Tenant in connection with the maintenance and repair of the Leased Premises or the installation therein of any fixtures and equipment. In the event any such liens, charges or claims are made or filed against the Leased Premises, Tenant agrees to promptly discharge the same and deliver to Landlord evidence thereof.
27. QUIET ENJOYMENT. So long as Tenant is not in default of the terms hereunder, Tenant shall peacefully hold and quietly enjoy the Leased Premises without interruption by Landlord, any mortgagee, or any other person claiming under Landlord or any mortgagee, except as otherwise provided herein.
28. SUBORDINATION. This Lease is subject and subordinate at all times to any present or future mortgage or deed of trust constituting a lien on the Leased Premises, and to all renewals, modifications, consolidations, replacements and extensions thereof, to the full extent of the indebtedness secured thereby, with the same force and effect as if the mortgage had been executed, delivered and duly recorded prior to the execution of the Lease. Tenant shall execute and deliver any instrument reasonably requested by Landlord in confirmation of such subordination within ten (10) days of Landlord's request.
29. ESTOPPEL CERTIFICATE. Within ten (10) days after request by the Landlord, Tenant shall, without charge, deliver a duly executed and acknowledged estoppel certificate to the Landlord or any mortgagee, purchaser, assignee of mortgagee or purchaser, or any other person, firm or corporation reasonably requested by Landlord. It is intended that any such statement delivered pursuant to this paragraph may be relied upon by Landlord or any mortgagee, purchaser, assignee of mortgagee or purchaser, or any other person, firm or corporation relying upon such statement.
30. ATTORNMENT. In the event that, by reason of the foreclosure of the mortgage for any reason or due to any exercise of a power of sale or as a result of the taking of a deed in lieu of foreclosure, mortgagee or any successor or assignee of mortgagee succeeds to the interest of the Landlord under this Lease, then upon receipt of notice from the mortgagee or such successor or assignee that it has succeeded to the rights of the Landlord under this Lease, Tenant hereby agrees to recognize mortgagee or such successor or assignee as Tenant's landlord under this Lease and hereby agrees to attorn to mortgagee or such successor or assignee. Said attornment is to be effective and self-operative without the execution of any other instrument immediately upon mortgagee or any successor or assignee of mortgagee succeeding to the rights of the Landlord under the Lease, and this Lease shall continue in accordance with its terms between Tenant and mortgagee or any successor assignee of mortgagee, as
Landlord; provided, however, that mortgagee or any successor or assignee of mortgagee shall not: (a) be bound by any prepayment of rent more than 60 days in advance; (b) be bound by any amendment or modification of this Lease made after the succession or assignment without the consent of mortgagee or its successor or assignee; (c) be personally liable under this Lease, and mortgagee's or its successor's or assignee's liability under the Lease shall be limited to the interest of mortgagee or its successor or assignee in the Leased Premises; (d) be liable, except by way of set-off, for any act, omission, neglect, or default of any prior landlord under this Lease including, without limitation, the Landlord; and (e) be subject to any claims, credits, offsets, or defenses which Tenant might have against any prior landlord under this Lease including, without limitation, the Landlord. Tenant agrees to execute and deliver within ten (10) days of Landlord's request or such successor's request an attornment agreement certifying as to the matters set forth in this paragraph.
31. Intentionally left blank.
32. TIME OF ESSENCE. Tenant agrees that time is of the essence in the performance of each and every term, covenant and condition of this Lease.
33. ENTIRE AGREEMENT. This instrument constitutes the entire agreement of the parties. It supersedes any and all other agreements, either oral or in writing, between the parties hereto. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or otherwise, have been made by any party or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. This Agreement may not be modified or amended by oral agreement, but only by an agreement in writing, signed by the parties hereto.
34. SEVERABILITY. If any provision of this Lease is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Lease will remain in full force and effect. Any provision of this Lease held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
35. BINDING EFFECT. It is agreed that the provisions, covenants and conditions of this Lease shall be binding upon each of the parties hereto, their heirs, successors and permitted assigns.
36. NOTICES AND COMMUNICATIONS. All notices consents, waivers and other communications under this Lease shall be deemed to be properly given and served if sent by registered or certified mail, postage prepaid, with return receipt requested, hand delivery (with confirmation of receipt), prepaid overnight delivery service, or facsimile with confirmation sheet if sent to the following:
If to Landlord: 1607 Commerce Limited Partnership
2500 McGee Drive, Suite 147
Norman, Oklahoma 73072
Attention: Paul A. Kruger
If to Tenant: Plastic Pallet Production, Inc.
1613 E. 15th St.
Tulsa, Oklahoma 74120
Attention: Warren Kruger
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Unless otherwise stated, the effective date of any such notice or communication shall be the date on which the same is received. Either party hereto may change the address to which notice is to be sent by prior written notice to the other party.
37. APPLICABLE LAW. This Lease is to be interpreted, construed and enforced in accordance with the laws of the State in which the Leased Premises is located, without regard to its conflict of laws principles.
38. DUPLICATE ORIGINALS. Any fully executed copy of this Lease shall be deemed for all purposes as a duplicate original hereof.
39. AGENCY. Nothing herein contained shall be deemed or construed by the parties hereto nor by any third party as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto, nor shall any act of the parties hereto be deemed to create any relationship between the parties hereto other than the relationship of landlord and tenant.
40. ATTORNEY FEES AND COSTS. In the event either party hereto shall file an action to enforce any agreement contained in this Lease or for breach of any covenant or condition hereof, then the prevailing party in any such action shall be entitled to recover from the other party or parties attorney's fee for the services of the prevailing parties' attorney, together with any and all costs of such action, said fees to be fixed by a court having competent jurisdiction over the subject matter in dispute.
41. EXECUTION IN COUNTERPARTS. This Lease may be executed in one or more counterparts, each of which will be deemed an original copy of the Lease and all of which, when taken together will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this Lease the day and year first above written.
