SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A-1
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUER UNDER SECTION 12 (b) OR
12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
AMERICAN FIRE RETARDANT CORP.
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(Name of Small Business Issuer in Its Charter)
NEVADA 88-0386245
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(State of other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification Number)
0-26261
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(SEC File No.)
9337 Bond Avenue, El Cajon, CA 92021
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(Address of principal offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (619) 390-6888
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Securities to be registered pursuant to Section 12 (b) of the Act:
NONE
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, 0.001 Par Value
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(Title of Class)
DOCUMENTS INCORPORATED BY REFERENCE: See Exhibit Index herein.
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PART I.
Item 1. Description of Business
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(a) Business Development.
American Fire Retardant Corporation, a Nevada corporation, ("American Fire"
or the "Company") is a fire protection company that specializes in fire
prevention and fire containment. The Company is in the business of developing,
manufacturing and marketing a unique line of interior and exterior fire
retardant chemicals and provides fire resistive finishing services through the
company's "Textile Processing Center" for commercial users. The Company also
specializes in designing new technology for future fire resistive applications
that are being mandated by local, state and governmental agencies. As
specialists in fire safe systems, the Company is active in the construction
industry as sub-contractors for fire stop and fire film installations.
The Company originally commenced operations as American Fire Retardant
Corporation, a corporation organized under the laws of the State of Florida
("AFRC Florida") on November 20, 1992.
On June 1, 1993 the board of Directors of AFRC Florida unanimously agreed
to incorporate in the State of Louisiana, as a separate and distinct entity
having the same shareholders of AFRC Florida.
On June 29, 1993 American Fire Retardant Corporation, a Louisiana
Corporation ("AFRC Louisiana") was formed. AFRC Louisiana was initially
authorized to issue a total of 1,000 shares of common stock, without par value.
On March 4, 1994, AFRC Florida qualified to do business in the State of
California under the name American Fire Retardant Corporation.
In August 1994, the facility operated in Florida by AFRC Florida was
closed, but continued to maintain its good standing status within the State of
Florida.
The Board of Directors of AFRC Wyoming unanimously resolved on December 30,
1996 pursuant to Section 17-6-1002 of the Wyoming Business Corporation Act, to
amend the Articles of Incorporation to increase its authorized capital from
1,000 shares of common stock to an unlimited number of shares of common stock,
without par value.
In April 1995, a group of individuals doing business as The MCM Group,
comprised of Thomas Mahoney, James Mahoney and Richard Mahoney, none of which
were affiliated with the Company, proposed to raise capital for AFRC Louisiana.
The MCM Group as consultants to AFRC Louisiana advised and proposed that the
Company form a Wyoming corporation and reincorporate in the State of Wyoming.
On April 7, 1995, the MCM Group arranged for the sale of 152,291
post-reverse split adjusted shares of the Common Stock of AFRC Louisiana, to
FIRE Firepro Corporation of America, a Nevada Corporation, in consideration of
$12,500.
On June 15, 1995, by unanimous consent of the shareholders of both AFRC
Florida and AFRC Louisiana, it was adopted that a new corporation be formed in
the State of Wyoming under the name American Fire Retardant Corporation ("AFRC
Wyoming"). The new Wyoming corporation, AFRC Wyoming would acquire all the
issued and outstanding shares from the shareholders of AFRC Florida and AFRC
Louisiana, in exchange for newly issued shares of AFRC Wyoming, whereby AFRC
Florida and AFRC Louisiana would be wholly owned subsidiaries of AFRC Wyoming,
the predecessor to the Company.
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On July 24, 1995, AFRC Wyoming applied for and received approval from the
State of Wyoming to be domesticated in Wyoming without any break in the
corporate existence.
On July 25, 1995 AFRC Wyoming undertook a private placement under which The
MCM Group proposed to raise a total of $500,000 through the sale of 83,333
post-reverse split adjusted shares of the Common Stock of AFRC Wyoming. As part
of the private placement, the AFRC Wyoming Shareholders agreed to give up and
make available as an additional incentive to investors, if needed, up to 42,875
post-reverse split adjusted shares based on the pro rata amount of funds raised
by the MCM Group.
Between July 1995 and November 1995, The MCM Group raised a total of
$155,000 through the sale of 25,833 post-reverse split adjusted shares of AFRC
Wyoming Common stock to the following individuals:
<TABLE>
<CAPTION>
Post Reverse Split Adjusted
----------------------------
Price per
Name Investment Shares Shares
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John H. Smith Jr. $100,000 $6.00 16,667 post-reverse split adjusted shares
Thomas W. Fell Jr. $ 25,000 $6.00 4,167 post-reverse split adjusted shares
Martin A. Chase $ 10,000 $6.00 1,667 post-reverse split adjusted shares
Robert L. Gipe $ 10,000 $6.00 1,666 post-reverse split adjusted shares
John Elizalde $ 10,000 $6.00 1,666 post-reverse split adjusted shares
</TABLE>
Because AFRC Wyoming and the MCM Group was having difficulty raising
capital under the private placement and AFRC Wyoming was in need of capital, in
order to secure the investment of John H. Smith Jr., the AFRC Wyoming
shareholders as a group agreed to and did, for the benefit of the Company to
transferred a total of 25,000 post-reverse split adjusted shares of Common Stock
owned by them, to Mr. Smith as an incentive for Mr. Smith for make the $100,000
investment in the Company.
The private placement was terminated by AFRC Wyoming on December 15, 1995
on the grounds that the MCM Group had not produced the desired results. As a
result of the April 7, 1995 purchase of 152,291 post-reverse split shares by
Firepro Corporation of America and the July 25, 1995 private placement
undertaken by the MCM Group under which a total of 25,833 post-reverse split
shares were sold, the Company it's reincorporated status as a Wyoming
Corporation issued a total of 178,125 post-reverse split adjusted shares.
Additionally, a total of 25,000 post-reverse split adjusted shares were
transferred by the existing AFRC Wyoming Shareholders to Mr. John H. Smith Jr.
as set forth above.
Pursuant to the terms of the private placement and the agreement between
AFRC Wyoming and The MCM Group, AFRC paid the MCM Group $24,000 representing
their commission and expenses under the private placement.
In January 1998, the company began to develop a restructuring plan for the
Company which included the assessment of the jurisdictions where the Company
presently conducted business and where the Company intended to pursue additional
business and the appropriate jurisdiction for the domicile of the company. The
company determined that as the company was not conducting any business in the
State of Wyoming and was conducting business in the State of Nevada, intended on
pursuing further business activities in the state of Nevada and the corporate
laws of the state of Nevada were favorable and flexible, that as part of the
company's restructuring plans, it was in the best interest of the corporation
and its shareholders, as part of the consolidation of its subsidiaries and the
Company's restructuring, to reincorporate and change its domicile from the State
of Wyoming to that of the State of Nevada.
Accordingly, in January 1998, as part of the plan restructuring and
ultimate re-incorporation and change of the domicile of the Company, AFRC
Wyoming formed AFRC Nevada (i.e. the present Company). AFRC Nevada is authorized
to issue a total of 25,000,000 shares of common stock, $0.001 par value. A copy
of the Articles of Incorporation as filed with the Secretary of State of Nevada
are attached hereto and incorporated herein by reference. See Exhibit Index,
Part III.
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The Board of Directors of AFRC Wyoming unanimously resolved on September 3,
1998 to effect a one-for-twelve (1-for-12) reverse stock split of all issued and
outstanding shares of the common stock of the Company as of September 1, 1998.
At a special meeting of the shareholders of the Company held on September 29,
1998, the shareholders approved the reverse stock split.
On March 17, 1999, at a special meeting of the shareholders of the Company,
the shareholders authorized the restructuring of the Company to simplify its
corporate structure by:
(1) Merging its wholly owned subsidiary, AFRC Louisiana into AFRC Wyoming,
whereupon the separate corporate existence of AFRC Louisiana would cease;
(2) Merging its wholly owned subsidiary, AFRC Florida into AFRC Wyoming,
whereupon the separate corporate existence of AFRC Florida would cease;
The shareholders further authorized the Company to change its domicile to
the state of Nevada through the merger of the Company (i.e., AFRC Wyoming) with
and into AFRC Nevada, with no change in the nature of the business or management
of the Company and no dilution to the shareholders or change in the
shareholdings of the Company.
The Merger of AFRC Louisiana, with and into its parent AFRC Wyoming was
completed on March 25, 1999. A copy of the Articles of Merger and Plan of
Reorganization are attached hereto and incorporated herein by reference. See
Exhibit Index, Part III.
The Merger of AFRC Florida, with and into its parent AFRC Wyoming was
completed on March 25, 1999. A copy of the Articles of Merger and Plan of
Reorganization are attached hereto and incorporated herein by reference. See
Exhibit Index, Part III.
On March 31, 1999, as the final step of the restructuring of the Company,
the merger of AFRC Wyoming, the parent with and into AFRC Nevada, for the sole
purpose of changing the domicile of the Company from that of Wyoming to that of
Nevada was completed. A copy of the Articles of Merger and Plan of
Reorganization are attached hereto and incorporated herein by reference. See
Exhibit Index, Part III.
On April 14, 1999, the Company qualified as a foreign corporation in the
State of Florida. A copy of the Application by Foreign Corporation for
Authorization to Transact Business in Florida whereby the Company qualified to
do business in the State of Florida is attached hereto and is incorporated
herein by this reference. See Exhibit Index, Part III.
On April 15, 1999, the Company qualified as a foreign corporation in the
State of Louisiana. A copy of the Application for Certificate of Authority to
Transact Business in Louisiana whereby the Company qualified to do business in
the State of Louisiana is attached hereto and is incorporated herein by this
reference. See Exhibit Index, Part III.
On April 20, 1999, the Company qualified as a foreign corporation in the
State of California. A copy of the Statement and Designation by Foreign
Corporation whereby the Company qualified to do business in the State of
California is attached hereto and is incorporated herein by this reference. See
Exhibit Index, Part III.
On April 21, 1999, the Company qualified as a foreign corporation in the
State of Colorado. A copy of the Application for Authority whereby the Company
qualified to do business in the State of Colorado is attached hereto and is
incorporated herein by this reference. See Exhibit Index, Part III.
On April 6, 1999, the Company applied for qualification as a foreign
corporation in the State of Mississippi. A copy of the Application for
Certificate of Authority whereby the Company qualified to do business in the
State of Mississippi is attached hereto and is incorporated herein by this
reference. See Exhibit Index, Part III.
On June 1, 1999, the Company by written consent of its shareholders,
Restated the By-laws of the Company. A copy of the Restated By-laws of the
Company are attached hereto and incorporated herein by reference. See Exhibit
Index, Part III.
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(b) Business of issuer
(1) Principal products, services and markets for the Company.
The Company's initial product, which has now become obsolete and is not
utilized or sold, was developed in 1979 by P.T.E. Industries. In March of 1988,
Stephen Owens began his employment with P.T.E. Industries as Vice President in
charge of Sales and Marketing. In late 1991, the president and founder of P.T.E.
Industries, retired at the age of 71 and granted Stephen Owens the right to
market this product. In 1992, AFRC Florida was incorporated and the Company
began its developmental journey to develop new formulations that safely and
effectively inhibit combustion and flame propagation in a wide variety of
textile fabrics. In 1993 the Company began to expand its growth potential in the
field of fire retarding textile fabrics for both industrial and commercial
applications in the market place.
In September 1993 the Company expanded its operation to the West Coast by
the acquisition of the assets of San Diego Flameproofing, for the contract fee
of $30,000.00, payments were in 12 monthly installments of $2,500.00. This asset
purchase allowed the company to establish an existing base of operations in
order to take advantage of the California market place and stringent fire code
enforcement.
In 1995, the Company entered into the field of fire stop systems in the
construction industry, while establishing its credibility with the fire service
and increasing the Company's client base. In October 1995, the Company purchased
the assets of "Fabric Protection", a fire resistive fabric company in Huntington
Beach, California for a contract fee of $40,000.00, with $5,000.00 down and
balance paid out in 13 installments of $2,692.00.
In November 1998, the Company purchased the formulation 238, an exterior
fire retardant compound for the contract fee of $45,000.00, with $20,000 down
and balance paid out in 5 installments of $5,000.00.
At the Company's inception, numerous products were created from the
company's own research and development. The company does not presently have an
active research and development department.
KEY PRODUCTS AND SERVICES
-------------------------
The Company offers a wide range of products and services. The Company is
actively engaged in the following operations which is divided into three areas
of sales income:
(1) Manufacturer of Fire Retardant Chemicals and Coatings. The Company has
several proprietary formulations. Raw materials are ordered from
several supply sources, such as B. F. Goodrich, Van Waters & Rogers,
and Albright & Wilson. With precise mixing instructions these
formulations are made into fire retardant chemicals for resale and
in-house use for fire retarding fabrics and other products.
(2) Textile Processing Center for Fire Resistive Fabrics. The Company fire
retards fabrics for commercial customers. The company's main clients
are purchasing agents who are hired by major hotel chains to assist
the hotels as "buyers" during new construction or refurbishing. These
agents also work hand in hand with the interior designers on the
projects. Because of the fire standards & codes that are enforced
through city ordinances, it is mandatory for fabrics such as
upholstery and drapes to meet the flammability requirements when
installed in publicly used buildings. The clients fabrics are shipped
to the Company's business location, processed to meet the necessary
flammability standards and shipped to the clients desired location.
(3) Firestop and Firefilm Installation. The Company is recognized by the
State Contractors Board of California as a subcontractor in the field
of Fireproofing - California License #729794. Firestop and Fire Film
is a service the company offers in the new and retrofit construction
industry.
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Chemicals
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The Company's chemical sales have not proceeded as fast as they could due
to the recent attention in handling the rapid increase in fire stop and firefilm
sales. The central core of the Company has always been the chemical area of
operations. The focus is manufacturing, marketing and distribution of the
Company's current product lines. Chemicals consists of two different classes:
(i) Company owned - where American Fire is the owner of several
formulations (both proprietary and patented) that the company manufactures
and markets; and
(ii) non-exclusive marketed products - where American Fire has agreements
to market on a non-exclusive basis several fire retardant products that are
owned by other entities.
Proprietary Products
--------------------
Fyberix(TM)2000V this non-durable fire retardant compound is designed for use
on textiles used in hospitals, nursing homes, hospices and
other health care facilities as well as in the
transportation and tourist industries, i.e. Cruise ships,
aircraft, hotels, motels, restaurants, etc. It enables
fabric to be fire resistive while maintaining a clean
appearance with its anti-soiling agent and at the same time
resists the growth bacteria, fungus, mites, etc. U.S. Patent
#5.631.047
Firextra(TM)1000 sold in either concentrate or ready-to-use form, this
proprietary product is the primary all-purpose, non-durable
aqueous saline based fire retardant compound. It is used on
almost every type of textile fabric- natural, synthetic, or
blended; it may be used on unfinished wood and wood products
as well as hay and paper; it is effective in treating
leather and is used by the major leather tanners in the
United States.
Fyberix(TM)2000 this proprietary formulation is an all-purpose, non-durable
aqueous saline based fire retardant and anti-soiling
compound. It is designed for fabrics used as upholstery,
drapery and curtain.
Firextra(TM)NS200 this proprietary formulation is an all-purpose non-durable
and non-saline aqueous based fire retardant compound. It is
used on almost every type of textile fabric natural,
synthetic, or blended. It is especially useful for treating
fabrics where chemical salt content could present problems.
Firextra(TM)4000 this proprietary formulation is an aqueous saline based fire
retardant compound. It is designed to treat unfinished wood
and wood products, thatch and bamboo. Wood products treated
with this product should be kept indoors or away from
weathering unless the surface has been sealed with a paint
or sealant after application.
Firextra(TM)4135 this proprietary formulation is a non-durable aqueous saline
based fire retardant compound. It is designed to treat spun
woven polyester fabrics.
Firextra(TM)5000 this proprietary formulation is a non-durable aqueous saline
based fire retardant compound. It is designed specifically
for nylon fabrics.
Firextra(TM)UV-11 this proprietary and highly complex formulation is a
concentrate that can be diluted with plain water or added to
other fire retardant or soil protection compounds to afford
an effective block against Ultra Violet "B" waves that cause
color fading, fabric thread weakening and fabric aging.
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Firextra(TM)FBC this proprietary formulation is latex in an aqueous base. It
is manufactured for the company by a major chemical
manufacturing company and can only be obtained from them by
a coded number. The product is used on the back side of
hard-to-treat textile products. In addition to providing
fire resistance the product adds fabric strength and
integrity to the fabric. B.F. Goodrich, is the major
chemical supplier of Firextra FBC. The formula is the
proprietary formulation of the B. F. Goodrich Company, which
was created for the use of the Company. There is no contract
with regard to the development by B.F. Goodrich of this
formulation for the Company and the product can only be
ordered by a confidential code number which was assigned to
the Company by the B.F. Goodrich Company.
Firextra(TM)238 this proprietary formulation is an acrylic base clear
coating fire retardant compound. It is used on thatch,
bamboo and other wood products that must be used outdoors
and/or be exposed to the elements of weather. It must be
re-applied every three years to maintain its integrity.
Overall, AFRC's existing chemical product line is broad for today's
marketplace which consist mainly of water based fire retardant chemicals. The
Company's products are able to treat a wide variety of manufactured goods and
with the addition of intumescent paints and other fire retardant coatings, we
are now able to provide additional services to the customer.
Intumescent is the property of swelling, enlarging or expanding, or
bubbling up as with heat. Accordingly, in a fire the product softens and then
expands to form a white, meringue-like layer, up to 100 mm (4 in.) thick which
insulates the structure and protects the steel from fire.
However, research and development is continually needed for the expansion
of the Company's lines. Development of the next generation of fire retardant
formulations is limited only by the need for a research staff at this time.
Product development is necessary in order to progress and further develop
products for the future. The Company's products either meet or exceed the
various protocols as required by local, state and federal regulation. All
products are thoroughly tested and certified by the State of California Fire
Marshall's Office. In order to sell or market a fire retardant chemical in the
State of California, each chemical must be tested by an outside laboratory for
the chemicals use. All other states have the choice to utilize their own state's
regulations or to adopt the standards mandated by the State of California which
are the most restrictive. Therefore, because the Company follows California
mandated rules which are the most restricted, the Company believes it to be in
compliance. A copy of the test for flammability is sent to the State Fire
Marshall's Office, along with a sample of the chemical, the fabric or item that
the chemical is specifically designed to treat. Once the State Fire Marshall's
Office has performed their own flammability test, they issue a certification
number on the product.
The success and reliability of the Company's increasing chemical product
lines and new technology applications, is in the current market place, which is
rapidly undergoing changes. The direction and emphasis is on the removal of the
potential fire load and flame spread in structures. Statutes and fire codes are
being formulated both in the United States and abroad that require more strict
standards of flammability, heat and smoke generation, fuel contribution to fire,
and the containment of any existing fire to it's area of origin.
Textile Processing
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Since 1993, the Company has been successfully treating a wide variety of
fabrics, and has become technical consultants in the field of topically treated
yard goods and piece goods in the commercial industry. Due to the limited number
of fire retardant consultants in the United States market place, commercial
customers who are forced to comply with their local fire ordinances are told
what they must comply with by their local inspectors, but not told how. For the
past four years, the Company has been committed to assist in solving the
client's fire ordinance problems. The Company's ability to successfully treat a
wide variety of fabrics has been due to the ability to personally create and
manufacture fire retardants to meet the hundreds of different fabric blends that
are in the market place. Because of this success, most of the fabric business is
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through referrals from current customers. As more emphasis and manpower is
placed on enforcing the stringent flammability codes for the use of textiles,
the growth of the fabric processing division is expected to increase
substantially. Currently, the only areas within the United States which require
residential as well as commercial upholstered fabrics to be fire resistive is
California, The City of Boston and The City of New York. All though there are
not many states or cities that mandate the use of fire resistive fabrics, there
are thousands of fire marshals, building inspectors and fire prevention
inspectors who do enforce the California fire standards within their own
jurisdictions. In California, according to The California Department of Forestry
(CDF) and The State of California Fire Marshall's Office, there are
approximately 450 CDF Peace Officers, 100 State Fire Inspectors, 200 Public
Officers, 750 CDF Deputies and 3000 Fire Engineers and Captains. Information and
data can be obtained through visiting the State Fire Marshall's Office:
@www.fire.ca.gov/sfm_responsibilities.html
and by calling 916-445-8286 for statistics on the law enforcement personnel (as
this is not published data).
For four years the Company has used and is currently using a process called
"topical coatings" to meet all current flammability standards. The Company
believes that this process will become second to a new durable textile process
that will be in demand within the next two years and will affect the fire
retardant industry as a whole. The difference between these two processes are:
Topical coatings - chemicals are applied to the surface of the fabrics
and air dried. If the fabric is laundered, the treatment will wash out
and re-treatment is necessary.
Durable processing - chemicals are applied to fabrics that are
absorbed into the fibers of the fabric and a controlled heat cure is
used for drying. This locks the fire retardants into the fiber, which
can withstand multiple washings.
In May 1998, the Company was invited to speak to the Consumer Product
Safety Commission, ("CPSC"), in Washington, D.C., with regards to a mandate
being proposed for fire resistive upholstery fabrics in the United States. The
CPSC issued an Advanced Notice of Proposed Rulemaking (CF94-01) regarding the
small open flame standard for upholstered furniture in the United States. A
complete and thorough report can be obtained through the "U.S. Consumer Product
Safety Commission" at www.cpsc.gov/businfo/frnotices/fr98/retardant.html, under
proposed rulings. Currently, the only areas within the United States that
require residential as well as commercial upholstered furniture to be fire
treated to meet fire testing is the State of California, The City of Boston and
The City of New York. Outside of the United States, the United Kingdom has been
the only producer of fire resistant upholstery for the last 10 years. The
testimony from the advisors of the United Kingdom was the CPSC'S strongest
source of information. The CPSC staff concluded that a national upholstered
furniture flammability standard is feasible, cost effective and that there is no
evidence of any possible hazards to humans from fire retardant chemicals that
would be used to meet the standard. It was estimated by the CPSC that the net
benefit of a national upholstered furniture flammability standard could approach
$2.0 billion each year. The consensus is that legislation will be in force
within the next 2 years.
The Company has the durable technology and is planning to enter the durable
fire resistive fabric marketplace within the next 2 years. Due to the cost of
the durable processing equipment, the company is currently unable to enter the
marketplace today. Currently, in the United States there are only a few small
fire retardant firms using topical coatings. The number of fire retardant firms
can be obtained from The State of California Fire Marshall's Office. According
to the Thomas Register, there is less than 100 fire retardant and/or related
firms throughout the United States that service the consumers. The Company knows
of no major operations at this time that would be able to handle the potential
volume when the CPSC legislation is in force.
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Current application of the Company's various fire retardant compounds are
accomplished through the following procedures.
(a) Textile processing for fire resistive fabric treatments are in
bulk rolled goods (by the yard). Applications are designed for
interior designers, hotels and purchasing agents, restaurants,
hospitals, schools, business, etc.
(b) Piece or finished goods, such as wood, mini-blinds, hay, costumes,
thatch roofing, tents, artificial foliage, props, etc. applications
cater to the theme park industry, theater sets, construction, exterior
decorative materials for restaurants and bars, hotel interior scene
designers, etc.
(c) On site applications are required when customers have failed fire
inspections and are forced to comply with the fire codes. When it is
impossible for the customer to transport materials for treatment, our
crews are sent on site to perform the application.
Fire Stopping
-------------
Since the middle of the 1980's fire stopping of through wall penetrations
of plumbing, electrical and other mechanical devices through fire rated walls
and floor assemblies has become a major focus of fire safety and building
officials. In the fall of 1995 the Company was asked to provide the services and
materials to fire stop several large hotels on the Mississippi Gulf Coast. With
each project satisfactorily completed came additional requests for bids on more
construction projects. The Company is considered within the hotel/casino
industry as a specialist-contractor in fire systems. The growth rate is such
that the Company had to devote extra time and effort to maintaining stability.
The Company works on fire stopping projects in the states of Alabama,
Mississippi, Louisiana, California, Colorado, Florida, and Nevada. All of the
building codes require that all buildings, with the exception of one and two
family dwellings, must have firewalls and fire rated walls in certain areas to
allow the occupants of those buildings to escape in the event of fire. No matter
how the buildings are constructed; plumbing, electrical and mechanical devices
must penetrate these firewalls and fire rated walls. When this occurs, the wall
looses its integrity and materials must be used to reinstate the fire resistance
integrity. These materials include fire rated silicone caulks, sealants, mineral
wool, intumescent putty and putty pads, intumescent wraps, collars,
alumna-silica blanket wraps, etc. Intumescent is the property of swelling,
enlarging or expanding, or bubbling up as with heat. Accordingly, in a fire the
product softens and then expands to form a white, meringue-like layer, up to 100
mm (4 in.) thick which insulates the structure and protects the steel from fire.
The Company specializes in the installation of fire stopping materials. The
Company's fire stop crews work directly under the general, electrical,
mechanical or plumbing contractors. We are recognized as specialists in the fire
safe field because our crews are trained and knowledgeable in fire codes. To
relieve our customer's liability and reduce the possibility of delays due to
failed inspections, the Company uses only those products which have been tested
and listed by approved testing laboratories for the through wall penetration or
construction gap to be fire stopped. Project submittal packages are provided by
the Company showing the proper engineering diagram and the testing laboratory
number for each type of through wall penetration, construction gap or special
installation involved in the project. The project submittal packages are
presented to the local building and fire inspectors, as well as, the general and
subcontractors involved for review and approval before work is begun. Once the
project submittal package has been approved and the contract signed, our trained
and certified fire stop installation crews begin their work, coordinating with
the other contractors involved to complete the project in the most efficient and
timely manner possible.
The Company has received their Nevada State Contractor's License #0046990,
in order to take advantage of the fire stop projects that the Company has future
work for. In addition, the Company markets A/D Fire Barrier Products, which are
thoroughly tested to ASTM E-814 "Through Penetration Fire Stop Systems" and are
listed by Underwriters Laboratories, Inc. ("UL"), Underwriter Laboratories of
Canada ("ULC"), Factory Mutual ("FM"), and Warnock Hersey Testing Laboratories.
Page 9
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Firefilm
--------
The Company has trained and certified crews in the application of A/D
Firefilm. A/D Firefilm is a decorative, thin-film, intumescent fire protection
for structural steel. It allows the designer to express the structure as an art
form for interior locations in buildings where fire resistance ratings are
required. In the past, steel beams and structural members could only be
protected by boxing them in with gypsum board or by applying an unattractive
cementatious fiber coating to them.
Beneath the colorful surface, A/D Firefilm is a thin film coating that is
an intumescent.
Intumescent is the property of swelling, enlarging or expanding, or
bubbling up as with heat. Accordingly, in a fire the product softens and then
expands to form a white, meringue-like layer, up to 100 mm (4 in.) thick which
insulates the structure and protects the steel from fire
The second component of the system, the decorative topcoat, acts as a
protective layer and serves as the attractive finish. A/D Firefilm has been
tested and is certified by ULC and Warnock Hersey. Flammability ratings up to
two hours were attained in accordance with CAN/ULC-S101 and ASTM-E119.
CAN/ULC-S101 AND ASTM-E119 are two different fire test protocols or standards
used to measure the strength and time the product must meet before it is
approved for use in a commercial building. The product must hold back combustion
(fire) or the buy products of combustion, such as carbon monoxide and carbon
dioxide for a definitive time period. The product could withstand 1, 2 or 3
hours of exposure to fire. To give a two-hour rating means that if an approved
product is applied to the structure that meets the ASTM-E119 Standard, the
structure will withstand two hours of direct heat before the integrity of the
structure will begin to fail.
THE MARKET
----------
According to the National Fire Protection Agency (NFPA) a fire occurs
somewhere in the United States every 15 seconds, resulting in an injury every 19
minutes and a death every 97 minutes. The statistical data obtained through the
United States Fire Administration (USFA) and the Consumer Product Safety
Commission (CPSC), reflects that in 1997 alone, there were over 406,500
residential fires, 3,390 deaths and 17,775 injuries, which caused in excess of
$4.5 billion dollars in damages. The residential fire problem represents
approximately 80 percent of all fire deaths and 75 percent of the injuries to
civilians. Fire is the third leading cause of accidental death in the home. The
true cost of fire in the United States is much greater than just the value of
property destroyed by fire, perhaps as high as billions per year. Analysis of
the growing costs of the major components of the total cost of fire is being
given more consideration in setting new priorities by our government.
All supporting data can be obtained through the United States Fire
Administration, at:
1. www.usfa.fema.gov/nfdc/overall.html;
2. www.usfa.fema.gov/nfdc/statistics.html; and
3. www.usfa.fema.gov/nfdc/residential.html
The Consumer Product Safety Commission at www.cpsc.gov/library/fire96.pdf.
The National Fire Protection Association at www.nfpa.org/Codes/index.html.
The market is rapidly undergoing changes through federal and state
regulations and codes that are continuously being enforced in the United States.
The direction and emphasis is on the removal of potential fire loads and flame
spreads in structures. The market has incurred various problems, which include a
lack of public awareness for the need of fire resistant materials and a lack of
formal education for the enforcement personnel. The United States Fire
Administration's National Fire Data Center states that mayors, city managers,
school officials, the media, and the general public, are still largely unaware
of the magnitude of the losses incurred by fire. Their lack of awareness and
failure to realize the seriousness of fire to communities and the country are
factors in keeping the U.S. fire problem one of the worst in the world per
capita.
Page 10
<PAGE>
The Company believes it has gained recognition in the field of fire
retardant and fire stop technology. Due to the Company's involvement in
assisting to educate the fire law enforcement, the company has received many
referrals through this marketing approach for the company's fire stop services.
In the past, the company has conducted various seminars for building officials,
architects, and Fire Marshall's at their request.
As part of the Company's marketing strategy, it is the company's intent to
continue to assist in educating law enforcement agencies in becoming aware of
the current laws and statutes that are in place. In order to penetrate the
retail market and increase chemical and fire retardant service sales, the
Company will hire outside salesmen and utilize distributors to accomplish full
wholesale and retail distribution of the companies fire retardant product line
within the next 18 months. Increasing the Company's research and development
department, through the hiring of a textile chemist and building a full testing
laboratory will assure the success in the development of new fire retardant
chemicals to the market place.
According to the 1998 Industrial Fabrics Magazine, the leather market
worldwide is $3.5 to $4.5 billion annually of which 30% is finishing chemicals
such as fire retardants and dyes. A large percent of the leather market is for
aircraft. The F.A.A. (Federal Aviation Administration) mandates that all
aircraft seats, wall coverings, etc. must meet the FAR 25.853 flammability
standard. Therefore, fire retardants do comprise a part of the market for
leather. The 50 domestic U.S. tanneries market an estimated 5% of the world
market or $200 million annually.
The Company believes that with an increase in its marketing ability, the
products and technology can reach the world market. With the acquisition of two
chemical companies, the market size is large and diverse. The markets include
retailers, paint and coating suppliers, industrial manufacturers, distributors,
field users such as contractors, contractor suppliers, thatch and bamboo
wholesalers, silk foliage wholesalers, any many others. According to the
Industrial Fabric Association, the fire retardant coatings market is estimated
at $150 million and growing. As building and architectural codes become more
stringent, the textile processing market is one of remarkable potential.
Currently, in the United Kingdom, there are six firms that provide fire
resistant coatings for the upholstery market. It is estimated that the finishers
treat 25,590,500 linear yards per year at approximately $2.00 per yard. The fire
resistive fabric industry is estimated at approximately $51.0 million annually.
The United Kingdom has a population base of approximately 70 million people. In
comparison to the United States population of approximately 260 million people,
the ratio is 3.7 to 1. Therefore the estimates for the United States fire
resistive fabrics for the upholstery industry alone could exceed $190.0 million
annually. The company currently has two methods of distribution for this new
market. (1) To treat the clients textiles at the Company's textile processing
facility; and (2) To offer chemicals and technology to established clients, such
as mills, tanneries, etc. so they may implement this process prior to or along
with the production of their goods.
(2) Distribution methods of products or services.
Distribution of the company's products or services is relatively simple, as
most new business comes by referrals and reputation. Orders or service needs are
requested by phone, and distribution is through one of the company's two
locations. Promotional costs and effective sales programs have to date limited
the company's ability to expand this area. The company offers its products and
services to a multiple cross section of industries, such as Institutional,
Commercial, Industrial, Government, Manufacturers, Consumers, Independent
Retailers and Certified Applicators. The majority of the company's clients are
identified as end users of the products or services. In certain industries,
companies that are considered end users have also been able to distribute the
products for resale. The company established their web site in 1998 which can be
found at www.americanfireretardant.com.
Page 11
<PAGE>
Strategic Alliances
-------------------
On May 5, 1999, the Company entered into a Letter of Intent with Fabritek
Industries LLC, a Connecticut Limited Liability Company ("Fabritek") to acquire
Fabritek in a stock for stock exchange, upon the conversion of Fabritek to a
corporation ("Fabritek Corp.") Fabritek is a venture stage organization, engaged
in the business of developing fire protection and fire retardant products and
applications in conjunction with Innovative Concepts Unlimited, Inc. ("ICU") and
Prizmalite Industries, Inc. ("Prizmalite") ICU has granted to Fabritek the
exclusive rights to utilize the technology developed by ICU relating to all
products, applications, inventions and directly or indirectly associated with or
related to flame retardant or protective coatings. Prizmalite has granted to
Fabritek the exclusive rights to the micro particle technology directly or
indirectly associated with or related to flame retardants, flame proofing and
fire protection products and applications.
Pursuant to the terms of the Letter of Intent, the Company will issue
800,000 shares of its Common Stock in exchange for all outstanding shares of
Fabritek Corp., whereupon Fabritek Corp. shall become a wholly owned subsidiary
of the Company. The Company and Fabritek are currently completing there
respective Due Diligence and are negotiating the terms of a definitive
Acquisition Agreement and Plan of Reorganization which is to be executed on or
before May 31, 1999. On May 24, 1999, the Company and Fabritek entered in an
Amendment to the Letter of Intent in order to provide additional time to
complete their respective Due Diligence and to negotiate and execute definitive
Acquisition Agreement and Plan of Reorganization. A copy of the Letter of Intent
and Amendment to the Letter of Intent is attached hereto and incorporated herein
by reference. See Exhibit Index, Part III.
According to the Amendment to the Letter of Intent the parties had until
June 30, 1999 to complete their Due Diligence and executed a mutually acceptable
definitive Acquisition Agreement. The deadline to execute said definitive
Acquisition Agreement expired and the Company has chose not to proceed further.
(3) Status of any publicly announced new product or service.
The Company has not made any public announcements of new products or
services offered by the Company.
(4) Competitive business conditions and the small business issuer's
competitive position in the industry and methods of competition;
There are several fire retardant companies in the U.S., offering the same
types of products and are engaged in an ongoing fight for the market share.
Among these are California Flame Proofing, Flamort and Flame Control. The
Company's products are different in composition due to different proprietary
ingredients, such as smoke inhibitors, rust inhibitors and anti-fungal
properties (the Company's patented formulation). According to the Industrial
Fabric Association, the fire retardant coatings market is estimated at $150
million and growing. As building and architectural codes become more stringent,
the textile processing market is one of remarkable potential.
The Company's largest competitors in the fabric finishing market are
Kiesling and Hess, Texas Flameproofing and Schneider Banks. The Company has not
promoted any marketing in this area due to the time that management has devoted
to its other divisions. The majority of the work performed by finishers comes
from the hotel industry for new and refurbishing installation projects. All of
the Company's current customers were past customers of one of the above
competitors. The advantage the Company has over all three of these competitors
is the ability to treat diverse fabrics with little or no change in the fabrics
dyes or feel to the touch of the hand, as a result of processing.
The in-house tracking service offered by the Company is considered one of
great importance to the customers. There are hundreds of rolls of fabrics that
are sent to the Company for the fire retardant process on a weekly basis. In
some cases, one customer or purchasing agent may be responsible for 4 different
hotel projects. The agent has the fabric mill send all fabrics directly to the
Company, which are side marked with what hotel and customer the fabric is for.
The Company's computerized tracking of each clients fabrics, allows us to print
a report on the date received by job name. In addition, it also indicates when
the fabric was treated, shipped out and to whom.
Page 12
<PAGE>
There are several competitors in the Company's fire stop division, but most
are through other market segments. Currently, electrical, plumbing and
mechanical contractors perform most fire stop installations. The advantages are
that the Company specializes in fire stop systems, fire codes and statutes and
is continuously aware of the constant changes being made in building codes,
whereas, this is not a main focus for subcontractors. The Company saves the
contractor time and money loss from failed inspections, deals directly with the
building inspectors and provides approved submittals directly to the general
contractor. The reputation the Company has in this market is its strongest asset
today.
(5) Sources and availability of raw materials and the names of principal
suppliers.
The company does not utilize any specialized raw materials and as such any
and all materials and raw materials are readily available. The company is not
aware of any problem that exist at present time or that is projected to occur
with the near future that will materially affect the source and availability of
raw materials which would be required by the company. The company currently
purchases raw materials from Van Waters and Rogers, Morre-tech, Albright and
Wilson, B.F.Goodrich and Great Lakes Chemical.
(6) Dependence on one or a few major customers;
In 1998 one job accounted to 12% of total sales. The Company feels that the
because of the diversity of the applications and uses of the various products
and services provided by the Company and the wide base of customers for such
products and services, that this alleviates the dependence on one or more major
customers. With the introduction of new fire laws, codes and regulations and the
continuing growth in the new construction, retrofitting and refurbishing
industry, the company will develop a wider base of customers.
(7) Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts, including duration;
The Company believes its chemical products and technology to be unique. The
Company is also dedicated to the protection of its trade secrets through tight
security, the advancement of the technology, and the establishment of strong
patent protection. Therefore, the Company has retained legal counsel to develop
and submit patent applications for its chemical products and technologies that
the Company views as patented. To date one patent has been granted in the United
States and one other patent application has been filed and is pending in the
United States.
A very brief summary of the categories covered by the patent which has been
issued which relates to the application of the Company's compounds and products.
Subject Matter of Issued Patent
-------------------------------
(1) Relates to compounds applied to porous materials, such as fabrics,
wood, cardboard, and fiberboard, to protect the materials from various
destructive and undesirable processes.
(2) Relates to compounds applied to porous materials, especially fabrics of
natural and synthetic materials used to make rugs, carpets, furniture
coverings, and wall hangings, to protect against fire, soil and water
damage, and virus and fungus growth.
(3) Protects not only the materials to which it is applied but also
protects persons in contact with the materials, by stopping fire and germ
growth.
UNITED STATES PATENTS
---------------------
The Company has had one U.S. patent granted on its chemical products and
has one additional patent application pending:
Fyberix (TM)2000V U.S. Patent #5.631.047
Fyberix (TM)2000 Patent Pending #08.089793
Page 13
<PAGE>
COPYRIGHTS / TRADEMARKS
-----------------------
The Company has a copyright on "Fire Retardant Applicator's Manual"
certificate of registration number TX 3-878-798 and two trademarks,
"Firextra(TM)" registration number 1,812,119 and "Fyberix(TM)" registration
number 1,815,602.
LICENSE AND ROYALTY AGREEMENTS
------------------------------
June 24, 1997, American Fire Retardant Corporation, entered into a royalty
agreement with Norman O. Houser, wherein American Fire will utilize Mr. Houser's
vermecide compound for the companies patented 2000V formulation. The agreement
grants Mr. Houser the sum of $0.75 per gallon on the sale of the companies
Fyberix 2000V. Said royalties are to begin at the time of agreement. As of the
date of this Registration Statement, the product has not entered the market
place, so no royalties have been paid. Cancellation of this royalty agreement
would occur if the company no longer used Mr. Houser's compound in the
formulation. A copy of the Agreement with Mr. Houser is attached hereto and
incorporated herein by reference. See Exhibit Index, Part III.
RESEARCH, DEVELOPMENT AN INTELLECTUAL PROPERTY
----------------------------------------------
The Company's water-based chemical development stage has been completed.