"LANDLORD" 1607 COMMERCE LIMITED PARTNERSHIP
A Texas Limited Partnership
By: COMMERCE, L.L.C.,
An Oklahoma Limited Liability Company,
General Partner
By: /s/ Paul A. Kruger
Paul A. Kruger, Manager
"TENANT" PLASTIC PALLET PRODUCTION, INC.,
a Texas corporation
By: /s/ Warren F. Kruger
Warren F. Kruger, President
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All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
THIS SECURITY AGREEMENT is made and entered into effective as of the 8th day of September, 2003, between PALWEB CORPORATION, an Oklahoma corporation ("PalWeb"); PLASTIC PALLET PRODUCTION, INC., a Texas corporation ("PPP"); and GREYSTONE MANUFACTURING, L.L.C., an Oklahoma limited liability company ("Greystone") (PalWeb, PPP and Greystone, collectively, the "Debtors"), and 1607 COMMERCE LIMITED PARTNERSHIP, a Texas limited partnership (the "Secured Party").
RECITALS:
A. The Debtors have requested that the Secured Party enter into leases (the "Leases") with PPP covering real estate and equipment located at 1607 Commerce Street, Dallas, Texas, and PalWeb and Greystone have guaranteed the obligations of PPP pursuant to the Leases (the "Guarantees").
B. The Secured Party has agreed to enter into the Leases and agreed to accept the Guarantees on the strength of the security provided the Secured Party in this Security Agreement and in a Stock Pledge Agreement executed by PalWeb on this date.
NOW, THEREFORE, to induce the Secured Party to enter into the Lease and accept the Guarantees, and for other valuable considerations, the receipt of which is hereby acknowledged, the Secured Party and the Debtors agree as follows:
1. Definitions.
1.1. Terms Defined in the UCC. Each term used herein which is defined in the UCC and not otherwise defined herein, shall have the respective meaning given such term in the UCC.
1.2. Definitions of Certain Terms Used Herein. As used in this Security Agreement, the following terms shall have the following meanings:
"Account" shall have the meaning given such term in Article 9 of the
UCC.
"Collateral" is defined in Section 2 of this Security Agreement.
"Chattel Paper" shall have the meaning given such term in Article 9 of the UCC.
"Equipment" shall have the meaning given such term in Article 9 of the UCC.
"General Intangible" shall have the meaning given such term in Article 9 of the UCC.
"Instruments" shall have the meaning given such term in Article 9 of the UCC.
"Inventory" shall have the meaning given such term in Article 9 of the UCC.
"Indebtedness" means and includes all liabilities, obligations and indebtedness of the Debtors to the Secured Party, of every kind and description, now existing or hereafter incurred, direct or indirect, absolute or contingent, due or to become due, matured or unmatured, and whether or not of the same or a similar class or character as the Leases and whether or not currently contemplated by the Secured Party or the Debtors, including (i) the Leases; (ii) the Guarantees; (iii) all other liabilities, obligations and indebtedness of the Debtors to the Secured Party arising out of or related to the Leases or the Guarantees, including costs and expenses of collection and other amounts reimbursable under the Lease or the Guarantees; and (iv) any and all extensions of any of the foregoing.
"Letter of Credit Rights" shall have the meaning given such term in Article 9 of the UCC.
"Lien" shall mean any lien (statutory or other), security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, capitalized lease or other title retention agreement).
"Payment Intangible" shall have the meaning given such term in Article 9 of the UCC.
"Permitted Liens" means (i) Liens in favor of F&M Bank, (ii) Liens for taxes, assessments or other governmental charges not delinquent or being contested in good faith and by appropriate proceedings and with respect to which proper reserves have been taken by the Company, (iii) judgment Liens that have been stayed or bonded and mechanics', workers', materialmen's or other like Liens arising in the ordinary course of the Company's business with respect to obligations which are not due or which are being contested in good faith by the Company, (iv) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof provided that any such Lien shall not encumber any other property of the Company, and (v) Liens arising in connection with the Leases and the transactions contemplated thereby.
"Proceeds" shall have the broadest and most extensive meaning now or hereafter given or assigned to such term in Article 9 of the UCC and, in any event, shall include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Debtors from time to time with respect to the Collateral, and (ii) any and all payments (in any form whatsoever) made or due and payable to the Debtors from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in the State of Oklahoma as hereinafter amended, modified or re-enacted from time to time.
2. Grant of Security Interest. As security for the payment of all Indebtedness, the Debtors hereby assign and grant to the Secured Party, a first and prior, continuous and
continuing security interest in, and assignment of, all of the following, whether now or hereafter existing or acquired (the "Collateral"):
(a) All Accounts of the Debtors;
(b) All Equipment of the Debtors;
(c) All Inventory of the Debtors;
(d) All General Intangibles of the Debtors, including all intellectual property more particularly described on Exhibit B attached hereto;
(e) All Payment Intangibles of the Debtors;
(f) All Instruments (including promissory notes), Letter of Credit Rights, Supporting Obligations, Documents, Chattel Paper of the Debtors;
(g) All books, records, ledger cards, electronic data processing materials and other general intangibles relating to the foregoing subsections (a) through (f); and
(h) all proceeds of and all replacements, additions,
substitutions, accessories, appurtenances, and parts for, the items
or types of collateral described above in subsections (a) through
(g), whether now owned or hereafter acquired including, without
limitation insurance proceeds.
3. Warranties. The Debtors warrant that: (i) no financing statement
(other than any which may have been filed on behalf of the Secured Party)
covering any of the Collateral is on file in any public office; (ii) except for
Permitted Liens, the Debtors are and will be the lawful owners of all of the
Collateral, free of all Liens and claims whatsoever, with full power and
authority to execute this Security Agreement and to perform the Debtors'
obligations hereunder, and to subject the Collateral to the security interest
hereunder; (iii) all information with respect to the Collateral and the Account
Debtors set forth on any schedule, certificate or other writing at any time
heretofore or hereafter furnished by the Debtors to the Secured Party, is and
will be true and correct in all material respects as of the date furnished, and
(iv) the Debtors are duly authorized to execute, deliver and perform this
Security Agreement.
4. Use and Possession. As long as there exists no event of default on either the Leases or the Guarantees (the "Event of Default"), the Debtors may have possession of the Collateral and use the same in any lawful manner not inconsistent with this Security Agreement, with any applicable law or regulation or with any policy of insurance on any of such Collateral.
5. Sales in the Ordinary Course of Business; Collections by Debtors. Until such time as the Secured Party shall notify the Debtors of the revocation of such power and authority because of the occurrence of an Event of Default (whether or not the Secured Party takes any other action or accelerates the Indebtedness), the Debtors (i) may, in the ordinary course of their business, at their own expense, sell, lease or furnish under contracts of service any of the
Collateral held by the Debtors for such purpose, and use and consume, in the ordinary course of its business, any raw materials, work in process or materials normally held by the Debtors for such purpose, and (ii) will, at their own expense, endeavor to collect, as and when due, all amounts due with respect to Accounts, lease and/or notes receivable, leases, lease agreements, chattel paper, contracts, General Intangibles and Payment Intangibles pertaining to any of the Collateral, including the taking of such action with respect to such collection as the Secured Party may reasonably request or, in the absence of such request, as the Debtors may deem advisable.
6. Collections by the Secured Party. Upon the occurrence of an Event of Default (whether or not the Secured Party takes any other action or accelerates the Indebtedness), the Secured Party may at any time, whether before or after any revocation of such power and authority or the maturity of any of the Indebtedness, notify any parties obligated on any of the Accounts, leases and/or notes receivable, leases, lease agreements, Chattel Paper, contracts, General Intangibles or Payment Intangibles to make payment to the Secured Party of any amounts due or to become due thereunder and enforce collection of any such Accounts, leases and/or notes receivable, leases, lease agreements, Chattel Paper, contracts, General Intangibles or Payment Intangibles by suit or otherwise and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations thereunder or evidenced thereby. The Debtors will, at their own expense, notify any parties obligated on any of the Accounts, leases and/or notes receivable, leases, lease agreements, Chattel Paper, contracts, General Intangibles or Payment Intangibles pertaining to the Collateral to make payment to the Secured Party of any amounts due or to become due thereunder. The Secured Party is authorized to endorse, in the name of the Debtors, any item howsoever received by the Secured Party, representing any payment on or other proceeds of any of the Collateral. In each instance in which the Secured Party may elect hereunder to effect direct collection of any one or more Accounts, leases and/or notes receivable, leases, lease agreements, Chattel Paper, contracts, General Intangibles or Payment Intangibles pertaining to the Collateral, the Secured Party is also entitled to take possession of all books and records of the Debtors relating to the Debtors' Accounts, leases and/or notes receivable, leases, lease agreements, Chattel Paper, contracts, General Intangibles or Payment Intangibles, and the Debtors will not in any manner take or suffer any action to be taken to hinder, delay or interfere with the Secured Party's attempts to effect collection.
7. Inventory Location. The Debtors hereby represent and warrant to the Secured Party that the Inventory is located only in the location set forth on Exhibit A hereto. The Debtors will not open or establish any warehouse not owned or established as of the date of this Security Agreement or locate any Inventory at any location except as set forth above without obtaining the Secured Party's prior written consent and executing such financing statements as the Secured Party and its counsel deem necessary to perfect its security interest therein. The Debtors shall immediately notify the Secured Party of the occurrence of any event causing loss or depreciation in value (except for ordinary wear and tear and loss or depreciation in value) of Collateral and the amount of such loss or depreciation.
8. Covenants of the Debtors. The Debtors will (i) upon demand, provide to the Secured Party any information the Secured Party deems necessary in order to protect, preserve,
continue, perfect, extend or maintain a valid security interest in the
Collateral (free of all other Liens, claims and rights of third parties
whatsoever) to secure payment of the Indebtedness, and Debtors hereby authorize
the filing of any financing statement, continuation statement, inventory list,
lien entry forms or other similar documents and will pay any expenses and fees
incurred from time to time by Secured Party in connection therewith; (ii) keep
all Inventory only at the locations set forth in Section 7 hereof or at such
other addresses as shall be provided to the Secured Party at least fifteen days
prior to the location of any Inventory thereat, and which address shall be
acceptable to the Secured Party; (iii) keep only at the locations set forth in
Section 7 hereof all records concerning Accounts, notes receivable, contracts,
General Intangibles and Payment Intangibles, which records will be of such
character as will enable the Secured Party or its agents or designees to
determine at any time the status thereof; (iv) furnish the Secured Party such
information concerning the Debtors, the Collateral and the Account Debtors as
the Secured Party may from time to time reasonably request; (v) permit the
Secured Party and its agents and designees from time to time to inspect the
Inventory and to inspect, audit and make copies of and extracts from all records
and all other papers in the possession of the Debtors, and will, upon reasonable
request of the Secured Party, deliver to the Secured Party all of such records
and papers which pertain to the Collateral and the Account Debtors; (vi) upon
request of the Secured Party, stamp on the Debtors' records concerning the
Collateral, a notation, in form satisfactory to the Secured Party, of the
security interest of the Secured Party hereunder; (vii) except for the sale or
lease of Inventory in the ordinary course of its business, not sell, lease,
transfer or otherwise dispose of, assign or create or permit to exist any Lien
on or security interest in any Collateral to or in favor of anyone other than
the Secured Party, except with the prior written consent of the Secured Party;
(viii) at all times keep all Collateral insured against loss, damage, theft and
other risks, in such amounts, with such companies, under such policies and in
such form, all as shall be reasonably satisfactory to the Secured Party, which
policies shall provide that loss thereunder shall be payable to the Debtors and
the Secured Party as their interests may appear, and such policies or
certificates thereof shall, if the Secured Party so requests, be deposited with
the Secured Party; (ix) if the Collateral is of a type normally used in more
than one state, whether or not actually so used, the Debtors will immediately
give written notice to the Secured Party of any change in the location of the
chief executive office or the chief place of business of the Debtors, and of any
transfer of any such Collateral in any jurisdiction other than the locations set
forth in paragraph 7 hereof; and (x) reimburse the Secured Party for all
reasonable expenses, including attorneys' fees and legal expenses, incurred by
the Secured Party in seeking to collect or enforce any rights in the Collateral
and to collect the Leases and all other Indebtedness and to enforce its rights
hereunder.