The fire retardant product line is constantly being evaluated and upgraded in
keeping with the market demands, customer problems and new discoveries in field
applications. In textile finishing, not all fabrics can be made fire resistive
due to several different specialty blends. As in the United Kingdom, there will
be problems with this and U.S. mills will began to discontinue those fabrics
targeted for the upholstery industry and work closely with the fire resistive
finishers in order to produce those fabrics that can easily be treated. This is
where research and development into new chemical formulations and technology
will come into its heaviest stage.
Testing
-------
All of the Company's products have undergone vigorous testing to insure
that they meet the flame resistance protocols for their applicable use. Properly
treated materials have successfully passed the burn requirements of the
following test protocols and more:
(a) retardancy
(b) toxicity
(c) corrosiveness
(d) resistance to staining
(e) static electricity reduction
(f) tensile strength
The fire stop and firefilm materials have been tested by various
independent testing laboratories and pass the protocols that must be met for the
various types of through wall/floor/ceiling assemblies.
Over the past 5 years the Company has tested the chemical uses on many
various materials through outside laboratories. The Company has over 100
different flammability test reports of various fabric blends performed by
independent testing laboratories, such as United States Testing Laboratories,
Textest, Better Fabrics Testing Bureau and many others. The Company is an active
member of several fire protection-related organizations, including the National
Fire Protection Association, International Fire Service Training Association,
Associated General Contractors, The American Society for Testing and Materials,
and The Industrial Fabric Association International.
Page 14
<PAGE>
Each of the groups listed below are dedicated to public safety in the
building environment. Their mission is to publicize a comprehensive and
compatible regulatory system through consistent performance based regulations
and building codes that are effective and meet government, industry and public
needs. These codes are intended to be adopted by reference, as local and state
laws governing construction or life safety. This is done by regulating buildings
in which people live, congregate, and are confined; by controlling substances
and products which may, in and of themselves or by their misuse, cause injuries,
death, and destruction by fire.
Except as specifically referenced below the Company is subject and adheres
to the various pubic saftey standards on a day to day basis as part of its
normal business operations.
<TABLE>
<CAPTION>
AMERICAN ASSOCIATION OF TEXTILE CHEMISTS AND COLORIST (AATCC)
-------------------------------------------------------------
<S> <C>
AATCC33 Standard Tests for the Flammability of Clothing
Textiles
(ASTM D-1230; 16 CFR Part 1610)
AATCC 34 Standard Tests for Fire Resistance of Textile Fabrics
(ASTM D-4372; CPAI 84; NFPA 701-89; California Title 19)
</TABLE>
<TABLE>
<CAPTION>
AMERICAN WOOD PRESERVERS ASSOCIATION (AWPA)
-------------------------------------------
<S> <C>
AWPA C-20 Structural Lumber-Fire Retardant Treatment By Pressure
Process (NFPA 703)
AWPA C-27 Plywood-Fire Retardant Treatment by Pressure Process
(NFPA 703)
</TABLE>
<TABLE>
<CAPTION>
AMERICAN SOCIETY FOR TESTING AND MATERIALS (ASTM)
-------------------------------------------------
<S> <C>
ASTM D-1230 Standard Tests for the Flammability of Clothing Textiles
(AATCC 33; 16 CFR Part 1619)
ASTM D-4372 Standard Specification for Flame Resistant Materials
used In Camping Tentage
(AATCC 34; CPAI 84; NFPA 701-89; California Title 19)
ASTM E-84 Standard Test Method for Surface Burning Characteristics
of Building Materials
(NFPA 255; UBC 8-1/94; UL 723; Steiner Tunnel Test)
ASTM E-108 Standard Test Method for Fire Tests of Roof Coverings
(NFPA 256)
ASTM E-119 Standard Test Methods for Fire Tests
of Building Construction and Materials (NFPA
257; UBC 7-1/94; UL 263)
ASTM E-162 Standard Test Method for Surface Flammability of
Materials Using a Radiant Heat Energy Source
ASTM E-163 Standard Method of Fire Tests of Window Assemblies
(NFPA 257; UBC 7-4/94)
ASTM E-648 Standard Test Method for Critical Radiant Flux of Floor
Covering Systems Using a Radiant Heat Energy Source
(NFPA 253)
ASTM E-814 Standard Test Method for Fire Tests of Through
Penetration Fire Stops (UBF 7-5/94)
ASTM E-1537 Standard Test Method for Fire Test of Real Scale
upholstered Furniture Items
(BFD TX-10; California TB 133; NFPA 266)
</TABLE>
Page 15
<PAGE>
<TABLE>
<CAPTION>
The standards imposed by the Boston Fire department as set forth below
would only be applicable to the Company if the Company was treating a product
for use in the City of Boston (i.e. the application of the Company's product to
a structure within the City of Boston).
BOSTON FIRE DEPARTMENT: FIRE PREVENTION CODE ARTICLES VII, TX & XXXI
--------------------------------------------------------------------
<S> <C>
BFD IX-1 Classification Fire Tests - curtains, drapes, cubicle
curtains, fabric coverings on walls and space
dividing panels which are not bonded to the
substrate surface, temporary enclosure materials,
tents and hanging decorations.
BFD IX-10 Regulation on Upholstered Furniture
ASTM E-1537; California TB 133)
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA HEALTH AND SAFETY CODE OF REGULATIONS
------------------------------------------------
<S> <C>
Cal Title 19 Vertical Flame Test for drapes, hangings, curtains, drops
all other decorative material, Christmas trees, tents,
awnings, fabric enclosures.
(AATCC 34; ASTM D-4372; CPAI 84; NFPA 701-89)
Cal. TB-116 Standard of Fire Test for Cigarette Ignition Resistance
of Components of Furniture
(NFPA 260; UFAC)
Cal. TB-117 Standard of Fire Test for Cigarette Ignition Resistance
of Upholstered Furniture Assemblies
NFPA 261; UFAC)
Cal. TB-133 Standard of Fire Test for Seating Furniture in Public Buildings
(ASTM E-1537; BFD IX-10; NFPA 266)
</TABLE>
<TABLE>
<CAPTION>
The following Code of Federal Regulations are standards applicable to the
flammability of clothing, textiles carpets, rugs, mattresses and matress pads.
The Company is not current engaged in this market and as such is not subject to
this regulations. If the Company were to enter these markets it would then be
subject to compliance with these regulations.
CODE OF FEDERAL REGULATIONS
---------------------------
<S> <C>
16 CFR 1610 Standard for the Flammability of Clothing Textiles
(AATCC 33; ASTM 1230)
16 CFR 1611 Standard for the Flammability of Vinyl Plastic Film
16 CFR 1615 Standard for the Flammability of Children's Sleepwear:
Sizes 0 through 6X
(FF 3-71)
16 CFR 1616 Standard for the Flammability of Children's Sleepwear:
Sizes 7 through 14"
(FF 5-74)
16 CFR 1630 Standard for the Surface Flammability of Carpets and Rugs
(FF 1-70)
16 CFR 1631 Standard for the Surface Flammability of Small Carpets
and Rugs
(FF 2-70)
16 CFR 1632 Standards for the Flammability of Mattresses and Mattress Pads
(FF 4-72 amended)
</TABLE>
Page 16
<PAGE>
<TABLE>
<CAPTION>
INDUSTRIAL FABRICS ASSOCIATIONS INTERNATIONAL (IFAI)
----------------------------------------------------
<S> <C>
CPAI 84 Standards for Flame Resistant Materials
Used in Camping Tentage (AATOC 34; ASTM
D-4372; NFPA 701-89; California Title 19)
</TABLE>
<TABLE>
<CAPTION>
The following regulations would be applicable to use and application of the
Company's products to marine vessels.
INTERNATIONAL MARITIME ORGANIZATION:
-----------------------------------
<S> <C>
IMO A.563(14) Standard Test Method for Determining the Resistance to Flame of
Vertically Supported Textile and Films
IMO A.652(16) Standard Test Method for Surface Flammability of Bulkhead,
Ceiling And Deck Finish Materials
IMO A.687(17) Standard Fire Test for Ignitability of Primary Deck Coverings
IMO A.688(17) Standard Fire Test for Ignitability of Bedding Components
</TABLE>
<TABLE>
<CAPTION>
NATIONAL FIRE PROTECTION ASSOCIATION;
------------------------------------
<S> <C>
NFPA 221 Standard for Fire Walls and Fire Barrier Walls
NFPA 251 Standard Test Method for Fire Tests of Building Construction
and Materials
(ASTM E-119; UBC 7-1/94; UL 263)
NFPA 252 Standard Fire Test of Door Assemblies
(UBC 7-2/94; UBC 7-3/74; UL 10A; UL 10B)
NFPA 253 Standard Fire Test of Floor Covering Systems Using a Radiant Heat
Energy Source
(ASTM E-648)
NFPA 255 Standard Test Method for Surface Burning Characteristic of
Building Materials
(ASTM E-163; UBC 8-1/94; UL 723; Steiner Tunnel Test)
NFPA 257 Standard Fire Test for Window Assemblies
(ASTM E-163; UBC 7-4/94)
NFPA 260 Standard Methods of Tests for Cigarette Ignition Resistance
to Components of Furniture
(Cal. TB 116; UFAC)
NFPA 261 Standard Methods of Tests for Cigarette Ignition Resistance for
Upholstered Furniture Assemblies
(Ca. TB 117; UFAC)
Page 17
<PAGE>
NFPA 265 Standard Methods of Fire Tests for Evaluating Room Fire Growth
Contribution of Textile Wall Coverings
NFPA 266 Standard Test for Upholstered Furniture Exposed to a Flaming
Ignition Source
(BFD IX-10; Cal. TB 133)
NFPA 267 Standard Test for Mattress and Bedding Exposed to a Flaming
Ignition Source
NFPA 701-89 Standard Methods of Fire Tests for Flame Resistant Textiles
and Films
(AATCC 34; ASTM D-4372; CPAI 84; Cal. Title 19)
NFPA 701-96 Standard Methods of Fire Tests for Flame Resistant Textiles
and Films:
NFPA 703 Standard for Fire Retardant Treatment of Building Materials
(AWPA C-20; AWPA C-27)
NFPA 705-93 Field Flame Test for Textiles and Films
</TABLE>
<TABLE>
<CAPTION>
UNIFORM BUILDING CODE (UBC):
----------------------------
<S> <C>
BC 7-1/94 Fire Test of Building Construction and Materials
(ASTM E-119; NFPA 251; UL 263)
UBC 7-2/94 Fire Test of Door Assemblies
(NFPA 252; UL 10B)
UBC 7-3/94 Fire Tests Tinclad Fire Doors
(NFPA 252; UL 10A)
UBC 7-4/94 Fire Tests of Window Assemblies
ASTM E-163; NFPA 257)
UBC 7-5/94 Fire Tests of Through-Penetration Fire Stops
(ASTM E-814; UL 1479)
UBC 8-1/94 Test Method for Surface Burning
Characteristics of Building Materials
(ASTM E-84; NFPA 255; UL 723; Steiner Tunnel Test
UBC 8-2/94 Standard Test Method for Evaluation Room Fire Growth Contribution
of Textile Wall Coverings (NFPA 265)
</TABLE>
Page 18
<PAGE>
<TABLE>
<CAPTION>
UNDERWRITERS LABORATORIES (UL):
-------------------------------
<S> <C>
UL 10A Standard Fire Test of Door Assemblies
(NFPA 252, UBC 7-2/94; UBC 7-3/94; UL 10B)
UL 10B Standard Fire Test of Door Assemblies
(NFPA 252; UBC 7-2/94; UBC 7-3/94; UL 10A)
UL 263 Standard Test Methods for Fire Tests of Building Construction
and Materials
(ASTM E-119; NFPA 251; UBC 7-1/94)
UL 723 Standard Test Method for Surface Burning Characteristics of
Building Materials
(ASTM E-84; NFPA 255; UBC 8-1/94; Steiner Tunnel Test)
UL 1479 Standard Test Method for Fire Tests of Through-Penetration
Fire Stops
(ASTM E-814; UBC 7-5/94)
UL 1709 Rapid Rise Fire Tests of Protection Materials for Structural
Steel
</TABLE>
(8) Need for any government approval of principal products or services. If
government approval is necessary and the small business issuer has not yet
received that approval, discuss the status of the approval within the
government approval process.
All of the products the company currently manufactures does not contain any
constituents that require government regulation. The state does require that all
fire retardant chemicals must be certified and registered with the State of
California Fire Marshall's Office. The company is in compliance with this.
(9) Effect of existing or probable governmental regulations on the business
While management is unaware of any new regulations being contemplated by
the subject agencies, it remains possible that these agencies could institute
new guidelines which could affect all companies in this field.
The Company has voluntarily filed this Registration Statement on Form 10-SB
in order to register it common stock pursuant to Section 12(g) of the Securities
Exchange Act of 1934.
As a result of the effectiveness of its Registration Statement on Form
10-SB, the Company shall be subject to Regulation 14A of the Commission, which
regulates proxy solicitations. Section 14(a) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), requires all companies with securities
registered pursuant to Section 12(g) thereof to comply with the rules and
regulations of the Commission regarding proxy solicitations, as outlined in
Regulation 14A. Matters submitted to stockholders of the Company at a special or
annual meeting thereof or pursuant to a written consent will require the Company
to provide its stockholders with the information outlined in Schedules 14A or
14C of Regulation 14; preliminary copies of this information must be submitted
to the Commission at least 10 days prior to the date that definitive copies of
this information are forwarded to stockholders.
Page 19
<PAGE>
The Company will also be required to file annual reports on Form 10-KSB and
quarterly reports on Form 10-QSB with the Commission on a regular basis, and
will be required to timely disclose certain events (e.g., changes in corporate
control; acquisitions or dispositions of a significant amount of assets other
than in the ordinary course of business; and bankruptcy) in a Current Report on
Form 8-K.
The Company's Management believes that it is in the Company's best interest
to become subject to the periodic reporting requirements as set forth above, in
order to provide a mechanism for the disclosure and publication of material
information about the Company and its financial condition to its shareholders
and the financial community. In the event that the Company's obligation to file
periodic reports is suspended under the Securities Exchange Act, it is the
intention of the Company to continue to voluntarily file period reports as if so
required to do so.
Management believes that these reporting obligations will increase the
Company's annual legal and accounting costs, but it is expected that revenues
will be sufficient to meet these costs.
(9) The Company is not aware of any other governmental regulations now in
existence or that may arise in the future that would have an effect on the
present business of the Company.
(10) During the last two fiscal years the Company has not incurred any cost
on research and development and no expenses have been born by customers of the
Company relating to research and development activities.
(11) Costs and effects of compliance with environmental laws (federal,
state and local).
As the present time, the Company does not manufacture any chemicals that
are subject to federal, state or local environmental compliance laws and
regulations.
Employees
---------
The Company employs thirteen full time employees as of March of 1999. Two
of the Company's employees are employed in administrative positions as President
and Executive Vice President. One employee is Sales and Technical Manager for
the firestop division of the Company. One employee is an accountant in charge of
accounts receivable and accounts payable. One employee is the shipping and
receiving manager. Another employee is in charge of construction contracts and
general secretarial duties. Three of the other seven employees are warehouse and
field supervisors. The other four employees are laborers. The company performs
all activities at the Company's business location, with the exception of
construction, which is performed at the clients location. The activities
include, but are not limited to, sales, marketing, accounting, shipping,
manufacturing (blending chemicals), treating of fabrics and other goods with
fire retardant chemicals, architect blue print reading and construction. Outside
services are legal and certified accounting. The company also uses job finders
for part time work in the construction area. None of these employees are covered
by collective bargaining agreements.
RISKS FACTORS
-------------
FORWARD LOOKING STATEMENTS. When used in this Registration Statement, the
words or phrases "will likely result", "are expected to", "will continue", "is
anticipated", "estimate", "projected", "intends to" or similar expressions are
intended to identify "forward-looking statements." Such statements are subject
to certain risks and uncertainties, including but not limited to market
conditions, competition, factors affecting the Company's ability to implement
its growth strategy, the Company's dependence on future financing, fluctuations
in operating results, the Company's ability to sustain levels of growth,
diversification of the Company's business, contingent risks, state and federal
regulation and licensing requirements, and environmental concerns that could
cause the Company's actual results to differ materially from those presently
anticipated or projected. Such factors, which are discussed in "Risk Factors,"
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the notes to consolidated financial statements, could
affect the Company's financial performance and could cause the Company's actual
results for future periods to differ materially from any opinions or statements
expressed with respect to future periods in this Registration Statement. As a
result all parties are cautioned not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. The Company's
independent accountants have not examined or compiled the accompanying
forward-looking statements and accordingly do not provide any assurance with
respect to such statements.
Page 20
<PAGE>
The Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in any new or
unproven venture, as well as risk factors particular to the industries in which
it will operate, and will include, among other things, those types of risk
factors outlined below.
PATENTS AND PROPRIETARY RIGHTS - THE UNAUTHORIZED USE OF INTELLECTUAL PROPERTY
BY THIRD PARTIES MAY HARM THE COMPANY'S BUSINESS.
The Company relies on patents, contractual rights, trade secrets,
trademarks, and copyrights to establish and protect its proprietary rights in
its products and its components. The Company has patented the technology that is
incorporated into its products and believes that, since it is a technology
patent, competitors will have a more difficult time developing products
functionally similar to the Company's. To further protect its products, the
Company will apply for additional patents for its inventions and for
non-commercial available components designed and developed by the Company that
are integral to product performance.
PROSECUTING ANY INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS COULD BE EXPENSIVE
AND, IF THE COMPANY IS NOT SUCCESSFUL, COULD DISRUPT ITS BUSINESS.
The Company intends to closely monitor competing product introductions for
any infringement of the Company's proprietary rights. The Company believes that,
as the demand for products such as those developed by the Company increases,
infringement of intellectual property rights may also increase. If infringement
of the Company's proprietary rights is by industry competitors, they have
substantially greater financial, technical, and legal resources than the Company
which could adversely affect the Company's ability to defend its rights. In
addition, the Company could incur substantial costs in defending its rights.
Further, the Company's patents are U.S. patents, and the Company does not
have patent protection outside the United States. The Company will be unable to
obtain patent protection in most non-U.S. jurisdictions, including Europe and
Japan. Some competitors may have non-U.S. operations where U.S. Patent rights
are not effective which could permit competitors to infringe on the Company's
proprietary rights without violating U.S. law.
The Company anticipates, based on the size and sophistication of its
competitors and the history of rapid technological advances in its industry,
that several competitors may be working to develop the Company's patented
technology. The Company intends to closely monitor any infringement of the
Company's proprietary rights. Competitors may have patent applications in
progress in the United States that, if issued, could relate to the Company's
products. If such patents were to issue, there can be no assurance that the
patent holders or licensees will not assert infringement claims against the
Company or that such claims will not be successful. The Company could incur
substantial costs in defending itself and its customers against any such claims,
regardless of the merits of such claims. Parties making such claims may be able
to obtain injunctive or other equitable relief which could effectively block the
Company's ability to sell its products, and each claim could result in an award
of substantial damages. In the event of a successful claim of infringement, the
Company and its customers may be required to obtain one or more licenses from
third parties. There can be no assurance that the Company or its customers could
obtain necessary licenses from third parties at a reasonable or acceptable cost
or at all. Patent litigation could be very expensive, and there is no assurance
that it would not have an adverse effect on the Company's business, financial
condition and results of operations.
Page 21
<PAGE>
TWO OF THE COMPANY'S SHAREHOLDERS HAVE VOTING CONTROL OVER THE COMPANY.
Due to the joint ownership of a majority of the shares of the Company's
outstanding common stock by Angela M. Raidl and her brother Bruce Raidl,
collectively, these individuals have the ability to elect all of the Company's
directors, who in turn elect all executive officers, without regard to the votes
of other stockholders.
THERE IS NO MARKET FOR THE COMPANY'S COMMON STOCK AND THERE IS NO ASSURANCE THAT
A MARKET WILL DEVELOP.
Although the Company intends to submit for quotation of its common stock on
the OTC Bulletin Board of the NASD following the effectiveness of this
registration statement, and to seek a broker-dealer to act as market maker for
its securities (without the use of any consultant), there is currently no market
for such shares, there have been no discussions with any broker-dealer or any
other person in this regard, and no market maker has been identified; there can
be no assurance that such a market will ever develop or be maintained. Any
market price for shares of common stock of the Company is likely to be very
volatile, and numerous factors beyond the control of the Company may have a
significant effect. In addition, the stock markets generally have experienced,
and continue to experience, extreme price and volume fluctuations which have
affected the market price of many small capital companies and which have often
been unrelated to the operating performance of these companies. These broad
market fluctuations, as well as general economic and political conditions, may
adversely affect the market price of the Company's common stock in any market
that may develop.
YEAR 2000 PROBLEMS MAY DISRUPT THE COMPANY'S OPERATIONS AND HARM ITS BUSINESS
RISK ASSOCIATED WITH YEAR 2000 ISSUES - THE COMPANY IS UNCERTAIN OF THE EFFECTS
OF THE YEAR 200O ON ITS COMPUTER PROGRAMS AND SYSTEMS.
Many currently installed computer systems and software programs were
designed to use only a two digit date field. These date code fields will need to
accept four digit entries to distinguish 21st century dates from 20th century
dates. Until the date fields are updated, the systems and programs could fail or
give erroneous results when referencing dates following December 31, 1999. Given
that the Company's products operate on certain hardware platforms and within
certain software operating systems and environments, the Company must rely upon
the efforts of the hardware and software vendors and manufacturers to be in the
vanguard with respect to operating systems and platform issues relating to the
Year 2000 compliance.
PRESENT YEAR 2000 STATUS
The Company has assessed the impact of the year 2000 issue on the Company's
products, services, platforms systems and internal information technology
systems (IT systems) and non-information technology systems (non-IT systems), in
use, and has found them to be Year 2000 compliant. The Company has also
contacted its major vendors and suppliers and has received confirmation and
verification that their respective computer systems are also Year 2000
compliant. The Company does not expect the Company's financial results to be
materially affected by the need to continue to monitor and address year 2000
issues, but if the costs associated with addressing these issues are greater
than planned, the Company's earnings and results of operations could be
affected. Due to the Company's dependence on computer technology to conduct the
Company's business, the nature and impact of year 2000 processing failures on
the Company's business, financial condition and operating results could be
material.
BUSINESS CONTINUITY AND CONTINGENCY PLANNING
The Company continues the process of identifying the reasonably likely year
2000 problem failures that the Company could experience with the goal of
revising, to the extent practical, the Company's existing business continuity
and contingency plans to address the internal and external issues specific to
those problems. Thus far, the Company has focused as planned on reviewing the
Company's critical business processes and although the Company conducted tests
on the various and Platform systems in use, and has found them to be Year 2000
compliant, the Company's expect to continuously review, test and revise the
Company's existing business continuity and contingency plans to ensure that all
systems are and maintain year 2000 compliant. This will include as required
repairing or obtaining replacement systems; changing suppliers; and reducing or
suspending certain non-critical aspects of our operations.
Page 22
<PAGE>
POSSIBLE CONSEQUENCES OF YEAR 2000 PROBLEMS
The Company believes that the Company has put in place the processes and
are devoting the resources necessary to achieve a level of readiness to meet the
Company's year 2000 challenges in a timely and appropriate manner. However,
there can be no assurance that the Company's internal systems or the systems of
others on which we rely will be year 2000 ready in a timely and appropriate
manner or that the Company's contingency plans or the contingency plans of
others on which the Company relies will mitigate the effects of year 2000
problem failures. Currently, the Company believes the most reasonably likely
worst case scenario would be a sustained, concurrent failure of multiple
critical systems (internal and external) that support the Company's operations
(i.e. vendors and suppliers of the Company). While the Company does not expect
that scenario to occur, that scenario if it occurs could, even despite the
successful execution of the Company's business continuity and contingency plans,
result in the reduction or suspension of a material portion of our operations
and accordingly have a material adverse effect on the Company's business and
financial condition.
The "Year 2000 Information" discussion contains various forward-looking
statements that represent the Company's beliefs or expectations regarding future
events. When used in the "Year 2000 Information" discussion, the words
"believes," "expects," "estimates," "plans," "goals," and similar expressions
are intended to identify forward-looking statements. Forward-looking statements
include, without limitation, the Company's expectations as to when the Company
will complete the identification and assessment, remediation planning,
remediation, and testing activities of the Company's year 2000 program as well
as the Company's year 2000 contingency planning; the Company's estimated cost of
achieving year 2000 readiness; and the Company's belief that the Company's
internal systems and equipment will be year 2000 ready in a timely and
appropriate manner. All forward-looking statements involve a number of risks and
uncertainties that could cause the actual results to differ materially from the
projected results. Factors that may cause those differences include availability
of information technology resources; customer demand for the Company's products
and services; continued availability of materials, services, and data from the
Company's suppliers; the ability to identify and remediate all date sensitive
lines of computer code and to replace embedded computer chips in affected
systems and equipment; the failure of others to timely achieve appropriate year
2000 readiness; and the actions or inaction of governmental agencies and others
with respect to year 2000 problems.
RISK THAT THE COMPANY'S COMMON STOCK MAY BE DEEMED A "PENNY STOCK."
The Company's common stock may be deemed to be "penny stock" as that term
is defined in Reg. Section 240.3a51-1 of the Securities and Exchange Commission.
Penny stocks are stocks (i) with a price of less than five dollars per share;
(ii) that are not traded on a "recognized" national exchange; (iii) whose prices
are not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks
must still meet requirement (i) above); or (iv) of an issuer with net tangible
assets less than US$2,000,000 (if the issuer has been in continuous operation
for at least three years) or US$5,000,000 (if in continuous operation for less
than three years), or with average annual revenues of less than US$6,000,000 for
the last three years.
Section 15(g) of the 1934 Act and Reg. Section 240.15g-2 of the Commission
require broker-dealers dealing in penny stocks to provide potential investors
with a document disclosing the risks of penny stocks and to obtain a manually
signed and dated written receipt of the document before effecting any
transaction in a penny stock for the investor's account. Potential investors in
the Company's common stock are urged to obtain and read such disclosure
carefully before purchasing any shares that are deemed to be "penny stock."
Page 23
<PAGE>
Moreover, Reg. Section 240.15g-9 of the Commission requires broker-dealers
in penny stocks to approve the account of any investor for transactions in such
stocks before selling any penny stock to that investor. This procedure requires
the broker-dealer to (i) obtain from the investor information concerning his or
her financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for investors in the Company's
common stock to resell their shares to third parties or to otherwise dispose of
them.
THE COMPANY IS DEPENDANT ON CERTAIN KEY EMPLOYEES.
Historically, the Company has been heavily dependent on the ability of
Bruce E. Raidl, to contribute essential technical and management experience. In
the event of future growth in administration, marketing, manufacturing and
customer support functions, the Company may have to increase the depth and
experience of its management team by adding new members. The Company's success
will depend to a large degree upon the active participation of its key officers
and employees. Loss of services of any of the current officers and directors
could have a significant adverse effect on the operations and prospects of the
Company. There can be no assurance that it will be able to employ qualified
persons on acceptable terms to replace officers that become unavailable.
IF THE COMPANY IS UNABLE TOO HIRE AND RETAIN NECESSARY SPECIALIZED KEY PERSONNEL
THE COMPANY'S BUSINESS AND GROWTH WILL SUFFER.
Although the management of the Company is committed to the business and
continued development and growth of the business, the addition of specialized
key personnel and sales persons to assist the Company in its expansion of its
national operations will be necessary. There can be no assurance that the
Company will be able to locate and hire such specialized personnel on acceptable
terms.
IF THE COMPANY IS UNABLE TO MAINTAIN ADEQUATE LEVELS OF INVENTORY THE COMPANY'S
BUSINESS MAY BE DISRUPTED.
The size of the fire retardant and fire protection markets and need to
maintain adequate inventories with regard to such products could force the
Company into implementing additional manufacturing and warehousing programs.
There can be no assurance that the Company will have the necessary capital
resource or man power to implement such manufacturing and warehousing programs.
IF THE COMPANY IS UNABLE TO MARKET ITS PRODUCTS AND SERVICES ITS BUSINESS WILL
SUFFER.
Due to the Company's limited resources, the sales and marketing of the
Company's products has been limited to date. The success of the Company is
dependent upon its ability to market and sell the products and services of the
Company with such limited resources.
IF THE GOVERNMENT IMPLEMENTS NEW OR ADDITIONAL REGULATIONS IN THE INDUSTRY IN
WHICH THE COMPANY OPERATES, THESE REGULATIONS MAY BE COSTLY OR DIFFICULT FOR THE
COMPANY TO COMPLY WITH AND COULD RESULT IN LOSS OF SALE.
While the Company is unaware of any new regulations being contemplated by
the subject agencies, it remains possible that these agencies could institute
new guidelines which could affect all similar companies in this field. The
implementation of new regulatory compliance factors could restrict sales of
certain products. Additional testing could be required and such additional
testing could cause delays in the introduction of products into certain market
sectors, which delays could adversely affect the Company's revenues.
Page 24
<PAGE>
IF THE COMPANY DOES NOT OBTAIN ADDITIONAL FINANCING IT MAY NOT BE ABLE TO
IMPLEMENT ALL OF ITS BUSINESS PLAN.
The Company's plan of operation calls for additional capital to facilitate
growth and support its long-term development and marketing programs. It is
likely that the Company would need to seek additional financing through
subsequent future public or private sales of its securities, including equity
securities. The Company may also seek funding for the development and marketing
of its products through strategic partnerships and other arrangements with
investment partners. There can be no assurance, however, that such collaborative
arrangements or additional funds will be available when needed, or on terms
acceptable to the Company, if at all. Any such additional financing may result
in significant dilution to existing stockholders. If adequate funds are not
available, the Company may be required to curtail one or more of its future
programs.
COMPETITION AND RAPID TECHNOLOGICAL CHANGE COULD HARM THE COMPANY'S BUSINESS.
The industry in which the Company operates is highly competitive, rapidly
growing and the Company will have to compete with a multitude of similar
companies, possessing substantially greater financial, personnel, technological
and marketing resources. It is particularly difficult for small independent
companies to compete with such major companies in the automobile industries,
fabric manufacturers, mills, etc. There is no assurance that the Company will be
able to compete in such an environment.
SUBSTANTIAL DOUBT THAT THE COMPANY CAN CONTINUE AS A GOING CONCERN.
The Company expects to continue to incur significant capital expenses in
pursuing its plans to increase sales volume, the expansion of its product line
and to obtain additional financing through stock offerings or other feasible
financing alternatives. Additional financing may not be available on terms
favorable to the Company, or at all. If adequate funds are not available or are
not available on acceptable terms, the Company may not be able to execute its
business plan or take advantage of business opportunities. The ability of the
Company to obtain such additional financing and to achieve its operating goals
is uncertain. In the event that the Company does not obtain additional capital
or is not able to increase cash flow through the increase of sales, there is a
substantial doubt of its being able to continue as a going concern.
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<PAGE>
Item 2. Management's Discussion and Analysis of Plan of Operation.
---------------------------------------------------------
The following discussion and analysis should be read together with the
Consolidated Financial Statements of the Company and the notes to the
Consolidated Financial Statements included elsewhere in this Registration
Statement.
FINANCIAL CONDITION
-------------------
Trends and Uncertainties. There is a continuing demand for the Company's
products. Fire Standards and Codes for protection from the spread of fire,
whether residential, commercial, or the passage of flames from room to room, are
being ordered by many levels of our regulatory departments. The Code of Federal
Regulations, The Consumer Protection Agency, The Federal Aviation Administration
and The United States Coast Guard, issued their own flammability standards
several years ago. These government agencies leave enforcement to each state or
jurisdiction. Because of the many fires in the last few years, the regulations
are being enforced on a more rigid basis. The problem will not be a lack of
demand, but the ability for each state to finance the law enforcement personnel
to perform their duties.
Capital and Source of Liquidity. The Company has been in business for 6
years. Each year, sales volumes have increased and the company is continually
developing new ideas to become one of the largest competitors in the fire
protection and fire prevention industry. The Company holds a patent on its
product Fyberix 2000V, which is just coming into the marketplace. This product
is not new to the company in its invention but new to the marketing arena. With
a successful marketing plan designed specifically to reach the markets that have
a need for this patented formulation, the company believes it will increase it'
s chemical sales by 20%. With the addition of Fyberix 2000V to the company's
other proprietary formulations, new markets would be attracted to the company,
such as nursing homes, medical facilities, cruise ships and prisons. Along with
the potential of attracting a retail market for over the counter sales of the
companies product lines. The Company believes that research and development of
new products is necessary for the continued growth in the market place. The
internal sources of liquidity for the Company consist of the cash flow from
sales and accounts receivable. The external sources of the Company's liquidity
comes from private loans and sale of equity stock. At this time, the Company has
no commitments for capital expenditures and therefore no expected source of
funding for such expenditures.
The Company is not self-supportive in its operations. Due to contracts with
general contractors, up front cost of performing work and progressive billing,
has positioned the company to need outside financing. Some contracts can last up
to six months, which decreases the cash flow. As shown in the figures in this
document, the Company is increasing its sales volume and staying very
competitive with larger companies in this field. Because of the significant
increase in fire stopping and fire film jobs, the financial condition is
improving. The Company has also been working diligently for the past two years
to go public and is in the final stages of that endeavor. At the current time,
the Company is working on an equity sale of $1,000,000(One Million Dollars) and,
if successful, would provide working capital and significantly reduce the need
for outside financing.
The Company has expansion plans. Currently, offices are planned for Las
Vegas, Nevada and in Florida. The Company already services clients in both
states, but no business locations have been established. Currently, the
California office facilitates Nevada, and the Louisiana office facilitates
Florida. Once business is actively pursued in these two states, the volume of
business will be multiplied several times, and costs will decrease. The company
also has an expansion plan for new equipment; designed to fire retard durable
goods, such as outdoor fabrics, clothing, automotive seats, furniture upholstery
and more. This field is undergoing very good support by the Consumer Safety
Protection Agency, and many of the shipments from overseas manufacturers are not
being permitted entry into the United States because they do not meet the fire
resistive protocols. The Company is continuously receiving calls from
manufactures and distributors inquiring about durable processing. The Company
has also worked very closely with the U.S. Department of Agriculture in
developing additional formulations that can withstand multiple washings and that
do not affect the feel or hand of the fabrics. The Company has the durable
process technology but lacks the equipment and sales force to enter this market
today.
Page 26
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YEAR ENDED DECEMBER 31, 1998 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
In the two fiscal years of 1997, 1998, the Company sustained net losses of
$377,925 and $511,104. At least 35% of the loss in 1998 was attributable to an
employee who underbid a major job. All bidding on jobs are now done by Stephen
F. Owens, President, or Randy Betts or Patricia Fredrick, account executives for
the Company. Without that factor, the net loss in fiscal year 1998 would have
been at least $100,000 less than in fiscal year 1997. During those same two
years, the Company has been on course to go public and in that endeavoring has
spent $75,881 on legal fees. The cash flow of the Company has been adversely
affected by having to pay for materials up front for jobs that take several
weeks to several months to complete. This has resulted in a need to get more
financing which in turn has increased the Company's interest expense.
Over the past two fiscal years, the Company has shifted it's income sources
from treating fabric, which has a low profit margin, to fire stopping jobs and
fire film jobs. These two profit centers comprised 65.76% of total sales in
fiscal year 1998 as compared to 43.72% of total sales in fiscal year 1996.
Despite the fact that the Company started doing fire film jobs in 1997, it has
already grown to 10.59% of total sales for fiscal year 1998 and so far in 1999
it is 28.6% of sales for the year.
OPERATIONAL RESULTS
-------------------
<TABLE>
<CAPTION>
1998 1997 1996
----------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $2,059,896 $ 1,906,935 $1,417,575
----------------------------------------------------------------------
Revenue $2,059,896 $1,906,935 $1,417,575
Gross Profit $1,513,809 $1,119,447 $ 984,533
Gross Profit% 73% 59% 69%
Selling G & A
and Depreciation $1,769,440 $1,275,248 $ 824,303
*Amortization Expense
Other Operating Expenses $ 255,473 $ 222,124 $ 31,434
Net Income/Loss $ (511,104) $ (377,925) $ 128,796
Earnings Per Share $ (0.25) $ (.034) $ 0.14
</TABLE>
During each of the last three years (1996, 1997 and 1998), the company
reported revenues of $1,417,575, $1,906,935, and $2,059,896 respectively. This
is a total increase of $642,321 for those three years or an increase of 45.31%
from the end of fiscal year 1996 to the end of fiscal year 1998. Revenues during
these three years are the result of increasing a relatively new area of revenue
in the construction arena for fire stop services along with the company
increasing its sales of chemicals and establishing a new area of sales income
from fire film jobs. This was partially offset by a decrease in fabric treatment
revenues. In fire stop services, the revenues for these same three years were
$619,817, $1,048,035 and $1,136,492 respectively. That is an increase of
$516,675. The third year revenue for fire stop services represents 55.17% of the
total revenues for fiscal year 1998 compared to 43.72% of total revenues for the
fiscal year 1996. The Company's revenues from sales of chemicals was $239,755,
$326,106 and $362,188 respectively for the same three years. The third year
revenues from sales of chemicals represents 17.58% of total revenues for fiscal
year 1998 as compared to 16.91% for the fiscal year 1996. The application of
fire film is the new area of sales, which started in fiscal year 1997. For
fiscal years 1997 and 1998, revenue from this area was $33,570 and $218,148
respectively. The total revenue for application of fire film for fiscal year
1998 represents 10.59% of total revenues for that fiscal year even though fire
film jobs were only started in fiscal year 1997. Also, these increases were
partially offset by a decrease in revenues from the treatment of fabrics. These
sales were $377,970, $294,224 and $252,566 respectively for the same three
years. The total revenues for treatment of fabrics for fiscal year 1998
represents 12.26% of total revenues for that fiscal year as compared to 26.66%
of total revenues for the fiscal year 1996. As shown above, there was a
substantial increase in fire stopping jobs and chemical sales and, to a lesser
degree, a modest increase in total revenues from the new area of fire film
application. These increases were partially offset by decreases in sales of fire
stop products and to a greater degree, fabric treatment.
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<PAGE>
Without adequate revenues to offset expenditures, the company has reported
a loss in the last three years. To date, the Company has funded itself by way of
a series of private and public equity sales. The Company established a
relationship with a financial institution in order to meet the supply and demand
of the growing business.
The cost of goods sold decreased substantially in 1998. This decrease was
due to several factors including over purchasing of inventory in 1997 and the
Company shifting its focus of sales from treatment of fabrics to fire stopping
jobs and fire film jobs. These jobs require more manpower, which is reflected in
the Operating Expenses rather than cost of goods. As shown in the paragraph
above, fire stopping jobs increased from 43.72% of total revenues in fiscal year
1996 to 55.17% of total revenues for fiscal year 1998. Fire film jobs increased
from 0% of total revenues for fiscal year 1996 to 10.59% of total revenues for
fiscal year 1998. The increase in these types of jobs increased the Company's
labor cost (both payroll and outside services) from $356,374 in fiscal year 1996
to $918,244 in fiscal year 1998. Although some of these totals are due to office
and management personnel, the most significant portion is due to fire stopping
and fire film jobs that required a substantial increase in labor to perform the
jobs. Because these increased costs were allocated to Operating Expenses, they
do not reflect in the cost of goods although they would more than offset the
decrease in that area. The cost of goods decreased from $787,488 in fiscal year
1997 to $546,087 in fiscal year 1998 is a reflection of using some of the
inventory for fire stopping and fire film jobs. The other major factor in this
decrease was the company's decision to begin manufacturing its own proprietary
formulations rather contracting outside blending manufactures. The cost of
materials to produce the final chemical product is significantly lesser than
contracting this service outside the company. The use of outside manufacturing
cost the Company approximately 15% more in cost of goods. Since 1998 the company
has manufactured their own chemical formulations, therefore, the 15% now
reflects in the gross profit.
The gross profit increase in 1998 was $394,362 from $1,119,447 in fiscal
year 1997 to $1,513,809 in fiscal year 1998. 61.2% of this increase was due to
the decrease in the cost of goods, which is explained in the paragraph above
this. The balance of this increase is Net Sales, which increased $152,961 from
$1,906,935 in fiscal year 1997 to $2,059,896 in fiscal year 1998. As explained
above, the increase in revenues for fiscal year 1998 is largely due to an
increase in the fire stop, fire film and sales of chemicals.
Expenditures increased substantially in 1997 and 1998 as compared to 1996.
The primary reason for this is Interest Expense. Financing interest for
factoring and loans expense cost the company $222,124 in 1997 and $255,473 in
1998.
Start up Cost. In 1997 the company incurred the start up cost of operations
in Mississippi for the largest casino in the South. Through the fourth
quarter of 1997 and first quarter of 1998 losses were created buy the
incorrect estimates of the errant employee. The employee contracted a job
with the Beau Rivage Casino, which established a set price or contract
price without the company having the ability to issue "change orders" in
the event more work was needed that is over an above the contracted amount.
This caused the Company's increase in payroll and cost of goods. The major
expense was in payroll because of the extra work that the Company performed
without being able to issue Change Orders. From an accounting standpoint,
these additional expenses were reflected in the Income Statement as part of
the Cost of Goods and Payroll/Outside Services Expense.
Raising Capital. The company expended approximately $45,000 in an attempt
to raise funds, but the financing entity retained by the company did not
perform according to the agreements.
Asset Purchase. A significant asset acquisition was made during the last
quarter of 1998 for formulation 238. The acquisition cost the company
$45,000.
Stock Issued. An expense in the amount of $216,301 was booked in 1997 for
services rendered to offset the share price for 54,167 shares of the
Company's Common Stock. An expense in the amount of $52,982 was booked in
1998 for services rendered to offset the share price for 255,543 shares of
the Company's Common Stock.
Page 28
<PAGE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THREE MONTHS
ENDED MARCH 31, 1998.
- --------------------------------------------------------------------------------
NET SALES increased $146,800 or 36.21% over the comparable period a year
earlier. For such three-month periods the increase was from $405,443 to
$552,243. The increase in net sales is due to additional contracts signed in the
course of doing normal business.
GROSS PROFIT increased 30.81% in the three months ended March 31, 1999 to
$380,616 from $290,963 in March 31, 1998. Gross profit as a percentage of sales
was 68.92% for the first quarter of fiscal 1999 compared to 71.76% for the first
quarter of fiscal 1998. The decrease in gross profit percentage is mainly due to
an increase in freight charges from $16,448 for the first quarter of fiscal 1998
to $28,214 for the same period in 1999. This was due to a Federal Express
overnight freight bill for $8000, which was disputed by AFRC in the fourth
quarter of 1998 which was not resolved and paid the first quarter of 1999.
OPERATING EXPENSES decreased to $388,033 for the three months ended March
31, 1999 from $413,070 for the three months ended March 31, 1998. The decrease
in operating expenses is primarily due to a decrease in payroll expenses from
the first quarter of 1998 to the first quarter of 1999. In 1998, the Company was
involved in a very large job at the Beau Rivage Casino, in Mississippi, which
resulted in a much larger payroll. The payroll for the Company for the three
months ended March 31, 1999 was $119,673 as compared to $206,146 for the same
period in 1998. The decrease in payroll expenses in the first quarter 1999 was
significantly offset by a substantial increase in legal and accounting fees in
preparation for the Company going public. The legal and accounting fees for the
first quarter 1999 were $36,121 as compared to $9,865 for the first quarter
1998. There was also an increase in interest expense of $37,240 for the three
months ended March 31, 1998 to $72,494 for the three months ended March 31,
1999. This increase was due to the use of factoring and additional interest on
loans received by the Company to assist in cash flow.
As a result of the foregoing factors, the Company had a NET LOSS of $79,911
for the three months ended March 31,1999 as compared to a NET LOSS of $157,361
for the three months ended March 31, 1998, a decrease of 49.22%.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary needs for funds are to provide working capital
associated with forecasted growth in sales volumes. Specifically, funds are
required to provide materials and manpower for the larger contracts the Company
has been signing, beginning in July of 1999. Working capital for the three
months ended March 31, 1999 was funded primarily through the sale of accounts
receivable and proceeds from private lenders.
Net cash provided by operating activities was $43,951 for the three months
ended March 31, 1999, as compared to ($159,216) for the three months ended March
31, 1998. This substantial change is due in large part to the significant
decrease in the NET LOSS of $77,450. A significant part of the loss in the first
quarter of fiscal 1998 was due to the losses incurred on the Beau Rivage job,
due to payroll and cost of goods exceeding the contractual amount of the job.
Net cash provided by financing activities for the three months ended March
31, 1999, was ($70,216) compared to $206,463 during the three months ended March
31, 1998. The first quarter of fiscal 1999 included $359,468 from lines of
credit. The repayment of notes payables and lines of credit offset this amount.
For the first quarter of fiscal 1998, $41,500 was provided from issuance of
capital stock. No such issuance occurred in the first quarter of fiscal 1999.
Page 29
<PAGE>
CAPITAL FUNDING
---------------
The company currently is unable to generate sufficient cash from operations
to sustain its business efforts as well as to accommodate its growth plans.
Until it is able to generate sufficient cash flow, the Company will seek capital
funding from outside resources. At present, the company is seeking an initial
capital infusion of at least $1,000,000 and anticipates the funding to be in
exchange for a combination of debt incurred and the sale of a percentage of its
equity. The company presently has no commitment for such funding and has not
concluded what form, whether debt or equity, such funding will be derived
through.
FUTURE REVENUES
---------------
The company has established three basic paths from which to achieve
revenues. These include, fabric processing sales and service, chemical sales and
sales for the installation of fire stop systems. On a long term basis,
operations alone, with increased revenues, should maintain the liquidity of the
company. Additional financing, whether it be debt or equity, will be required
for the greater portion of the expansion plans to enable the company to move
into new technology for durable goods. The company will seek to maintain low
operating and administrative costs while expanding operations and increasing
revenues. There is no doubt, increased marketing expenses will occur in the
furtherance of marketing and sales efforts, with the resultant increase in
revenues and profit.
Durable Processing. The large upholstery industry is the primary market
target for fabric processing sales. Fabric mills, upholstery manufactures,
automobile manufactures, clothing manufactures, etc. are actively searching for
ways to dramatically reduce flammability to their products. The company believes
it's technology provides a practical, cost effective solution to this problem,
as it does not compromise the quality of the customers goods and the
affordability of acquiring same. The upholstery/fabric industry is huge as
billions of yards are used in the United States alone. The company anticipates
that utilizing an aggressive marketing campaign. it will be able to make
significant penetration into this market commencing in 2000.
EXISTING FINANCING ARRANGEMENTS
-------------------------------
St. Martin Bank - Accounts Receivable Financing.
-----------------------------------------------
In March 1997, the Company entered into a Merchant Services Agreement with
St. Martin Bank and Trust of St. Martinville, Louisiana. Under the terms of this
agreement, the Company would sell certain qualified account receivables to St.
Martin Bank on a discount from full face value in order to obtain necessary
working capital, up to a set limit. The initial limit of this financing was
$100,090 as evidenced by a promissory note executed by the Company in favor of
St. Martin Bank. This promissory note was secured by a Commercial Guaranty by
the Company and personally by the then acting officers of the Company, Stephen
F. Owens, Angela R. Raidl and Edward Friloux.
On May 21, 1997 the line of credit available to the Company for factoring
of its receivables with St. Martin Bank was increased to $250,000 as evidenced
by a new promissory note. On August 18, 1998 the Company ceased factoring its
receivables with St. Martin Bank. The balance due and owing to St. Martin Bank
as of August 18, 1998 was $172,725.73 as evidenced by a promissory note executed
by the Company in favor of St. Martin Bank. The note was had a maturity date of
November 16, 1998 and was secured by a Commercial Guaranty executed by all of
the then acting officers of the Company, a Commercial Pledge Agreement covering
all inventory, accounts and equipment of the Company and a second position
Collateral Mortgage Lien against the real property owned by the Company located
in Lafayette, Louisiana. The maturity date of this note was extended and on
February 4, 1999, with a balance of $154,059.29, the loan was converted to a 7
year term loan under which the Company is to make monthly installment payments
of $2,600.57 per month for 84 months.
Page 30
<PAGE>
A Summary of the terms of the current and existing note with St. Martin
Bank are as follows:
---------------------------------------------------
Principal Amount of Note: $154,059.29
Date of Note: February 4, 1999
Maturity Date: April 20, 2006
Initial Interest Rate: 9.750%
Variable Interest: The interest rate of the note is subject to
change from time to time based on changes in
an index which is the St. Martin Bank Prime
Rate Adjusted Daily.
Security: The note is secured by a Commercial Pledge
Agreement covering all inventory, accounts
and equipment of the Company and a second
position Collateral Mortgage Lien against
the real property owned by the Company
located in Lafayette, Louisiana.
A copy of the agreements between the Company and St. Martin Bank are
attached hereto and incorporated herein by reference. See the Exhibit Index,
Part III.
Private Capital - Accounts Receivable Financing
-----------------------------------------------
On April 17, 1999 the Company entered into a Purchase and Security
Agreement with Private Capital, Inc., located in Lafayette, Louisiana. Under the
terms of this agreement, the Company would sell certain qualified account
receivables to Private Capital, Inc., at a price equal to the net amount of the
acceptable account receivable, less a discount equal to 8.0% of the net amount
of the acceptable account receivable. At the time of purchase of such account
receivable by Private Capital, Private Capital shall pay to the Company the net
amount of the account receivable less the discount. Private Capital agrees to
rebate to the Company a sum equal to 2.0% on each account receivable that is
paid within 30 days. Any account that pays after 30 days will be charged the
full discount, plus Any account purchased by Private Capital from the Company
unpaid for a period in excess of ninety (90) days from the date of said purchase
by Private Capital, the Company agrees to pay to Private Capital additional sums
equal to and calculated based on 2.0% for any part of a 30 day increment,
exceeding 60 date that Private Capital purchases said account receivable.
To secure the payment by the Company to Private Capital for any
indebtedness which may result from a charge back as a result of a delinquent or
non-paying account, the Company has granted to Private Capital a security
interest in all of the Company's inventory now or hereafter acquired by the
Company located at the Company's offices in Broussard, Louisiana, and all
accounts receivable, deposit accounts with Private Capital, equipment and
general intangibles and chattel papers of the Company and all proceeds thereof.
As additional security for the payment by the Company to Private Capital
for any indebtedness which may result from a chargeback as a result of a
delinquent or non-paying account, the then acting officers of the Company,
Stephen F. Owens, Angela M. Raidl and Edward Friloux all executed guarantees.
A copy of the agreements between the Company and Private Capital, Inc., are
attached hereto and incorporated herein by reference. See the Exhibit Index,
Part III.
Bank of Erath - Unsecured Note
------------------------------
On June 16, 1997 the Company borrowed the sum of $15,030.00 from the Bank
of Erath if Abbeville, Louisiana. The loan is unsecured and had an original
maturity date of September 14, 1997. One October 20, 1998 the loan was extended
to April 15, 2001.
Page 31
<PAGE>
A Summary of the terms of the loan with Bank of Erath are as follows:
--------------------------------------------------------------------
Principal Amount of Note: $15,000.00
Original Date of Note: June 16, 1997
Maturity Date: April 15, 2001
Initial Interest Rate: 12.672%
Monthly Installments: $488.04
A copy of the original promissory note and Loan Extension Agreement between
the Company and Bank of Erath are attached hereto and incorporated herein by
reference. See the Exhibit Index, Part III.
Item 3. Properties
----------
California Office.
------------------
The Company's main office facility is located at 9337 Bond Avenue, El
Cajon, California 92021, which serves as its corporate headquarters and is
situated in a leased 7,800 square feet office/warehouse building which contains
1,500 square feet of office space and 6,300 square feet of warehouse. The
Company leases this space from Darwin E. Zavadil, who is not affiliated in any
way with the Company and the terms of the lease were negotiated at arms-length.
A Summary of the terms of the lease are as follows:
---------------------------------------------------
Lease Term: From June 1, 1997 through May 31, 2002.
Security Deposit: $4,155.00
Rental rate: $4,155.00 subject to a cost of living adjustment
beginning in the second year of the lease.
Rental Adjustments: The monthly rent for the 2nd year of the lease and
cumulatively for every year thereafter and through the option period shall
automatically be adjusted based upon any increase that may occur in the Consumer
Price Index. The maximum increase in the Cost of Living shall be capped at five
(5%) per adjustment. The minimum rent increase shall be three (3%).
Option to Renew: There are no options to renew the lease
Option to Purchase: The Company has the option to purchase the property for
the sum of $528,780 in the first year of the lease. Beginning June 1,
1998 and each year thereafter, the same cost of living increase that
affects the rent shall also increase the selling price.
Real Property Taxes: Lessor is responsible for the payment of property
taxes.
Personal Property Taxes: The Company shall pay all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the premises.
Utilities: The Company shall pay for all gas, heat, light, power telephone
and other utilities and services supplied to the premises, together
with any taxes thereon.
Subleasing: Consent of Lessor is required.
Guaranty of Lease: Angela M. Raidl, the largest shareholder, a director and
officer of the Company has personally guaranteed the lease obligations
of the Company.
A copy of the Industrial Lease Agreement for the premises located at 9337
Bond Avenue, El Cajon, California 92021 is attached hereto and incorporated
herein by reference. See the Exhibit Index, Part III.
Louisiana Office.
-----------------
The Company's Louisiana office is located at 110 Brush Road, Broussard,
Louisiana, 70518 ("Broussard Property") and is situated in a Company-owned 4,000
square feet metal building of which 1,200 square feet is office space and 2,800
square feet is warehouse. The facility is used for the Gulf and East Coast sales
as well as manufacturing and warehousing of products. This location is also the
training center for fire retardant application and fire safe seminars, a
flammability testing laboratory capable of accomplishing several diverse test
protocols and the base for the on-site fire safe installation and fire retardant
applications.
Page 32
<PAGE>
The Company owns the Broussard Property, which is mortgaged to one of the
Company's lenders, Whitney National Bank, and now stands as collateral for a
promissory note in the principal amount of $74,400.00. The monthly payment for
the initial five year period is $925.00 per month. The promissory note bears
interest on the principal amount due as follows: (1) for the initial five year
period the interest rate shall be 8.50 percent per annum; (2) for the second
five year period, commencing on December 13, 2001, the interest rate shall be
fixed at one-quarter (0.25%) of one percent above Whitney prime; such interest
rate to continue for the remainder of the loan, with the final payment being due
and payable on December 30, 2006.
The production process undertaken by each of the Companies location can be
classified as light manufacturing. In regards to chemical manufacturing the
Company has avoided using hard-to-get raw materials. The chemicals are
reasonably simple to manufacture so there is no need to overstock in blended
products. The Company has an excellent relationship with all of its suppliers.
Most raw materials are available from more than one source. No unique equipment
is necessary for manufacturing chemicals, although automation equipment could
cut production time in projecting for the future increase in this area. No
special skills are needed to manufacture Firextra products. Increased orders
will increase the need for raw materials, which should cut the cost for
materials.
The production of the fire resistive textile fabrics currently occupies
most of the 6,300 square feet of warehouse in California. The State of
California must certify all applicators in order to apply fire retardants. The
cost of chemicals is minimum since the Company manufactures the chemicals used
for this department. At this time, for topical treatments no unique equipment is
needed. As we enter the next phase into the durable market, increase in labor,
production automation equipment, and a larger facility will be required.
A copy of the Promissory Note and Collateral Mortgage executed by the
Company in favor of Whitney Bank is attached hereto and incorporated herein by
reference. See the Exhibit Index, Part III.
Louisiana Corporate Apartment.
------------------------------
The Company leases an apartment in Lafayette, Louisiana which is located at
211 Liberty Avenue, Lafayette, Louisiana 70508. This apartment is utilized by
the Company's principals or employees when visiting the Louisiana facility. The
apartment is approximately 900 square feet. The Company leases this space from
The Plantations at Lafayette, who is not affiliated in any way with the Company
and the terms of the lease were negotiated at arms-length.
A Summary of the terms of the lease are as follows:
---------------------------------------------------
Lease Term: From March 13, 1998 through April 30, 1999.
Security Deposit: $200.00
Rental rate: $925.00 per month.
Rental Adjustments: No rental increases.
Option to Renew: The lease will automatically renew on a month to month
basis at the expiration of the term of the lease in the event hat the
Company or Landlord fails to give 30 days prior notice of their intent
to terminate the lease.
Option to Purchase: Not applicable.
Real Property Taxes: Lessor is responsible for the payment of property
taxes.
Personal Property Taxes: The Company shall pay all taxes assessed against
and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the premises.
Utilities: The Company shall pay for all gas, heat, light, power telephone
and other utilities and services supplied to the premises, together
with any taxes thereon/
Page 33
<PAGE>
Subleasing: No subleasing allowed.
Guaranty of Lease: Angela M. Raidl, the largest shareholder, a director and
officer of the Company has personally guaranteed the lease obligations
of the Company.
A copy of the Industrial Lease Agreement for the premises located at 211
Liberty Avenue, Lafayette, Louisiana 70508 is attached hereto and incorporated
herein by reference. See the Exhibit Index, Part III.
Oil, Gas and Mineral Interest.
-----------------------------
On October 31, 1997, the Company has entered into a Oil, Gas and Mineral
Lease with Penwell Energy, Inc., a Texas Corporation, giving Penwell the right
to drill on a portion of the Company's property located in Lafayette Parish,
Louisiana, consisting of approximately 1.0 acres of land. At the present time
the Company feels that the Oil, Gas and Mineral Lease has little or no value.
Penwell is not affiliated in any way with the Company and the terms of the lease
were negotiated at arms-length.
A Summary of the terms of the lease are as follows:
---------------------------------------------------
Lease Term: Three (3) years.
Royalties: The Company shall receive royalties on oil, gas, and other
minerals set forth in the lease equal to one-fourth (1/4th) of that
produced and saved from the land and not used for fuel in conducting
operations on the property.
A copy of the Oil, Gas and Mineral Lease is attached hereto and
incorporated herein by reference. See the Exhibit Index, Part III.
Automobile Purchase Contracts.
-----------------------------
In September 1996, the Company purchased two Ford F-150 pick-up trucks for
use by the Company at its Louisiana facility. The Company borrowed the sum of
$42,888.46 from Whitney Bank to purchase these vehicles. The promissory note to
Whitney Bank in the principal amount of $42,888.46 was secured by a security
agreement in which both Ford F-150 trucks are collateral. This promissory note
accrues interest at 7.75% with principal and interest payments of $867 per
month. A copy of the Promissory Note and Commercial Security Agreement executed
by the Company in favor of Whitney Bank is attached hereto and incorporated
herein by reference. See the Exhibit Index, Part III.
In October 1997, the Company purchased two 1997 Ford F-150 pick-up trucks
from Bay City Motors, Inc., of Lafayette, Louisiana, who is not affiliated in
any way with the Company and the terms of the purchase were negotiated at
arms-length. These vehicles are for use in the Company's business. The purchase
of these two vehicles were financed through Regions Bank of Birmingham, Alabama.
A Summary of the Purchase Financing Terms are as follows:
---------------------------------------------------------
Vehicle No 1. 1997 Ford F-150
VIN: 1FTDX1720VKC99219
Purchase Price: $18,003.78
Contract Date: 10/13/97
Amount Financed: $18,003.78
Percentage Rate: 8.90%
Payments: 48 Months
Payment Amount: $448.81 per month
First Payment: 11/27/97
Vehicle No 2. 1997 Ford F-150
VIN: 1FTDX1720VKD8225
Purchase Price: $17,684.28
Contract Date: 10/14/97
Amount Financed: $17,684.28
Percentage Rate: 8.90%
Payments: 48 Months
Payment Amount: $440.85 per month
First Payment: 11/28/97
Page 34
<PAGE>
The Company also leases various vehicles and equipment from the following
companies:
1997 Ford Expedition Lease. The Company leases a 1997 Ford Expedition for
use by the President of the Company. This lease is through Ford Motor Credit and
a summary of the lease terms are as follows:
Vehicle: 1997 Ford Expedition
Gross Costs: 38,883.44
Down Payment: $5,104.78
Total Payments: $24,631.88
Lease Term: 36 Months
Monthly Payment: $575.06
1997 Ford F-150 Pick Up. The Company leases a 1997 Ford F-150 pick up for
use at the California facilities. This lease is through Ford Motor Credit and a
summary of the lease terms are as follows:
Vehicle: 1997 Ford F-150
Gross Costs: $25,994.58
Down Payment: $1,514.91
Total Payments: $22,795.68
Lease Term: 48 Months
Monthly Payment: $474.91
IOS Capital Lease.
-----------------
The Company leases from IOS Capital Ricoh copier and Canon facsimile
machine. A summary of the lease terms are as follows:
Down Payment: $182.86
Lease Term: 60 Months
Monthly Payment: $169.71
Item 4. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth security ownership information (on a
Post-reverse split adjusted basis) as of the close of business on April 19,
1999, for any person or group, known by the Company to own more than five
percent (5%) of the Company's voting securities.
The following table sets forth security ownership information as of the
close of business on April 19, 1999, for any person or group, known by the
Company to own more than five percent (5%) of the Company's voting securities.
<TABLE>
<CAPTION>
Title of Name of Amount of Percent
Class Beneficial Owner Ownership of Class
---------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Angela M. Raidl 1,016,291 43.36%
1951 Tavern Road
Alpine, CA 91901
Common Stock Edward E. Friloux 175,257 7.47%
117 Red Barn Drive
Carenco, LA 70520
Common Stock Bruce E. Raidl 166,667 7.11%
12139 Valhalla Drive
Lakeside, CA 92040
Common Stock David Ian Fosterg 157,000 6.69%
PO Drawer 5127
Lake Charles, LA 70606
Common Stock Richard Rosenberg 130,211 5.55%
901 Foxpointe Circle
Delray Beach, FL 33445
</TABLE>
Angela M. Raidl has sole investment power and sole voting power over the
shares set forth in the above table.
Page 35
<PAGE>
(b) Security Ownership of Management
The following table sets forth security ownership information (on a
Post-reverse split adjusted basis, as of the close of business on April 19,
1999, for any director, executive officer or group of the Company's voting
securities:
<TABLE>
<CAPTION>
Title of Name of Amount of Percent
Class Beneficial Owner Ownership of Class
---------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Angela M. Raidl 1,016,291 43.36%
1951 Tavern Road
Alpine, California 91901
Common Stock Stephen F. Owens 0 0.0%
1951 Tavern Road
Alpine, California 91901
Common Stock All Directors & Officers
as a Group (2 Persons) 1,016,291 43.36%
</TABLE>
(c) Change in Control.
There are no present arrangements or pledges of the Company's securities
which may result in a change in control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons
(a) Identity of Directors and Executive Officers.
<TABLE>
<CAPTION>
Name and Address Age Position Term Served Since
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stephen F. Owens 39 President, CEO, 1 Year 1992
1951 Tavern Road and Director
Alpine, California 91901
Angela M. Raidl 38 Vice President, 1 Year 1992
1951 Tavern Road Treasurer,
Alpine, California 91901 Secretary and Director
</TABLE>
Each of the persons listed in the above table possesses sole investment
power and sole voting power over the shares set forth in the above table.
There are no arrangements or understandings between any of the directors or
executive officers, or any other person or persons pursuant to which they were
selected as directors and/or officers
Stephen F. Owens - Chairman of the Board of Directors, Chief Executive
Officer and President. Mr. Owens, a native of New York and a resident of
California, has served as Chief Executive Officer and President since the
company's inception. Mr. Owens has 10 years experience in the fire retardant
industry, specializing in product evaluations, sales and marketing. Mr. Owens is
able to quickly recognize future market requirements and develop effective short
range action and long term plans to capitalize on new opportunities. Mr. Owens
was Vice President of Sales for International Research Center from 1987 to 1989
prior to founding American Fire Retardant Corporation. He is a member of the
National Fire Protection Association. Mr. Owens co-authored along with Mr.
Edward E. Friloux the Fire Retardant Applicator's Manual, which has been under
copyright protection with the Library of Congress Number TX 3-878-798 since 11
August 1994. Prior to his entry into the fire retardant industry, Mr. Owens
served in the United States Army.
Page 36
<PAGE>
Angela M. Raidl - Vice President, Treasurer, Secretary and a Director. Ms.
Raidl, a native of Louisiana and a resident of California, has served as officer
and director since the company's inception. Ms. Raidl has 10 years experience in
the fire retardant industry, specializing in the management and administration
of the day to day responsibilities of the company, including training all
clerical staff, cash flow management, receivables, payables, payroll, purchasing
and personnel. Ms. Raidl also heads the operations division of American Fire's
Fabric Treatment Division, monitoring quality control, researching new ways of
increasing production, in addition to soliciting new accounts for this division.
Ms. Raidl has held administrative positions for 18 years. She attended Nicholls
State University and the University of Southwestern Louisiana, studying Business
Administration at both. Ms. Raidl is a Licensed Certified Applicator by the
State of California and is a member of the National Fire Protection Association.
Other Key Advisors and Consultants
----------------------------------
The Company has retained Presidio Capital & Management Corp. of Deerfield
Beach, Florida as its financial consultant and advisor, effective on June 11,
1998 by written Consulting Agreement entered into on that date ("Consulting
Agreement"). The Consulting Agreement provides that Presidio or its
broker-dealer affiliate, Capstone Partners, L.C. ("Capstone") will perform work
and render services in connection with the completing of a business plan and
offering documentation necessary in conducting a Rule 504 offering of the
Company's Common Stock. Additionally, the Consulting Agreement permits Presidio
to nominate one director on the board of directors to represent any new group of
investors that subscribe to the Offering, assuming the board of directors is no
larger than five members. If the board of directors is expanded to seven
members, then Presidio has the right to nominate two of such directors. This
provision contained in the Consulting Agreement obligates the Company to permit
such board composition for a term of five years after the date that the Offering
terminates. In exchange for its services under the Consulting Agreement,
Presidio or its broker-dealer affiliate, Capstone, were to receive certain
compensation established as a set fee and based upon the success of the
Offering. The Rule 504 offering was terminated on January 6, 1999 with no shares
being sold under said offering.
A copy of the Consulting Agreement with Presidio Capital is attached hereto
and incorporated herein by reference. See the Exhibit Index, Part III.
(1) Directorships
No Director of the Company or person nominated or chosen to become a
director holds any other directorship in any company with a class of securities
registered pursuant to section 12 of the Exchange Act or subject to the
requirements of section 15(d) of such Act or any other company registered as an
investment company under the Investment Company Act of 1940.
(a) Identity of Significant Employees.
The Company has one employee, Mr. Bruce Raidl, who is not an executive
officer, but is expected to make a significant contribution to the Company's
business. It is expected that current members of management and the Board of
Directors will be the only persons whose activities will be material to the
Company's operations. Members of management are the only persons who may be
deemed to be promoters of the Company
(b) Family Relationships.
Stephen F. Owens, the President and Chairman of the Board is the husband of
Angela M. Raidl, the Vice President, Treasurer, Secretary and a director.
Additionally, Bruce Raidl, an employee of the Company is the brother of Angela
Raidl. Other than the husband-wife relationship of Mr. Owens and Mrs. Raidl, and
the brother-sister relationship of Ms. Raidl and Mr. Raidl, there is no family
relationship between any director or executive officer of the Company.
Page 37
<PAGE>
(c) Involvement in Certain Legal Proceedings
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of the
Company:
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the bankruptcy or
two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
Item 6. Executive Compensation
----------------------
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
---------------------------
Long Term Compensation
--------------------------------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------------------------
Securities All
Other Underlying Other
Annual Restricted Options/ LTIP Compen-
Name and Year or Compen- Stock SAR's Payouts sation
Principal Period Salary Bonus sation) Awards (#) ($) ($)
Position Ended ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Angela M. Raidl 1998 $41,346.00 0 0 0 0 0 0
Vice President
CFO and Secretary
Stephen F. Owens 1998 $ 1,500.00 0 0 0 0 0 0
President and
CEO
Bruce Raidl 1998 $50,000.00 0 0 0 0 0 0
Employee
Edward Friloux 1998 $32,200.00 0 0 0 0 0 0
Employee
</TABLE>
Keyman Life Insurance
---------------------
The Company does not presently own life insurance covering the death of any
officer, director or key employee of the Company. The Company is planning to
purchase such insurance in order to provide adequate funding for the Company's
repurchase of shares of Common Stock from the estate of any officer or director
as a result of death, and to provide the Company with capital to replace the
executive loss. However, the Company can make no assurance if and when such life
insurance coverage will be obtained, and if available, whether the premiums
payable for coverage will be reasonable.
Page 38
<PAGE>
Directors' and Officers' Insurance
----------------------------------
The Company is exploring the possibility of obtaining directors' and
officers' liability insurance. The Company has obtained several premium
quotations but has not entered into any contractual arrangements with any
insurance company to provide said coverage as of the date of this Offering
Memorandum. Furthermore, there is no assurance that the Company will be able to
obtain such coverage in the future, or that if the coverage is obtainable that
the premiums will not be prohibitive.
EMPLOYMENT CONTRACTS/STOCK INCENTIVE PLANS
------------------------------------------
Management Employment Agreements and Compensation
-------------------------------------------------
The Company previously entered into written employment agreements effective
October 7, 1997 with several key members of the management team, which included
Stephen F. Owens, Angela M. Raidl, Bruce E. Raidl and Edward E. Friloux, Sr.
Each of these employment agreements established a base monthly salary for the
Company's officers, which base salary was to commence as of February 1, 1998.
The monthly base salaries for each of the above four individuals were set
pursuant in their respective employment agreements as follows:
Stephen F. Owens ..................... $6,000
Angela M Raidl ........................ $5,000
Bruce F. Raidl ......................... $5,000
Edward E. Friloux, Sr. ............... $3,500
Prior to these employment agreements becoming effective, all of the above
individuals mutually agreed that the agreements were null and void and of no
force or effect. All of the above individuals have executed written agreements
canceling such employment agreement with the exception of Mr. Edward Friloux who
has since refused to cancel his employment agreement. On April 28, 1999 the
Company terminated Mr. Friloux for failure to report to work and failure of
performance of his duties.
KEY EMPLOYEES
-------------
At the date of this registration statement, the Company has no other
employees that could not be replaced with other non-skilled labor. However, if
the Company is to grow, additional key personnel will be needed in the areas of
marketing, sales, and new product development. As the company expands,
additional sales, marketing, production, and support staff will be added.
Item 7. Certain Relationships and Related Transactions
----------------------------------------------
TRANSACTIONS WITH MANAGEMENT AND OTHERS
---------------------------------------
There have been several significant transactions entered into between the
Company and its management during the course of its development. Each of the
officers and directors of the Company may engage in other businesses, either
individually or through partnerships or corporations in which they have an
interest, hold an office or serve on boards of directors. Certain conflicts of
interest may arise between the Company and its officers and directors. All of
the officers and directors may have other business interests to which they
devote their time.
The Company attempts to resolve any such conflicts of interest in favor of
the Company. The officers and directors of the Company are accountable to it and
its shareholders as fiduciaries, which requires that such officers and directors
exercise good faith and integrity in handling the Company's affairs. A
shareholder may be able to institute legal action on behalf of the Company or on
behalf of itself and all other similarly situated shareholders to recover
damages or for other relief in cases of the resolution of conflicts in any
manner prejudicial to the Company.
Page 39
<PAGE>
During the course of the previous three years, several officers and
directors of the Company, as set forth below have received shares of the
Company's Common Stock in exchange for their services to the Company and in lieu
of cash compensation to which they would have been entitled.
On April 1, 1997 the Company issued 3,333 post-reverse split adjusted
shares of restricted Common Stock to John E. Domingue, a former director and
officer of the Company exchange for his services with organization the business
and the development of the business plan. These shares were issued at $0.84 per
share on a post-reverse split adjusted basis. The securities were issued
pursuant to an exemption from registration provided under Section 4(2) of the
Securities Act of 1933. Mr. Domingue was, at the time of the issuance of said
shares, an officer and director of the Company and possessed all information
about the Company to make an informed investment decision.
The Company has also borrowed cash for working capital from certain
officers and directors as well as other shareholders of the Company. Each loan
has been documented by the Company's promissory notes, which are generally
described below, and all loans are current. The Company believes that the terms
of all of the loan transactions described herein are based upon terms which are
no more or less favorable than terms which would have been agreed to by persons
unaffiliated with the Company and that all of the transactions set forth below
are otherwise fair to the Company and its shareholders:
Warren Guidry Note. On October 3, 1997, the Company borrowed the principal
sum of $100,000 from Warren Guidry, a shareholder of the Company. Interest
accrues at the rate of 10.50% per annum simple interest. Additionally, in
consideration for making the loan to the Company, the Company issued 16,667
post-reverse split adjusted shares of Common Stock to the lender. The note was
due and payable in 120 days and the note is now past due. On May 10, 1999, Mr.
Guidry granted the Company and extension of until August 31, 1999 provided that
the Company make agreed upon principal and interest payments of $3,735.37 per
month. Mr. Guidry agree to negotiate a further extension on or before August 31,
1999 provided that the Company keeps current on all payments to him.
Issuance of shares to Founders. On October 16, 1997, AFRC Wyoming realizing
that it had failed to issue some 756,350 post-reverse split adjusted shares of
Common Stock to its founders resulting from the prior acquisition in 1995 of
AFRC LA issued a total of 756,350 post-reverse split adjusted shares as follows:
<TABLE>
<CAPTION>
Name Shares
----------------------------------------------------------------------
<S> <C>
Angela Raidl .......... 382,500 post-reverse split adjusted shares
Bruce Raidl ........... 166,667 post-reverse split adjusted shares
Edward E. Friloux ..... 78,667 post-reverse split adjusted shares
David Ian Foster ...... 44,500 post-reverse split adjusted shares
Richard Rosenberg ..... 41,667 post-reverse split adjusted shares
Rod Guidry Jr. ........ 34,017 post-reverse split adjusted shares
David Aucion .......... 8,333 post-reverse split adjusted shares
</TABLE>
No underwriters were used. The securities were issued pursuant to an
exemption from registration provided under Section 4(2) of the Securities Act of
1933. All of the above individuals were, at the time when said shares were to
have been issued, were founders of the Company and possessed all information
about the Company to make an informed investment decision.
Richard Rosenberg Note Consolidation and Conversion. On March 31, 1999, the
Company entered into an agreement with Richard Rosenberg, a shareholder and
former director of the Company, which agreement was amended on April 12, 1999,
under Mr. Rosenberg agreed to the convert $34,411.45 of the $77,545.79 debt
owing to him by the Company, into 49,159 post-split shares of restricted Common
Stock at the rate of $0.70 per share. The price per shares was determined
through the negotiations between the Company and Mr. Rosenberg as part of the
negotiations in resolving the consolidation of and conversion of the notes
owing to Mr. Rosenberg as set forth below.
Page 40
<PAGE>
Mr. Rosenberg further agreed to consolidate all notes and loans made by him
to the Company into one note with a principal balance of $43,134.34, with
interest thereon at the rate of 6.0% interest. The Company will make month
payments of $2,500 per month for 18 months commencing on May 1, 1999.
In consideration for Mr. Rosenberg's agreement to convert a portion of his
debt to common stock and consolidate the note and loans made by him to the
Company into one note with a reduced interest rate of 6.0%, the Company agreed
to issues Mr. Rosenberg 15,968 shares of restricted common stock.
Copies of the Agreement dated March 31, 1999, as amended April 12, 1999,
along with the consolidated promissory note are attached hereto and incorporated
herein by reference. See the Exhibit Index, Part III.
There have been no preliminary contact or discussion by any of the
Company's officers, directors, promoters, their affiliates or associates with
any representatives of the owners of any business or company regarding the
possibility of any acquisitions or mergers transactions, and there are no
present plans, proposals, arrangements or understandings with any person or
company regarding the possibility of any acquisitions or merger transaction.
TRANSACTIONS WITH PROMOTERS
---------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any promoter or founder, or any member of
the immediate family of any of the foregoing persons, had a material interest.
Item 8. Description of Securities
-------------------------
The Company has one class of securities authorized, consisting of
25,000,000 authorized shares of common stock with a par value of $0.001 per
share, of which 2,343,788 shares are issued and outstanding.
COMMON STOCK
------------
The holders of the Company's common stock are entitled to one vote per
share on each matter submitted to a vote at a meeting of stockholders. The
shares of common stock do not carry cumulative voting rights in the election of
directors.
The shareholders of the Company have no pre-emptive rights to acquire
additional shares of common stock or other securities. The common stock is not
subject to redemption rights and carries no subscription or conversion rights.
In the event of liquidation of the Company, the shares of common stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities of the company. All shares of the common stock now outstanding are
fully paid and non-assessable.
OUTSTANDING STOCK OPTIONS AND WARRANTS
--------------------------------------
There are no outstanding options, warrants or calls to purchase any of the
authorized securities of the Company.
CHANGE IN CONTROL
-----------------
There is no provision in the Company's Articles of Incorporation, as
amended, or Bylaws, as amended, that would delay, defer, or prevent a change in
control of the Company.
Page 41
<PAGE>
PART II
-------
Item 1. Market Price Of And Dividends On The Company's Common Equity And Related
Stockholder Matters
------------------------------------------------------------------------
Market Information. There has never been any established "public market"
for shares of common stock of the Company. The Company has submitted for listing
and quotation on the OTC Bulletin Board of the National Association of
Securities Dealers, Inc. (the "NASD"). If approved for quotation, there can be
no assurance that any market for the Company's common stock will develop or be
maintained. If a public market ever develops in the future, the sale of
"unregistered" and "restricted" shares of common stock pursuant to Rule 144 of
the Securities and Exchange Commission by members of management or may have a
substantial adverse impact on any such public market.
There are no outstanding options, warrants or calls to purchase any of the
authorized securities of the Company.
Holders. The number of record holders of the Company's securities as of the
date of this Registration Statement is approximately 184.
Dividends. The Company has not declared any cash dividends with respect to
its common stock or its preferred stock, and does not intend to declare
dividends in the foreseeable future. The future dividend policy of the Company
cannot be ascertained with any certainty, and if and until the Company completes
any acquisition, reorganization or merger, no such policy will be formulated.
There are no material restrictions limiting, or that are likely to limit, the
Company's ability to pay dividends on its securities.
Item 2. Legal Proceedings
-----------------
Alman v. AFRC Florida
---------------------
The Company was involved in litigation in the calendar year 1997. The
Company's former subsidiary, AFRC Florida was a party defendant in the matter
Allen E. Alman and Phyllis S. Alman v. American Fire Retardant Corporation of
Florida and Stephen F. Owens, Dade County Florida, Case No. 97-7203 CA 09. The
matter was a dispute over the terms of a Stock Purchase Agreement entered into
in September 1993 with regard to the purchase by AFRC Florida of all the stock
and assets of Apco Equipment Sale Corporation dba Thoro-Sheen Company. This
matter was resolved in July 1997 wherein AFRC Florida and Mr. Owens agreed to
pay to Mr. And Mrs. Almans the total sum of $51,550, payable $5,775.00 on or
before July 15, 1997, $5,775.00 on or before August 30, 1997 and the balance of
$40,000 in installments of $1,800.00 per month for 24 months commencing on
September 30, 1997, until paid in full.
All payments were made in a timely manner pursuant to the terms of the
Joint Stipulation and the final payment was made on September 15, 1999.
Halvelin v. AFRC
-----------------
The Company is a party defendant in the matter of Havelin v. American Fire
Retardant Corporation, United States District Court, Southern District of
Mississippi, Case No. 1-99CV156GR. The Plaintiff, Jennifer L. Havelin was suing
the Company alleging that the Company discriminated against the Plaintiff
because of Plaintiff's sex, a female. The Plaintiff originally filed a claim
with Equal Employment Opportunity Commission ("EEOC") in May 15, 1998 alleging
discrimination and that Plaintiff had been laid off because she was a female. On
January 29, 1999 the EEOC dismissed Plaintiffs claim as being without merit.