9. Remedies. Whenever an Event of Default shall exist, the Indebtedness shall be immediately due and payable, or not, as provided in the Leases and Guarantees, and the Secured Party may from time to time exercise any rights and remedies available to it hereunder, under the Leases, Guarantees or applicable law. The Debtors agree, in case of an Event of Default and upon the request of the Secured Party, to assemble the Collateral, at the Debtors' expense, at a convenient place acceptable to the Secured Party. Without limiting the foregoing, upon the existence of an Event of Default, the Secured Party may, to the fullest extent permitted by applicable law, without notice (except as required by the Leases and Guarantees), advertisement, hearing or process of law of any kind, (i) enter upon any premises where any of the Collateral may be located and take possession of and remove all or any such items, (ii) sell any or all of the
Collateral free of all rights and claims of the Debtors therein and thereto at any public or private sale, and (iii) bid for and purchase any of the Collateral at any such sale. If any notification of intended disposition of any of the Collateral is required by law, such notification, if mailed, shall be deemed reasonably and properly given if mailed at least ten days before disposition, postage prepaid, addressed to the Debtors, at the address shown on the signature page or at any other address of the Debtors appearing on the records of the Secured Party. Any proceeds of any of the Collateral (including proceeds of collections by the Secured Party described in Section 6) may be applied by the Secured Party to the payment of expenses incurred in connection with enforcing its rights or remedies with respect to the Collateral, including reasonable attorneys' fees and legal expenses, and any balance of such proceeds may be applied by the Secured Party toward the payment of such of the Indebtedness, and in such order of application as the Secured Party may from time to time elect, but only if allowed by applicable law.
10. Reimbursement of Secured Party. The Secured Party may from time to time, at its option, perform any agreement, obligation or covenant of the Debtors hereunder which the Debtors shall fail to perform, and take any other action which the Secured Party reasonably deems necessary for the maintenance or preservation of any of the Collateral or its interest therein, and the Debtors agree to forthwith reimburse the Secured Party for all reasonable expenses of the Secured Party in connection with the foregoing, together with interest thereon at the Default Rate from the date of notice thereof to the Debtors until reimbursed by the Debtors.
11. Reasonable Care. The Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if it takes such action for that purpose as the Debtors may request in writing, but failure of the Secured Party to comply with any such request shall not of itself be deemed a failure to exercise reasonable care.
12. Notices. Any notice from the Secured Party to the Debtors, if mailed, shall be deemed given when mailed, postage prepaid, or delivered by commercial delivery service, addressed to the Debtors, at the Debtors' address shown on the signature page hereto or at any other address of the Debtors appearing on the records of the Secured Party. Any notice from the Debtors to the Secured Party, if mailed, shall be deemed given when mailed, postage prepaid, or by commercial delivery service, addressed to the Secured Party at the address shown on the signature page hereto or at such other address as the Secured Party shall have provided to the Debtors for such purpose.
13. No Waiver. No delay on the part of the Secured Party in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Secured Party of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy.
14. Amendments and Modifications. No amendment to, modification or waiver of, or consent with respect to any provision of this Security Agreement, shall in any event be effective unless the same shall be in writing and signed and delivered by the Secured Party, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
15. Choice of Law. This Security Agreement has been delivered to the Secured Party at Tulsa, Oklahoma, and shall be construed in accordance with and governed by the laws of the State of Oklahoma.
16. Severability. Whenever possible each provision of this Security Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Security Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Security Agreement.
17. Binding Effect. This Security Agreement shall be binding upon the Debtors and their successors and assigns, and shall inure to the benefit of the Secured Party and its successors and assigns.
18. Financing Statement. A carbon or photographic copy, or other reproduction, of this Security Agreement or of any financing statement prepared or filed with respect hereto is sufficient as a financing statement for all purposes.
IN WITNESS WHEREOF, this Security Agreement has been duly executed and delivered in Tulsa, Oklahoma, effective as of the day and year first above written.
Address for Debtors: PALWEB CORPORATION,
an Oklahoma corporation
1607 West Commerce By: /s/ Warren F. Kruger
Dallas, Texas 75208 ------------------------------
Warren F. Kruger, President
PLASTIC PALLET PRODUCTION, INC., a
Texas corporation
1607 West Commerce By: /s/ Warren F. Kruger
Dallas, Texas 75208 ------------------------------
Warren F. Kruger, President
GREYSTONE MANUFACTURING, L.L.C.,
an Oklahoma limited liability
company
1613 E. 15th St. By: /s/ Warren F. Kruger
Tulsa, Oklahoma 74120 ------------------------------
Warren F. Kruger, President
"Debtors"
7
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1607 COMMERCE LIMITED PARTNERSHIP,
a Texas limited partnership
By: 1607 Commerce, L.L.C., an
Oklahoma limited liability
company, General Partner
Address for Secured Party By: /s/ Paul A. Kruger
------------------------------
: Paul A. Kruger, Manager
"Secured Party"
|
All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.
In consideration of the execution by 1607 COMMERCE LIMITED PARTNERSHIP, as landlord ("Landlord"), of that certain Equipment Lease dated September 8th, 2003, (the "Lease") between Landlord, as landlord, and PLASTIC PALLET PRODUCTION, INC, a corporation, as tenant ("Tenant"), and as an inducement to Landlord to execute the Lease, the undersigned hereby jointly and severally guarantee to Landlord and to its successors and assigns, the payment by Tenant when due of the rent and all other sums provided for in the Lease and the due performance by Tenant of all of the provisions of the Lease and any and all modifications or extensions thereof. In the event of Tenant's failure, or the failure of its successors or assigns, if any, to pay said sums or the render any other performance required of Tenant, when due, the undersigned will forthwith pay all amounts that may be due and will forthwith perform all of the provisions of said Lease to be performed by Tenant and pay all damages that may result from the non-performance thereof by Tenant. The undersigned hereby consents to and waives notice of any extension of time for performance which Landlord may grant to Tenant and to any modifications or amendments of said Lease or extensions or renewals of the term thereof to which Landlord and Tenant, or their successors and assigns, may agree.
The undersigned waives notice of acceptance of this Guaranty and of any default in the payment of rent, additional rent or any other amounts contained or reserved in said Lease, and notice of any breach or non-performance of any of the covenants, conditions or agreements contained in said Lease.
The undersigned further agrees that the liability under this Guaranty of the undersigned shall be primary, and that in any right of action which may accrue to the Landlord, their successors or assigns, under said Lease or this Guaranty, Landlord and their successors or assigns, at their option may proceed against the undersigned without having taken or commenced any action or obtained any judgment against Tenant and without applying any security deposit or other property of Tenant or any other person held as collateral security for the performance of the obligations of Tenant under the Lease or otherwise to the discharge of the obligations of the Tenant under the Lease. The undersigned waives any right to require Landlord to pursue any remedy in Landlord's power against Tenant and waives as defenses to the obligations hereunder the pleadings or defense of any statute of limitations. Any partial payment, performance or other circumstance which operates to toll any statute of limitations as to Tenant shall operate to toll the statute of limitations as to the undersigned under this Guaranty.