This action arose from the same facts set forth by Plaintiff in her claim with
the EEOC. Further, pursuant to Title VII the Plaintiff had 90 days (i.e. until
May 1, 1999) to file a lawsuit in Federal Court with regard to this matter. The
Plaintiff filed her action beyond the prescribed time period.
On August 25, 1999, the Company settled this matter for a total sum of
$5,000 paid by the Company to Ms. Havelin.
Page 42
<PAGE>
As a result of the resolution of the above matters, the costs of litigation
associated with those matters have ceased and therefore there is no further
effect on the results of operations and liquidity.
With the exception of the legal proceedings set forth above, the Company is
not presently a party to any litigation, claim, or assessment. Further, the
Company is unaware of any unasserted claim or assessment, which will have a
material effect on the financial position or future operations of the Company.
Delinquent Payroll Taxes
------------------------
The Company owes the Internal Revenue Service $219,582 for prior delinquent
payroll taxes by the Company's former subsidiaries, AFRC Florida and AFRC
Louisiana. These payroll taxes became delinquent starting in the 3rd quarter of
1997 through the 4th quarter of 1998. The total delinquent payroll tax
liabilities are $101,403 attributed to AFRC Florida and $118,178 attributed to
AFRC Louisiana. The Company has retained the tax counsel of Royston & Hebert in
Lafayette, Louisiana to represent the Company before the Internal Revenue
Service and the Company is currently submitting an Offer and Compromise work-out
agreement to obtain a substantial reduction of the outstanding payroll tax
balance due. The Company has since kept current with all present payroll and
other tax obligations.
Item 3. Changes in and Disagreements with Accountants
---------------------------------------------
There has been no change of the independent auditors of the Company and
there are no disagreements with such independent auditors.
Item 4. Recent Sales of Unregistered Securities
---------------------------------------
The following transactions describe the sales of the Company's securities
over the last three years:
Transaction #1.
- ---------------
In January 22, 1997, the Company issued a total of 1,667 post-reverse split
adjusted shares of restricted Common Stock at a price of $1.62 per share on a
post-reverse split adjusted basis. 833 post-reverse split adjusted shares to
Jack Manckia and 834 post-reverse split adjusted shares to Julian Phillips, in
conversion of a total of $2,700 owing by the Company to Messrs. Manckia and
Philips. No underwriters were used. The securities were issued pursuant to an
exemption from registration provided under Section 4(2) of the Securities Act of
1933. Mr. Manckia and Mr. Philips were both lenders to the Company and possessed
all information about the Company to make an informed investment decision.
Transaction #2.
- ---------------
On April 1, 1997 the Company issued 3,333 post-reverse split adjusted
shares of restricted Common Stock at a price of $0.84 per share on a
post-reverse split adjusted basis, to John E. Domingue, a former director and
officer of the Company exchange for his services with organization of the
business and the development of the Company's business plan. No underwriters
were used. The securities were issued pursuant to an exemption from registration
provided under Section 4(2) of the Securities Act of 1933. Mr. Domingue was, at
the time of the issuance of said shares, an officer and director of the Company
and possessed all information about the Company to make an informed investment
decision.
Page 43
<PAGE>
Transaction #3.
- ---------------
On October 16, 1997, the Company issued 50,833 post-reverse split adjusted
shares of Common Stock to four individuals in consideration for their services
and financial accommodations provided to the Company.
16,667 post-reverse split adjusted shares were issued to Warren Guidry
for Mr. Guidry's financial accommodations in making a loan of $100,000
to the Company.
8,333 post-reverse split adjusted shares were issued to Julian Phillips
for Mr. Phillips' financial accommodations in making a loan of $30,000
to the Company, and as interest on said a loan. Said shares were issued
on a deemed value of $4.20 per share on a post-reverse split adjusted
basis.
833 post-reverse split adjusted shares were issued to Gerald Andrus at
a price of $4.20 per share on a post-reverse split adjusted basis, in
consideration for building maintenance and repair services provided by
Mr. Andrus to the Company.
8,333 post-reverse split adjusted shares were issued to Lewis Rosenberg
at a price of $4.20 per share on a post-reverse split adjusted basis,
in consideration for legal services provided by Mr. Rosenberg to the
Company.
16,667 post-reverse split adjusted shares were issues to Rich
Wambsgans at a price of $4.20 per share on a post-reverse split
adjusted basis, in consideration for his consulting and financial
services to the Company. Mr. Wambsgans is an accredited investors.
No underwriters were used in any of these transactions. The securities were
issued pursuant to an exemption from registration provided under Section 4(2) of
the Securities Act of 1933. All parties had a direct relationship with the
Company and possessed all information about the Company to make an informed
investment decision.
Transaction #4.
- ---------------
On October 16, 1997, AFRC Wyoming realizing that it had failed to issue
some 756,350 post-reverse split adjusted shares of Common Stock to its founders
resulting from the prior acquisition in 1995 of AFRC LA issued a total of
756,350 post-reverse split adjusted shares as follows:
<TABLE>
<CAPTION>
Name Shares
----------------------------------------------------------------------
<S> <C>
Angela Raidl .......... 382,500 post-reverse split adjusted shares
Bruce Raidl ........... 166,667 post-reverse split adjusted shares
Edward E. Friloux ..... 78,667 post-reverse split adjusted shares
David Ian Foster ...... 44,500 post-reverse split adjusted shares
Richard Rosenberg ..... 41,667 post-reverse split adjusted shares
Rod Guidry Jr. ........ 34,017 post-reverse split adjusted shares
David Aucion .......... 8,333 post-reverse split adjusted shares
</TABLE>
No underwriters were used. The securities were issued pursuant to an
exemption from registration provided under Section 4(2) of the Securities Act of
1933. All of the above individuals were, at the time when said shares were to
have been issued, were founders of the Company and possessed all information
about the Company to make an informed investment decision.
Page 44
<PAGE>
Transaction #5.
- ---------------
Private Placement Offering dated October 20, 1997 consisting of 250,000
post-reverse split adjusted shares of Common Stock under which all 250,000
post-reverse split adjusted shares of Common Stock were sold pursuant to an
exemption from registration provided by Rule 504, at a price of $0.12 per share
on a post-reverse split adjusted basis, for a total of $30,000 to the following:
Gooding Investments, Ltd. .... 100,000 post-reverse split adjusted shares
Glen Agar Investments, Ltd. .. 100,000 post-reverse split adjusted shares
Victor Keel .................. 50,000 post-reverse split adjusted shares
Transaction #6.
- ---------------
Private Placement Offering dated October 27, 1997 consisting of 135,667
post-reverse split adjusted shares of Common Stock under which a total of 42,905
post-reverse split adjusted shares of Common Stock were sold between October 27,
1997 and July 1998, at $4.20 per share on a post-reverse split adjusted basis,
for a total of $197,000 raised. The securities were sold pursuant to an
exemption from registration provided by Rule 504 to a class of investors being
comprised of both accredited and non-accredited investors who were residents of
various states. 380 of said shares represent fractional shares rounded up as a
result of the reverse stock split.
Transaction #7.
- ---------------
On December 28, 1998, the Company issued and aggregate of 255,923
post-reverse split shares of Common Stock to five individuals in consideration
cash, services and in correction of a prior transfer.
96,590 post-reverse split adjusted shares were issued to Edward E.
Friloux in consideration for their chemical engineering services
provided by Mr. Friloux to the Company valued at $17,386.
112,500 post-reverse split adjusted shares were issued to David Ian
Foster in consideration for their chemical engineering services
provided by Mr. Foster to the Company valued at $19,205.
33,333 post-reverse split adjusted shares were issued to Angela Raidl
who in May 1998 in error transferred 33,000 post-reverse split adjusted
shares to Ruth and Richard Rosenberg for financial accommodations
provided by Mr. and Mrs. Rosenberg to the Company. Said shares should
have been issued from the Company and not from Mrs. Raidl personally.
Accordingly, the issuance of these 33,333 post-reverse split adjusted
shares were to repay Ms. Raidl for her shares transferred on behalf of
the Company to Mr. and Mrs. Rosenberg.
6,750 post-reverse split adjusted shares were issued to Lewis Rosenberg
for interest expense of $2,363 on loans made by Lewis Rosenberg to the
Company.
6,750 post-reverse split adjusted shares were issued to Richard
Rosenberg for interest expense of $2,362 on loans made by Richard
Rosenberg to the Company.
No underwriters were used. The securities were issued pursuant to an
exemption from registration provided under Section 4(2) of the
Securities Act of 1933. All parties had a direct relationship with the
Company and possessed all information about the Company to make an
informed investment decision.
Page 45
<PAGE>
Transaction #8.
- ---------------
On March 31, 1999, the Company entered into an agreement with Richard
Rosenberg, a shareholder and former director of the Company, which agreement was
amended on April 12, 1999, under Mr. Rosenberg agreed to the convert $34,411.45
of the $77,545.79 debt owing to him by the Company, into 49,159 post-reverse
split adjusted shares of restricted Common Stock at the rate of $0.70 per share,
which price was negotiated at arms length between the Company and Mr. Rosenberg.
Mr. Rosenberg further agreed to consolidate all notes and loans made by him to
the Company into one note with a principal balance of $43,134.34, with interest
thereon at the rate of 6.0% interest. The Company will make month payments of
$2,500 per month for 18 months commencing on May 1, 1999. In consideration for
Mr. Rosenberg's agreement to convert a portion of his debt to common stock and
consolidate the note and loans made by him to the Company into one note with a
reduced interest rate of 6.0%, the Company agreed to issues Mr. Rosenberg 15,968
post-reverse split adjusted shares of restricted common stock. No underwriters
were used. The securities were sold pursuant to an exemption from registration
provided under Section 4(2) of the Securities Act of 1933 and Mr. Rosenberg is
an accredited investors.
Item 5. Indemnification of Directors and Officers
-----------------------------------------
Section 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes a
Nevada corporation to indemnify any director, officer, employee, or corporate
agent "who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the corporation" due to his corporate role.
Section 78.751(1) extends this protection "against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or proceeding if
he acted in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the right
of the corporation. The party must have been acting in good faith and with the
reasonable belief that his actions were not opposed to the corporation's best
interests. Unless the court rules that the party is reasonably entitled to
indemnification, the party seeking indemnification must not have been found
liable to the corporation.
To the extent that a corporate director, officer, employee, or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he be indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense."
Section 78.751 (4) of the NRS limits indemnification under Sections 78.751
(1) and 78.751(2) to situations in which either (1) the stockholders, (2)the
majority of a disinterested quorum of directors, or (3) independent legal
counsel determine that indemnification is proper under the circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may advance an
officer's or director's expenses incurred in defending any action or proceeding
upon receipt of an undertaking. Section 78.751(6)(a) provides that the rights to
indemnification and advancement of expenses shall not be deemed exclusive of any
other rights under any bylaw, agreement, stockholder vote or vote of
disinterested directors. Section 78.751(6)(b) extends the rights to
indemnification and advancement of expenses to former directors, officers,
employees and agents, as well as their heirs, executors, and administrators.
Page 46
<PAGE>
Regardless of whether a director, officer, employee or agent has the right
to indemnity, Section 78.752 allows the corporation to purchase and maintain
insurance on his behalf against liability resulting from his corporate role.
The Articles of Incorporation provide for above-referenced indemnification
provisions of the NRS. This right to indemnification continues as to persons who
have ceased to be agents of the Company and inures to the benefit of such
persons' heirs, executors and administrators.
Page 47
<PAGE>
PART F/S
AMERICAN FIRE RETARDANT CORP.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
Contents
----------
Page
----
Independent Auditors' Report ............................... 49
Consolidated Balance Sheets ................................ 50
Consolidated Statements of Operations ...................... 52
Consolidated Statements of Stockholders' Equity (Deficit)... 53
Consolidated Statements of Cash Flows ...................... 54
Notes to the Consolidated Financial Statements ............. 56
Page 48
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
American Fire Retardant Corporation and Subsidiary
San Diego, California
We have audited the accompanying consolidated balance sheet of American Fire
Retardant Corporation and Subsidiary as of December 31, 1998 and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the years ended December 31, 1998 and 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
American Fire Retardant Corporation and Subsidiary as of December 31, 1998 and
the consolidated results of their operations and their cash flows for the years
ended December 31, 1998 and 1997, in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
March 10, 1999
Page 49
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
December 31,
-------------
1998
-------------
<S> <C>
CURRENT ASSETS
Inventory (Note 1) $ 140,495
Accounts receivable, net (Notes 1 and 4) 472,302
-------------
Total Current Assets 612,797
-------------
PROPERTY AND EQUIPMENT (Notes 1 and 3) 196,603
-------------
OTHER ASSETS
Restricted cash (Note 4) 71,519
Deferred charges, net 72,500
Deposits and other assets 16,372
-------------
Total Other Assets 160,391
-------------
TOTAL ASSETS $ 969,791
=============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 50
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Balance Sheets (Continued)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31,
-------------
1998
-------------
<S> <C>
CURRENT LIABILITIES
Cash overdraft $ 9,462
Accounts payable 65,887
Accrued expenses (Note 9) 229,321
Unearned revenue 42,690
Shareholder loans (Note 6) 215,700
Notes payable, current portion (Note 5) 225,697
Line of credit (Note 4) 418,869
-------------
Total Current Liabilities 1,207,626
-------------
LONG-TERM LIABILITIES
Notes payable (Note 5) 94,668
-------------
Total Liabilities 1,302,294
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value; unlimited number of
shares authorized, 2,278,661 shares issued and
outstanding 874,369
Accumulated deficit (1,206,872)
-------------
Total Stockholders' Equity (Deficit) (332,503)
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 969,791
=============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 51
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended
December 31,
---------------------------------
1998 1997
------------- -------------
<S> <C> <C>
NET SALES $ 2,059,896 $ 1,906,935
COST OF SALES 546,087 787,488
------------- -------------
GROSS MARGIN 1,513,809 1,119,447
------------- -------------
EXPENSES
Selling, general and administrative 1,712,784 1,212,230
Depreciation and amortization expense 39,286 23,495
Bad debt expense 17,370 39,523
------------- -------------
Total Expenses 1,769,440 1,275,248
------------- -------------
LOSS FROM OPERATIONS (255,631) (155,801)
------------- -------------
OTHER EXPENSES
Interest expense (255,473) (222,124)
------------- -------------
Total Other Expenses (255,473) (222,124)
------------- -------------
LOSS BEFORE INCOME TAXES (511,104) (377,925)
PROVISION FOR INCOME TAXES (Note 1) - -
------------- -------------
NET LOSS $ (511,104) $ (377,925)
============= =============
BASIC LOSS PER SHARE $ (0.25) $ (0.34)
============= =============
FULLY DILUTED LOSS PER SHARE $ (0.25) $ (0.34)
============= =============
BASIC WEIGHTED AVERAGE SHARES 2,059,754 1,100,105
============= =============
FULLY DILUTED WEIGHTED AVERAGE SHARES 2,059,754 1,100,105
============= =============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 52
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Common Stock Stock
------------------------ Subscriptions Accumulated
Shares Amount Receivables Deficit
---------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 913,650 $ 318,886 $ - $ (317,843)
Stock issued for cash 292,499 208,500 (30,000) -
Additional founders' shares issued 756,350 - - -
Stock issued for services 54,167 216,301 - -
Stock issued for conversion
of note payable 1,667 2,700 - -
Stock issuance costs - (14,000) - -
Net loss for the year ended
December 31, 1997 - - - (377,925)
--------- ---------- ---------- -----------
Balance, December 31, 1997 2,018,333 732,387 (30,000) (695,768)
Common stock issued for cash 4,405 18,500 - -
Receipt of stock subscription - - 30,000 -
Common stock issued for
services and interest 255,923 52,982 - -
Contribution of capital by
shareholder for services
rendered - 70,500 - -
Net loss for the year ended
December 31, 1998 - - - (511,104)
--------- ---------- ---------- -----------
Balance, December 31, 1998 2,278,661 $ 874,369 $ - $(1,206,872)
========= ========== ========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 53
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended
December 31,
---------------------------------
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (511,104) $ (377,925)
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating activities:
Common stock issued for services and interest 52,982 216,301
Depreciation and amortization 67,018 39,215
Bad debt expense 17,370 39,523
Capital contributed for services rendered 70,500 -
Change in Assets and Liabilities:
(Increase) decrease in accounts receivable (56,192) (327,997)
(Increase) decrease in deferred charges (44,486) -
(Increase) decrease in deposits (6,683) (6,124)
(Increase) decrease in inventory (77,128) (44,351)
Increase (decrease) in cash overdraft - (15,018)
Increase (decrease) in accounts payable (21,308) 6,741
Increase (decrease) in accrued expenses 155,661 5,180
------------- -------------
Net Cash Provided (Used) by Operating Activities (353,370) (464,455)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (15,866) (57,375)
------------- -------------
Net Cash (Used) by Investing Activities (15,866) (57,375)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of stock offering costs - (14,000)
Proceeds from sale of common stock 48,500 178,500
Proceeds from notes payable - related 129,000 129,700
Payments on notes payable - related (85,300) (41,322)
Proceeds from notes payable 382,590 114,413
Proceeds from lines of credit - 296,404
Payment on lines of credit (79,517) -
Payment on notes payable (47,891) (57,954)
------------- -------------
Net Cash Provided by Financing Activities $ 347,382 $ 605,741
------------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 54
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
For the Years Ended
December 31,
---------------------------------
1998 1997
------------- -------------
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH $ (21,854) $ 83,911
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 83,911 -
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 62,057 $ 83,911
============= =============
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR
Interest $ 208,490 $ 114,424
Income taxes $ - $ -
NON-CASH FINANCING ACTIVITIES
Stock issued for conversion of note payable $ - $ 2,700
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 55
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements include those of American Fire
Retardant Corporation (a Wyoming corporation) (the Company) and its
wholly-owned subsidiary, American Fire Retardant Corporation (a Florida
corporation)(Subsidiary).
The Company was originally incorporated in Louisiana on June 29, 1993. On
July 24, 1995, the Company applied for and received approval from the State
of Wyoming to be domesticated in Wyoming without any break in corporate
existence.
The Subsidiary was incorporated in the State of Florida on November 20,
1992 and was qualified to do business in California on March 4, 1994.
The Company and Subsidiary have offices in Louisiana and California and
provide services relating to fabric treatment and other fire retardant
activities.
The Company has an unlimited number of no par value common shares
authorized.
b. Accounting Method
The Company's consolidated financial statements are prepared using the
accrual method of accounting. The Company has elected a December 31 year
end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
d. Accounts Receivable
Accounts receivable are shown net of an allowance for doubtful accounts of
$13,952 at December 31, 1998.
e. Basic Loss Per Share
The computations of basic loss per share of common stock are based on the
weighted average number of shares outstanding during each period presented.
f. Principles of Consolidation
The consolidated financial statements include those of American Fire
Retardant Corporation and its wholly-owned subsidiary, American Fire
Retardant Corporation (California). All significant intercompany
transactions and accounts have been eliminated in the consolidation.
Page 56
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Property and Equipment
Property and equipment are stated at cost. Expenditures for small tools,
ordinary maintenance and repairs are charged to operations as incurred.
Major additions and improvements are capitalized. Depreciation is computed
using the straight-line and accelerated methods as follows:
Machinery and equipment 4-5 years
Vehicles 5 years
Building 39.5 years
Furniture and fixtures 5 years
Leasehold improvements 7 years
Depreciation expense for the years ended December 31, 1998 and 1997 was
$33,433 and $32,389.
h. Revenue Recognition
Revenue is recognized upon completion of fire retardant and prevention
projects and upon delivery of fire prevention materials.
i. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
j. Concentrations of Risk
Cash
At times, the Company has demand deposits in excess of amounts protected by
FDIC insurance.
Accounts Receivable
Credit losses, if any, have been provided for in the financial statements
and are based on management's expectations. The Company's accounts
receivable are subject to potential concentrations of credit risk. The
Company does not believe that it is subject to any unusual, or significant
risk in the normal course of its business.
Sales
The Company had one customer in 1998 who accounted for 17% of the net
sales.
Page 57
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
k. Provision for Income Taxes
No provision for income taxes has been accrued because the Company has net
operating loss carryovers. The net operating loss carryforwards of
approximately $1,139,000 at December 31, 1998, expire in 2013. No tax
benefit has been reported in the consolidated financial statements because
the Company is uncertain if the carryforwards will expire unused.
Accordingly, the potential tax benefits are offset by a valuation account
of the same amount.
l. Inventory
Inventories are stated at the lower of cost or market value using the
first-in, first-out method of valuation.
m. Advertising
The Company expenses advertising costs as they are incurred.
n. Deferred Charges
Formulation 238
In November 1998, the Company acquired Formulation 238 for $45,000. The
Company paid $25,000 prior to year end and owed $20,000, which is recorded
as a note payable. The cost of $45,000 is being amortized over a five year
life and is shown net of accumulated amortization of $1,500 at December 31,
1998 in the deferred charges.
Fabric Protection
In 1995, the Company purchased various pieces of equipment and customer
lists for $40,000. The amount is being amortized over a 5 year period and
is shown net of $24,000 of accumulated amortization at December 31, 1998 as
part of the deferred charges.
Thorosheen
In July 1997, the Company purchased various customer lists and technologies
for $40,000. The amount is being amortized over a 2 year period and is
shown net of $27,000 of accumulated amortization.
Amortization expense for the three acquisitions for the years ended
December 31, 1998 and 1997 was $33,585 and $6,826, respectively.
Page 58
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
o. Change in Accounting Principle
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share" and Statement
of Financial Accounting Standards No. 129 "Disclosures of Information About
an Entity's Capital Structure." SFAS No. 128 provides a different method of
calculating earnings per share than was previously used in accordance with
APB Opinion No. 15, "Earning Per Share." SFAS o. 128 provides for the
calculation of "Basic" and "Dilutive" earnings per share. Basic earnings
per share includes no dilution and is computed by dividing income available
to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the
potential dilution of securities that could share in the earnings of an
entity, similar to fully diluted earnings per share. SFAS No. 129
establishes standards for disclosing information about an entity's capital
structure. SFAS No. 128 and SFAS No. 129 are effective for financial
statements issued for periods ending after December 15, 1997. In fiscal
1998, the Company adopted SFAS No. 128, which did not have a material
impact on the Company's financial statements. The implementation of SFAS
No. 129 did not have a material effect on the Company's financial
statements.
The Financial Accounting Standards Board has also issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 130
establishes standards for reporting and display of comprehensive income,
its components and accumulated balances. Comprehensive income is defined to
include all changes in equity except those resulting from investments by
owners and distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that displays with the same prominence as other
financial statements. SFAS No. 131 supersedes SFAS No. 14 "Financial
Reporting for Segments of a Business Enterprise." SFAS No. 131 establishes
standards on the way that public companies report financial information
about operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim
financial statements issued to the public. It also establishes standards
for disclosure regarding products and services, geographic areas and major
customers. SFAS No. 131 defines operating segments as components of a
company about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance.
SFAS No. 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Because of the recent issuance of the
standard, management has been unable to fully evaluate the impact, if any,
the standard may have on future financial statement disclosures. Results of
operations and financial position, however, will be unaffected by
implementation of these standards.
Page 59
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
o. Change in Accounting Principle (Continued)
In February 1998, the Financial Accounting Standards Board ("FASB") has
issued Statement of Financial Accounting Standard ("SFAS") No 132.
"Employers' Disclosures about Pensions and other Postretirement Benefits"
which standardizes the disclosure requirements for pensions and other
Postretirement benefits and requires additional information on changes in
the benefit obligations and fair values of plan assets that will facilitate
financial analysis. SFAS No. 132 is effective for years beginning after
December 15, 1997 and requires comparative information for earlier years to
be restated, unless such information is not readily available. Management
believes the adoption of this statement will have no material impact on the
Company's financial statement.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value. Gains
or losses resulting from changes in the values of those derivatives would
be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. The key criterion for hedge accounting is
that the hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is effective
for all fiscal quarters of fiscal years beginning after June 15, 1999.
Management believes the adoption of this statement will have no material
impact on the Company's financial statements.
p. Reverse Stock Split
In September 1998, the Board of Directors authorized a 1-for-12 reverse
stock split. All references to common stock have been retroactively
restated.
NOTE 2 - GOING CONCERN
These consolidated financial statements are presented on the basis that the
Company is a going concern. Going concern contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business
over a reasonable length of time. The Company has an accumulated deficit
which raises substantial doubt about its ability to continue as a going
concern.
Management is presently pursuing plans to increase sales volume, reduce
administrative costs, and improve cash flows as well as obtain additional
financing through stock offerings. The ability of the Company to achieve
its operating goals and to obtain such additional finances, however, is
uncertain.
Page 60
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 1998:
December 31,
1998
--------------
Machinery and equipment $ 112,924
Vehicles 84,427
Building 90,733
Land 10,000
Furniture and fixtures 20,038
Leasehold improvements 5,324
--------------
323,446
Less accumulated depreciation (126,843)
--------------
$ 196,603
The Company signed an oil, gas and mineral lease on October 31, 1997 with a
Texas corporation on the land in Broussard, Louisiana. The lease is for the
initial term of 3 years with minimum annual rents of $200 per year. The
Company has not received any royalty revenue in the years ended December
31, 1998 or 1997.
NOTE 4 - LINE OF CREDIT
The Company has entered into a purchase and security agreement with Private
Capital, Inc. (Private Capital) wherein the Company may take advances
against its accounts receivables. The balance due Private Capital at
December 31, 1998 was $418,869. The Company is required to maintain a
reserve account balance of 22% of the total advances. Because of a timing
issue at December 31, 1998, the Company only had a reserve of 17%. The
reserve account balance at December 31, 1998 was $71,519. Private Capital
charges the Company an 8% discount on all receivables purchased
Page 61
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 5 - NOTES PAYABLE
Notes payable at December 31, 1998 consisted of the following:
<TABLE>
<CAPTION>
December 31,
1998
------------
<S> <C>
Note payable to a bank secured by property and equipment,
interest at 8.5% on the outstanding balance, principal and
interest payments of $925, due monthly, maturing January 2002. $ 64,837
Note payable to a bank, secured by property accruing
interest at 7.75%, principal and interest payments of
$867 due monthly, maturing September 2001. 26,364
Note payable to a bank, secured by equipment accruing
interest at 12.5%, with a balloon payment due December 1997. 12,005
Notes payable to a bank, secured by vehicles, accruing interest at
8.9%, principal and interest payments of $866,
maturing October 2001. 26,552
Note payable to St. Martin Bank bearing interest at 11.75%,
secured by building and due on February 2, 1999. 155,604
Judgment payable, unsecured, requiring monthly payments
of $1,800 bearing simple interest of 8% due October 1999. 15,003
Note payable to an individual for the purchase of technology
requiring 4 monthly payments of $5,000, through April 1999,
unsecured, non-interest bearing. 20,000
---------
Total notes payable 320,365
Less: current portion (225,697)
---------
Long-term notes payable $ 94,668
=========
Maturities of long-term debt are as follows:
Year ending December 31:
1999 $ 225,697
2000 25,201
2001 23,686
2002 7,868
2003 8,930
Thereafter 28,983
---------
Total $ 320,365
=========
</TABLE>
Page 62
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 6 - SHAREHOLDER LOANS
<TABLE>
<CAPTION>
December 31,
1998
------------
<S> <C>
Note payable to shareholder, non-interest bearing, unsecured,
due on demand. $ 2,000
Note payable to shareholder dated November 3, 1996 and February 3,
1997, non-interest bearing, unsecured,
due on demand. 38,000
Note payable to shareholder dated October 28, 1998, bearing
interest at 6.00%, guaranteed by the president of the Company,
due on demand. 75,700
Note payable to shareholder dated October 3, 1997, bearing
interest at 10.50%. Secured by Company stock and due
August 1999. 100,000
---------
$ 215,700
=========
</TABLE>
All amounts are due on demand and are classified as current liabilities.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Leases
The Company leases office space under a non-cancelable operating lease. The
lease calls for monthly payments of $4,155 and expires May 31, 2002. The
Company has leased an apartment in Louisiana which calls for monthly
payments of $925 per month and expires on April 30, 1999. Future minimum
lease payments are as follows:
Amount
---------
1999 $ 53,560
2000 49,860
2001 49,860
2002 24,930
---------
Total $178,210
=========
Rent expense for the years ended December 31, 1998 and 1997 was $63,244 and
$70,346.
Page 63
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 7 - COMMITMENTS AND CONTINGENCIES (Continued)
Employment Contract
The Company has an employment contract with a key employee. Under the terms
of this contract, the Company is committed to paying this individual $3,500
in salary per month through November 1, 2003. Salary expense under this
contract for the years ended December 31, 1998 and 1997 was $38,500 and
$-0-, respectively.
Vehicle Leases
The Company has leased two vehicles which call for combined monthly
payments of $1,050 per month. The leases expire in 1998 and 2000. Future
minimum lease payments are as follows:
1999 $ 25,661
2000 1,900
--------
Total $ 27,561
========
Litigation
The Company has had a judgment for $51,550 levied against it for
non-payment for the Thorosheen purchase (Note 1). The balance owed at
December 31, 1998 was $15,003. This balance requires monthly payments of
$1,800 until paid in full (see also Note 5).
Royalty Agreement
The Company has committed to paying an individual $0.75 per gallon in
royalties on the sale of Fyberix 2000V. The royalties are payable monthly.
Royalty expense for the years ended December 31, 1998 and 1997 was $-0- and
$-0-, respectively, as there have been no sales of Fyberix 2000V.
NOTE 8 - STOCK ISSUANCES
On January 22, 1997, the Company issued 1,667 shares of common stock valued
at $1.62 per share for the conversion of a note payable.
On April 1, 1997, the Company issued 3,333 shares of common stock valued at
$0.84 per share for consulting services.
On October 16, 1997, the Company issued 756,350 shares of common stock
valued at $0.00 as additional founders shares.
On October 20, 1997, the Company issued 250,000 shares of common stock at
$0.12 per share for cash.
On October 16, 1997, the Company issued 50,833 shares of common stock
valued at $4.20 per share for consulting services.
Page 64
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 8 - STOCK ISSUANCES (Continued)
In October and November 1997, the Company issued 42,500 shares of common
stock at $4.20 per share for cash.
In January, March and May 1998, the Company issued 4,405 shares of common
stock at $4.20 per share for cash.
On December 20, 1998, the Company issued 209,090 shares of common stock
valued at $0.175 per share for consulting services.
On December 20, 1998, the Company issued 46,833 shares of common stock
valued at $0.35 per share for interest expense.
NOTE 9 - ACCRUED EXPENSES
Accrued expenses consisted of the following at December 31, 1998:
Payroll taxes - federal and state $196,771
Accrued interest 10,500
Sales tax payable 14,350
---------
$221,621
=========
The Company is delinquent in paying back payroll taxes. Interest and
penalties have been accrued on the payroll taxes and are included of the
$196,771. The Company has been current in their payments from June 1998 to
date and is making additional monthly payments on the back taxes due.
NOTE 10 - SUBSEQUENT EVENT
Change in Domicile
On March 17, 1999, the Company and Subsidiary merged into American Fire
Retardant Corporation, a Nevada corporation for the purpose of changing its
domicile to Nevada.
Page 65
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999 and December 31, 1998
Page 66
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 5,391 $ -
Inventory 124,249 140,495
Accounts receivable, net 455,005 472,302
------------- ------------
Total Current Assets 584,645 612,797
------------- ------------
PROPERTY AND EQUIPMENT 195,305 196,603
------------- ------------
OTHER ASSETS
Restricted cash 23,341 71,519
Deferred charges, net 62,850 72,500
Deposits and other assets 16,372 16,372
------------- ------------
Total Other Assets 102,563 160,391
------------- ------------
TOTAL ASSETS $ 882,513 $ 969,791
============= ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 67
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Cash overdraft $ - $ 9,462
Accounts payable 60,689 65,887
Accrued expenses 268,447 229,321
Unearned revenue 69,895 42,690
Shareholder loans 188,735 215,700
Notes payable, current portion 199,147 225,697
Line of credit 375,467 418,869
------------- ------------
Total Current Liabilities 1,162,380 1,207,626
------------- ------------
LONG-TERM LIABILITIES
Notes payable 86,958 94,668
------------- ------------
Total Liabilities 1,249,338 1,302,294
------------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value; unlimited number of
shares authorized, 2,343,788 and 2,278,661
shares issued and outstanding, respectively 919,958 874,369
Accumulated deficit (1,286,783) (1,206,872)
------------- ------------
Total Stockholders' Equity (Deficit) (366,825) (332,503)
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 882,513 $ 969,791
============= ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 68
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
-------------------------------------
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
NET SALES $ 552,243 $ 405,443
COST OF SALES 171,627 114,480
------------- ------------
GROSS MARGIN 380,616 290,963
------------- ------------
EXPENSES
Selling, general and administrative 371,110 403,112
Depreciation and amortization expense 11,460 1,381
Bad debt expense 5,463 8,577
------------- ------------
Total Expenses 388,033 413,070
------------ ------------
INCOME (LOSS) FROM OPERATIONS (7,417) (122,107)
------------- ------------
OTHER EXPENSES
Interest expense (72,494) (35,254)
------------- ------------
Total Other Expenses (72,494) (35,254)
------------- ------------
LOSS BEFORE INCOME TAXES (79,911) (157,361)
PROVISION FOR INCOME TAXES - -
------------- ------------
NET LOSS $ (79,911) $ (157,361)
============= ============
BASIC LOSS PER SHARE $ (0.04) $ (0.08)
============= ============
FULLY DILUTED LOSS PER SHARE $ (0.04) $ (0.08)
============= ============
BASIC WEIGHTED AVERAGE SHARES 2,278,661 2,019,884
============= ============
FULLY DILUTED WEIGHTED AVERAGE SHARES 2,278,661 2,019,884
============= ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 69
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Common Stock Stock
------------------------ Subscriptions Accumulated
Shares Amount Receivables Deficit
---------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 2,018,333 732,387 (30,000) (695,768)
Common stock issued for cash 4,405 18,500 - -
Receipt of stock subscription - - 30,000 -
Common stock issued for
services and interest 255,923 52,982 - -
Contribution of capital by
shareholder for services
rendered - 70,500 - -
Net loss for the year ended
December 31, 1998 - - - (511,104)
--------- ---------- ---------- -----------
Balance, December 31, 1998 2,278,661 $ 874,369 $ - $(1,206,872)
Common stock issued for
debt conversion (unaudited) 49,159 34,411 - -
Common stock issued for
interest (unaudited) 15,968 11,178 - -
Net loss for the three months
ended March 31, 1999
(unaudited) - - - (79,911)
--------- ---------- ---------- ------------
Balance, March 31, 1999
(unaudited) 2,343,788 $ 919,958 $ - $ (1,286,783)
========= ========== ========== ============
The accompanying notes are an integral part of these consolidated financial statements.
Page 70
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31,
-------------------------------------
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (79,911) $ (157,361)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 18,008 3,248
Bad debt expense 5,463 8,577
Stock issued for interest expense 11,178 -
Change in Assets and Liabilities:
(Increase) decrease in accounts receivable 11,834 (61,563)
(Increase) decrease in deposits - (6,683)
(Increase) decrease in inventory 16,246 (13,961)
Increase (decrease) in accounts payable (5,198) 13,581
Increase (decrease) in accrued expenses 39,126 50,546
Increase (decrease) in unearned revenue 27,205 4,400
------------- ------------
Net Cash Provided (Used) by Operating Activities 43,951 (159,216)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (7,060) (12,290)
------------- ------------
Net Cash (Used) by Investing Activities (7,060) (12,290)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - related - -
Payments on notes payable - related - -
Proceeds from sale of common stock - 41,500
Proceeds from notes payable - 25,400
Proceeds from lines of credit - 183,364
Paydown on line of credit (43,402) -
Payment on notes payable (26,814) (43,801)
------------- ------------
Net Cash Provided (Used) by Financing Activities $ (70,216) $ 206,463
------------- ------------
The accompanying notes are an integral part of these consolidated financial statements.
Page 71
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
March 31, December 31,
1998 1998
------------- ------------
(Unaudited)
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH $ (33,325) $ 34,957
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 62,057 83,911
------------- ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 28,732 $ 118,868
============= ============
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR
Interest $ 56,437 $ 35,254
Income taxes $ - -
NON-CASH FINANCING ACTIVITIES
Common stock issued for debt $ 34,411 $ -
Common stock issued for interest $ 11,178 $ -
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Page 72
<PAGE>
AMERICAN FIRE RETARDANT CORPORATION
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 1999 and December 31, 1998
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared by
the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows at
March 31, 1999 and 1998 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's December 31, 1998 audited consolidated financial statements. The
results of operations for the periods ended March 31, 1999 and 1998 are not
necessarily indicative of the operating results for the full years.
Page 73
<PAGE>
PART III
--------
ITEM 1. Index to Exhibits
The following Exhibits are filed as a part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description*
--------------------------------------------------------------------------
<S> <C>
2.1(a) Certificate of Merger from the State of Wyoming regarding Merger
of AFRC Louisiana with and into AFRC Wyoming.
2.1(b) Certificate of Merger from the State of Louisiana regarding
Merger of AFRC Louisiana with and into AFRC Wyoming.
2.1(c) Articles of Merger regarding Merger of AFRC Louisiana with and
into AFRC Wyoming.
2.1(d) Acquisition Agreement and Plan of Merger regarding Merger of AFRC
Louisiana with and into AFRC Wyoming.
2.2(a) Certificate of Merger from the State of Florida regarding Merger
of AFRC Florida with and into AFRC Wyoming.
2.2(b) Certificate of Merger from the State of Wyoming regarding Merger
of AFRC Louisiana with and into AFRC Wyoming.
2.2(c) Florida Articles of Merger regarding Merger of AFRC Louisiana
with and into AFRC Wyoming.
2.2(d) Wyoming Articles of Merger regarding Merger of AFRC Louisiana
with and into AFRC Wyoming.
2.2(e) Acquisition Agreement and Plan of Merger regarding Merger of AFRC
Florida with and into AFRC Wyoming.
2.3(a) Articles of Merger regarding Merger regarding Merger of AFRC
Wyoming with and into AFRC Nevada (the "Company") to change the
Domicile of the Company.
2.3(b) Acquisition Agreement and Plan of Merger regarding Merger of AFRC
Wyoming with and into AFRC Nevada (the "Company") to change the
Domicile of the Company.
3.1 Articles of Incorporation of American Fire Retardant Corp. filed
on January 20, 1998.
3.2 Restated By-laws of American Fire Retardant Corp.
3.3 Qualification of American Fire Retardant Corp., as a Foreign
Corporation in the State of Florida.
3.4 Qualification of American Fire Retardant Corp., as a Foreign
Corporation in the State of Louisiana.
3.5 Statement and Designation of American Fire Retardant Corp., as
Foreign Corporation in California.
3.6 Qualification of American Fire Retardant Corp., as a Foreign
Corporation in the State of Colorado.
3.7 Qualification of American Fire Retardant Corp., as a Foreign
Corporation in the State of Mississippi.
10.1(a) Letter of Intent Between American Fire Retardant Corp., and
Fabritek Industries, LLC.
10.1(b) Amendment to Letter of Intent Between American Fire Retardant
Corp., and Fabritek Industries, LLC.
10.2 Royalty Agreement between American Fire Retardant Corp., and
Norman O. Houser.
10.3 Sale, Assignment and Assumption Agreement between American Fire
Retardant Corp. and Patrick L. Brinkman with regard to the
purchase of manufacturing rights to De-Fyre X-238.
Page 74
<PAGE>
10.4(a) Merchant Service Agreement between American Fire Retardant Corp.
and St. Martin Bank.
10.4(b) St. Martin Bank $100,090 Promissory Note Dated March 11, 1997.
10.4(c) Edward E. Friloux Commercial Guaranty to St. Martin Bank re:
$100,090 Promissory Note.
10.4(d) Stephen F. Owens Commercial Guaranty to St. Martin Bank re:
$100,090 Promissory Note.
10.4(e) Angela M. Raidl Commercial Guaranty to St. Martin Bank re:
$100,090 Promissory Note.
10.4(f) St. Martin Bank $250,000 Promissory Note Dated May 21, 1998.
10.4(g) St. Martin Bank Business Loan Agreement Dated August 18, 1998.
10.4(h) St. Martin Bank $172,725.73 Promissory Note Dated August 18,
1998.
10.4(i) Edward E. Friloux Commercial Guaranty to St. Martin Bank re:
$172,725.73 Promissory Note.
10.4(j) Stephen F. Owens Commercial Guaranty to St. Martin Bank re:
$172,725.73 Promissory Note.
10.4(k) Angela M. Raidl Commercial Guaranty to St. Martin Bank re:
$172,725.73 Promissory Note.
10.4(l) St. Martin Bank Commercial Pledge Agreement re: $172,725.72
Promissory Note.
10.4(m) St. Martin Bank Pledge of Collateral Mortgage Note re:
$172,725.72 Promissory Note.
10.4(n) St. Martin Bank Agreement to Provide Insurance re: $172,725.72
Promissory Note.
10.4(o) St. Martin Bank - Collateral Mortgage re: $172,725.72 Promissory
Note.
10.4(p) St. Martin Bank - $54,059.29 Promissory Note Dated February 4,
1999.
10.5(a) Private Capital, Inc. - Purchase and Security Agreement Dated
April 17, 1997.
10.5(b) Private Capital, Inc. - Angela M. Raidl Continuing Guaranty &
Waiver.
10.5(c) Private Capital, Inc. - Stephen F. Owens and Edward E. Friloux
Continuing Guaranty & Waiver.
10.6(a) Bank of Erath $15,030 Promissory Note Dated June 16, 1997.
10.6(b) Bank of Erath 0 LOan Extension Agreement Dated October 20, 1998.
10.7 American Fire Retardant Corp. - El Cajon, California Industrial
Lease
10.8(a) Whitney Bank - $74,400 Secured Promissory Note Dated
10.8(b) Whitney Bank - Collateral Mortgage, Security Agreement and
Assignment of Leases and Rents
10.9 American Fire Retardant Corp. - Standard Lease for Louisiana
Corporate Apartment
10.10 Oil, Gas & Mineral Lease with Penwell Energy Inc.
10.11(a) Whitney National Bank - $42,888.46 Promissory Note
10.11(b) Whitney National Bank - Security Agreement
10.12 Presidio Capital Consulting Agreement
10.13 Warren Guidry Letter Promissory Note
Page 75
<PAGE>
10.14(a) Agreement with Richard Rosenberg
10.14(b) Amendment to Agreement with Richard Rosenberg
10.14(c) Richard Rosenberg - $43,134.39 Promissory Note
21 Subsidiaries of the Registrant
27 Financial Data Schedule
</TABLE>
* Summaries of all exhibits contained within this registration statement
are modified in their entirety by reference to these exhibits.
Page 76
<PAGE>
SIGNATURES
----------
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Company has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN FIRE RETARDANT CORP.
A Nevada Corporation
Date: November 12, 1999 /S/ Stephen F. Owens
---------------------------------------
By: Stephen F. Owens
Its: President and Director
Date: November 12, 1999 /S/ Angela M. Raidl
---------------------------------------
By: Angela M. Raidl
Its: Vice President, Chief Financial
Officer, Secretary and Director
Page 77
Exhibit 2.1(a)
--------------
State of Wyoming
Office of the
Secretary of State
United States of America,
State of Wyoming ss.
1, JOSEPH B. MEYER, Secretary of State of the State of Wyoming, do hereby
certify that the filing requirements for the issuance of this certificate have
been fulfilled.
CERTIFICATE OF MERGER
OF
AMERICAN FIRE RETARDANT CORPORATION (UNQUALIFIED) (LA) merged into: AMERICAN
FIRE RETARDANT CORPORATION (WY)(SURVIVOR)
Accordingly, the undersigned, by virtue of the authority vested in me by law,
hereby issues this Certificate.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed the Great Seal of
the State of Wyoming. Done at Cheyenne, the Capital, this 25th day of MARCH
A.D., 1999.
[Seal of the State of Wyoming]
/s/ Joseph B. Meyer
--------------------------------------------
Secretary of State
By /s/
--------------------------------------------
Linda O'Neil
Exhibit 2.1(b)
--------------
UNITED STATES OF AMERICA
STATE OF LOUISIANA
DUPLICATE
FOX MCKEITHEN
SECRETARY OF STATE
As Secretary of State, of the State of Louisiana I do hereby Certify that a copy
of a Merger document whereby AMERICAN FIRE RETARDANT CORPORATION, organized
under the laws of LOUISIANA, is merged into
AMERICAN FIRE RETARDANT CORPORATION
Organized under the laws of WYOMING,
Was filed and recorded in this Office on March 25, 1999, with an effective date
of March 25, 1999.
In testimony whereof, I have hereunto set my hand and caused the Seal of My
Office to be affixed at the City of Baton Rouge on,
March 25, 1999
/s/ Fox McKeithen
--------------------------------------------
Secretary of State
[Seal of the State of Louisiana]
Page 1
<PAGE>
UNITED STATES OF AMERICA
STATE OF LOUISIANA
FOX MCKEITHEN
SECRETARY OF STATE
As Secretary of State, of the State of Louisiana, I do hereby Certify that the
annexed transcript was prepared by and in this office from the record on file,
of which purports to be a copy, and that it is full, true and correct.
In testimony whereof, I have hereunto set my hand and caused the Seal of my
Office to be affixed at the City of Baton Rouge on,
March 25, 1999
/s/ Fox McKeithen
--------------------------------------------
Secretary of State
[Seal of the State of Louisana]
Page 2
Exhibit 2.1(c)
--------------
ARTICLES OF MERGER
OF
AMERICAN FIRE RETARDANT CORPORATION
(A Louisiana Corporation)
WITH AND INTO
AMERICAN FIRE RETARDANT CORPORATION
(A Wyoming Corporation)
- -------------------------------------------------------------------------------
The undersigned corporations do hereby certify that:
1. The name and state of incorporation of each of the constituent
corporations to the merger are as follows:
Name State of Incorporation
------------------------------------ ----------------------
American Fire Retardant Corporation Wyoming
American Fire Retardant Corporation Louisiana
2. An Acquisition Agreement and Plan of Merger (the "Plan") between the
parties to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with Section
17-16-1105 of the Wyoming Revised Statutes and Louisiana Revised Statutes
12:112.
3. The number of outstanding shares of common stock of American Fire
Retardant Corporation, a Louisiana Corporation was 1,000 and the number of such
shares which were entitled to vote on the Plan was 1,000. The total number of
shares which voted for adoption of the Plan was 1,000 and the total number of
shares which voted against the adoption of the Plan was zero (0). The number of
votes cast for the Plan was sufficient for approval of the Plan.
4. The number of outstanding shares of common stock of American Fire
Retardant Corporation, a Wyoming Corporation was 2,022,938 and the number of
such shares which were entitled to vote on the Plan was 2,022,938. The total
number of undisputed votes for adoption of the Plan was 1,504,235 and the total
number of undisputed votes against the adoption of the Plan was 8,333. The
number of votes cast for the Plan by the only voting group entitled to vote was
sufficient for approval of the Plan.
5. The surviving corporation of the merger is American Fire Retardant
Corporation, a Wyoming Corporation which will be governed by the laws of the
State of Wyoming.
6. The surviving corporation agrees that it may be served with process in
the State of Louisiana in any proceeding for enforcement of any obligations of
any constituent corporation of the State of Louisiana, as well as for
enforcement of any obligation of the surviving corporation arising from the
merger, and the surviving corporation hereby irrevocably appoints the Louisiana
Secretary of State as its agent to accept service of process in any such suit or
other proceedings and the Louisiana Secretary of State is authorized to mail a
copy of such process to the surviving corporation at the surviving corporation's
new principal place of business at 9337 Bond Avenue, El Cajon, CA 92012.
Page 1 of 3
<PAGE>
7. The Plan is on file at the new principal place of business of the
surviving corporation, 9337 Bond Avenue, El Cajon, CA 92012.
8. A copy of the Plan will be furnished by the surviving corporation, on
request and without cost, to any shareholder or stockholder of either
constituent corporation.
9. These Articles of Merger shall be effective upon the date the filing of
these Articles of Merger in the offices of the Secretary of State of both
Louisiana and Wyoming becomes complete.
AMERICAN FIRE RETARDANT CORPORATION
A Wyoming Corporation
DATE: March 17, 1999 /s/ Stephen F. Owens
---------------------------------------
By: Stephen F. Owens
Its: President
DATE: March 17, 1999 /s/ Angela M. Raidl
---------------------------------------
By: Angela M. Raidl
Its: Secretary
AMERICAN FIRE RETARDANT CORPORATION
A Louisiana Corporation
DATE: March 17, 1999 /s/ Stephen F. Owens
---------------------------------------
By: Stephen F. Owens
Its: President
DATE: March 17, 1999 /s/ Angela M. Raidl
---------------------------------------
By: Angela M. Raidl
Its: Secretary
Page 2 of 3
<PAGE>
STATE OF CALIFORNIA )
) SS
COUNTY OF SAN DIEGO )
On this 17th day of March, 1999, before me, George Chachas, a Notary Public,
personally appeared Stephen F. Owens and Angela M. Raidl, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacity, and that by their signatures on
the instrument the persons, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
[Notary Seal]
/s/ George Chachas
- --------------------------------
George Chachas - Notary Public
Page 3 of 3
Exhibit 2.1(d)
--------------
ACQUISITION AGREEMENT AND PLAN OF MERGER
This Acquisition Agreement and Plan of Merger is made as of March 17, 1999,
by and between American Fire Retardant Corporation, a Louisiana Corporation (the
"Disappearing Corporation") and American Fire Retardant Corporation, a Wyoming
Corporation (the "Surviving Corporation"). (The corporations together are
sometimes referred to below as the "Constituent Corporations.")
RECITALS
--------
A. Whereas, the Disappearing Corporation, American Fire Retardant
Corporation, is a Louisiana Corporation organized and existing under the laws of
the State of Louisiana, having been incorporated on June 29, 1993 with
authorized capital stock consisting of 1,000 shares of common shares with no par
value of which 1,000 shares are issued and outstanding.
B. Whereas, the Surviving Corporation, American Fire Retardant Corporation,
is a Wyoming Corporation organized and existing under the laws of the State of
Wyoming, having been incorporated on July 24, 1995, with authorized capital
stock consisting of an unlimited number of shares of common stock without par
value of which 2,022,938 shares are issued and outstanding.
C. Whereas, the Disappearing Corporation is presently a wholly owned
subsidiary of the Surviving Corporation.
D. Whereas, the Board of Directors of the Disappearing Corporation desire
to merge the Disappearing Corporation, with and into the Surviving Corporation
for the purpose of consolidating the Constituent Corporations into one entity.
E. Whereas, the merger will have no effect or change in the nature of the
business or management of the resulting business operating through the Surviving
Corporation.
F. Whereas, the Board of Directors of each of the Constituent Corporations
deem it advisable for the welfare of the Constituent Corporations that these
corporations merge under the terms and conditions hereinafter set forth, and
they have duly approved and authorized the terms of this Agreement.
G. Whereas, the laws of the State of Louisiana and Wyoming permit such a
merger, and the Constituent Corporations desire to merge under and pursuant to
the provisions of the laws of their respective states.
H. Whereas, the Plan of Merger as set forth herein is contained in the
Articles of Merger to be filed with the respective States of the Constituent
Corporations.
AGREEMENT
---------
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants herein contained, it is agreed that the Disappearing
Corporation will merge with and into the Surviving Corporation under the terms
and conditions set forth herein as follows:
1. The Merger. Subject to the terms and conditions hereof, the merger shall
be consummated in accordance with the Louisiana Business Corporation Act and the
applicable provisions of the Wyoming Business Corporation Act, as promptly as
practicable following the approval of the shareholders of the Surviving
Corporation. At the Effective Date as set forth herein, subject to the terms and
conditions of this Agreement and in accordance with the laws of the States of
Wyoming and Louisiana, the Disappearing Corporation shall be merged with and
into Surviving Corporation, whereupon the separate existence of Disappearing
Corporation shall cease and the Wyoming Corporation shall be the Surviving
Corporation. The Surviving Corporation shall continue its corporate existence
under the laws of the State of Wyoming.
Page 1 of 5
<PAGE>
Without any other transfer or documentation, on the effective date of the
merger the Surviving Corporation shall (i) succeed to all of Disappearing
Corporation's rights and property; and (ii) be subject to all Disappearing
Corporation's liabilities and obligations. Notwithstanding the above, after the
effective date the Surviving Corporation's proper officers and directors may
perform any acts necessary or desirable to vest or confirm Surviving
Corporation's possession of and title to any property or rights of Disappearing
Corporation, or otherwise carry out this Agreement's purposes. This includes
execution and delivery of deeds, assurances, assignments or other instruments.
2. Execution of Articles of Merger. Following the approval of the merger by
the shareholders of the Surviving Corporation, the Disappearing Corporation and
Surviving Corporation shall complete and execute Articles of Merger and cause
the Articles of Merger to be delivered to the Secretary of State of the States
of Wyoming and Louisiana for filing. The parties hereto will also execute and
deliver such other documents or certificates as may be required to effect the
merger.
3. Effect of Merger. The effect of the merger shall be to merge the
Disappearing Corporation with the Surviving Corporation without any change in
the nature of the business or management.
4. Name of Surviving Corporation. The name of the Surviving Corporation,
shall, and, from and after the effective date of the merger, be American Fire
Retardant Corporation. The separate existence of the Disappearing Corporation
shall cease at the effective time of the merger, except insofar as it may be
continued by law or in order to carry out the purposes of this Agreement, and
except as continued in the Surviving Corporation.
5. Articles of Incorporation of Surviving Corporation. The Articles of
Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of the Surviving Corporation as presently on file with the
Secretary of States office of the State of Wyoming, a copy of which is attached
hereto as Exhibit A.
6. By-laws of the Surviving Corporation. The By-laws of the Surviving
Corporation, at the effective time of the merger, shall be the present By-laws
of the Surviving Corporation, until altered or replaced as provided herein.
7. Board of Directors and Officers. The members of the Board of Directors
and the Officers of the Surviving Corporation immediately after the effective
time of the merger shall be those persons who are presently the members of the
Board of Directors and the Officers of the Disappearing Corporation and
Surviving Corporation, as set forth below, for the terms provided by law or in
the By-laws of the Surviving Corporation, or until their respective successors
are elected and qualified.
Directors: Officers:
---------------- ---------------------------------------------
Stephen F. Owens President and CEO ...........Stephen F. Owens
Angela M. Raidl Chief Financial Officer .....Angela M. Raidl
Secretary ...................Angela M. Raidl
Page 2 of 5
<PAGE>
8. Conversion of shares. By virtue of the merger and without any action by
any shareholder, upon the effective date each share of capital stock of
Disappearing Corporation outstanding immediately prior to the effective date
shall be converted into one (1) fully paid and non-assessable share of Surviving
Corporation's common stock, without any dilution or change in the rights or
privileges associated with said shares. No fractional shares of Surviving
Corporation shall be issued.
9. Stock Certificates. On or after the effective date, all of Disappearing
Corporation's outstanding stock certificates shall be deemed to represent
ownership of Surviving Corporation' shares, into which Disappearing
Corporation's shares have been converted (as provided above). The holders of
such certificates must surrender them to the Surviving Corporation in whatever
manner it may legally require, or as provided by the Surviving Corporation. On
receipt thereof, Surviving Corporation shall issue and exchange certificates for
shares of its common stock representing the number of shares to which the holder
is entitled as provided above.
Pending the surrender and exchange of certificates, the registered owner on
Disappearing Corporation's books of any outstanding stock certificate shall be
entitled to exercise all voting and other rights, and receive any dividends
payable, with respect to the shares of Surviving Corporation represented by the
certificates (as provided above).
10. Authority to Conduct Business. The Surviving Corporation represents
that the corporation has not filed an application for authority to do business
in the State of Louisiana. The Surviving Corporation has filed or will file
applications to conduct business as a foreign corporation within the States of
California, Florida, Louisiana and such other states as it will conduct business
from time to time.
11. Effective Date. Provided this Agreement is not abandoned, the effective
date of merger (the "Effective Date") shall be at the close of business on the
date when the requisite Articles of Merger are duly filed in the office of the
Secretary of State of Wyoming and Louisiana.
12. Service of Process of Surviving Corporation. The Surviving Corporation
agrees that it may be served with process is the State of Louisiana in any
proceedings for enforcement of any obligation of the Disappearing Corporation,
as well as for the enforcement of any obligation of the Surviving Corporation
arising from the merger, and hereby irrevocably appoints the Secretary of State
of the State of Louisiana, as its agent to accept service of process in any suit
or other proceedings. Copies of such process shall be mailed to:
American Fire Retardant Corp.
Mr. Stephen F. Owens
9337 Bond Avenue
El Cajon, California 92021
13. Abandonment. This Agreement of Merger may be abandoned (a) by either
Constituent Corporation, acting by its Board of Directors, at any time prior to
its adoption by the shareholders of both of the Constituent Corporations, as
provided by law, or, (b) by the mutual consent of the Constituent Corporations,
acting each by its Board of Directors, at any time after such adoption by such
shareholders and prior to the effective time of merger. In the event of the
abandonment of this Agreement of Merger pursuant to (a) above, notice thereof
shall be given by the Board of Directors of the Constituent Corporation and
thereupon, or abandonment pursuant to (b) above, this Agreement of Merger shall
become wholly void and of no effect and there shall be no further liability of
obligation hereunder on the part of either the Constituent Corporations or of
its Board of Directors or shareholders. 14. The obligations of each party hereto
to consummate the Merger and the other transactions contemplated by this
Agreement shall be subject to fulfillment on or prior to the Closing of each of
the following conditions:
Page 3 of 5
<PAGE>
a. Shareholder Approval. The shareholders of Surviving Corporation
shall have duly adopted and approved this Agreement and the
transactions contemplated hereby in accordance with the applicable
provisions of the Wyoming Business Corporation Act or other applicable
law.
b. No Injunctions. No injunction or restraining or other order issued
by a court of competent jurisdiction which prohibits the consummation
of the transactions contemplated by this Agreement shall be in effect
(each party agreeing to use diligent efforts to have any such
injunction or order lifted), and no governmental action or proceeding
shall have been commenced or threatened in writing seeking any
injunction or restraining or other order that seeks to prohibit,
restrain, invalidate or set aside consummation of the transactions
contemplated by this Agreement.
c. No Governmental Proceedings. No action will have been taken, and no
statute, rule or regulation will have been enacted, by any state or
federal government agency that would render the consummation of the
Merger illegal.
d. Governmental Approvals. All governmental filings or approvals
required in connection with the consummation of the transactions
contemplated by this Agreement shall have been made or received.
15. Amendments. Subject to applicable law, this Agreement, the Articles of
Merger and any exhibit attached hereto or thereto may be amended by the parties
hereto at any time prior to the Effective Date; provided, however, that any such
amendment must be in writing and executed by all parties hereto.
16. Assignment. The rights under this Agreement shall not be assignable nor
the duties delegable by any party without the written consent of the other
parties; and nothing contained in this Agreement, express or implied, is
intended to confer upon any person or entity, other than the parties hereto and
their successors in interest and permitted assignees, any rights or remedies
under or by reason of this Agreement unless so stated to the contrary.
17. Entire Agreement. This Agreement (including all schedules and exhibits
attached hereto and thereto and all documents delivered as provided for herein
and therein) contain the entire agreement among the parties hereto with respect
to the subject matter hereof and the transactions contemplated hereby and
supersedes all prior negotiations, discussions, agreements, and undertakings,
both written and oral, among the parties hereto, with respect to the subject
matter hereof.
18. Counterparts. This Agreement may be executed in one or more
Counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile with original executed copies to be delivered by overnight
mail.
19. Governing Law. This Agreement shall be construed by and enforced in
accordance with the laws of the State of Wyoming without giving effect to the
principles of the conflicts of laws.
20. Approval and Adoption by Boards of Directors of the Constituent
Corporations. The Boards of Directors of the Constituent Corporation deem it
best interests of the corporations and their shareholders that Disappearing
Corporation be merged with and into the Surviving Corporation and their
respective Boards of Directors have adopted on behalf of their corporations the
this Agreement.
Page 4 of 5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their respective duly authorized officers, as of the date first written above.
THE DISAPPEARING CORPORATION
----------------------------
AMERICAN FIRE RETARDANT CORPORATION
A Louisiana Corporation
/s/ Stephen F. Owens
--------------------------------------------
By: Stephen F. Owens
Its: President
/s/ Angela M. Raidl
--------------------------------------------
By: Angela M. Raidl
Its: Secretary
THE SURVIVING CORPORATION
-------------------------
AMERICAN FIRE RETARDANT CORPORATION
A Wyoming Corporation
/s/ Stephen F. Owens
--------------------------------------------
By: Stephen F. Owens
Its: President
/s/ Angela M. Raidl
--------------------------------------------
By: Angela M. Raidl
Its: Secretary
Page 5 of 5
Exhibit 2.2(a)
--------------
STATE OF FLORIDA
Department of State
I certify the attached is a true and correct copy of the Articles of Merger,
filed or, March 25,1999, for AMERICAN FIRE RETARDANT CORPORATION, the surviving
Wyoming corporation not authorized to transact business in Florida, as shown by
the records of this office.
Given under my hand and the Great Seal of the State of Florida at Tallahassee,
the Capitol, this the Thirteenth day of April, 1999
/s/ Katherine Harris
[Seal of the State of Florida] ---------------------------------------
Katherine Harris
Secretary of State
Exhibit 2.2(b)
--------------
State of Wyoming
Office of the
Secretary of State
United States of America,
State of Wyoming ss.
1, JOSEPH B. MEYER, Secretary of State of the State of Wyoming, do hereby
certify that the filing requirements for the issuance of this certificate have
been fulfilled.
CERTIFICATE OF MERGER
OF
AMERICAN FIRE RETARDANT CORPORATION (UNQUALIFIED) (FL) merged into: AMERICAN
FIRE RETARDANT CORPORATION (WY)(SURVIVOR)
Accordingly, the undersigned, by virtue of the authority vested in me by law,
hereby issues this Certificate.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed the Great Seal of
the State of Wyoming. Done at Cheyenne, the Capital, this 25th day of MARCH
A.D., 1999.
[Seal of the State of Wyoming]
/s/ Joseph B. Meyer
--------------------------------------------
Secretary of State
By /s/
--------------------------------------------
Linda O'Neil
Exhibit 2.2(c)
--------------
ARTICLES OF MERGER
------------------
(Profit Corporations)
The following articles of merger are submitted in accordance with the Florida
Business Corporation Act, pursuant to section 607.1105, F.S.
First: The name and jurisdiction of the surviving corporation are:
Name Jurisdiction
- ----------------------------------- -------------
American Fire Retardant Corporation Wyoming
Second: The name and jurisdiction of each merging corporation are:
Name Jurisdiction
- ----------------------------------- -------------
American Fire Retardant Corporation Florida
Third: The Plan of Merger is attached.
Fourth: The merger shall become effective on the date the Articles of Merger are
filed with the Florida Department of State
OR ---/---/--- (Enter a specific date. NOTE: An effective date cannot be prior
to the date of filmy than 90 days in the future.)
Fifth: Adoption of Merger by surviving corporation - (COMPLETE ONLY ONE
STATEMENT)
The Plan of Merger was adopted by the shareholders of the surviving corporation
on March 17, 1999.
The Plan of Merger was adopted by the board of directors of the surviving
corporation on ___ and shareholder approval was not required.
Sixth: Adoption of Merger by merging corporation(s) (COMPLETE ONLY ONE
STATEMENT) The Plan of Merger was adopted by the shareholders of the merging
corporation(s) on March 17, 1999.
The Plan of Merger was adopted by the board of directors of the merging
corporation(s) on ___ and shareholder approval was not required.
(Attach additional sheets if necessary)
Page 1
<PAGE>
Seventh: SIGNATURES FOR EACH CORPORATION
- ----------------------------------------
<TABLE>
<CAPTION>
Name of Corporation Signature Typed or Printed Name of Individual & Title
- -------------------- --------- ---------------------------------------------
<S> <C> <C>
American Fire Retardant /s/ Stephen F. Owens Stephen F. Owens - President
- -----------------------
Corporation - Florida
American Fire Retardant /s/ Angela M. Raidl Angela M. Raidl - Secretary
- ------------------------
Corporation - Florida
American Fire Retardant /s/ Stephen F. Owens Stephen F. Owens - President
- ------------------------
Corporation - Wyoming
American Fire Retardant /s/ Angela M. Raidl Angela M. Raidl - Secretary
- -----------------------
Corporation - Wyoming
Page 2
</TABLE>
Exhibit 2.2(d)
--------------
ARTICLES OF MERGER
OF
AMERICAN FIRE RETARDANT CORPORATION
(A Florida Corporation)
WITH AND INTO
AMERICAN FIRE RETARDANT CORPORATION
(A Wyoming Corporation)
- --------------------------------------------------------------------------------
The undersigned corporations do hereby certify that:
1. The name and state of incorporation of each of the constituent
corporations to the merger are as follows:
Name State of Incorporation
----------------------------------- ----------------------
American Fire Retardant Corporation Wyoming
American Fire Retardant Corporation Florida
2. An Acquisition Agreement and Plan of Merger (the "Plan") between the
parties to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with Section
17-16-1105 of the Wyoming Revised Statutes and Section 607.1105 of the Florida
Statutes.
3. The number of outstanding shares of common stock of American Fire
Retardant Corporation, a Florida Corporation was 1,000 and the number of such
shares which were entitled to vote on the Plan was 1,000. The total number of
shares which voted for adoption of the Plan was 1,000 and the total number of
shares which voted against the adoption of the Plan was zero (0). The number of
votes cast for the Plan was sufficient for approval of the Plan.
4. The number of outstanding shares of common stock of American Fire
Retardant Corporation, a Wyoming Corporation was 2,022,938 and the number of
such shares which were entitled to vote on the Plan was 2,022,938. The total
number of undisputed votes for adoption of the Plan was 1,504,235 and the total
number of undisputed votes against the adoption of the Plan was 8,333. The
number of votes cast for the Plan by the only voting group entitled to vote was
sufficient for approval of the Plan.
5. The surviving corporation of the merger is American Fire Retardant
Corporation, a Wyoming Corporation which will be governed by the laws of the
State of Wyoming.
6. The surviving corporation agrees that it may be served with process in
the State of Florida in any proceeding for enforcement of any obligations of any
constituent corporation of the State of Florida, as well as for enforcement of
any obligation of the surviving corporation arising from the merger, and the
surviving corporation hereby irrevocably appoints the Florida Secretary of State
as its agent to accept service of process in any such suit or other proceedings
and the Florida Secretary of State is authorized to mail a copy of such process
to the surviving corporation at the surviving corporation's new principal place
of business at 9337 Bond Avenue, El Cajon, CA 92012.
Page 1 of 3
<PAGE>
7. The Plan is on file at the new principal place of business of the
surviving corporation, 9337 Bond Avenue, El Cajon, CA 92012.
8. A copy of the Plan will be furnished by the surviving corporation, on
request and without cost, to any shareholder or stockholder of either
constituent corporation.
9. These Articles of Merger shall be effective upon the date the filing of
these Articles of Merger in the offices of the Secretary of State of both
Florida and Wyoming becomes complete.
AMERICAN FIRE RETARDANT CORPORATION
A Wyoming Corporation
DATE: March 17, 1999 /s/ Stephen F. Owens
---------------------------------------
By: Stephen F. Owens
Its: President
DATE: March 17, 1999 /s/ Angela M. Raidl
---------------------------------------
By: Angela M. Raidl
Its: Secretary
AMERICAN FIRE RETARDANT CORPORATION
A Florida Corporation
DATE: March 17, 1999 /s/ Stephen F. Owens
---------------------------------------
By: Stephen F. Owens
Its: President
DATE: March 17, 1999 /s/ Angela M. Raidl
---------------------------------------
By: Angela M. Raidl
Its: Secretary
Page 2 of 3
<PAGE>
STATE OF CALIFORNIA )
) SS
COUNTY OF SAN DIEGO )
On this 17th day of March, 1999, before me, George Chachas, a Notary Public,
personally appeared Stephen F. Owens and Angela M. Raidl, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacity, and that by their signatures on
the instrument the persons, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
[Notary Seal]
/s/ George Chachas
- --------------------------------
George Chachas - Notary Public
Page 3 of 3
Exhibit 2.2(e)
--------------
ACQUISITION AGREEMENT AND PLAN OF MERGER
This Acquisition Agreement and Plan of Merger is made as of March 17, 1999,
by and between American Fire Retardant Corporation, a Florida Corporation (the
"Disappearing Corporation") and American Fire Retardant Corporation, a Wyoming
Corporation (the "Surviving Corporation"). (The corporations together are
sometimes referred to below as the "Constituent Corporations.")
RECITALS
--------
A. Whereas, the Disappearing Corporation, American Fire Retardant
Corporation, is a Florida Corporation organized and existing under the laws of
the State of Florida, having been incorporated on November 20, 1992, with
authorized capital stock consisting of 1,000 shares of common shares with $.50
par value of which 1,000 shares are issued and outstanding.
B. Whereas, the Surviving Corporation, American Fire Retardant Corporation,
is a Wyoming Corporation organized and existing under the laws of the State of
Wyoming, having been incorporated on July 24, 1995, with authorized capital
stock consisting of an unlimited number of shares of common stock without par
value of which 2,022,938 shares are issued and outstanding.
C. Whereas, the Disappearing Corporation is presently a wholly owned
subsidiary of the Surviving Corporation.
D. Whereas, the Board of Directors of Disappearing Corporation desire to
merge the Disappearing Corporation, with and into the Surviving Corporation for
the purpose of consolidating the Constituent Corporations into one entity.
E. Whereas, the merger will have no effect or change in the nature of the
business or management of the resulting business operating through the Surviving
Corporation.
F. Whereas, the Board of Directors of each of the Constituent Corporations
deem it advisable for the welfare of the Constituent Corporations that these
corporations merge under the terms and conditions hereinafter set forth, and
they have duly approved and authorized the terms of this Agreement.
G. Whereas, the laws of the State of Florida and Wyoming permit such a
merger, and the Constituent Corporations desire to merge under and pursuant to
the provisions of the laws of their respective states.
H. Whereas, the Plan of Merger as set forth herein is contained in the
Articles of Merger to be filed with the respective States of the Constituent
Corporations.
AGREEMENT
---------
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants herein contained, it is agreed that the Disappearing
Corporation will merge with and into the Surviving Corporation under the terms
and conditions set forth herein as follows:
1. The Merger. Subject to the terms and conditions hereof, the merger shall
be consummated in accordance with the Florida Business Corporation Act and the
applicable provisions of the Wyoming Business Corporation Act, as promptly as
practicable following the approval of the shareholders of the Surviving
Corporation. At the Effective Date as set forth herein, subject to the terms and
conditions of this Agreement and in accordance with the laws of the States of
Wyoming and Florida, the Disappearing Corporation shall be merged with and into
Surviving Corporation, whereupon the separate existence of Disappearing
Corporation shall cease and the Wyoming Corporation shall be the Surviving
Corporation. The Surviving Corporation shall continue its corporate existence
under the laws of the State of Wyoming.
Page 1 of 5
<PAGE>
Without any other transfer or documentation, on the effective date of the
merger the Surviving Corporation shall (i) succeed to all of Disappearing
Corporation's rights and property; and (ii) be subject to all Disappearing
Corporation's liabilities and obligations. Notwithstanding the above, after the
effective date the Surviving Corporation's proper officers and directors may
perform any acts necessary or desirable to vest or confirm Surviving
Corporation's possession of and title to any property or rights of Disappearing
Corporation, or otherwise carry out this Agreement's purposes. This includes
execution and delivery of deeds, assurances, assignments or other instruments.
2. Execution of Articles of Merger. Following the approval of the merger by
the shareholders of the Surviving Corporation, the Disappearing Corporation and
Surviving Corporation shall complete and execute Articles of Merger and cause
the Articles of Merger to be delivered to the Secretary of State of the States
of Wyoming and Florida for filing. The parties hereto will also execute and
deliver such other documents or certificates as may be required to effect the
merger.
3. Effect of Merger. The effect of the merger shall be to merge the
Disappearing Corporation into the Surviving Corporation without any change in
the nature of the business or management.
4. Name of Surviving Corporation. The name of the Surviving Corporation,
shall, and, from and after the effective date of the merger, be American Fire
Retardant Corporation The separate existence of the Disappearing Corporation
shall cease at the effective time of the merger, except insofar as it may be
continued by law or in order to carry out the purposes of this Agreement, and
except as continued in the Surviving Corporation.
5. Articles of Incorporation of Surviving Corporation. The Articles of
Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of the Surviving Corporation as presently on file with the
Secretary of States office of the State of Wyoming, a copy of which is attached
hereto as Exhibit A.
6. By-laws of the Surviving Corporation. The By-laws of the Surviving
Corporation, at the effective time of the merger, shall be the present By-laws
of the Surviving Corporation, until altered or replaced as provided herein.
7. Board of Directors and Officers. The members of the Board of Directors
and the Officers of the Surviving Corporation immediately after the effective
time of the merger shall be those persons who are presently the members of the
Board of Directors and the Officers of the Disappearing Corporation and
Surviving Corporation, as set forth below, for the terms provided by law or in
the By-laws of the Surviving Corporation, or until their respective successors
are elected and qualified.
Directors: Officers:
---------------- --------------------------------------------
Stephen F. Owens President and CEO...........Stephen F. Owens
Angela M. Raidl Chief Financial Officer.....Angela M. Raidl
Secretary ..................Angela M. Raidl
Page 2 of 5
<PAGE>
8. Conversion of shares. By virtue of the merger and without any action by
any shareholder, upon the effective date each share of capital stock of
Disappearing Corporation outstanding immediately prior to the effective date
shall be converted into one (1) fully paid and non-assessable share of Surviving
Corporation's common stock, without any dilution or change in the rights or
privileges associated with said shares. No fractional shares of Surviving
Corporation shall be issued.
9. Stock Certificates. On or after the effective date, all of Disappearing
Corporation's outstanding stock certificates shall be deemed to represent
ownership of Surviving Corporation' shares, into which Disappearing
Corporation's shares have been converted (as provided above). The holders of
such certificates must surrender them to the Surviving Corporation in whatever
manner it may legally require, or as provided by the Surviving Corporation. On
receipt thereof, Surviving Corporation shall issue and exchange certificates for
shares of its common stock representing the number of shares to which the holder
is entitled as provided above.
Pending the surrender and exchange of certificates, the registered owner on
Disappearing Corporation's books of any outstanding stock certificate shall be
entitled to exercise all voting and other rights, and receive any dividends
payable, with respect to the shares of Surviving Corporation represented by the
certificates (as provided above).
10. Authority to Conduct Business. The Surviving Corporation represents
that the corporation has not filed an application for authority to do business
in the State of Florida. The Surviving Corporation has filed or will file
applications to conduct business as a foreign corporation within the States of
California, Florida, Louisiana and such other states as it will conduct business
from time to time.
11. Effective Date. Provided this Agreement is not abandoned, the effective
date of merger (the "Effective Date") shall be at the close of business on the
date when the requisite Articles of Merger are duly filed in the office of the
Secretary of State of Wyoming and Florida.
12. Service of Process of Surviving Corporation. The Surviving Corporation
agrees that it may be served with process is the State of Florida in any
proceedings for enforcement of any obligation of the Disappearing Corporation,
as well as for the enforcement of any obligation of the Surviving Corporation
arising from the merger, and hereby irrevocably appoints the Secretary of State
of the State of Florida, as its agent to accept service of process in any suit
or other proceedings. Copies of such process shall be mailed to:
American Fire Retardant Corp.
Mr. Stephen F. Owens
9337 Bond Avenue
El Cajon, California 92021
13. Abandonment. This Agreement of Merger may be abandoned (a) by either
Constituent Corporation, acting by its Board of Directors, at any time prior to
its adoption by the shareholders of both of the Constituent Corporations, as
provided by law, or, (b) by the mutual consent of the Constituent Corporations,
acting each by its Board of Directors, at any time after such adoption by such
shareholders and prior to the effective time of merger. In the event of the
abandonment of this Agreement of Merger pursuant to (a) above, notice thereof
shall be given by the Board of Directors of the Constituent Corporation and
thereupon, or abandonment pursuant to (b) above, this Agreement of Merger shall
become wholly void and of no effect and there shall be no further liability of
obligation hereunder on the part of either the Constituent Corporations or of
its Board of Directors or shareholders.
Page 3 of 5
<PAGE>
14. The obligations of each party hereto to consummate the Merger and the
other transactions contemplated by this Agreement shall be subject to
fulfillment on or prior to the Closing of each of the following conditions:
a. Shareholder Approval. The shareholders of Surviving Corporation
shall have duly adopted and approved this Agreement and the
transactions contemplated hereby in accordance with the applicable
provisions of the Wyoming Business Corporation Act or other applicable
law.
b. No Injunctions. No injunction or restraining or other order issued
by a court of competent jurisdiction which prohibits the consummation
of the transactions contemplated by this Agreement shall be in effect
(each party agreeing to use diligent efforts to have any such
injunction or order lifted), and no governmental action or proceeding
shall have been commenced or threatened in writing seeking any
injunction or restraining or other order that seeks to prohibit,
restrain, invalidate or set aside consummation of the transactions
contemplated by this Agreement.
c. No Governmental Proceedings. No action will have been taken, and no
statute, rule or regulation will have been enacted, by any state or
federal government agency that would render the consummation of the
Merger illegal.
d. Governmental Approvals. All governmental filings or approvals
required in connection with the consummation of the transactions
contemplated by this Agreement shall have been made or received.
15. Amendments. Subject to applicable law, this Agreement, the Articles of
Merger and any exhibit attached hereto or thereto may be amended by the parties
hereto at any time prior to the Effective Date; provided, however, that any such
amendment must be in writing and executed by all parties hereto.
16. Assignment. The rights under this Agreement shall not be assignable nor
the duties delegable by any party without the written consent of the other
parties; and nothing contained in this Agreement, express or implied, is
intended to confer upon any person or entity, other than the parties hereto and
their successors in interest and permitted assignees, any rights or remedies
under or by reason of this Agreement unless so stated to the contrary.
17. Entire Agreement. This Agreement (including all schedules and exhibits
attached hereto and thereto and all documents delivered as provided for herein
and therein) contain the entire agreement among the parties hereto with respect
to the subject matter hereof and the transactions contemplated hereby and
supersedes all prior negotiations, discussions, agreements, and undertakings,
both written and oral, among the parties hereto, with respect to the subject
matter hereof.
18. Counterparts. This Agreement may be executed in one or more
Counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile with original executed copies to be delivered by overnight
mail.
19. Governing Law. This Agreement shall be construed by and enforced in
accordance with the laws of the State of Wyoming without giving effect to the
principles of the conflicts of laws.
20. Approval and Adoption by Boards of Directors of the Constituent
Corporations. The Boards of Directors of the Constituent Corporation deem it
best interests of the corporations and their shareholders that Disappearing
Corporation be merged with and into the Surviving Corporation and their
respective Boards of Directors have adopted on behalf of their corporations the
this Agreement.
Page 4 of 5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their respective duly authorized officers, as of the date first written above.