The undersigned agrees that, in the event Tenant shall become insolvent or shall be adjudicated a bankrupt, or shall file a petition for reorganization, arrangement or similar relief under any present or future provision of the Federal Bankruptcy Code, or any other act for the relief of debtors or any similar acts or law, or if such a petition filed by creditors of Tenant shall be approved by a Court, or if Tenant shall seek a judicial readjustment of the rights of its creditors under any present or future federal or state law or if a receiver of all or part of Tenant's property and assets is
appointed by any state or federal court, and in any such proceeding the Lease
shall be terminated or rejected, or the obligations of Tenant thereunder shall
be modified, the undersigned will immediately (a) pay to Landlord, or their
successors or assigns, an amount equal to all unpaid rent and other amounts
accrued under the Lease to the date of such termination, rejection or
modification, plus (b), at the option of Landlord, their successors and assigns,
either (i) pay to Landlord, or their successors or assigns, an amount equal to
the then present cash value of the rent and additional rent which would have
been payable under the Lease for the unexpired portion of the term of the Lease
if it had not been terminated, rejected or modified, less the then cash rental
value of the premises which are the subject of the Lease for such unexpired
portion of the term of the Lease, taking into consideration the Lease as
modified, if such is the case, or (ii) if the Lease is terminated or rejected,
execute and deliver to Landlord, or their successors or assigns, a new lease
with the undersigned as tenant for the balance of the term and upon the same
terms and conditions as the terminated or rejected Lease, and will pay Landlord
interest on the amounts which become payable and are designated in (a) and
(b)(i) above at 18% per annum from the date of such termination, rejection or
modification to the date of payment, including any period of time after any
breach of default hereunder.
Neither the obligation of the undersigned to make payment in accordance with the terms of the Guaranty nor any remedy for the enforcement thereof shall be impaired, modified, changed, released or limited in any manner whatsoever by any impairment, modification, change, release or limitation of the liability to the Tenant, or its estate in bankruptcy, or otherwise, or of any remedy for the enforcement thereof, resulting from the operation of any present of future provision of the Federal Bankruptcy Code, or of any other statute, or from the decision of any Court.
Landlord may, without notice to or demand upon the undersigned and without affecting the obligation of the undersigned hereunder, take and hold security for the obligations under this Guaranty and the Lease, add to, exchange or release any such security, apply or realize upon such security as Landlord determines and release, add or substitute any one or more guarantors should more than one person or entity be or become liable on this Guaranty. Landlord may exercise any right or remedy it may have against Tenant or any security held by Landlord without impairing the obligations of the undersigned on this Guaranty, and the undersigned waives any defense arising out of the absence, impairment or loss of any right of reimbursement, subrogation or other remedy of the undersigned against Tenant or any such security, whether resulting from any election by Landlord or otherwise.
The undersigned assumes the responsibility to keep informed of the financial condition of Tenant under the Lease and all other circumstances bearing upon the risk of non-payment or non-performance by Tenant under the Lease, and agrees that, absent a request for such information by the undersigned, Landlord shall have no duty to advise the undersigned of information known to Landlord regarding such condition or circumstances. This Guaranty shall bind the undersigned and his successors and assigns.
Should any action at law or in equity be filed or instituted to construe the terms, for the breach of, to enforce the terms of, or to interpret or declare the rights of the parties under this
Guaranty, the successful party in such action shall, in addition to all other relief afforded to the successful party, recover its costs and expenses (whether or not taxable) and reasonable attorneys' fees incurred in such action.
Landlord may, with or without notice to the undersigned, assign this Guaranty in whole or in part.
This Guaranty is secured by a Security Agreement and Stock Pledge Agreement of even date herewith.
All notices required or permitted hereunder or at law shall be in writing and delivered by personal delivery or certified or registered mail, return receipt requested. Notices to Landlord shall be to the address specified in the Lease and notices to the undersigned shall be to the undersigned's address set forth below. Any notice personally delivered shall be effective upon delivery. Any notice sent by registered or certified mail, postage prepaid and properly addressed shall be effective on the date of mailing. Landlord or the undersigned may change their address for notices by notice to the other in the manner specified in this paragraph.
EXECUTED this 8th day of September, 2003.
PALWEB CORPORATION
By: /s/ Warren F. Kruger
----------------------------------------
Warren F. Kruger, President
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Notice Address:
1613 E. 15th St.
Tulsa, OK 74120
GREYSTONE MANUFACTURING, L.L.C.
By: /s/ Warren F. Kruger
----------------------------------------
Warren F. Kruger, President
|
Notice Address:
1613 E. 15th St.
Tulsa, OK 74120
In consideration of the execution by 1607 COMMERCE LIMITED PARTNERSHIP, as landlord ("Landlord"), of that certain lease dated September 8th, 2003, (the "Lease") between Landlord, as landlord, and PLASTIC PALLET PRODUCTION, INC, a corporation, as tenant ("Tenant"), and as an inducement to Landlord to execute the Lease, the undersigned hereby jointly and severally guarantee to Landlord and to its successors and assigns, the payment by Tenant when due of the rent and all other sums provided for in the Lease and the due performance by Tenant of all of the provisions of the Lease and any and all modifications or extensions thereof. In the event of Tenant's failure, or the failure of its successors or assigns, if any, to pay said sums or the render any other performance required of Tenant, when due, the undersigned will forthwith pay all amounts that may be due and will forthwith perform all of the provisions of said Lease to be performed by Tenant and pay all damages that may result from the non-performance thereof by Tenant. The undersigned hereby consents to and waives notice of any extension of time for performance which Landlord may grant to Tenant and to any modifications or amendments of said Lease or extensions or renewals of the term thereof to which Landlord and Tenant, or their successors and assigns, may agree.
The undersigned waives notice of acceptance of this Guaranty and of any default in the payment of rent, additional rent or any other amounts contained or reserved in said Lease, and notice of any breach or non-performance of any of the covenants, conditions or agreements contained in said Lease.
The undersigned further agrees that the liability under this Guaranty of the undersigned shall be primary, and that in any right of action which may accrue to the Landlord, their successors or assigns, under said Lease or this Guaranty, Landlord and their successors or assigns, at their option may proceed against the undersigned without having taken or commenced any action or obtained any judgment against Tenant and without applying any security deposit or other property of Tenant or any other person held as collateral security for the performance of the obligations of Tenant under the Lease or otherwise to the discharge of the obligations of the Tenant under the Lease. The undersigned waives any right to require Landlord to pursue any remedy in Landlord's power against Tenant and waives as defenses to the obligations hereunder the pleadings or defense of any statute of limitations. Any partial payment, performance or other circumstance which operates to toll any statute of limitations as to Tenant shall operate to toll the statute of limitations as to the undersigned under this Guaranty.
The undersigned agrees that, in the event Tenant shall become insolvent or shall be adjudicated a bankrupt, or shall file a petition for reorganization, arrangement or similar relief under any present or future provision of the Federal Bankruptcy Code, or any other act for the relief of debtors or any similar acts or law, or if such a petition filed by creditors of Tenant shall be approved by a Court, or if Tenant shall seek a judicial readjustment of the rights of its creditors under any present or future federal or state law or if a receiver of all or part of Tenant's property and assets is
appointed by any state or federal court, and in any such proceeding the Lease
shall be terminated or rejected, or the obligations of Tenant thereunder shall
be modified, the undersigned will immediately (a) pay to Landlord, or their
successors or assigns, an amount equal to all unpaid rent and other amounts
accrued under the Lease to the date of such termination, rejection or
modification, plus (b), at the option of Landlord, their successors and assigns,
either (i) pay to Landlord, or their successors or assigns, an amount equal to
the then present cash value of the rent and additional rent which would have
been payable under the Lease for the unexpired portion of the term of the Lease
if it had not been terminated, rejected or modified, less the then cash rental
value of the premises which are the subject of the Lease for such unexpired
portion of the term of the Lease, taking into consideration the Lease as
modified, if such is the case, or (ii) if the Lease is terminated or rejected,
execute and deliver to Landlord, or their successors or assigns, a new lease
with the undersigned as tenant for the balance of the term and upon the same
terms and conditions as the terminated or rejected Lease, and will pay Landlord
interest on the amounts which become payable and are designated in (a) and
(b)(i) above at 18% per annum from the date of such termination, rejection or
modification to the date of payment, including any period of time after any
breach of default hereunder.
Neither the obligation of the undersigned to make payment in accordance with the terms of the Guaranty nor any remedy for the enforcement thereof shall be impaired, modified, changed, released or limited in any manner whatsoever by any impairment, modification, change, release or limitation of the liability to the Tenant, or its estate in bankruptcy, or otherwise, or of any remedy for the enforcement thereof, resulting from the operation of any present of future provision of the Federal Bankruptcy Code, or of any other statute, or from the decision of any Court.
Landlord may, without notice to or demand upon the undersigned and without affecting the obligation of the undersigned hereunder, take and hold security for the obligations under this Guaranty and the Lease, add to, exchange or release any such security, apply or realize upon such security as Landlord determines and release, add or substitute any one or more guarantors should more than one person or entity be or become liable on this Guaranty. Landlord may exercise any right or remedy it may have against Tenant or any security held by Landlord without impairing the obligations of the undersigned on this Guaranty, and the undersigned waives any defense arising out of the absence, impairment or loss of any right of reimbursement, subrogation or other remedy of the undersigned against Tenant or any such security, whether resulting from any election by Landlord or otherwise.
The undersigned assumes the responsibility to keep informed of the financial condition of Tenant under the Lease and all other circumstances bearing upon the risk of non-payment or non-performance by Tenant under the Lease, and agrees that, absent a request for such information by the undersigned, Landlord shall have no duty to advise the undersigned of information known to Landlord regarding such condition or circumstances. This Guaranty shall bind the undersigned and his successors and assigns.
Should any action at law or in equity be filed or instituted to construe the terms, for the breach of, to enforce the terms of, or to interpret or declare the rights of the parties under this
Guaranty, the successful party in such action shall, in addition to all other relief afforded to the successful party, recover its costs and expenses (whether or not taxable) and reasonable attorneys' fees incurred in such action.
Landlord may, with or without notice to the undersigned, assign this Guaranty in whole or in part.
All notices required or permitted hereunder or at law shall be in writing and delivered by personal delivery or certified or registered mail, return receipt requested. Notices to Landlord shall be to the address specified in the Lease and notices to the undersigned shall be to the undersigned's address set forth below. Any notice personally delivered shall be effective upon delivery. Any notice sent by registered or certified mail, postage prepaid and properly addressed shall be effective on the date of mailing. Landlord or the undersigned may change their address for notices by notice to the other in the manner specified in this paragraph.
The obligations under this Guaranty are secured by a Security Agreement and Stock Pledge Agreement of even date herewith.
EXECUTED this 8th day of September, 2003.
PALWEB CORPORATION
By: /s/ Warren F. Kruger
----------------------------------------
Warren F. Kruger, President
|
Notice Address:
1613 E. 15th St.
Tulsa, OK 74120
GREYSTONE MANUFACTURING, L.L.C.
By: /s/ Warren F. Kruger
----------------------------------------
Warren F. Kruger, President
|
Notice Address:
1613 E. 15th St.
Tulsa, OK 74120
This Agreement dated effective September 8th, 2003, and granted by PALWEB CORPORATION, an Oklahoma corporation (the "Pledgor"), to 1607 COMMERCE LIMITED PARTNERSHIP, a Texas limited partnership (the "Lessor").
Concurrently herewith, Pledgor has executed separate Guaranty obligations (the "Guarantees") guaranteeing the obligations of its subsidiary, Plastic Pallet Production, Inc., a Texas corporation ("PPP") on (i) Lease Agreement of real estate located at 1607 West Commerce Street, Dallas, Texas, and (ii) Equipment Lease covering certain equipment and leasehold improvements at that location.
As used herein, "UCC" shall mean the Uniform Commercial Code of Oklahoma, as amended and in effect as of the date hereof, as the context may require.