THE DISAPPEARING CORPORATION
----------------------------
AMERICAN FIRE RETARDANT CORPORATION
A Florida Corporation
/s/ Stephen F. Owens
--------------------------------------------
By: Stephen F. Owens
Its: President
/s/ Angela M. Raidl
--------------------------------------------
By: Angela M. Raidl
Its: Secretary
THE SURVIVING CORPORATION
-------------------------
AMERICAN FIRE RETARDANT CORPORATION
A Wyoming Corporation
/s/ Stephen F. Owens
--------------------------------------------
By: Stephen F. Owens
Its: President
/s/ Angela M. Raidl
--------------------------------------------
By: Angela M. Raidl
Its: Secretary
Page 5 of 5
Exhibit 2.3(a)
--------------
ARTICLES OF MERGER
OF
AMERICAN FIRE RETARDANT CORPORATION
(A Wyoming Corporation)
WITH AND INTO
AMERICAN FIRE RETARDANT CORP.
(A Nevada Corporation)
- --------------------------------------------------------------------------------
The undersigned corporations do hereby certify that:
1. The name and state of incorporation of each of the constituent
corporations to the merger are as follows:
Name State of Incorporation
----------------------------------- ----------------------
American Fire Retardant Corp. Nevada
American Fire Retardant Corporation Wyoming
2. The Disappearing Corporation and the Surviving Corporation desire to
merge for the sole purpose of effecting a change of Domicile from the State of
Wyoming to the State of Nevada. The surviving corporation of the merger is
American Fire Retardant Corp. which will be governed by the laws of the State of
Nevada.
3. An Acquisition Agreement and Plan of Merger (the "Plan") between the
parties to the merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with Section
92A.200 of the Nevada Revised Statutes and Section 17-16-1105 of the Wyoming
Statutes.
4. The number of outstanding shares of common stock of American Fire
Retardant Corp. was 2,000 and the number of such shares which were entitled to
vote on the Plan was 2,000. The total number of shares which voted for adoption
of the Plan was 2,000 and the total number of shares which voted against the
adoption of the Plan was zero (0). The number of votes cast for the Plan was
sufficient for approval of the Plan.
5. The number of outstanding shares of common stock of American Fire
Retardant Corporation was 2,022,938 and the number of such shares which were
entitled to vote on the Plan was 2,022,938. The total number of undisputed votes
for adoption of the Plan was 1,504,235 and the total number of undisputed votes
against the adoption of the Plan was 8,333. The number of votes cast for the
Plan by the only voting group entitled to vote was sufficient for approval of
the Plan.
6. The Plan dictates that by virtue of the merger and without any action by
any shareholder, upon the effective date each share of capital stock of
Disappearing Corporation outstanding immediately prior to the effective date
shall be converted into one (1) fully paid and non-assessable share of Surviving
Corporation's common stock, without any dilution or change in the rights or
privileges associated with said shares. No fractional shares of Surviving
Corporation shall be issued.
Page 1 of 3
<PAGE>
7. The surviving corporation agrees that it may be served with process in
the State of Wyoming in any proceeding for enforcement of any obligations of any
constituent corporation of the State of Wyoming, as well as for enforcement of
any obligation of the surviving corporation arising from the merger, and the
surviving corporation hereby irrevocably appoints the Wyoming Secretary of State
as its agent to accept service of process in any such suit or other proceedings
and the Wyoming Secretary of State is authorized to mail a copy of such process
to the surviving corporation at the surviving corporation's new principal place
of business at 9337 Bond Avenue, El Cajon, CA 92012.
8. The Plan is on file at the new principal place of business of the
surviving corporation, 9337 Bond Avenue, El Cajon, CA 92012.
9. A copy of the Plan will be furnished by the surviving corporation, on
request and without cost, to any shareholder or stockholder of either
constituent corporation.
10. These Articles of Merger shall be effective upon the date the filing of
these Articles of Merger in the offices of the Secretary of State of both
Wyoming and Nevada becomes complete.
AMERICAN FIRE RETARDANT CORPORATION
A Wyoming Corporation
DATE: March 17, 1999 /s/ Stephen F. Owens
---------------------------------------
By: Stephen F. Owens
Its: President
DATE: March 17, 1999 /s/ Angela M. Raidl
---------------------------------------
By: Angela M. Raidl
Its: Secretary
AMERICAN FIRE RETARDANT CORPORATION
A Wyoming Corporation
DATE: March 17, 1999 /s/ Stephen F. Owens
---------------------------------------
By: Stephen F. Owens
Its: President
DATE: March 17, 1999 /s/ Angela M. Raidl
---------------------------------------
By: Angela M. Raidl
Its: Secretary
Page 2 of 3
<PAGE>
STATE OF CALIFORNIA )
) SS
COUNTY OF SAN DIEGO )
On this 17th day of March, 1999, before me, George Chachas, a Notary Public,
personally appeared Stephen F. Owens and Angela M. Raidl, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacity, and that by their signatures on
the instrument the persons, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
[Notary Seal]
/s/ George Chachas
- --------------------------------
George Chachas - Notary Public
Page 3 of 3
Exhibit 2.3(b)
--------------
ACQUISITION AGREEMENT AND PLAN OF MERGER
----------------------------------------
This Acquisition Agreement and Plan of Merger is made as of March 17, 1999,
by and between American Fire Retardant Corporation, a Wyoming Corporation (the
"Disappearing Corporation") and American Fire Retardant Corp., a Nevada
Corporation (the "Surviving Corporation"). (The corporations together are
sometimes referred to below as the "Constituent Corporations.")
RECITALS
--------
A. Whereas, the Disappearing Corporation, American Fire Retardant
Corporation, is a Wyoming Corporation organized and existing under the laws of
the State of Wyoming, having been incorporated on July 24, 1995, with authorized
capital stock consisting of an unlimited number of shares of common shares
without par value of which 2,022,938 shares are issued and outstanding.
B. Whereas, the Surviving Corporation, American Fire Retardant Corp., is a
Nevada Corporation organized and existing under the laws of the State of Nevada,
having been incorporated on January 29, 1998, with authorized capital stock
consisting of 25,000,000 shares of common stock, $0.001 par value per share, of
which 2,000 shares are issued and outstanding.
C. Whereas, the Surviving Corporation is presently a wholly owned
subsidiary of the Disappearing Corporation.
D. Whereas, the Board of Directors of the Disappearing Corporation desire
to merge the Disappearing Corporation, with and into the Surviving Corporation
for the sole purpose of effecting a change of Domicile from the State of Wyoming
to the State of Nevada.
E. Whereas, the merger will have no effect or change in the nature of the
business or management of the resulting business operating through the Surviving
Corporation.
F. Whereas, the Board of Directors of each of the Constituent Corporations
deem it advisable for the welfare of the Constituent Corporations that these
corporations merge under the terms and conditions hereinafter set forth, and
they have duly approved and authorized the terms of this Agreement.
G. Whereas, the laws of the State of Wyoming and Nevada permit such a
merger, and the Constituent Corporations desire to merge under and pursuant to
the provisions of the laws of their respective states.
H. Whereas, the Plan of Merger as set forth herein is contained in the
Articles of Merger to be filed with respective States of the Constituent
Corporations.
AGREEMENT
---------
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants herein contained, it is agreed that the Disappearing
Corporation will merge with and into the Surviving Corporation under the terms
and conditions set forth herein as follows:
1. The Merger. Subject to the terms and conditions hereof, the merger shall
be consummated in accordance with the Wyoming Business Corporation Act and the
applicable provisions of the Nevada Revised Statutes, as promptly as practicable
following the approval of the shareholders of the Disappearing Corporation. At
the Effective Date as set forth herein, subject to the terms and conditions of
this Agreement and in accordance with the laws of the States of Nevada and
Wyoming, the Disappearing Corporation shall be merged with and into Surviving
Corporation, whereupon the separate existence of Disappearing Corporation shall
cease and the Nevada Corporation shall be the Surviving Corporation. The
Surviving Corporation shall continue its corporate existence under the laws of
the State of Nevada.
Page 1 of 5
<PAGE>
Without any other transfer or documentation, on the effective date of the
merger the Surviving Corporation shall (i) succeed to all of Disappearing
Corporation's rights and property; and (ii) be subject to all Disappearing
Corporation's liabilities and obligations. Notwithstanding the above, after the
effective date the Surviving Corporation's proper officers and directors may
perform any acts necessary or desirable to vest or confirm Surviving
Corporation's possession of and title to any property or rights of Disappearing
Corporation, or otherwise carry out this Agreement's purposes. This includes
execution and delivery of deeds, assurances, assignments or other instruments.
2. Execution of Articles of Merger. Following the approval of the merger by
the shareholders of the Disappearing Corporation, the Disappearing Corporation
and Surviving Corporation shall complete and execute Articles of Merger and
cause the Articles of Merger to be delivered to the Secretary of State of the
States of Nevada and Wyoming for filing. The parties hereto will also execute
and deliver such other documents or certificates as may be required to effect
the merger.
3. Effect of Merger. The effect of the merger will be to change the
domicile of the Disappearing Corporation from the State of Wyoming to the State
of Nevada without any change in the nature of the business or management.
4. Name of Surviving Corporation. The name of the Surviving Corporation,
shall, and, from and after the effective date of the merger, be American Fire
Retardant Corp. The separate existence of the Disappearing Corporation shall
cease at the effective time of the merger, except insofar as it may be continued
by law or in order to carry out the purposes of this Agreement, and except as
continued in the Surviving Corporation.
5. Articles of Incorporation of Surviving Corporation. The Articles of
Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of the Surviving Corporation as presently on file with the
Secretary of States office of the State of Nevada, a copy of which is attached
hereto as Exhibit A.
6. By-laws of the Surviving Corporation. The By-laws of the Surviving
Corporation, at the effective time of the merger, shall be the present By-laws
of the Surviving Corporation, until altered or replaced as provided herein.
7. Board of Directors and Officers. The members of the Board of Directors
and the Officers of the Surviving Corporation immediately after the effective
time of the merger shall be those persons who are presently the members of the
Board of Directors and the Officers of the Disappearing Corporation and
Surviving Corporation, as set forth below, for the terms provided by law or in
the By-laws of the Surviving Corporation, or until their respective successors
are elected and qualified.
Directors: Officers:
---------------- --------------------------------------------
Stephen F. Owens President and CEO.......... Stephen F. Owens
Angela M. Raidl Chief Financial Officer .... Angela M. Raidl
Secretary .................. Angela M. Raidl
Page 2 of 5
<PAGE>
8. Conversion of shares. By virtue of the merger and without any action by
any shareholder, upon the effective date each share of capital stock of
Disappearing Corporation outstanding immediately prior to the effective date
shall be converted into one (1) fully paid and non-assessable share of Surviving
Corporation's common stock, without any dilution or change in the rights or
privileges associated with said shares. No fractional shares of Surviving
Corporation shall be issued.
9. Stock Certificates. On or after the effective date, all of Disappearing
Corporation's outstanding stock certificates shall be deemed to represent
ownership of Surviving Corporation' shares, into which Disappearing
Corporation's shares have been converted (as provided above). The holders of
such certificates must surrender them to the Surviving Corporation in whatever
manner it may legally require, or as provided by the Surviving Corporation. On
receipt thereof, Surviving Corporation shall issue and exchange certificates for
shares of its common stock representing the number of shares to which the holder
is entitled as provided above.
Pending the surrender and exchange of certificates, the registered owner on
Disappearing Corporation's books of any outstanding stock certificate shall be
entitled to exercise all voting and other rights, and receive any dividends
payable, with respect to the shares of Surviving Corporation represented by the
certificates (as provided above).
10. Authority to Conduct Business. The Surviving Corporation represents
that the corporation has not filed an application for authority to do business
in the State of Wyoming. The Surviving Corporation has filed or will file
applications to conduct business as a foreign corporation within the States of
California, Florida, Louisiana and such other states as it will conduct business
from time to time.
11. Effective Date. Provided this Agreement is not abandoned, the effective
date of merger (the "Effective Date") shall be at the close of business on the
date when the requisite Articles of Merger are duly filed in the office of the
Secretary of State of Nevada and Wyoming.
12. Service of Process of Surviving Corporation. The Surviving Corporation
agrees that it may be served with process is the State of Wyoming in any
proceedings for enforcement of any obligation of the Disappearing Corporation,
as well as for the enforcement of any obligation of the Surviving Corporation
arising from the merger, and hereby irrevocably appoints the Secretary of State
of the State of Wyoming, as its agent to accept service of process in any suit
or other proceedings. Copies of such process shall be mailed to:
American Fire Retardant Corp.
Mr. Stephen F. Owens
9337 Bond Avenue
El Cajon, California 92021
13. Abandonment. This Agreement of Merger may be abandoned (a) by either
Constituent Corporation, acting by its Board of Directors, at any time prior to
its adoption by the shareholders of both of the Constituent Corporations, as
provided by law, or, (b) by the mutual consent of the Constituent Corporations,
acting each by its Board of Directors, at any time after such adoption by such
shareholders and prior to the effective time of merger. In the event of the
abandonment of this Agreement of Merger pursuant to (a) above, notice thereof
shall be given by the Board of Directors of the Constituent Corporation and
thereupon, or abandonment pursuant to (b) above, this Agreement of Merger shall
become wholly void and of no effect and there shall be no further liability of
obligation hereunder on the part of either the Constituent Corporations or of
its Board of Directors or shareholders.
Page 3 of 5
<PAGE>
14. The obligations of each party hereto to consummate the Merger and the
other transactions contemplated by this Agreement shall be subject to
fulfillment on or prior to the Closing of each of the following conditions:
a. Shareholder Approval. The shareholders of Disappearing Corporation
shall have duly adopted and approved this Agreement and the
transactions contemplated hereby in accordance with the applicable
provisions of the Wyoming Business Corporation Act other applicable
law.
b. No Injunctions. No injunction or restraining or other order issued
by a court of competent jurisdiction which prohibits the consummation
of the transactions contemplated by this Agreement shall be in effect
(each party agreeing to use diligent efforts to have any such
injunction or order lifted), and no governmental action or proceeding
shall have been commenced or threatened in writing seeking any
injunction or restraining or other order that seeks to prohibit,
restrain, invalidate or set aside consummation of the transactions
contemplated by this Agreement.
c. No Governmental Proceedings. No action will have been taken, and no
statute, rule or regulation will have been enacted, by any state or
federal government agency that would render the consummation of the
Merger illegal.
d. Governmental Approvals. All governmental filings or approvals
required in connection with the consummation of the transactions
contemplated by this Agreement shall have been made or received.
15. Amendments. Subject to applicable law, this Agreement, the Articles of
Merger and any exhibit attached hereto or thereto may be amended by the parties
hereto at any time prior to the Effective Date; provided, however, that any such
amendment must be in writing and executed by all parties hereto.
16. Assignment. The rights under this Agreement shall not be assignable nor
the duties delegable by any party without the written consent of the other
parties; and nothing contained in this Agreement, express or implied, is
intended to confer upon any person or entity, other than the parties hereto and
their successors in interest and permitted assignees, any rights or remedies
under or by reason of this Agreement unless so stated to the contrary.
17. Entire Agreement. This Agreement (including all schedules and exhibits
attached hereto and thereto and all documents delivered as provided for herein
and therein) contain the entire agreement among the parties hereto with respect
to the subject matter hereof and the transactions contemplated hereby and
supersedes all prior negotiations, discussions, agreements, and undertakings,
both written and oral, among the parties hereto, with respect to the subject
matter hereof.
18. Counterparts. This Agreement may be executed in one or more
Counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile with original executed copies to be delivered by overnight
mail.
19. Governing Law. This Agreement shall be construed by and enforced in
accordance with the laws of the State of Nevada without giving effect to the
principles of the conflicts of laws.
20. Approval and Adoption by Boards of Directors of the Constituent
Corporations. The Boards of Directors of the Constituent Corporation deem it
best interests of the corporations and their shareholders that Disappearing
Corporation be merged with and into the Surviving Corporation and their
respective Boards of Directors have adopted on behalf of their corporations the
this Agreement.
Page 4 of 5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their respective duly authorized officers, as of the date first written above.
THE DISAPPEARING CORPORATION
----------------------------
AMERICAN FIRE RETARDANT CORPORATION
A Wyoming Corporation
/s/ Stephen F. Owens
--------------------------------------------
By: Stephen F. Owens
Its: President
/s/ Angela M. Raidl
--------------------------------------------
By: Angela M. Raidl
Its: Secretary
THE SURVIVING CORPORATION
-------------------------
AMERICAN FIRE RETARDANT CORP.
A Nevada Corporation
/s/ Stephen F. Owens
--------------------------------------------
By: Stephen F. Owens
Its: President
/s/ Angela M. Raidl
--------------------------------------------
By: Angela M. Raidl
Its: Secretary
Page 5 of 5
Exhibit 3.1
-----------
ARTICLES OF INCORPORATION
OF
AMERICAN FIRE RETARDANT CORP.
KNOW ALL MEN BY THESE PRESENTS:
We, the undersigned, being each of the original incorporators herein named,
for the purpose of forming a corporation to do business both within and without
the State of Nevada, and in pursuance of corporation laws of the State of
Nevada, being Chapter 78 of the Nevada Revised Statutes, do make and file these
Articles of Incorporation hereby declaring and certifying that the facts herein
stated are true:
FIRST: The name of this corporation is: American Fire Retardant Corp.
SECOND: The corporation is to have perpetual existence.
THIRD: Its principal office in the State of Nevada is located at 201 West
Liberty Street, Suite 1, Reno NV 89501. The name and address of its
Resident Agent is Thomas R. Brooksbank, Esq., 201 West Liberty Street,
Suite 1, Reno NV 89501.
The corporation may also maintain offices at such other places within or
without the State of Nevada as it may from time to time determine. Corporate
business of every kind and nature may be conducted, and meetings of directors
and shareholders may be held outside the State of Nevada with the same effect as
if in the State of Nevada.
Page 1
<PAGE>
FOURTH: The purpose for which the corporation is organized is to engage in
any lawful activity within or without the State of Nevada.
FIFTH: The amount of the total authorized capital stock of the corporation
is 25,000,000 shares with par value of $.001. All of the said shares shall be of
one class, without series or other distinction, and shall be designated as
"Common Stock."
SIXTH: The capital stock, after the amount of the subscription price has
been paid in money, property, or services, as the Directors shall determine,
shall be subject to no further assessment to pay the debts of the corporation,
and no stock issued as fully paid up shall ever be assessable or assessed, and
these Articles of Incorporation shall not and cannot be amended, regardless of
the vote therefor, so as to amend, modify or rescind this Article SIXTH or any
of the provisions hereof.
SEVENTH: The members of the governing Board of the Corporation shall be
styled "Directors," and the first Board shall be four (4) in number.
The number of directors shall not be reduced to less than one, and may, at
any time or times, be increased or decreased by a duly adopted amendment to
these Articles of Incorporation, or in such manner as shall be provided in the
Bylaws of the corporation or by an amendment to the Bylaws of the corporation
duly adopted by either the Board of Directors or the shareholders.
Page 2
<PAGE>
The names and addresses of the first Board of Directors are as follows:
DIRECTOR ADDRESS
--------------- ----------------
Angela M. Raidl 1951 Tavern Road
Alpine, CA 91901
Stephen F. Owens 1951 Tavern Road
Alpine, CA 91901
Edward E. Friloux, Sr. 204 Notre Dame Drive
Lafayette, LA 80506
John E. Domingue 100 Farmington Drive
Lafayette, LA 80506
EIGHTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized: To determine from time
to time whether and if allowed, under what conditions and regulations the
accounts and books of the corporation (other than the books required by law to
be kept at the principal office of the corporation in Nevada) or any of them,
shall be open to the inspection of the stockholders and the stockholders' rights
in this respect are and shall be restricted or limited accordingly.
To make, alter, amend and rescind the By-Laws of the corporation, to fix
the amount to be reserved as working capital; and to fix the times for the
declaration and payment of dividends, to authorize and cause to be executed
mortgages and liens upon the real and personal property of the corporation.
With the consent in writing or pursuant to the affirmative vote of the
holders of at least a majority of the stock issued and outstanding, at a
stockholders' meeting duly called for that purpose, to sell, assign, transfer or
otherwise dispose of the property or the corporations as an entirety.
In order to promote the interests of the corporation and to encourage the
utilization of the corporation's lands and other property, to sell, assign,
transfer, lease and in any lawful manner dispose of such portions of said
property as the Board of Directors shall deem advisable, and to use and apply
the funds received in payment therefore to the surplus account for the benefit
of the corporation, or the payment of dividends, or otherwise; provided that a
majority of the whole board concur therein, and further provided that the
capital stock shall not be decreased except in accordance with the laws of
Nevada.
Page 3
<PAGE>
By a resolution passed by a majority of the whole board, under suitable
provision of the By-Laws, to designate two or more of their number to constitute
an executive committee, which committee shall, for the time being, as provided
in said resolution or in the By-Laws, have and exercise any and all of the
powers of the board of directors which may be lawfully delegated in the
management of the business and affairs of the corporation.
To make provision for reasonable compensation to its members for their
services as directors and to fix the basis and conditions upon which this
compensation shall be paid. Any director may also serve the corporation in any
other capacity and receive compensation therefor in any form.
The corporation reserves the right to amend, alter, or repeal any
provisions contained in these Articles of Incorporation in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation.
NINTH: Each common shareholder of the corporation shall be entitled to no
preemptive or preferential rights, as such rights are defined by law.
TENTH: Every person who was or is a party or is threatened to be made a
party to or is involved in any action, suit or proceedings, whether civil,
criminal, administrative or investigative, by reason of the fact that he or a
person for whom he is the legal representative is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless to the fullest extent legally permissible under the law of the
State of Nevada from time to time against all expenses, liability and loss
(including attorney's fees, judgments, fines and amounts paid or to be paid in
settlement) reasonably incurred or suffered by him in connection therewith. Such
right of indemnification shall be a contract right which may be enforced in any
manner desired by such person. Such right of indemnification shall not be
exclusive of any other right which such directors, officers or representatives
may have or hereafter acquire and, without limiting the generality of such
statement, they shall be entitled to their respective rights of indemnification
under any By-Law, agreement, vote of stockholders, provision of law or
otherwise, as well as their rights under this Article.
Page 4
<PAGE>
Without limiting the application of the foregoing, the Board of Directors
may adopt By-Laws from time to time with respect to indemnification to provide
at all times the fullest indemnification permitted by the law of the State of
Nevada and may cause the corporation to purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation, or
is or was serving at the request of the corporation as a director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust or other enterprise against any liability asserted against such person and
incurred in any such capacity or arising out of such status, whether or not the
corporation would have the power to indemnify such person.
ELEVENTH: The private property of the Stockholders, Directors and Officers
shall not be subject to the payment of corporate debts to any extent whatsoever.
No director, officer or shareholder shall have any personal liability to
the corporation or its stockholders for damages for breach of fiduciary duty as
a director or officer, except that this provision does not eliminate or limit in
any way the liability of a director or officer for:
Page 5
<PAGE>
(a) Acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law; or
(b) The payment of dividends in violation of Nevada Revised Statutes
(N.R.S.) 78.300. TWELFTH: The names and addresses of the incorporators of the
Corporation are as follows:
NAME ADDRESS
----------------- -----------------------------------
RENEE D. REYNOLDS 201 West Liberty Street, Ste. 1
Reno NV 89501
M. DENISE JACKSON 201 West Liberty Street, Ste. 1
Reno NV 89501
WENDY A. POWERS 201 West Liberty Street, Ste. 1
Reno NV 89501
IN WITNESS WHEREOF, we have hereunto set our hands this 29th day of January
1998, hereby declaring and certifying that the facts stated hereinabove are
true.
/s/ Renee D. Reynolds
----------------------
Renee D. Reynolds
/s/ M. Denise Jackson
----------------------
M. Denise Jackson
/s/ Wendy Powers
----------------------
Wendy Powers
STATE OF NEVADA )
)ss:
COUNTY OF WASHOE )
On this 29th day of January 1998, personally appeared before me, a Notary
Public, RENEE D. REYNOLDS, M. DENISE JACKSON and WENDY A. POWERS who
acknowledged to me that they executed the foregoing instrument.
/s/ Heather M. Denio
- ---------------------
NOTARY PUBLIC
Page 6
Exhibit 3.2
-----------
RESTATED BYLAWS
OF
AMERICAN FIRE RETARDANT CORP.
(A Nevada Corporation)
================================================================================
ARTICLE I.
OFFICES
Section 1.01. Location of Offices. The corporation may maintain such
offices within or without the State of Nevada as the Board of Directors may from
time to time designate or require.
Section 1.02. Principal Office. The address of the principal office of the
corporation shall be at the address of the registered office of the corporation
as so designated in the office of the Secretary of State of the state of
incorporation, or at such other address as the Board of Directors shall from
time to time determine.
ARTICLE II.
MEETING OF SHAREHOLDERS
Section 2.01. Annual Meetings. The annual meeting of the shareholders shall
be held on such date as the Board of Directors shall determine by resolution. If
the election of directors shall not be held on the day thus designated for any
annual meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as may be practicable.
Section 2.02. Special Meetings. Special meetings of the stockholders may be
held at the office of the corporation in the State of Nevada, or elsewhere,
whenever called by the President, or by the Board of Directors, or by vote of,
or by an instrument in writing signed by the holders of a majority of the issued
and outstanding capital stock. Not less than ten (10) nor more than sixty (60)
days written notice of such meeting, specifying the day, hour and place, when
and where such meeting shall be convened, and the objects for calling the same,
shall be mailed in the United States Post Office, addressed to each of the
stockholders of record at the time of issuing the notice, and at his, her, or
its address last known, as the same appears on the books of the corporation.
The written certificate of the officer or officers calling any special
meeting setting forth the substance of the notice, and the time and place of the
mailing of the same to the several stockholders, and the respective addresses to
which the same were mailed, shall be prima facie evidence of the manner and fact
of the calling and giving such notice.
Page 1 of 18
<PAGE>
All business lawfully to be transacted by the stockholders of the
corporation may be transacted at any special meeting or at the adjournment
thereof. Only such business, however, shall be acted upon at special meeting of
the stockholders as shall have been referred to in the notice calling such
meetings; but at any stockholders' meeting at which all of the outstanding
capital stock of the corporation is represented, either in person or by proxy,
any lawful business may be transacted, and such meeting shall be valid for all
purposes.
Section 2.03. Place of Meetings. The Board of Directors may designate any
place, either within or without the state of incorporation, as the place of
meeting for any annual or special meeting. A waiver of notice, signed by all
shareholders entitled to vote at a meeting, may designate any place, either
within or without the state of incorporation, as the place for the holding of
such meeting. If no designation is made, the place of meeting shall be the
registered office of the corporation in the state of incorporation.
Section 2.04. Notice of Meetings. Notification of the annual meeting shall
state the purpose or purposes for which the meeting is called and the date,
time, and the place, which may be within or without this state, where it is to
be held. A copy of such notice shall be either delivered personally to, or shall
be mailed with postage prepaid, to each stockholder of record entitled to vote
at such meeting not less than ten (10) nor more than sixty (60) days before such
meeting. If mailed, notice shall be directed to a stockholder at his address as
it appears upon the records of the corporation. Upon such mailing of any such
notice, the service thereof shall be complete and the time of the notice shall
begin to run from the date upon such notice is deposited in the mail for
transmission to said stockholder. Personal delivery of such notice to any
officer of a corporation, association, or any member of a partnership, shall
constitute delivery of such notice to such corporation, association, or any
member of a partnership.
Section 2.05. Waiver of Notice. If all the stockholders of the corporation
shall waive notice of the annual or special meeting, no notice of such meeting
shall be required. Further, whenever all the stockholders shall meet in person
or by proxy, such meeting shall be valid for all purposes without call or
notice, and at such meeting any corporate action may be taken.
Section 2.06. Default Notice. If the address of any stockholder does not
appear upon the books of the corporation, it will be sufficient to address any
notice to said stockholder at the registered office of the corporation within
the state of Nevada.
Section 2.07. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any annual meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the corporation may provide
that the share transfer books shall be closed, for the purpose of determining
shareholders entitled to notice of or to vote at such meeting, but not for a
period exceeding sixty (60) days. If the share transfer books are closed for the
purpose of determining shareholders entitled to notice of or to vote at such
meeting, such books shall be closed for at least ten (10) days immediately
preceding such meeting.
Page 2 of 18
<PAGE>
In lieu of closing the share transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty (60) and, in case of a meeting
of shareholders, not less than ten (10) days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the share transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting or
to receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof. Failure to comply
with this Section shall not affect the validity of any action taken at a meeting
of shareholders.
Section 2.08. Voting Lists. At each meeting of the stockholders, a full,
true and complete list, in alphabetical order, of all the stockholders entitled
to vote at such meeting, and indicating the number of shares held by each,
certified by the Secretary of the corporation, shall be furnished, which list
shall be prepared not less than ten (10) nor more than sixty (60) days before
such meeting, and shall be open to the inspection of the stockholders, or their
agents or proxies, at the place where such meeting is to be held, and not less
than ten (10) nor more than sixty (60) days prior thereto. Only the persons in
whose names shares of stock are registered on the books of the corporation for
not less than ten (10) nor more than sixty (60) days preceding the date of such
meeting, as evidenced by the list of stockholders so furnished, shall be
entitled to vote at such meeting. Proxies and powers of attorney to vote must be
filed with the secretary of the corporation before an election or a meeting of
the stockholders, or they cannot be used at such election or meeting.
Section 2.09. Voting Rights. At each meeting of the stockholders, every
stockholder shall be entitled to vote in person or by his or her duly authorized
proxy appointed by instrument in writing subscribed by such stockholder or by
his or her duly authorized attorney. Each stockholder shall have one (1) vote
for each share of stock standing registered in his or her or its name on the
books of the corporation. The votes for directors, and upon demand by any
stockholder, the votes upon any question before the meeting, shall be by viva
voce.
Section 2.10. Quorum. At all stockholders' meetings, the holders of a
majority of the entire issued and outstanding capital stock of the corporation,
shall constitute a quorum for all purposes of such meetings.
If holders of the amount of stock necessary to constitute a quorum shall
fail to attend, in person or by proxy, at the time and place fixed by these
Bylaws for any annual meeting, or fixed by a notice as above provided for a
special meeting, a majority in interest of the stockholders present in person or
by proxy may adjourn from time to time without notice other than by announcement
at the meeting, until holders of the amount of stock requisite to constitute a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted as
originally called.
Page 3 of 18
<PAGE>
Section 2.11. Proxies. At each meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person or by proxy;
provided, however, that the right to vote by proxy shall exist only in case the
instrument authorizing such proxy to act shall have been executed in writing by
the registered holder or holders of such shares, as the case may be, as shown on
the share transfer of the corporation or by his or her or her attorney thereunto
duly authorized in writing. Such instrument authorizing a proxy to act shall be
delivered at the beginning of such meeting to the secretary of the corporation
or to such other officer or person who may, in the absence of the secretary, be
acting as secretary of the meeting. In the event that any such instrument shall
designate two or more persons to act as proxies, a majority of such persons
present at the meeting, or if only one be present, that one shall (unless the
instrument shall otherwise provide) have all of the powers conferred by the
instrument on all persons so designated. Persons holding stock in a fiduciary
capacity shall be entitled to vote the shares so held and the persons whose
shares are pledged shall be entitled to vote, unless in the transfer by the
pledge or on the books of the corporation he or she shall have expressly
empowered the pledgee to vote thereon, in which case the pledgee, or his or her
or her proxy, may represent such shares and vote thereon.
Section 2.12. Voting Procedures. At each meeting of the stockholders, the
polls shall be opened and closed; the proxies and ballots issued, received, and
be taken in charge of, for the purpose of the meeting, and all questions
touching the qualifications of voters and the validity of proxies, and the
acceptance or rejection of votes, shall be decided by two (2) inspectors. The
presiding officer of the meeting shall appoint such inspectors at or prior to
the meeting.
Section 2.13. Written Consent by Majority of Stockholders. In accordance
with NRS 78.320(b)(2), any action which may be taken at any annual or special
meeting of the stockholders may be taken without a meeting and without prior
notice if consent thereto is signed by stockholders holding at least a majority
of the voting power, except that if a different proportion of voting power is
required for such an action at a meeting, then that proportion of written
consent is required.
Section 2.14. Order of Business. At the stockholders' meetings, the regular
order of business shall be as follows:
(a) Reading and approval of the Minutes of previous meeting or meetings;
(b) Reports of the Board of Directors, the President, Chief Financial
Officer and Secretary of the corporation in the order named;
(c) Reports of Committees;
(d) Election of Directors;
(e) Unfinished business;
(f) New business;
(g) Adjournment.
Page 4 of 18
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ARTICLE III.
DIRECTORS AND THEIR MEETINGS
Section 3.01. General Powers. The property, affairs, and business of the
corporation shall be managed by its Board of Directors. The Board of Directors
is vested with the complete and unrestrained authority in the management of all
the affairs of the corporation, and is authorized to exercise for such purpose
as the General Agent of the corporation, its entire corporate authority. The
Board of Directors may exercise all the powers of the corporation whether
derived from law or the Articles of Incorporation, except such powers as are by
statute, by the Articles of Incorporation or by these Bylaws, vested solely in
the shareholders of the corporation.
Section 3.02. Number, Term, and Qualifications. The Board of Directors of
the corporation shall consist of such number, not less than three (3) or more
than seven (7) persons or such number as shall be fixed from time to time by the
Board of Directors. Each director shall hold office until the next annual
meeting of shareholders of the corporation and until his or her successor shall
have been duly elected and qualified. Directors need not be citizens of the
United States or residents of the state of incorporation or shareholders of the
corporation.
Section 3.03. Resignations. A director may resign at any time by delivering
a written resignation to either the president, a vice president, the secretary,
or assistant secretary, if any. The resignation shall become effective on its
acceptance by the Board of Directors; provided that if the board has not acted
thereon within ten days from the date presented, the resignation shall be deemed
accepted.
Section 3.04. Removal. At a meeting expressly called for that purpose, one
or more directors may be removed by a vote of a majority of the shares of
outstanding stock of the corporation entitled to vote at an election of
directors.
Section 3.05. Vacancies and Newly Created Directorship. All vacancies,
including those caused by an increase in the number of directors, may be filled
by a majority of the remaining directors, though less than a quorum, unless it
is otherwise provided in the Articles of Incorporation.
Section 3.06. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this bylaw immediately following, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide by resolution the time and place, either within or without the state
of incorporation, for the holding of additional regular meetings without other
notice than such resolution.
Section 3.07. Special Meetings. Special meetings of the Board of Directors
may be held on the call of the President or Secretary on at least one (1) day
notice by mail to directors' resident in the State of Nevada, and on at least
three (3) days notice by mail, or three (3) days notice by telegraph, to
directors not resident in said state.
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Any meeting of the Board, no matter where held, at which all of the members
shall be present, even though without or of which notice shall have been waived
by all absentees, provided a quorum shall be present, shall be valid for all
purposes unless otherwise indicated in the notice calling the meeting or in the
waiver of notice. Any and all business may be transacted by any meeting, either
regular or special, of the Board of Directors.
Section 3.08. Location of Directors Meeting. Meetings of the directors may
be held at the principal office of the corporation in the State of Nevada, or
elsewhere, at such place or places as the Board of Directors may, from time to
time, determine.
Section 3.09. Meetings by Telephone Conference Call. The Board of Directors
may provide, by resolution, for the holding of additional regular meetings,
without notice other than such resolution. The Board of Directors may hold any
such additional regular meetings by telephone conference or other means of
electronic communication by which all directors can hear and speak to each of
the other directors.
Section 3.10. Quorum. A majority of the Board of Directors in office shall
constitute a quorum for the transaction of business, but if at any meeting of
the Board there be less than a quorum present, a majority of those present may
adjourn from time to time, until a quorum shall be present, and no notice of
such adjournment shall be required. The Board of Directors may prescribe rules
not in conflict with these Bylaws for the conduct of its business; provided,
however, that in the fixing of salaries of the officers of the corporation, the
unanimous action of all the directors shall be required.
Section 3.11. Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, and the individual directors shall have no power as such.
Section 3.12. Written Consent to Action by Directors. In accordance with
NRS 78.315(2), any action required or permitted to be taken at any annual or
special meeting of board of directors, or of a committee thereof may be taken
without a meeting, if before or after the action consent thereto is signed by
all members of the board or the committee.
Section 3.13. Order of Business. The regular order of business at meetings
of the Board of Directors shall be as follows:
(a) Reading and approval of the minutes of any previous meeting or
meetings;
(b) Reports of officers and committeemen;
(c) Election of officers;
(d) Unfinished business;
(e) New business;
(f) Adjournment.
Section 3.14. Report to and Action on behalf of the Stockholders. The Board
of Directors shall make a report to the stockholders at annual meetings of the
stockholders of the condition of the corporation, and shall furnish each of the
stockholders with a true copy thereof upon request.
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The Board of Directors, in its discretion, may submit any contract or act
for approval or ratification at any annual meeting of the stockholders called
for the purpose of considering any such contract or act, which, if approved, or
ratified by the vote of the holders of a majority of the capital stock
represented in person or by proxy at such meeting, provided that a lawful quorum
of stockholders be there represented in person or by proxy, shall be valid and
binding upon the corporation and upon all the stockholders thereof, as if it had
been approved or ratified by every stockholder of the corporation.
Section 3.15. Formation of Executive Committee. The Board of Directors may,
by resolution passed by a majority of the whole Board, designate an Executive
Committee. This Committee shall consist of two (2) or more members besides the
President, who by virtue of his or her office, shall be a member and the
chairman thereof. The Committee shall in the interim between the meetings of the
Board, exercise all powers of that body in accordance with the general policy of
the corporation and under the direction of the Board of Directors. It shall also
attend to and supervise all the financial operations of the corporation, and
shall examine and audit all the corporation's accounts at the close of each
fiscal year, and at such other times, as it may deem necessary. The Secretary
shall be the Secretary of the Committee and shall attend its meetings, and its
meetings shall be held on the call of the President. All members of the
Committee must be given at least two (2) days notice of meetings either by mail
or telegraph or by personal communication, either by telephone or otherwise. A
majority of the members of the Committee shall keep due records of all meetings
and actions of the Committee, and such records shall at all times be open to the
inspection of any director.
Section 3.16. Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.17. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her or her dissent shall be entered in the minutes of the meeting, unless
he or she shall file his or her or her written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof, or
shall forward such dissent by registered or certified mail to the secretary of
the corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
ARTICLE IV.
OFFICERS AND THEIR DUTIES
Section 4.01. Number. The officers of the corporation shall be a president,
one or more vice-presidents, as shall be determined by resolution of the Board
of Directors, a secretary, a treasurer, and such other officers as may be
appointed by the Board of Directors. The Board of Directors may elect, but shall
not be required to elect, a chairman of the board and the Board of Directors may
appoint a general manager.
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Section 4.02. Election, Term of Office, and Qualifications. The officers
shall be chosen by the Board of Directors annually at its annual meeting. In the
event of failure to choose officers at an annual meeting of the Board of
Directors, officers may be chosen at any regular or special meeting of the Board
of Directors. Each such officer (whether chosen at an annual meeting of the
Board of Directors to fill a vacancy or otherwise) shall hold his or her office
until the next ensuing annual meeting of the Board of Directors and until his or
her successor shall have been chosen and qualified, or until his or her death,
or until his or her resignation or removal in the manner provided in these
Bylaws. Any one person may hold any two or more of such offices, except that the
president shall not also be the secretary. No person holding two or more offices
shall act in or execute any instrument in the capacity of more than one office.
The chairman of the board, if any, shall be and remain a director of the
corporation during the term of his or her office. No other officer need be a
director.
Section 4.03. Subordinate Officers, Etc. The Board of Directors may from
time to time, by resolution, appoint such additional Vice Presidents and
additional Assistant Secretaries, Assistant Chief Financial Officers and
Transfer Agents as it may deem advisable; prescribe their duties, fix their
compensation, and all such appointed officers shall be subject to removal at any
time by the Board of Directors. All officers, agents and factors shall be chosen
and appointed in such manner and shall hold their office for such terms as the
Board of Directors may by resolution prescribe.
Section 4.04. Resignations. Any officer may resign at any time by
delivering a written resignation to the Board of Directors, the president, or
the secretary. Unless otherwise specified therein, such resignation shall take
effect on delivery.