1. Pledge and Security Interest. As security for the due and punctual payment of all indebtedness of the Pledgor to the Lessor arising under the Guarantees, and each of them, including all extensions, renewals and changes in the form thereof, whether for principal, interest, premiums, fees, expenses or otherwise as well as all future advances or obligations owed to the Lessor (including without limitation) direct, indirect, contingent, joint, several, joint and several or howsoever created (all such indebtedness and obligations being herein sometimes referred to as the "Obligations"), together with any and all expenses which may be incurred by the Lessor in collecting any or all of the Obligations or in enforcing any rights hereunder (all such expenses being hereinafter referred to as the "Expenses") (the "Obligations" and the "Expenses" shall also be part of the "Secured Obligations"), the Pledgor hereby pledges, assigns, transfers, sets over and delivers unto and for the benefit of the Lessor the certificates for the Pledged Securities listed on Exhibit "A," with stock powers covering such certificates executed in blank, together with shares represented thereby and all cash securities, dividends or other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares (all collectively referred to herein as the "Pledged Securities").
TO HAVE AND TO HOLD the Pledged Securities, together with all rights, titles, interests, powers, privileges and preferences appertaining or incidental thereto, including all cash proceeds received in respect to the Pledged Securities and all securities delivered in substitution or addition to the foregoing Pledged Securities, unto the Lessor, its successors and assigns, forever as security for the Secured Obligations subject, however, to the terms, covenants and conditions hereinafter set forth.
2. Representations and Warranties. The Pledgor represents and warrants as follows:
(a) The Pledged Securities have been validly authorized and issued, are fully paid and non-accessible and the Pledgor owns the same beneficially free and clear of any liens, charges or encumbrances thereon or affecting the title thereto.
(b) The Pledgor has good right and lawful authority to pledge and deposit the Pledged Securities as provided herein and warrants and will preserve and defend all right, title and interest in and to the Pledged Securities delivered to the Lessor hereunder against the claims of all persons, and will maintain and preserve the lien hereof as long as this Agreement shall remain in full force and effect.
3. Appointment of the Lessor; Registration in Nominee Name. The Lessor shall have the right and absolute discretion to appoint one or more agents for the purpose of retaining physical possession of the certificates representing or evidencing the Pledged Securities, which may be held in the name of the Pledgor, endorsed or assigned in blank in favor of the Lessor. In addition to all other rights possessed by the Lessor, the Lessor may, from time to time after the occurrence of an uncured default under the Guarantees, or either of them (the "Default") (hereinafter defined) or an event which with the giving of notice or the lapse of time, or both, would be a Default, at the Lessor's sole discretion and without notice to the Pledgor, take any or all of the following actions: (a) execute the blank stock power to authorize transfer of the Pledged Securities; (b) transfer all or any part of the Pledged Securities into the name of the Lessor or its nominee for public or private sale; (c) take control of any proceeds of any of the Pledged Securities; and (d) exchange certificates or instruments representing or evidencing the Pledged Securities for certificates or instruments of smaller or larger denominations for any purpose consistent with its performance of this Agreement.
4. Voting Rights, Dividends, Replacement of Pledged Securities.
(a) So long as there has not occurred an uncured default, the Pledgor shall be entitled to exercise any and all voting rights and powers relating or pertaining to the Pledged Securities or any part thereof for any purpose not inconsistent with the terms of this Agreement.
(b) Unless the Lessor expressly consents in writing, the Pledgor shall not receive and not be entitled to retain any and all stock and/or stock dividends in respect of the Pledged Securities, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of the issuer thereof or received in exchange for the Pledged Securities, or any part thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer or the Pledgor may be a party or otherwise. Any and all cash dividends and distributions and other property received in respect of the Pledged Securities or in payment of the principal of or in redemption of or in exchange for any Pledged Securities (either at maturity, upon call for redemption or otherwise), shall become part of the Pledged Securities and delivered to the Lessor or, if received by the Pledgor, shall be held in trust for the benefit of the Lessor and shall forthwith be delivered to the Lessor or its designated agent (accompanied by
proper instruments of assignment and/or stock powers executed by the Pledgor in accordance with the Lessor's instructions) to be held subject to the terms of this Agreement.
(c) Upon the occurrence of an uncured Default, at the option of the Lessor, all rights of the Pledgor to exercise the voting rights and powers which it is entitled to exercise shall cease and all such rights shall thereupon become vested in the Lessor, which shall have the sole and exclusive right and authority to exercise such voting and/or consensual rights and powers. After the occurrence of a Default, the Lessor shall receive and be entitled to retain as collateral any and all cash dividends and distributions, if any, paid in respect of the Pledged Securities. Any and all money and other property paid over to or received by the Lessor pursuant to the provisions of subsection (b) above shall be retained by the Lessor as part of the Pledged Securities and be applied in accordance with the provisions hereof.
5. Remedies Upon Default. Upon the occurrence of an uncured Default in the payment of the Secured Obligations when due (whether by acceleration or otherwise), then, in addition to having the right to exercise any rights and remedies of a secured party upon default under the Uniform Commercial Code in effect in the State of Oklahoma, the Lessor may, without being required to give any notice to the Pledgor, apply the cash (if any) then held by it hereunder to the payment in full of the Secured Obligations and all other indebtedness referred to in the order and manner specified therein. If there shall be no such cash or the cash so applied shall be insufficient to pay all Obligations in full, the Lessor may thereupon sell the Pledged Securities, or any part thereof, and shall apply the proceeds of such sale to the payment in full of the Secured Obligations and all other indebtedness referred herein in the order and manner specified therein.
If the Pledgor commences the cure of a Default which requires more than fifteen (15) days and the Pledgor has immediately initiated steps which are reasonably sufficient to cure such Default and continues to take reasonable and necessary steps to cure the Default, the Pledgor may continue to cure the Default beyond any cure period so long as the event of default is capable of being cured within a reasonable time and the Pledgor continues in good faith to effect a cure.