Section 4.05. Removal. Any officer may be removed from office at any
special meeting of the Board of Directors called for that purpose or at a
regular meeting, by vote of a majority of the directors, with or without cause.
Any officer or agent appointed in accordance with the provisions of Section 4.03
hereof may also be removed, either with or without cause, by any officer on whom
such power of removal shall have been conferred by the Board of Directors.
Section 4.06. Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification,
or any other cause, or if a new office shall be created, then such vacancies or
new created offices may be filled by the Board of Directors at any regular or
special meeting.
Section 4.07. The Chairman of the Board. The Chairman of the Board, if
there be such an officer, shall have the following powers and duties.
(a) He or she shall preside at all shareholders' meetings;
(b) He or she shall preside at all meetings of the Board of Directors; and
(c) He or she shall be a member of the executive committee, if any.
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Section 4.08. The President. The president shall have the following powers
and duties:
(a) He or she shall be the chief executive officer of the corporation, and,
subject to the direction of the Board of Directors, shall have general charge of
the business, affairs, and property of the corporation and general supervision
over its officers, employees, and agents;
(b) If no chairman of the board has been chosen, or if such officer is
absent or disabled, he or she shall preside at meetings of the shareholders and
Board of Directors;
(c) He or she shall be a member of the executive committee, if any;
(d) He or she shall be empowered to sign certificates representing shares
of the corporation, the issuance of which shall have been authorized by the
Board of Directors; and
(e) He or she shall have all power and shall perform all duties normally
incident to the office of a president of a corporation, and shall exercise such
other powers and perform such other duties as from time to time may be assigned
to him or her by the Board of Directors.
Section 4.09. The Vice Presidents. The Board of Directors may, from time to
time, designate and elect one or more vice presidents, one of whom may be
designated to serve as executive vice president. Each vice president shall have
such powers and perform such duties as from time to time may be assigned to him
or her by the Board of Directors or the president. At the request or in the
absence or disability of the president, the executive vice president or, in the
absence or disability of the executive vice president, the vice president
designated by the Board of Directors or (in the absence of such designation by
the Board of Directors) by the president, the senior vice president, may perform
all the duties of the president, and when so acting, shall have all the powers
of, and be subject to all the restrictions upon, the president.
Section 4.10. Chief Financial Officer. The Chief Financial Officer shall
have the custody of all the funds and securities of the corporation. When
necessary or proper, he or she shall endorse on behalf of the corporation for
collection checks, notes, an other obligations; he or she shall jointly with
such other officer as shall be designated by these Bylaws, sign all checks made
by the corporation, and shall pay out and dispose of the same under the
direction of the Board of Directors. The Chief Financial Officer shall sign with
the President all bills of exchange and promissory notes of the corporation; he
or she shall also have the care and custody of the stocks, bonds, certificates,
vouchers, evidence of debts, securities, and such other property belonging to
the corporation as the Board of Directors shall designate; he or she shall sign
all papers required by law or by these By-laws or the Board of Directors to be
signed by the Chief Financial Officer. Whenever required by the Board of
Directors, the Chief Financial Officer shall render a statement of the
corporation's cash account; he or she shall enter regularly in the books of the
corporation to be kept by him or her for the purpose, full and accurate accounts
of all moneys received and paid by him or her on account of the corporation. The
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Chief Financial Officer shall at all reasonable times exhibit the books of
account to any Director of the corporation during business hours, and shall
perform all acts incident to the position of Chief Financial Officer subject to
the control of the Board of Directors.
The Chief Financial Officer shall, if required by the Board of Directors,
give bond to the corporation conditioned for the faithful performance of all his
or her duties as Chief Financial Officer in such sum, and with such security as
shall be approved by the Board of Directors, with the expense of such bond to be
borne by the corporation.
Section 4.11. Salaries. The salaries and other compensation of the officers
of the corporation shall be fixed from time to time by the Board of Directors,
except that the Board of Directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any subordinate
officers or agents appointed in accordance with the provisions of Section 4.03
hereof. No officer shall be prevented from receiving any such salary or
compensation by reason of the fact that he or she is also a director of the
corporation.
Section 4.12. Surety Bonds. In case the Board of Directors shall so
require, any officer or agent of the corporation shall execute to the
corporation a bond in such sums and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful performance of his or her
duties to the corporation, including responsibility for negligence and for the
accounting of all property, monies, or securities of the corporation which may
come into his or her hands.
ARTICLE V.
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 5.01. How Constituted. The Board of Directors may designate an
executive committee and such other committees as the Board of Directors may deem
appropriate, each of which committees shall consist of two or more directors.
Members of the executive committee and of any such other committees shall be
designated annually at the annual meeting of the Board of Directors; provided,
however, that at any time the Board of Directors may abolish or reconstitute the
executive committee or any other committee. Each member of the executive
committee and of any other committee shall hold office until his or her
successor shall have been designated or until his or her resignation or removal
in the manner provided in these Bylaws.
Section 5.02. Powers. During the intervals between meetings of the Board of
Directors, the executive committee shall have and may exercise all powers of the
Board of Directors in the management of the business and affairs of the
corporation, except for the power to fill vacancies in the Board of Directors or
to amend these Bylaws, and except for such powers as by law may not be delegated
by the Board of Directors to an executive committee.
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Section 5.03. Proceedings. The executive committee, and such other
committees as may be designated hereunder by the Board of Directors, may fix its
own presiding and recording officer or officers, and may meet at such place or
places, at such time or times and on such notice (or without notice) as it shall
determine from time to time. It will keep a record of its proceedings and shall
report such proceedings to the Board of Directors at the meeting of the Board of
Directors next following.
Section 5.04. Quorum and Manner of Acting. At all meeting of the executive
committee, and of such other committees as may be designated hereunder by the
Board of Directors, the presence of members constituting a majority of the total
authorized membership of the committee shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the members present at any meeting at which a quorum is present shall be the
act of such committee. The members of the executive committee, and of such other
committees as may be designated hereunder by the Board of Directors, shall act
only as a committee and the individual members thereof shall have no powers as
such.
Section 5.05. Vacancies. If any vacancies shall occur in the executive
committee or of any other committee designated by the Board of Directors
hereunder, by reason of disqualification, death, resignation, removal, or
otherwise, the remaining members shall, until the filling of such vacancy,
constitute the then total authorized membership of the committee and, provided
that two or more members are remaining, continue to act. Such vacancy may be
filled at any meeting of the Board of Directors.
Section 5.06. Compensation. The Board of Directors may allow a fixed sum
and expenses of attendance to any member of the executive committee, or of any
other committee designated by it hereunder, who is not an active salaried
employee of the corporation for attendance at each meeting of said committee.
Section 5.07. Resignations. Any member of the executive committee, and of
such other committees as may be designated hereunder by the Board of Directors,
may resign at any time by delivering a written resignation to either the
president, the secretary, or assistant secretary, or to the presiding officer of
the committee of which he or she is a member, if any shall have been appointed
and shall be in office. Unless otherwise specified herein, such resignation
shall take effect on delivery.
Section 5.08. Removal. The Board of Directors may at any time remove any
member of the executive committee or of any other committee designated by it
hereunder either for or without cause.
ARTICLE VI.
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
Section 6.01. Execution of Instruments. Subject to any limitation contained
in the Articles of Incorporation or these Bylaws, the president or vice
president, may, in the name and on behalf of the corporation, execute and
deliver any contract or other instrument authorized in writing by the Board of
Directors. The Board of Directors may, subject to any limitation contained in
the Articles of Incorporation or in these Bylaws, authorize in writing any
officer or agent to execute and delivery any contract or other instrument in the
name and on behalf of the corporation; any such authorization may be general or
confined to specific instances.
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Section 6.02. Loans. No loans or advances shall be contracted on behalf of
the corporation, no negotiable paper or other evidence of its obligation under
any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed
as security for the payment of any loan, advance, indebtedness, or liability of
the corporation, unless and except as authorized by the Board of Directors. Any
such authorization may be general or confined to specific instances.
Section 6.03. Deposits. All moneys of the corporation shall be deposited
when and as received by the Chief Financial Officer in such bank or banks or
other depository as may from time to time be designated by the Board of
Directors, and such deposits shall be made in the name of the corporation.
Section 6.04. Checks, Drafts, Etc. No note, draft, acceptance, endorsement
to other evidence of indebtedness shall be valid or against the corporation
unless the same shall be signed by the President or a Vice President, and
attested by the Secretary or an Assistant Secretary, or signed by the Chief
Financial Officer or an Assistant Chief Financial Officer and countersigned by
the President, Vice President, or Secretary, except that the Chief Financial
Officer or an Assistant Chief Financial Officer, may, without countersignature,
sign payroll checks and make endorsements for deposit to the credit of the
corporation in all its duly authorized depositories. No check or order for money
shall be signed in blank by more than one (1) officer of the corporation.
Section 6.05. Bonds and Debentures. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the president or a vice president and by the secretary and sealed with
the seal of the corporation. The seal may be a facsimile, engraved or printed.
Where such bond or debenture is authenticated with the manual signature of an
authorized officer of the corporation or other trustee designated by the
indenture of trust or other agreement under which such security is issued, the
signature of any of the corporation's officers named thereon may be a facsimile.
In case any officer who signed, or whose facsimile signature has been used on
any such bond or debenture, should cease to be an officer of the corporation for
any reason before the same has been delivered by the corporation, such bond or
debenture may nevertheless be adopted by the corporation and issued and
delivered as through the person who signed it or whose facsimile signature has
been used thereon had not ceased to be such officer. The corporation shall make
no loan or advance of money to any stockholder or officer therein unless the
Board of Directors shall otherwise authorize.
Section 6.06. Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements, and assignments of stocks, bonds, and other securities owned by or
standing in the name of the corporation, and the execution and delivery on
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behalf of the corporation of any and all instruments in writing incident to any
such sale, transfer, endorsement, or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by any
officer or agent thereunto authorized by the Board of Directors.
Section 6.07. Proxies. Proxies to vote with respect to shares of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any vice
president and the secretary or assistant secretary of the corporation, or by any
officer or agent thereunder authorized by the Board of Directors.
Section 6.08. Mortgages and Liens. The directors shall have the power to
authorize and cause to be executed, mortgages and liens without limit as to
amount upon the property and franchise of this corporation, and pursuant to the
affirmative vote, either in person or by proxy, of the holders of a majority of
the capital stock issued and outstanding; the directors shall have authority to
dispose in any manner of the whole property of this corporation.
ARTICLE VII.
CAPITAL STOCK
Section 7.01. Issuance. The capital stock of the corporation shall be
issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 7.02. Stock Certificates. Ownership of stock in the corporation
shall be evidenced by certificates of stock in such forms as shall be prescribed
by the Board of Directors, and shall be under the seal of the corporation and
signed by the President or the Vice President and also by the Secretary or an
Assistant Secretary. All certificates shall be consecutively numbered; the name
of the person owing the shares represented thereby with the number of shares and
the date of issue shall be entered on the corporation's books. No certificates
shall be valid unless it is signed by the President or Vice President and by the
Secretary or Assistant Secretary. All certificates surrendered to the
corporation shall be canceled and no new certificate shall be issued until the
former certificate for the same number of shares shall have been surrendered or
canceled.
Section 7.03. Stock Transfer. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation of the certificate
therefor, made either in person or under assignment; a new certificate shall be
issued therefor. Whenever any transfer shall be expressed as made for collateral
security and not absolutely, the same shall be so expressed in the entry of said
transfer on the books of the corporation.
Section 7.04. Transfer Rules and Transfer Agent. The Board of Directors
shall have the power and authority to make all such rules and regulations not
inconsistent herewith as it may deem expedient concerning the issue, transfer
and registration of certificates for shares of the capital stock of the
corporation. The Board of Directors may appoint a transfer agent and a registrar
of transfers and may require all stock certificates to near the signature of
each transfer agent and such registrar of transfer.
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Section 7.05. Stock Ledgers. The Stock Transfer Books shall be closed for
all meetings of the stockholders for the period of ten (10) days prior to such
meetings and shall be closed for the payment of dividends during such periods
from time to time may be fixed by the Board of Directors, and during such
periods no stock shall be transferable.
Section 7.06. Lost or Destroyed Certificates. The corporation may issue a
new certificate for shares of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the Board
of Directors may, in its discretion, require the owner of the lost or destroyed
certificate or his or her legal representatives, to give the corporation a bond
in such form and amount as the Board of Directors may direct, and with such
surety or sureties as may be satisfactory to the board, to indemnify the
corporation and its transfer agents and registrars, if any, against any claims
that may be made against it or any such transfer agent or registrar on account
of the issuance of such new certificate. A new certificate may be issued without
requiring any bond when, in the judgment of the Board of Directors, it is proper
to do so.
Section 7.07. Closing of Transfer Books and Fixing of Record Date.
(a) The Board of Directors shall have power to close the share books of the
corporation for a period of not to exceed sixty (60) days preceding the date of
any meeting of shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or capital shares shall go into effect, or a
date in connection with obtaining the consent of shareholders for any purpose.
(b) In lieu of closing the share transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital shares shall go into effect, or a date in
connection with obtaining any such consent, as a record date for the
determination of the shareholders entitled to a notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent.
(c) If the share transfer books shall be closed or a record date set for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for, or such record date
shall be, at least ten (10) days immediately preceding such meeting.
Section 7.08. No Limitation on Voting Rights; Limitation on Dissenter's
Rights. To the extent permissible under the applicable law of any jurisdiction
to which the corporation may become subject by reason of the conduct of
business, the ownership of assets, the residence of shareholders, the location
of offices or facilities, or any other item, the corporation elects not to be
governed by the provisions of any statute that (i) limits, restricts, modified,
suspends, terminates, or otherwise affects the rights of any shareholder to cast
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one vote for each share of common stock registered in the name of such
shareholder on the books of the corporation, without regard to whether such
shares were acquired directly from the corporation or from any other person and
without regard to whether such shareholder has the power to exercise or direct
the exercise of voting power over any specific fraction of the shares of common
stock of the corporation issued and outstanding or (ii) grants to any
shareholder the right to have his or her stock redeemed or purchased by the
corporation or any other shareholder on the acquisition by any person or group
of persons of shares of the corporation. In particular, to the extent permitted
under the laws of the state of incorporation, the corporation elects not to be
governed by any such provision, including the provisions of the Nevada Control
Share Acquisitions Act, Sections 78.378 to 78.3793, inclusive, of the Nevada
Revised Statutes, or any statute of similar effect or tenor.
Section 7.09. Dividends. The Board of Directors shall have the power to
reserve over and above the capital stock paid in, such an amount, in its
discretion, as it may deem advisable to fix as a reserve fund, and may, from
time to time, declare dividends from the accumulated profits of the corporation
in excess of the amounts so reserved, and pay the same to the stockholders of
the corporation, and may also, if it deems the same advisable, declare stock
dividends of the unissued capital stock.
ARTICLE VIII.
INDEMNIFICATION, INSURANCE, AND OFFICER AND DIRECTOR CONTRACTS
Section 8.01. Indemnification: Third Party Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees) judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with any such action, suit or proceeding,
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, he or she had reasonable
cause to believe that his or her conduct was unlawful.
Section 8.02. Indemnification: Corporate Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
Page 15 of 18
<PAGE>
fact that he or she is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit, if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue, or matter as to which such a person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the corporation, unless and only to the extent that the court
in which the action or suit was brought shall determine on application that,
despite the adjudication of liability but in view of all circumstances of the
case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
Section 8.03. Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in Sections
8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he
or she shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith. Any
other indemnification under Sections 8.01 and 8.02 hereof, shall be made by the
corporation upon a determination that indemnification of the officer, director,
employee, or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Sections 8.01 and 8.02 hereof. Such
determination shall be made either (i) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit, or proceeding; or (ii) by independent legal counsel on a written opinion;
or (iii) by the shareholders by a majority vote of a quorum of shareholders at
any meeting duly called for such purpose.
Section 8.04. General Indemnification. The indemnification provided by this
Section shall not be deemed exclusive of any other indemnification granted under
any provision of any statute, in the corporation's Articles of Incorporation,
these Bylaws, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent, and shall inure to
the benefit of the heirs and legal representatives of such a person.
Section 8.05. Advances. Expenses incurred in defending a civil or criminal
action, suit, or proceeding as contemplated in this Section may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding upon a majority vote of a quorum of the Board of Directors and upon
receipt of an undertaking by or on behalf of the director, officers, employee,
or agent to repay such amount or amounts unless if it is ultimately determined
that he or she is to indemnified by the corporation as authorized by this
Section.
Section 8.06. Scope of Indemnification. The indemnification authorized by
this Section shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who ceases to be directors, officers, employees, or agents of the corporation,
and shall inure to the benefit of the heirs, executors, and administrators of
all such persons and shall be in addition to all other indemnification permitted
by law.
Page 16 of 18
<PAGE>
Section 8.07. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, employee, or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against any such liability and under the laws of the state
of incorporation, as the same may hereafter be amended or modified.
ARTICLE IX.
MISCELLANEOUS
Section 9.01. Company Records. A copy of the Stock and Transfer Books,
Articles of Incorporation and the Bylaws of the corporation shall be kept at its
principal office of the corporation in the State of Nevada, and at such other
places as may be prescribed by the Board of Directors.
Section 9.02. Salaries. No director nor executive officer shall be entitled
to any salary or compensation for any services performed for the corporation,
unless such salary or compensation shall be fixed by resolution of the Board of
Directors, adopted by the unanimous vote of all of the directors voting in favor
thereof.
ARTICLE X.
AMENDMENT OF BYLAWS
Section 10.01. Amendment Procedures. Amendments and changes of these Bylaws
may be made at any regular or special meeting of the Board of Directors by a
majority vote of the Board of Directors, or may be made by a vote of, or a
consent in writing signed by, the holders of a majority of the issued and
outstanding capital stock.
Page 17 of 18
<PAGE>
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that he is the secretary of American
Fire Retardant Corp., a corporation duly organized and existing under and by
virtue of the laws of the State of Nevada; that the above and foregoing Bylaws
of said corporation were duly adopted by the Board of Directors of the
corporation and by the Shareholders of the corporation, and that the above and
foregoing Bylaws are now in full force and effect.
Dated this 1st day of June, 1999.
/s/ Angela M. Raidl
-----------------------------------
Angela M. Raidl - Secretary
Page 18 of 18
Exhibit 3.3
-----------
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify from the records of this office that AMERICAN FIRE RETARDANT CORP., is
a corporation organized under the laws of Nevada, authorized to, transact
business in the State of Florida, qualified on April 14, 1999.
The document number of this corporation is F99000001935.
I further certify that said corporation has paid all fees and penalties due this
off ice through December 31, 1999, and its status is active.
I further certify that said corporation has not filed a Certificate of
Withdrawal.
Given under my hand and the Great Seal of the State of Florida at Tallahassee,
the Capitol, this the, Fourteenth day of April, 1999
/s/ Katherine Harris
--------------------
Katherine Harris
Secretary of State
[Seal of the State of Florida]
<PAGE>
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the application by AMERICAN
FIRE RETARDANT CORP., a Nevada corporation, authorized to transact business
within the State of Florida on April 14, 1999 as shown by the records of this
office.
The document number of this corporation is F99000001935.
Given under my hand and the Great Seal of the State of Florida at Tallahassee,
the Capitol, this the, Fourteenth day of April, 1999
/s/ Katherine Harris
--------------------
Katherine Harris
Secretary of State
[Seal of the State of Florida]
<PAGE>
APPLICATION BY FOREIGN CORPORATION FOR AUTHORIZATION TO TRANSACT
BUSINESS IN FLORIDA
IN COMPLIANCE WITH SECTION 607.1503, FLORIDA STATUTES, THE FOLLOWING IS
SUBMITTED 1REGISTER A FOREIGN CORPORATION TO TRANSACT BUSINESS IN THE STATE OF
FLORIDA.
1. American Fire Retardant Corp. (Name of corporation; must include the word
"INCORPORATED", "COMPANY", "CORPORATION" or words or abbreviations of like
import in language as will clearly indicate that it is a corporation instead of
a natural person or partnership if not so contained in the name at present.)
2. Nevada 3. 88-0386245
- ------------------------------- ----------------------------------
(State or country under the law (FEI number, if applicable)
of which it is incorporated)
4. 1/29/98 5. Perpetual
- ------------------------------- ----------------------------------
(Date of incorporation) Duration: Year corp. will cease to
exist or "perpetual")
6. March 25, 1999
- -------------------------------------------------------------------------------
(Date first transacted business in Florida.)
(SEE SECTIONS 607.1501. 607.1502 and 817-155. FS.)
7. 9337 Bond Avenue
El Cajon, CA 92012
- -------------------------
(Current mailing address)
8. Fire Retardant and flame proofing products and services.
- -----------------------------------------------------------
(Purpose(s) of corporation authorized in home state or country to be carried
out in state of Florida)
9. Name and street address of Florida reGistered agent: (P.O. Box or Mail Drop
Box NOT acceptable).
- -------------------------------------------------------------------------------
Name: Paracorp Incorporated
Office Address: 236 East 6th Avenue
Tallahassee, Florida, 32303
10. Registered agent's acceptance:
- ----------------------------------
Having been named as registered agent and to accept service of process for the
above stated corporation at the place designated in this application, I hereby
accept the appointment as registered agent and agree to act in this capacity. I
further agree to with the provisions of all statutes relative to the proper and
complete performance of my duties, and I am familiar with and accept the
obligations of my position as registered agent.
/s/ Denise Zollner
----------------------------------
Denise Zollner Assistant Secretary
(Registered agent's signature)
11. Attached is a certificate of existence duly authenticated, not more than 90
days prior to delivery of this application to the Department of State, by the
Secretary of State or other official having custody of corporate records in the
jurisdiction under the law of which it is incorporated.
12. Names and addresses of officers and/or directors:(Street address ONLY - P.O.
Box NOT acceptable).
Page 1
<PAGE>
A. DIRECTORS (Street address only - P.O. Box NOT acceptable)
Chairman: Stephen F. Owens
Address: 9337 Bond Avenue
El Cajon, CA 92012
Vice Chairman: Angela M. Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
B. OFFICERS (Street address only - P.O. Box NOT acceptable)
President: Stephen F. Owens
Address: 9337 Bond Avenue
El Cajon, CA 92012
Vice President: Angela M. Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
Secretary: Angela M. Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
Treasurer: Angela M. Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
NOTE: If necessary, you may attach an addendum to the application listing
additional officers and/or directors.
13. /s/ Stephen F. Owens
--------------------------
Stephen F. Owens
(Signature of Chairman, Vice Chairman, or any officer listed in number 12
of the application)
14. Stephen F. Owens, President
- -------------------------------------------------------------------------------
(Typed or printed name and capacity of person signing application)
Exhibit 3.4
-----------
UNITED STATES OF AMERICA
STATE OF LOUISIANA
FOX MCKEITHEN
SECRETARY OF STATE
As Secretary of State, of the State of Louisianan, I hereby Certify that
the Application Form for Certificate of Authority of
AMERICAN FIRE RETARDANT CORP.
Domiciled at CARSON CITY, NEVADA,
Was filed and recorded in this Office on April 15, 1999,
Thus authorizing the corporation to exercise the same powers, rights and
privileges accorded similar domestic corporations, subject to the provisions of
R. S. 1950, 12, Chapter 3, and other applicable laws.
In testimony whereof, I have hereunto set my hand and caused the Seal of my
Office to be affixed at the City of Baton Rouge on,
April 16, 1999
/s/ Fox McKeithen
-----------------
Fox McKeithen
Secretary of State
<PAGE>
UNITED STATES OF AMERICA
STATE OF LOUISIANA
FOX MCKEITHEN
SECRETARY OF STATE
As Secretary of State, of the State of Louisianan, I hereby Certify that
AMERICAN FIRE RETARDANT CORP.
A NEVADA corporation domiciled at CARSON CITY,
Filed charter and qualified to do business in this State April 15, 1999,
I further certify that the records of this Office indicate the corporation has
paid all fees due the Secretary of State, and so far as the Office of the
Secretary of State concerned is in good standing and is authorized to do
business in this State.
I further certify that this Certificate is not intended to ( reflect the
financial condition of this corporation since this information is not available
from the records of this office.
In testimony whereof, I have hereunto set my hand and caused the Seal of my
Office to be affixed at the City of Baton Rouge on,
April 19, 1999
/s/ Fox McKeithen
-----------------
Fox McKeithen
Secretary of State
<PAGE>
APPLICATION FOR CERTIFICATE OF AUTHORITY
TO TRANSACT BUSINESS IN LOUISIANA
(R.S. 12: 304)
Foreign Corporation Return to:Corporations Division
Enclose $100.00 filing fee P.O. Box 94125
Make remittance payable to Baton Rouge, LA
Secretary of State Phone (504) 925-4704
Do not send cash
Check one: Check one:
STATE OF Non profit Original
Application Business Amended Application
Current Corporation Name: American Fire Retardant Corp.
Previous Corporation Name:
(use only for amended application changing the corporation name)
A corporation organized under the laws of the State of Nevada with principal
office within state of organization at Paracorp, Incorporated 318 N. Carson
Street, #208, Carson City, NV 39701
and having its principal office (wherever located) outside of State of
organization at 9337 Bond Ave, El Cajon, CA 92012
(address, city, state, zip)
doing business, or being about to do business in the state of Louisiana in
conformity with the laws thereof, does, pursuant to the laws of said state,
hereby makes its written declaration that the registered office of the
corporation in Louisiana is located at 400 Travis St., Suite 1308 Shreveport, LA
71101 and its registered agent(s) In Louisiana Paracorp Incorporated and the
principal business establishment in the State of Louisiana is 110 Brush Road
Broussard, LA 70518.
The nature of business which the corporation proposes to transact in this State,
if it does not propose, or is not permitted, to transact in this State business
of every nature which it is empowered to transact by its articles or certificate
of Incorporation; to engage in any lawful activity.
The corporation's director(s) and officer(s) names and addresses (attach
addendum if needed):
See addendum attached hereto & hereby incorporated by reference
Corporation's federal tax Identification number:88-0386245.
Date first transacted business In Louisiana:
Dated and executed at San Diego, California on the 17th day of 1999.
/s/
Stephen F. Owens, President
On this 17th day of March 1999, personally appeared before me Stephen Owens
who being by me first duly sworn, declared that he is the President of
the above named corporation, and that the statements contained therein are true.
/s/
George G. Chachas
Notary
I hereby acknowledge and accept the appointment
of registered agent for and on behalf of
the above named corporation.
Sworn to and subscribed before me this 15th day of April 1999.
Notary
/s/ Deborah P. Sims
- -------------------------
Notary Public
BOSSIER PARISH, LOUISIANA
<PAGE>
ADDENDUM
DIRECTOR AND OFFICERS OF
AMERICAN FIRE RETARDANT CORP.
A. Directors
Chairman: Stephen F. Owens
Address: 9337 Bond Avenue
El Cajon, CA 92012
Vice Chairman: Angela M. Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
Director:
Address:
B. Officers
President: Stephen F. Owens
Address: 9337 Bond Avenue
El Cajon, CA 92012
Vice President: Angela M. Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
Secretary: Angela M. Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
CFO/Treasurer: Angela M. Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
Exhibit 3.5
-----------
STATE OF CALIFORNIA
SECRETARY OF STATE
CERTIFICATE OF QUALIFICATION
I, BILL JONES, Secretary of State of the State of California, hereby certify:
That on the 20th day of April, 1999, AMERICAN FIRE RETARDANT CORP., corporation
organized and existing under the laws of Nevada, complied with the requirements
of California law in effect on that date for the purpose of qualifying to
transact intrastate business in the State of California, and that as of said
date said corporation became and now is qualified and authorized to transact
intrastate business in the State of California, subject however, to any
licensing requirements otherwise imposed by the laws of this State.
IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the
State Of California this day of April 27, 1999.
/S/ Bill Jones
[Seal of the State of California] ---------------------------------------
BILL JONES
Secretary of State
<PAGE>
STATEMENT AND DESIGNATION
BY FOREIGN CORPORATION
AMERICAN FIRE RETARDANT CORP., a corporation organized and existing under
the laws of Nevada, makes the following statements and designation:
1. The address of its principal executive office is 9337 Bond Avenue, El
Cajon, California 92012
2. The address of its principal office in the State of California is 9337 Bond
Avenue El Cajon, California 92012
DESIGNATION OF AGENT FOR SERVICE OF PROCESS IN THE STATE OF CALIFORNIA
(Complete Either Item 3 or Item 4)
3. (Use this paragraph if the process agent is a natural person.) Stephen F.
Owens, a natural person residing in the State of California, whose complete
address is 9337 Bond Avenue El Cajon, CA 92012, is designated as agent upon
whom process directed to this corporation may be served within the State of
California, in the manner provided by law.
4. (Use this paragraph if the process agent is a corporation.) corporation
organized and existing under the laws of is designated as agent upon whom
process directed to this corporation may be served within the State of
California, in the manner provided by law.
NOTE:Corporate agents must have complied with Section 1505, California
Corporations Code, prior to designation.
5. It irrevocably consents to service of process directed to it upon the agent
designated above to service of process on the Secretary of State of the
State of California if the agent so designated the agent's successor is no
longer authorized to act or cannot be found at the address given.
/s/ Stephen F. Owens Stephen F. Owens, President
- -------------------------------- ---------------------------
(Signature of Corporate Officer) (Typed Name and Title of Officer Signing)
Exhibit 3.6
-----------
Corporations Section
1560 Broadway, Suite 200
Denver, CO 80202
(303) 894-2251
(303) 894-2242
FILING FEE: $75.00
MUST SUBMIT TWO COPIES
APPLICATION FOR AUTHORITY
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation hereby applies for Authority to transact business in
Colorado, and for that purpose submits the following statement:
FIRST: The name of the corporation is American Fire Retardant Corp.
- -------------------------------------------------------------------------
(Exact Corporation name must agree with the attached Certificate of Good
Standing)
SECOND: The name which it elects to use in Colorado is American Fire Retardant
Corp.
- --------------------------------------------------------------------------------
(if its corporate name is not available for use in Colorado)
THIRD: It is incorporated uncle the laws of Nevada
- --------------------------------------------------------------------------------
(State of Incorporation)
FOURTH: The date of its incorporation is 1/29/98.
- --------------------------------------------------------------------------------
The period of duration is Perpetual
FIFTH: The street address of its principal office (Include City, State and Zip
Code) is 9337 Bond Avenue, El Cajon Ca 92012.
SIXTH: The street address of its proposed registered office in Colorado is 5025
S. Federal Blvd, Englewood, Colorado 80110, and the name of its proposed
registered agent Colorado at that address is Paracorp of California
Incorporated.
Signature of Registered Agent SEE ATTACHED [maybe in accompanying document)
Date Business commenced or expects to commence transacting business in this
state 4/21/99.
SEVENTH: The names and respective addresses of its directors and officers are:
0FFICE NAME BUSINESS ADDRESS
--------------------------------------------------------
SEE Addendum attached hereto & hereby
EIGHTH: This application MUST BE ACCOMPANIED BY A CERTIFICATE OF GOOD STANDING
ISSUED BY THE JURISDICTION OF ITS INCORPORATION AND DATED WITHIN NINETY (90)
DAYS OF THE FILING OF THE APPLICATION,
/S/ Stephen F. Owens
--------------------------------------------
By: Stephen F. Owens
Its: President
<PAGE>
ADDENDUM
DIRECTOR AND OFFICERS OF
AMERICAN FIRE RETARDANT CORP.
A. Directors
----------------------------------------
Chairman: Stephen F. Owens
Address: 9337 Bond Avenue
El Cajon, CA 92012
Vice Chairman: Angela M. Raidl
Address, 9337 Bond Avenue
E1 Cajon, CA 92012
----------------------------------------
B. Officers
President: Stephen F. Owns
Address; 9337 Bond Avenue
El Cajon, CA 92012
Vice President: Angela M. Raidl.
Address: 9337 Bond Avenue
El Cajon, CA 92012
Secretary: Angela M. Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
CF0/Treasurer: Angela M, Raidl
Address: 9337 Bond Avenue
El Cajon, CA 92012
<PAGE>
STATE OF COLORADO
REGISTERED AGENT CONSENT FORM
DATE: 4/21/99
COMPANY NAME: AMERICAN FIRE RETARDANT CORP.
PARACORP OF CALIFORNIA INCORPORATED HEREBY ACCEPTS APPOINTMENT AS REGISTERED
AGENT FOR AND ON BEHALF OF THE ABOVE-REFERENCED COMPANY.
/s/ Denise Zollner
- ------------------------------------
DENISE ZOLLNER, ASSISTANT SECRETARY
PARACORP OF CALIFORNIA INCORPORATED
Exhibit 10.7
---------------
OFFICE OF THE MISSISSIPPI SECRETARY OF STATE
PO BOX 1369 JACKSON, MS 39205-0136
(601) 359-1333
Application for Certificate of Authority:
The undersigned corporation, pursuant to Section 79-4-15 03 (if a profit
corporation) or Section 79-11-367 (if a nonprofit corporation) of the
Mississippi Code of 1972, hereby executes the following document and sets forth
1. Type of Corporation:
-------------------
[ X ] Profit [ ] Nonprofit
2. Name of the Corporation:
-----------------------
American Fire Retardant Corp.
3. The future effective date is (Complete if applicable):
----------------------------------------------------
4. Its state or country of incorporation is:
----------------------------------------
Nevada
5. Street Address of the corporation's principal office:
-----------------------------------------------------
9337 Bond Avenue
City, State, ZIP5, ZIP4
-----------------------
El Cajon, CA 92012
6. Date of incorporation: 1/28/98 Period of duration: Perpetual
7. Name, Street and Mailing Address of the Registered Agent and Registered
Office are:
Name: Paracorp Incorporated
Physical: Route 1, Box 94, Highway 16 West at Massey Road
Address -----------------------------------------------
PO Box
City, State, ZIP5, ZIP4
Rolling Fork, MS 89159
----------------------
Page 1
<PAGE>
8. Officers:
--------
Name: Stephen F. Owens Title: President
Business Address: 9337 Bond Avenue
City, State, ZIP5, ZIP4: El Cajon, CA 92012
Name: Angela. Raidl Title: Vice President
Business Address 9337 Bond Avenue
City, State, ZIP5, ZIP4: El Cajon, CA 92012
Name: Angela. Raidl Title: CFO, Secretary
Business Address: 9337 Bond Avenue
City, State, ZIP5, ZIP4: El Cajon, CA 92012
9. Directors:
---------
Name: Stephen F. Owens Title: Director
Business Address: 9337 Bond Avenue
City, State, ZIP5, ZIP4: El Cajon, CA 92012
Page 2
<PAGE>
Name: Angela M. Raidl Title: Director
Business Address: 9337 Bond Avenue
City, State, ZIP5, ZIP4: El Cajon, CA 92012
10. FOR NONPROFIT ONLY (Check appropriate box)
The corporation [ ] has members [ ] has no members.
11. Name elected to use in Mississippi is
American Fire Retardant Corp.
By: Signature
/S/ Angela M. Raidl
-----------------------------
Printed Name: Angela M. Raidl Title: Vice President
<PAGE>
OFFICE OF THE MISSISSIPPI SECRETARY OF STATE
PO BOX 136, JACKSON, MS 39205-0136
(601) 359-1333
Application for Appointment of Registered Agent
1. Name of the Corporation
-----------------------
American Fire Retardant Corp.
2. It is incorporated under the laws of
Nevada
3. Registered Agent
Paracorp Incorporated
is designated and appointed registered agent of this corporation in the
State of Mississippi upon whom service of process against this corporation
may be had in the event of any suit against this corporation in said State;
and that all prior designations and appointments of registered agents, if
any, be and the same hereby revoked.
Witness my signature, and the SEAL of said Company, this the 17 day of
March, AD, 1999 (year)
By: Signature
/S/ Angela M. Raidl
-----------------------------
Printed Name: Angela M. Raidl Title: Vice President
The undersigned hereby accepts the above description and appointment of
registered agent for service of process
Dated in: Rolling Fork, Mississippi, the: day of AD, (year)
Signature of Registered Agent
Physical Route 1, Box 94, Hwy 16 West at Massey Road
-------------------------------------------
Address
P.O. Box
City, State, ZIP5, ZIP4: Rolling Fork MS 39159
Exhibit 10.1(a)
---------------
- --------------------------------------------------------------------------------
American Fire Retardant Corp.
9337 Bond Avenue Telephone: (619) 390-6888
El Cajon, Blvd. 92021 Facsimile: (619) 390-6889
- --------------------------------------------------------------------------------
Mr. Andrew B. Spencer
Fabritek Industries, LLC
11 Village Street
East Hartford, CO 06018
Letter of Intent
----------------
This Letter of Intent (the "Letter of Intent") is effective as of May 5 1999,
and is by and among Fabritek Industries LLC, a Connecticut Limited Liability
Company ("Fabritek"), whose principal address is 11 Village Street, East
Hartford, Connecticut, 06018, together with all the members of Fabritek,
hereinafter referred to as (the "Transferring Members"), and American Fire
Retardant Corp., a Nevada Corporation, ("AFRC"), with its principal office
located at 9337 Bond Avenue, El Cajon, California 92021, and confirms our
understanding and sets forth in principle the terms upon which (a) Fabritek
shall convert to a Connecticut C Corporation, hereinafter "Fabritek Corp." and
(b) AFRC Nevada will acquire Fabritek Corp. through a stock for stock exchange
in a tax free reorganization, whereupon Fabritek Corp. shall become a wholly
owned subsidiary of AFRC.
General
-------
The purpose of this Letter of Intent is to memorialize the basic
understandings of AFRC, Fabritek, and the Transferring Members and certain terms
and conditions that have been discussed by and between the parties hereto. This
Letter of Intent shall not constitute a complete statement of, or legally
binding or enforceable agreement or commitment on the part of AFRC Nevada,
Fabritek or the Transferring Members with respect to the matters described
herein but shall impose on AFRC, Fabritek and the Transferring Members a
obligation to negotiate in good faith towards a final agreement which shall be
legally binding upon all parties hereto when executed.
1. AFRC Represents as follows:
(a) AFRC is a corporation duly organized under the laws of the State of
Nevada and is validly existing and duly qualified to do business.
(b) AFRC is a fire protection company that specializes in fire prevention
and fire containment. AFRC is in the business of developing, manufacturing
and marketing a unique line of interior fire retardant chemicals and
provides fire resistive finishing services through the AFRC's "Textile
Processing Center" for commercial users. AFRC also specializes in designing
new technology for future fire resistive applications that are being
mandated by local, state and governmental agencies. As specialists in fire
safe systems, AFRC is active in the construction industry as
sub-contractors for fire stop and firefilm installations.
Page 1
<PAGE>
(c) AFRC is authorized to issued 25,000,000 shares of Common Stock, $0.001
par value per share.
(d) As of the close of business on April 29, 1999, there are 2,343,788
shares of AFRC common stock issued and outstanding and approximately 184
shareholders of record. American Registrar & Transfer Co., of Salt Lake
City, Utah is the transfer agent.
(e) AFRC is presently preparing a Registration Statement on Form 10-SB
pursuant to Section 12(g) of the Securities Exchange Act of 1934 for filing
with the Securities and Exchange Commission ("SEC") in order to registered
the Class of Common Stock, $0.001 Par Value pursuant to Section 12(g). Upon
the clearly of all comments from the SEC, it is the intention of AFRC to
apply for listing and quotation of its common stock on the OTC Bulletin
Board.
(f) All requisite State and Federal corporate, securities and tax filings
are current.
(g) Presently, AFRC has audited financial statements through December 31,
1999.
2. Fabritek Represents as follows:
(a) Fabritek is a Limited Liability Company duly organized under the laws
of the State of Connecticut and is validly existing and duly qualified to
do business. Fabritek presently has 10 members who hold 100% of the
membership interest of Fabritek.
(b) Fabritek is a venture stage organization, engaged in the business of
developing fire protection and fire retardant products and applications in
conjunction with Innovative Concepts Unlimited, Inc. ("ICU") and Prizmalite
Industries, Inc. ("Prizmalite") ICU has granted to Fabritek the exclusive
rights to utilize the technology developed by ICU relating to all products,
applications, inventions and directly or indirectly associated with or
related to flame retardant or protective coatings. Prizmalite has granted
to Fabritek the exclusive rights to the micro particle technology directly
or indirectly associated with or related to flame retardants, flame
proofing and fire protection products and applications.