6. Sale of the Pledged Securities.
(a) Notwithstanding anything to the contrary herein, sale of the Pledged Securities may be made at any public or private sale, for cash, upon credit or for future delivery, as the Lessor shall deem appropriate in a commercially reasonable manner. The Lessor shall be authorized at any such sale (to the extent it, in its sole discretion, deems advisable) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Pledged Securities then being sold for their own account for investment and not with a view to the distribution or resale thereof, and upon consummation of any such sale the Lessor shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Pledged Securities sold. Each such purchaser at any such
sale shall hold the property purchased absolutely free from any claim or right on the part of the Pledgor. The Lessor shall give the Pledgor at least fifteen (15) days' written notice of the Lessor's intention to make any such public or private sale. Such notice, in case of public sale, shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Lessor may fix in the notice of such sale. At any such sale, the Pledged Securities, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Lessor may, in its sole discretion, determine, and the Lessor may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for and purchase the whole or any part of the Pledged Securities. The Lessor shall not be obligated to make any sale of the Pledged Securities if it shall determine not to do so, regardless of the fact that notice of sale of the Pledged Securities may have been given. The Lessor may, after notice or publication as required by law, adjourn any public or private sale, or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale; and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case sale of all or any part of the Pledged Securities is made on credit or for future delivery, the Pledged Securities so sold may be retained by the Lessor until the sale price is paid by the purchaser or purchasers thereof, but the Lessor shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Pledged Securities so sold and, in the case of any such failure, such Pledged Securities may be sold again upon like notice. As an alternative to the Lessor's right to sell hereunder or under the Uniform Commercial Code, the Lessor may proceed by suit or suits at law or in equity to foreclose this Agreement and to sell the Pledged Securities, or any portion thereof, pursuant to a judgment or decree of a court or courts of competent jurisdiction.
(b) The Pledgor understands that compliance with federal or state securities laws may strictly limit the course of conduct of the Lessor if the Lessor were to attempt to dispose of all or any part of the Pledged Securities and may also limit the extent to which or the manner in which any subsequent transferee of the Pledged Securities may dispose of the same. The Pledgor agrees that in any sale of any of the Pledged Securities, the Lessor is hereby authorized to comply with any such limitation or restriction in connection with such sale as it may be advised by counsel is necessary to avoid violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers and/or further restrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Pledged Securities), or in order to obtain any required approval of the sale or of the purchaser by any governmental regulatory authority or official, and the Pledgor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Lessor be liable or accountable to the Pledgor for any
discount allowed by reason of the fact that such Pledged Securities are sold in compliance with any such limitation or restriction.
7. Application of Proceeds of the Pledged Securities Sale. The Lessor shall apply all cash held by it pursuant to Section 4 hereof and the proceeds of sale of the Pledged Securities as follows:
First: to the payment of the Expenses, including but not limited to the costs and expenses of such sale or the collection of such cash, including the out-of-pocket expenses of the Lessor and the reasonable fees and out-of-pocket expenses of counsel employed in connection therewith, and to the payment of all advances made by the Lessor for the account of the Pledgor hereunder and the payment of all costs and expenses incurred by the Lessor in connection with the administration and enforcement of this Agreement;
Second: to the payment of the Obligations; and
Third: the balance, if any, of such proceeds shall be paid to the Pledgor or its assigns, or as a court of competent jurisdiction may direct.
8. The Lessor Appointed Attorney-in-Fact. The Pledgor hereby appoints the Lessor the Pledgor's attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which the Lessor may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Lessor shall, to the extent permitted herein, have the right and power to receive, endorse and collect all checks and other orders for the payment of money made payable to the Pledgor representing any dividend, interest payment or other distribution payable or distributable in respect of the Pledged Securities or any part thereof and to give full discharge for the same.
9. Miscellaneous.
(a) No Waiver. No failure on the part of the Lessor to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy by the Lessor preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and not exclusive of any other remedies provided by law. The Lessor may extend or renew the Obligations and grant releases, compromises or indulgences with respect to the Secured Obligations, any extension or renewal thereof, any security therefor, to any obligor hereunder or thereunder, and no such action shall impair the Lessor's rights hereunder.
(b) Termination. This Agreement shall terminate when the Secured Obligations have been fully performed and paid, at which time the Lessor shall reassign and redeliver (or cause to be so reassigned and redelivered) to the Pledgor, without
recourse or warranty and at the expense of the Pledgor against receipt, such of the Pledged Securities (if any) as shall not have been sold or otherwise applied by the Lessor pursuant to the terms hereof and which is still held by the Lessor hereunder, together with appropriate instruments of reassignment and release.
(c) Addresses for Notices, Etc. All notices, requests, demands, directions and other communications provided for hereunder shall be in writing (including telegraphic communication) and mailed, telegraphed or delivered as set out in the Guarantees, or, as to any party, to such other address as such party shall specify by a notice in writing to the other parties.
(d) Further Assurances. The Pledgor agrees to do such further reasonable acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments as the Lessor may at any time request in connection with the administration or enforcement of this Agreement (including, without limitation, to aid the Lessor in the sale of all or any part of the Pledged Securities) or related to the Pledged Securities or any part thereof or in order better to assure and confirm unto the Lessor its rights, powers and remedies hereunder. The Pledgor hereby consents and agrees that the issuer of the Pledged Securities, or any registrar or transfer agent for any of the Pledged Securities, shall be entitled to accept the provisions hereof as conclusive evidence of the right of the Lessor to affect any transfer pursuant to Section 2, notwithstanding any other notice or direction to the contrary heretofore or hereafter given by the Pledgor or any other person to such issuer or to any such registrar or transfer agent.
(e) Binding Agreement; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective successors and assigns, except that the Pledgor shall not be permitted to assign this Agreement or any interest herein or in the Pledged Securities, or any part thereof, or otherwise pledge, encumber or grant any option with respect to the Pledged Securities, or any part thereof, or any cash or property held by the Lessor as Pledged Securities under this Agreement.
(f) Governing Law; Amendments. This Agreement shall be governed by the laws of the State of Oklahoma. No provision of this Agreement may be amended, waived or modified, nor may any of the Pledged Securities be released, unless specifically provided for herein, except in writing signed by the Lessor.
(g) Headings. Paragraph headings used herein are for convenience only and shall not affect the construction of this Agreement.
(h) Jurisdiction; Venue. The Pledgor agrees that the exclusive jurisdiction to resolve any disputes in law or in equity arising out of this Agreement shall be in the state courts sitting in Tulsa County, Oklahoma or federal courts sitting in the Northern
District of Oklahoma, and the Pledgor submits to the jurisdiction of the such courts, waiving all obligations to venue.
(i) Counterparts. This Agreement may be executed in counterpart (or by facsimile signature with the original signature page to be delivered thereafter) and each counterpart shall constitute an original as if each signature is contained on a single document.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above written.
PALWEB CORPORATION, an Oklahoma corporation
By: /s/ Warren F. Kruger
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Warren F. Kruger, President
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"Pledgor"
All annexes to this agreement are omitted from this Exhibit. The registrant will furnish supplementally a copy of any omitted annex to the Commission upon request.