(c) Upon execution of this Letter of Intent, Fabritek shall immediately
undertake to convert from a Limited Liability Company to a Corporation
("Fabtritek Corp.") having the same management and the same members as
shareholders with no more than 2,500,000 shares issued and outstanding.
Page 2
<PAGE>
3. AFRC Nevada, Fabritek, and the Transferring Members (the "Parties") intend to
enter into a definitive Acquisition Agreement and Plan of Reorganization (the
"Acquisition Agreement") whereby AFRC and Fabritek Corp., following the
conversion of Fabritek to a corporation, will effectuate a stock for stock
exchange in a tax free reorganization (the "Reorganization"). Under the terms of
the Acquisition Agreement, all of the Transferring Shareholders, will transfer
all of their shares of the Common Stock in Fabritek Corp., held by such
Transferring Shareholders, to AFRC so that following the consummation of the
transaction, AFRC will own one hundred percent (100.00%) of the issued and
outstanding capital stock of Fabritek Corp., and Fabritek Corp., will be a
wholly owned subsidiary of AFRC.
4. In exchange for all of the issued and outstanding capital stock of Fabritek
Corp., AFRC will issue a total of 800,000 restricted shares of common stock of
AFRC to the Transferring Shareholders pro-rata according to their respective
ownership interest in Fabritek Corp.
5. Concurrently with the consummation of the Reorganization, the Board of
Directors of AFRC and Fabritek Corp., shall be expanded to five (5) and the
present directors of AFRC and Fabritek Corp., shall execute resolutions
appointing the following persons as directors to serve until the next annual
meeting of the shareholders or until their successors are duly elected and
qualified:
AFRC Board of Directors
-----------------------
1. Stephen F. Owens
2. Angela M. Raidl
3. Designee of AFRC
4. Ken Wilson
5. Robert Conradi
Fabritek Corp. Board of Directors
---------------------------------
1. Andrew B. Spencer
2. Robert Conradi
3. Ken Wilson
4. Stephen F. Owens
5. Angela M. Raidl
6. Concurrently with the consummation of the Reorganization, present directors
of AFRC and Fabritek Corp., shall execute resolutions appointing mutually agreed
upon persons to serve as additional or replacement officers as officers of AFRC
and Fabritek in order to utilize the experience, expertise and talents for the
mutual benefit of AFRC and Fabritek Corp.
7. In addition, the Parties acknowledge the following terms and conditions:
(a) That at Fabritek's expense, Fabritek shall convert Fabritek from a
Limited Liability Company to a Connecticut Corporation no later than May
15, 1999.
Page 3
<PAGE>
(b) That Fabritek Corp. shall have secured and delivered to AFRC such
exclusive rights agreement with regard to ICU and Prizmalite satisfactory
to AFRC and its legal counsel.
(c) Each party shall bear there own expenses associated with the
acquisition contemplated herein.
8. Upon execution of this Letter of Intent, with the exception of the conversion
of Fabritek from a Limited Liability Company to a corporation, the Parties will
not transfer, sell or hypothecate, assign or distribute any of the assets in the
possession of each except upon the written agreement of the parties to this
Letter of Intent and will continue operations in substantially the same manner
as they are presently functioning, until the Acquisition Agreement and Plan of
Reorganization has been consummated.
9. Upon the execution of this Agreement, and prior to the consummation of the
transactions contemplated herein, Fabritek will provide AFRC and AFRC will
provide Fabritek, at the respective expense of each, audited financial
statements and financial documentation for the period extending back two (2)
fiscal years prior to the execution of this Agreement or from date of
commencement of business if less than 2 years, other financial and corporate
information, pro forma financial information, due diligence materials, articles
of incorporation, bylaws, business plans, proof of ownership of assets, patents,
trademarks, accounts receivable, bank statements and copies of deeds, liens,
mortgages, a certificate of good standing issued by the state of incorporation
of each, and any other documents that may be reasonably required by each to
execute its due diligence for the transactions contemplated herein. After review
of the documents and information provided in this paragraph, AFRC or Fabritek
may make a reasonable determination that the transactions contemplated are not
in its best interests and may terminate this Agreement with no further
obligation.
10. Upon the execution of this Letter of Intent, the Parties will cooperate in
the negotiation and preparation of the definitive Acquisition Agreement and
other necessary documentation and will use all reasonable efforts to satisfy the
conditions set for herein, which are in their respective control, each party to
bear its own expenses, with no liability for such expenses to the other party,
whether or not the Reorganization shall close. The Parties shall have executed a
definitive Agreement on or before May 31, 1999, with the consummation of the
Reorganization to take place on or before June 15, 1999 (the "Closing Date").
11. If a definitive Acquisition Agreement has not be executed by the Parties by
May 31, 1999, then the Parties shall have no further obligations to proceed with
the Reorganization, whereupon the Parties hereby release each other from any and
all obligations hereunder.
12. Subject to the requirements of law, any news releases or other announcements
prior to Closing Date by AFRC and/or Fabritek, or their officers, directors or
shareholders pertaining to this Letter of Intent or the Reorganization
contemplated herein shall be approved in writing by all parties hereto prior to
release. AFRC and Fabritek agree to keep the existence of this Letter of Intent
and its contents confidential, except as may be necessary to comply with
applicable law.
Page 4
<PAGE>
13. The parties hereto will hold in confidence all information obtained with
respect to the other, and, except as required by law, will not reveal such
information to any person other than to those to whom it may be necessary in
order to complete the acquisition. If deemed appropriate by either party, a
separate Confidentiality Agreement will be executed by the parties to confirm
the confidentiality provisions and terms set forth in this paragraph.
14. Until May 31, 1999, (or such earlier date on which either Party ends its
active efforts to consummate the Reorganization), neither AFRC or Fabritek, or
any of their affiliates shall negotiate directly or indirectly with any other
party in respect of the sale or acquisition of Fabritek.
15. It is understood that this Letter of Intent merely constitutes a statement
of the mutual intentions of the parties with respect to the proposed
Reorganization, does not contain all matters upon which agreement must be
reached in order for the proposed Reorganization to be consummated and except in
respect of this paragraph and paragraphs 7(a) through 7(c), 8, 9, 10, 11, 12, 13
and 14 above, creates no binding rights in favor of either party. A binding
commitment with respect to the Reorganization will result only after execution
and delivery of a definite Acquisition Agreement, subject to the terms and
conditions contained therein and such covenants and representations necessary to
protect and satisfy both Parties.
16. The Parties intend that this Letter of Intent shall comply with all
applicable laws of the United States and the several states which may have
jurisdiction. Any provision herein which is later determined to be in violation
of any such laws shall be eliminated from the terms of this Letter of Intent,
and the remainder of this Letter of Intent shall continue in full force and
effect.
IN WITNESS WHEREOF, the Parties have executed this Letter of Intent on the
date above written.
American Fire Retardant Corp.
A Nevada Corporation
Dated: 5/5/99 /s/ Stephen F. Owens
--------------------------------------------
By: Stephen F. Owens
Its: President
Dated: 5/5/99 /s/ Angela M. Raidl
--------------------------------------------
By: Angela M. Raidl
Its: Secretary
Page 5
<PAGE>
Fabritek Industries LLC
A Connecticut Limited Liability Company
Dated: 5/5/99 /s/ Andrew B. Spencer
--------------------------------------------
By: Andrew B. Spencer
Its: Manager
Dated: 5/5/99 /s/ Robert E. Conradi
--------------------------------------------
By: Robert Conradi
Its: Manager
Dated: 5/5/99 /s/ Kenneth H. Wilson
--------------------------------------------
By: Kenneth H. Wilson
Its: Manager
Page 6
Exhibit 10.1(b)
---------------
AMENDMENT TO LETTER OF INTENT
This Amendment to Letter of Intent (the "Agreement") is made this 24th day
of May, 1999, is by and among Fabritek Industries LLC, a Connecticut Limited
Liability Company ("Fabritek"), whose principal address is 11 Village Street,
East Hartford, Connecticut, 06018, together with all the members of Fabritek,
hereinafter referred to as (the "Transferring Members"), and American Fire
Retardant Corp., a Nevada Corporation, ("AFRC"), and amends that Letter of
Intent between the parties dated May 5, 1999.
RECITALS
A. Whereas, on May 5, 1999, AFRC Nevada, Fabritek and the Transferring
Members, entered into a Letter of Intent with regard to the proposed acquisition
of Fabritek by AFRC Nevada.
B. Whereas, the parties now desire to amend and modify the Letter of Intent
to provide for additional time to conduct Due Diligence and negotiate and enter
into a definitive Acquisition Agreement and Plan of Reorganization.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
AGREEMENTS
1. Amendment to Letter of Intent. Paragraphs 7(a), 10, 11 and 14 of the
Letter of Intent is hereby amended and modified to read as follows:
7(a).That at Fabritek's expense, Fabritek shall convert Fabritek
from a Limited Liability Company to a Connecticut Corporation no
later than June 15, 1999.
10. Upon the execution of this Letter of Intent, the Parties will
cooperate in the negotiation and preparation of the definitive
Acquisition Agreement and other necessary documentation and will
use all reasonable efforts to satisfy the conditions set for
herein, which are in their respective control, each party to bear
its own expenses, with no liability for such expenses to the
other party, whether or not the Reorganization shall close. The
Parties shall have executed a definitive Agreement on or before
June 30, 1999, with the consummation of the Reorganization to
take place on or before July 15, 1999 (the "Closing Date").
11. If a definitive Acquisition Agreement has not be executed by
the Parties by June 30, 1999, then the Parties shall have no
further obligations to proceed with the Reorganization, whereupon
the Parties hereby release each other from any and all
obligations hereunder.
Page 1 of 3
<PAGE>
14. Until June 30, 1999, (or such earlier date on which either
Party ends its active efforts to consummate the Reorganization),
neither AFRC or Fabritek, or any of their affiliates shall
negotiate directly or indirectly with any other party in respect
of the sale or acquisition of Fabritek.
3. All other terms and conditions of the Letter of Intent shall remain in
full force and effect.
4. Entire Agreement; Exhibits. This document and its Exhibits contain the
entire agreement between the parties relating to the subject matter contained in
this Agreement. All prior or contemporaneous agreements, representations or
warranties, written or oral, between the parties are superseded by this
Agreement. This Agreement may not be modified except by written document signed
by an authorized representative of each party. In the event that any part of
this Agreement is found to be unenforceable, the remainder shall continue in
effect, to the extent consistent with the intent of the parties as of the
effective date of this Agreement.
5. No Oral Change. This Agreement and any provision hereof may not be
waived, changed, modified or discharged orally, but only by an agreement in
writing signed by the party against whom enforcement of any such waiver, change,
modification or discharge is sought.
6. Non-Waiver. The failure of any party to insist in any one or more cases
upon the performance of any of the provisions, covenants or conditions of this
Agreement or to exercise any option herein contained shall not be construed as a
waiver or relinquishment for the future of any such provisions, covenants or
conditions. No waiver by any party of one breach by another party shall be
construed as a waiver with respect to any subsequent breach.
7. Choice of Law. This Agreement and its application shall be governed by
the laws of the State of California.
8. Counterparts and/or Facsimile Signature. This Agreement may be executed
in any number of counterparts, including counterparts transmitted by telecopier
or FAX, any one of which shall constitute an original of this Agreement. When
counterparts of facsimile copies have been executed by all parties, they shall
have the same effect as if the signatures to each counterpart or copy were upon
the same document and copies of such documents shall be deemed valid as
originals. The parties agree that all such signatures may be transferred to a
single document upon the request of any party.
9. Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
Page 2 of 3
<PAGE>
American Fire Retardant Corp.
A Nevada Corporation
Dated: 5/25/99 /s/ Stephen F. Owens
--------------------------------------------
By: Stephen F. Owens
Its: President
Dated: 5/25/99 /s/ Angela M. Raidl
--------------------------------------------
By: Angela M. Raidl
Its: Secretary
Fabritek Industries LLC
A Connecticut Limited Liability Company
Dated: 5/25/99 /s/ Andrew B. Spencer
--------------------------------------------
By: Andrew B. Spencer
Its: Manager
Dated: 5/25/99 /s/ Robert E. Conradi
--------------------------------------------
By: Robert Conradi
Its: Manager
Dated: 5/25/99 /s/ Kenneth H. Wilson
--------------------------------------------
By: Kenneth H. Wilson
Its: Manager
Page 3 of 3
Exhibit 10.2
------------
AMERICAN FIRE RETARDANT CORPORATION
110 Brush Road
Broussard, LA 70518
318/837-1198
FAX 837-1699
June 24, 1997
Norman 0. Houser
1746 Redwood Court
Munster, Indiana 46321
As per our conversation this date, American Fire Retardant Corporation hereby
agrees to pay Norman 0. Houser the sum of $0.75 per gallon in royalties on the
sale of our Fybefix 200OV. Said royalty is being paid in recognition of
services. Said royalties to be paid at the beginning of the month, immediately
following American Fire Retardant Corporation's receipt of payment of the
invoice.
Sincerely
/S/ Edward Friloux
- ------------------
Edward Friloux
Senior Vice President
Attested by /s/ Stephen F. Owens Dated: June 24, 1997
- -----------------------------------
Stephen Owens
President
Agreed upon by /s/ Norman O. Houser Dated June 24, 1997
- -----------------------------------
Norman O. Houser
Exhibit 10.3
------------
SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS SALE, ASSIGN, AND ASSUMPTION AGREEMENT (this "instrument") is made of
10/29/98, by and between Patrick L. Brinkman ("Brinkman"), and American Fire
Retardant Corp. ("American").
WHEREAS, Brinkman desires to transfer to American exclusive manufacturing
rights to De-Fyre X-238 tire retardant.
NOW, THEREFORE, for a sum of $45,000 (forty-five thousand dollars) the
undertakings set forth below, the parties hereto agree as follows;
1. Sale of the Exclusive Manufacturing Rights for De-Fyre X-238/Assumption
of Obligations. Upon receipt of $20,000 (twenty-thousand dollars) in certified
funds, Brinkman will Temporarily assign to American (i) the formula and test
results for De-Fyre X-238. Final assignment will occur upon receipt of 5 (Five)
monthly payments of $5,000 (five-thousand dollars) starting December 1, 1998 and
ending April 1, 1999. If for any reason all or any of these payments are not
paid on time a cease and desist for manufacturing and sales will automatically
be brought against American and legal collection will proceed. Brinkman may also
at this time contact American's customers relating only to this formula, for
future sales. Upon completion, of above set terms Brinkman will permanently
assign to American all technical information (including formulas, test results,
technical files, literature, video tapes, and manufacturing information owned by
Brinkman.
2. Additional Undertakings of American. American hereby agrees to promptly
remove E.T. Horn's and De-Fyre's name from any and all literature labels, MSDS's
ads and any other literature or materials now and hereafter used in connection
with the De-Fyre business. American hereby assumes any and all customer base of
the De-Fyre business.
3. Further Assurances. American agrees to execute such other documents as
may be necessary and desirable to implement the consummation of the transactions
effected hereby.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
date and year first set forth above.
PATRICK L. BRINKMAN AMERICAN FIRE RETARDANT CORP.
/s/ Pat Brinkman /s/ Stephen F.Owens
----------------------------- ----------------------------------
Pat Brinkman Stephen F. Owens, President
Dated: 10/29/98 Dated: 10/28/98
Exhibit 10.4(a)
---------------
MERCHANT SERVICES AGREEMENT
Merchant: AMERICAN FIRE RETARDANT CORP LENDER: ST MARTIN BANK AND TRUST CO
110 BRUSH ROAD P0 BOX 199
BROUSSARD, LA 70518 ST MARTINVILLE, LA 70582
THIS AGREEMENT is between the Bank and the Merchant identified above. We and you
agree to the following terms and conditions with respect to your participation
in our Cash Flow Manager Program (the "Program"):
Section 1. Definitions
1.1 "Account" means one of your Customer's credit accounts with you, any part
of which is assigned by you to us in conjunction with the Program.
1.2 "Account Statement" means the statement of Account activity billed to your
Customer by us on a monthly basis.
1.3 "Credit Agreement" means any written installment or other written form
of Credit Agreement between you and a Customer.
1.4 "Credit Memo" means the form reflecting a credit, other than a credit
arising from a payment, to a Customer's Account.
1.5 "Customer" means a debtor obligated to you on Receivables that arise from
goods which you sold or services you have rendered to a customer, client or
patient.
1.6 "Discount Fee" means the fixed percentage charge that you agree to pay us
for the Receivables purchased by us from you pursuant to this Agreement.
Subject to the limitations set forth in Section 6.2 of this Agreement, we
may amend the Discount Fee from time to time upon written notice to you
based upon considerations of transaction volume, delinquency, current
economic conditions, and other factors described herein. Initially, and
except as otherwise provided the Discount Fee will be equal to the
following % of the Receivables purchased by us:
3% PERCENT(___%) OF THE FACE AMOUNT.
Bank Initials [__] Merchant Initials [__]
1.7 "Face Amount" means the cash price for the goods you sold and/or services
you rendered to a Customer, less any downpayment paid by a Customer, plus
any taxes imposed on such sales transaction.
1.8 "Initial Purchase" means the first purchase of Receivables by us from you
pursuant to the terms of this Agreement.
1.9 "Invoice" means the form reflecting the sale of goods or services to a
Customer.
1.10 "Line of Credit" means any funded or unfunded Line of Credit and/or
promissory note) established by us pursuant to this Agreement to secure
your obligation to repurchase Receivables as set forth in Section 6 of this
Agreement.
1.11 "Net Amount" of a Receivable means the gross amount of a Receivable, less
the Discount Fee and other discounts, returns, credits or allowances of any
nature at any time issued, owing, granted or outstanding.
Page 1
<PAGE>
MERCHANT SERVICES AGREEMENT
1.12 "Obligations" means all of your obligations to us, whether pursuant to this
Agreement, or under any Line of Credit agreement, note, contract. guaranty,
accommodation or otherwise, however and whenever created, arising or
evidenced, whether direct or indirect, liquidated or contingent, now
existing or arising hereafter.
1.13 "Operating Account" means the depository account maintained by you with us
for funding of the Receivables purchased by us from you.
1.14 "Receivables" means all accounts, instruments, contract rights, chattel
paper, documents and general intangibles that are acceptable to us and
arise from your sale of goods or services, and the proceeds thereof, and
all security and guaranties therefor, whether now existing or arising
hereafter.
1.15 "Related Agreements" mean any other agreement(s) we have with you which
relate to the Program. Initially, these Related Agreements include those
set forth in the following documents or instruments (as indicated by an x):
_____ Line of Credit Agreement dated:
_____ Note & Security Agreement dated:
_____ Note dated:
_____ Security Agreement dated:
Bank Initials [__] Merchant Initials [__]
1.16 "Reserve Account" means the interest or non-interest bearing deposit
account established pursuant to Section 3 as a reserve against delinquent
accounts.
Section 2. Term of Agreement and Termination
2.1 Effective Date. This Agreement will become effective when it is executed
and will continue in full force thereafter until it is terminated in
accordance with this Agreement.
2.2 Termination. This Agreement may be terminated by you or us upon the giving
of sixty (60) days prior written notice to the other party of such
termination.
2.3 Termination In the Event of Default In Obligations. We may terminate this
Agreement immediately upon written notice to you in the event you are in
default of any of your Obligations. In the event of such termination, all
further services, obligations or agreements to be performed by us pursuant
to this Agreement, or under any Related Agreements, will immediately
terminate.
2.4 Winding Up. Upon termination of this Agreement for any reason, any and all
outstanding charges shall be immediately due and payable, and all
Receivables then hold by us may, at our sole option, be reassigned to you
in accordance with Section 6, or held by us until all amounts due to us
pursuant to [hose Receivables have boon fully paid.
Section 3. Purchase and Sale of Receivables; Reserve Account
3.1 Assignment and Sale. We agree to purchase, and you agree to assign and
sell, and hereby assign and sell, to us as absolute owner, with full
recourse, your entire interest in such of your presently outstanding
Receivables as we determine acceptable, as well as all of your future
Receivables which are in our sole discretion acceptable to us and that are
reflected by the Invoices you deliver to us. The assignment of Receivables
to us shall automatically become effective on the date the Receivables are
funded by us by credit to your Operating Account.
3.2 Purchase Price. The purchase price of the Receivables will be Net Amount
thereof, which shall be payable by credit to your Operating Account with us
on or before the next banking day after delivery to us of acceptable
Invoices.
Page 2
<PAGE>
3.3 Reserve Account. We may retain a portion of the sums payable to you, the
amount of which we may adjust from time to time in our reasonable
discretion, as a reserve to provide for the delinquency of the Receivables
we purchase. Amounts retained by us pursuant to this provision shall be
credited to your Reserve Account. No amounts may be drawn from the Reserve
Account without out consent. The initial reserve percentage will .be the
following percentage of the Face Amount of the acceptable Invoices
submitted to us.
10% PERCENT(___%) OF THE FACE AMOUNT.
Bank Initials [__] Merchant Initials [__]
Section 4. Billing and Other Services To Be Performed By The Bank
4.1 Training. We will provide you with such training, manuals and forms and
related support services as may be required for your participation in the
Program.
4.2 Billing of Receivables, Finance Charges. With respect to Receivables
purchased by us, we will send a monthly Account Statement to each of your
Customers with an outstanding balance on their Account, itemizing the
Customer's Account activity for the preceding billing period, in accordance
with the credit terms applicable to that Customer's Account. In addition, a
finance charge will accrue on and be payable with respect to the
Receivables purchased by us in accordance with the following provisions
(check applicable box or boxes):
[__] Except as otherwise agreed or provided herein, interest (hereinafter
referred to as a 'Customer Finance Charge") will accrue on and be billed by
us to Customer Accounts in accordance with the applicable Credit Agreement
in effect with respect to that Customer at the Customer Finance Charge rate
(APR) set forth below. In the event we agree to purchase a Receivable from
you which for any reason cannot be billed, or you do not want billed, to
your Customer at the Customer Finance Charge rate provided for herein, you
agree to pay us the difference between the amount of the Customer Finance
Charge, it any, billed to your Customer, and the amount of the Customer
Finance Charge that we otherwise would have been entitled to receive
pursuant to this paragraph. In addition, if this box __ is checked, you
agree that we may reassign and charge back to you all or any portion of the
Customer Finance Charge billed to your Customer which is not paid in
accordance with the payment terms applicable to that Customer. Provided,
however, this agreement to pay all or any portion of a Customer Finance
Charge is expressly made subject to the limitations set forth in Section
6.2 of this Agreement, and you do not agree to pay and we do not intend to
contract for, reserve, charge or collect any rate of interest which is
higher than the maximum rate of interest we could charge under applicable
law for an extension of credit to you.
CUSTOMER FINANCE CHARGE RATE (APR):____ %
Bank Initials [__] Merchant Initials [__]
[__] Except as otherwise agreed or provided herein, Interest (hereinafter
retorted to as a 'Merchant Payable Finance Charge*) will accrue and be
payable by you on the unpaid balances of Customer Accounts at the
Merchant Payable Finance Charge rate (APR) set forth below. The Merchant
Payable Finance Charge will be payable by you to us at the close of each
month by charge to the Reserve Account established pursuant to this
Agreement. Provided, however, this agreement to pay a Merchant Payable
Finance Charge is expressly made subject to the limitations set forth in
Section 6.2 at this Agreement, and you do not agree to pay and we do not
intend to contract lot, reserve, charge or collect any late of interest
which is higher than the maximum rate at interest we could charge under
applicable law for an extension of credit to you.
MERCHANT PAYABLE FINANCE CHARGE RATE (APR): 12%
Bank Initials [__] Merchant Initials [__]
4.3 Application of Payments. Payments received by us from your Customers will
be applied by us to your Customer's Account, and payment will be deemed
to have been made when it is received by us. All variations,
modifications or extensions of indebtedness on Receivables purchased by
us will be made solely by us. Nothing in this Agreement authorizes you to
collect any of the Receivables assigned by you to us in connection with
the Program, but, in the event you do, you agree to remit the same to us,
property endorsed, no later than the next banking day. You agree to pay
to us any finance charges incurred by a Customer because of delay on your
part in delivering any payments or Credit Memos to us.
Page 3
<PAGE>
4.4 Power of Attorney. You hereby appoint us as your attorney-in-fact to
receive, open, and dispose of all mail addressed to us pertaining to your
Receivables; to endorse our name upon any notes, acceptances, checks,
drafts, money orders and other evidences of payment of Receivables that may
come into our possession, and to deposit or otherwise collect the same, and
to do any and all other acts and things necessary to carry out the terms of
this Agreement. This power, being coupled with an interest, is irrevocable
while any Receivable remains unpaid.
4.5 Payment. The Discount Fee shall be deducted from the gross amount of the
receivables purchased by us and is payable on the banking day the
Receivables purchase is funded by us.
Section 5. Procedures and Forms
5.1 Documentation. You agree to provide us on a timely basis with a copy of
your Customer's Credit Agreement (it a Customer Finance Charge is to be
billed to your Customer) in accordance with the forms set forth in Section
4.2 above, Invoices and Credit Memos (it applicable) related to all sales
creating Customer Receivables, ,together with such other documents and
proof of delivery at goods or rendition of services as we may reasonably
require. You also agree to notify your Customer that your Customer's
Account has been assigned by you to us and to direct your Customer to make
payment directly to us. In the event we agree to purchase a Customer's
Receivable prior to receiving satisfactory evidence of a signed Credit
Agreement with that Customer, the Customer Finance Charge on that
Customer's Account may be billed to your Customer at the maximum applicable
statutory nonusurious rate. In such event, and unless otherwise waived by
us in writing. you agree, subject to the limitations of Section 6.2, to pay
us interest on the unpaid balance of that Customer's Account in accordance
with Section 4.2 until you have furnished us with satisfactory evidence at
a signed Credit Agreement with that Customer.
5.2 Responsibility for Documentation. You agree that you will be solely
responsible for the adequacy, completeness and accuracy of the data that
you supply to us and its preparation in accordance with the format
prescribed by us. You agree to indemnity and hold us (or anyone else
providing data processing services on our behalf) harmless from any claim
or liability sustained by virtue of acting in reliance on the data that you
supply to us.
You understand and agree that it is your sole responsibility to obtain and
maintain an executed written Credit Agreement with each of your credit
Customers, unless otherwise agreed by us in writing.
You also acknowledge that you understand that the form of Credit Agreement
you may use should be reviewed by your legal counsel.
You agree to Indemnify and hold us harmless from any claim or liability we
may sustain by virtue of acting In reliance on your obligation to obtain or
maintain written Credit Agreements with your Customers, or to provide any
disclosures required under applicable state or federal law.
Section 6. Reassignment of Receivables; Security Interest
6.1 Reassignment of Receivables. We may reassign and charge back to you all or
any portion of your outstanding Receivables purchased by us pursuant to
this Agreement:
(a) it payment thereon is not received by us within ninety (90) days after
the date payment on the Account has become due as reflected by the
Account Statement sent to the Customer obligated to pay such
Receivables; or
(b) ninety (90) days after any portion of that Customer's Receivables
becomes delinquent or in default, as determined by the terms of the
Credit Agreement between you and that Customer; or
(c) if any dispute arises with the Customer regarding the Receivable,
including without limitation, any alleged deduction, defense, offset
or counterclaim; or
Page 4
<PAGE>
(d) it you are in default under the terms of this Agreement or under any
other agreement or Obligation you have with us; or
(e) if this Agreement is terminated.
6.2 Effect of Reassignment. To reassign Receivables, we may charge first
against your Reserve Account, then to your Operating Account or other
account with the Bank, an amount equal to the unpaid balance of the
reassigned Receivables, including accrued and unpaid finance charges on the
date of reassignment. The reassignment shall be effective automatically
upon the chargeback to you. In the event the reserve or other account is
insufficient to satisfy the balance of the reassigned Receivable, you agree
that we may immediately fund and make advances pursuant to your Line of
Credit with us as necessary to pay the deficiency amount due to us.
Notwithstanding any provision to the contrary, you do not agree to pay and
we do not intend to contract for, reserve, charge or collect any rate of
interest which is higher than the maximum rate of interest we could charge
under applicable law for the extension of credit that is agreed to in this
Agreement. If any notice of interest accrual is sent and is in error, you
and we mutually agree to correct it, and if we actually collect more
interest than allowed by law and this Agreement, we agree to refund the
excess portion. Any interest in excess of that maximum amount shall be
credited to the principal amount of your Obligations relating to this
Agreement, or, it the principal amount of the debt has been paid, refunded
to your Operating Account.
6.3 Security Interest. You hereby grant to us a security interest in your
present and future Receivables and all returned, repossessed and reclaimed
goods, and related books and records, to secure all of your Obligations,
and agree to execute and deliver an appropriate UCC-1 financing statement
and other related instruments as we may require. You further sell and
assign to us all of your rights as an unpaid vendor or lienor, all of your
related rights of stoppage in transit, replevin and reclamation and rights
against third parties, and you agree to cooperate with us in exercising
these rights. In addition, you hereby pledge and grant to us a security
interest in the Reserve Account established pursuant to Section 3.3 of this
Agreement.
Section 7. Representations, Warranties and Covenants
7.1 Merchant's Covenants. You covenant that you will supply, or allow us to
review, financial information and necessary documents on you or on any
Customer upon our request.
7.2 Merchant's Representations and Warranties. You represent and warrant:
(a) that you are fully authorized to enter into this Agreement and to
perform hereunder;
(b) that this Agreement constitutes a valid and binding obligation;
(c) that you are solvent and in good standing in the State of your
formation;
(d) that your Receivables are and will be in the future bona fide and
existing obligations of your Customers arising out of your sales of
goods and/or services, free and clear of all security Interests, liens
or claims of any kind whatsoever of third parties;
(e) that you have a valid Credit Agreement with your Customer or have
Identified each Customer with whom you do not have an existing written
Credit Agreement; and
(f) that your inventory is not subject to any security interests, liens or
encumbrances of any kind whatsoever, and that you will not permit it
to become so encumbered without our prior written consent.
(g) you will have made delivery of the goods or tendered the services to
which the receivable relates, that the documentation pertaining to the
sale is valid and genuine, and that the goods or services have been
accepted by the Customer;
Page 5
<PAGE>
(h) you will have preserved and will continue to preserve any liens and
any rights to liens available by virtue of [he sale of goods or
services;
(i) the Customer will not be affiliated with you;
(j) you will have no knowledge of any dispute or potential dispute that
might impair the validity of the transaction or the Customer's
obligation to pay the related Receivable in accordance with its terms;
(k) you have the right to render the services or to sell the goods
creating the Receivable, and will have done so in accordance with any
applicable laws; and
(1) you will have paid, or provided for the payment of, all taxes arising
from the transaction creating the Receivable.
7.3 Bank's Representations and Warranties. We represent and warrant that the
services rendered by us pursuant to the terms of this Agreement will be
performed timely and in a professional manner; provided, however, you agree
that we will not be responsible for any indirect, special or consequential
loss or damage, such as loss of anticipated revenues or other consequential
economic loss in connection with or arising out of any unintentional breach
of this Agreement. Nor will we be liable for any errors in judgment or
mistakes that may be made in good faith when acting as your
attorney-in-fact pursuant to Section 4.4 at this Agreement. Nor will we be
liable for any delay in the performance of our duties caused by strike,
lawsuit, riot, civil disturbance, fire, shortage of supplies, or materials
or any other cause reasonably beyond our control.
Section 8. Default
8.1 Events of Default. The following events will constitute a Default under the
terms of this Agreement:
(a) You fail to pay or to perform any Obligation, covenant or liability in
connection with this Agreement and ten (10) days pass after we give
written notice to you of such default, or if you fail to pay any other
indebtedness which you may have to us under any other agreement with
us in accordance with its terms; or
(b) Any warranty, representation or statement whenever made by you in
connection with this Agreement proves to be false in any material
respect when made, or if you fail to disclose that any such warranty,
representation or statement has become untrue in any material respect;
or
(c) The dissolution or termination of your corporate existence or, it an
Individual, your death; or
(d) Your insolvency; or
(e) The assignment for the general benefit of your creditors, the
appointment of a receiver or trustee for your assets, the commencement
of any proceeding under any bankruptcy or insolvency laws by or
against you or any proceeding for the dissolution, liquidation or
settlement of claims against you or winding up of your affairs; or
(f) The termination or withdrawal of any guaranty for your Obligations; or
(g) The failure to pay any tax imposed upon you in connection with any
transaction creating a Receivable; of
(h) If any judgment against you remains unpaid, unslayed on appeal,
undischarged, unbonded or undismissed for a period of thirty (30)
days; or
(i) You discontinue your business as a going concern; or
(j) We deem in good faith that the prospect for your payment or
performance of your Obligations to have been impaired.
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<PAGE>
8.2 Effect of Default. Upon the occurrence of any Default, we may immediately
terminate this Agreement upon written notice of termination to you, at
which time all amounts owed to us for the services rendered pursuant to
this Agreement shall become immediately due and payable, and our
obligations with respect to the further performance of services hereunder
shall, at our sole option, immediately terminate.
Section 9. Applicable Law
9.1 This Agreement shall be construed under, governed and enforced in
accordance with the laws of the Slate where we are located, as shown by our
address on Page 1 of this Agreement.
Section 10. General Provisions.
10.1 Expenses and Attorney's Fees. In the event of any default or dispute
between us and you arising under this Agreement, the party prevailing in
such dispute shall be entitled to a recovery at expenses incurred by that
party in enforcing this Agreement, including costs of court and a
reasonable attorney's fees.
10.2 Non-Waiver. No delay or failure on our part in exercising any right,
privilege or option hereunder shall be deemed a waiver of any such tight,
privilege or option and no waiver, amendment, or modification of any
provision of this Agreement shall be valid unless it is in writing and
signed by us and you.
10.3 Severability. Should any provision of this Agreement be prohibited by or
invalid under applicable law, the validity of the remaining provisions
shall not be affected thereby.
10.4 Headings. The headings heroin are for convenience only and shall not define
or limit the scope, extent, meaning or intent of this Agreement.
10.5 Notices. All notices contemplated or required by this Agreement shall be
deemed to have been duly given when given in writing and hand delivered to
the other party, or deposited in the U.S. Mail, postage prepaid, certified
mail, return receipt requested, to the other party's address set forth in
this Agreement. Any party may change the address for notice purposes by
giving notice in accordance with this Agreement.
10.6 Entire Agreement Construction. This agreement together with the Related
Agreements, embody the entire agreement between us and you with respect to
the Program, and you acknowledge that there are no oral statements or
representations upon which you are relying in executing this agreement. In
the event of any inconsistency arising between this Agreement and any of
the Related Agreements, the agreement applicable to the specific right,
duty or obligation of yours or ours shall control to the extent necessary
to effect the purposes of this Agreement.
Section 11. Special Provisions
IN WITNESS WHEREOF this Agreement has been executed by the parties and is
effective on the Date shown at the top of Page 1 of this Agreement. You are
hereby acknowledge receiving a copy of this Agreement on the date you executed
it.
Merchant Signature
/s/ Edward C. Friloux, Jr.
---------------------------------------
By: Edward C. Friloux Jr.
Its: Senior V.P./Secretary
Dated: 13 March 1997
Page 7
Exhibit 10.4(b)
---------------
PROMISSORY NOTE
Principal Loan Date Maturity Loan No. Call
$100,090.00 03-11-1997 03-11-1998 5010001201 B
- -------------------------------------------------------------------------------
Collateral Account Officer Initials
030 011J
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
- -------------------------------------------------------------------------------
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
===============================================================================
Principal Amount: $100,090.00
Initial Rate: 11.500%
Date of Note: March 11, 1997
===============================================================================
PROMISE TO PAY. AMERICAN FIRE RETARDANT CORPORATION ('Borrower") promises to pay
to the order of ST. MARTIN BANK & TRUST COMPANY ("Lender"), In lawful money of
the United States of America the sum of One Hundred Thousand Ninety & 00/100
Dollars (U.S. $100,090.00) or such other or lesser amounts as may be reflected
from time to time on the books and records of Lender as evidencing the aggregate
unpaid principal balance of loan advances made to Borrower on a revolving line
of credit basis as provided below, together with simple Interest assessed on a
variable rate basis at the rate per annum equal to 2.000 percentage points over
the Index provided below, as the Index under this Note may be adjusted from time
to time, one or more times, with Interest being assessed on the unpaid principal
balance of this Note as outstanding from time to time, commencing on March 11,
1997 and continuing until this Note is paid In full, or until default under this
Note with Interest thereafter being subject to the default interest rate
provisions set forth herein.
LINE OF CREDIT. This Note evidences a revolving a line of credit "master
note". Advances under this Note, as well as directions for payment from
Borrower's accounts, may be requested orally or In writing by Borrower or by an
authorized person. Lender may, but need not, require that all oral requests be
confirmed In writing. :The following party or parties are authorized to request
advances under the line of credit until Lender receives from Borrower at
Lender's address shown above written notice of revocation of their authority:
EDWARD E FRILOUX, SR., SENIOR VICE PRESIDENT. Borrower agrees to be liable for
all sums either (a) advanced In accordance with the Instructions of an
authorized person or (b) credited to any of Borrowers deposit accounts with
Lender. -The unpaid principal balance owing on this Note at any time may be
evidenced by endorsements on this Note or by Lender's Internal records,
Including daily computer print-outs. Lender will have no obligation to advance
funds under this Note If: (a) Borrower or any guarantor Is In default under the
terms of this Note or any agreement that Borrower or any guarantor has with
Lender, Including any agreement made In connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or Is Insolvent; (c)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor's guarantee of this Note or any other loan with Lender; (d)
Borrower has applied funds provided pursuant to this Note for purposes other
than those acceptable to Lender; or (a) Lender In good faith deems Itself
Insecure under this Note or any other agreement between Lender and Borrower.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in one
payment of all outstanding principal plus all accrued unpaid Interest on March
11, 1998. In addition, Borrower will pay regular monthly payments of accrued
unpaid Interest beginning April 1, 1997, and all subsequent Interest payments
are due on the some day of each month after that until this Note Is paid In
full. Interest on this Note Is computed on a 365/360 simple Interest basis; that
Is, by applying the ratio to the annual Interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance Is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate In
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid Interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
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VARIABLE INTEREST RATE. The Interest rate on this Note Is subject to change from
time to time based on changes in an Index which is the ST MARTIN BANK PRIME RATE
ADJUSTED DAILY (the "Index"). The Index Is not necessarily the lowest rate
charged by Lender on Its loans and Is set by Lender In Its sole discretion. If
the Index becomes unavailable during the term of this loan, Lender may designate
a substitute Index after notifying Borrower. Lender will tell Borrower the
current Index rate upon Borrowers request. Borrower understands that Lender may
make loans based on other rates as well. The Interest rate change will not occur
more often than each DAY. The Index currently Is 9.500% per annum. The Interest
rate to be applied to the unpaid principal balance of this Note will be at a
rate of 2.000 percentage points over the Index, resulting In an Initial rate of
11.500% per annum. Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may prepay this Note in full at any time by paying the then
unpaid principal balance of this Note, plus' accrued simple Interest and any
unpaid late charges through date of prepayment. If Borrower prepays this Note in
full, or if Lender accelerates payment, Borrower understands that unless
otherwise required by law, any prepaid fees or charges will not be subject to
rebate and will be earned by Lender at the time this Note is signed. Unless
otherwise agreed to in writing, early payments under this Note will not relieve
Borrower of Borrower's obligation to continue to a regularly scheduled payments
under the above payment schedule. Early payments will instead reduce the
principal balance due, and Borrower may be required to make fewer payments under
this Note.
LATE CHARGE. If Borrower falls to pay any payment under this Note In full within
10 days of when due, Borrower agrees to pay Lender a late payment fee in an
amount equal to 5.000% of the unpaid amount of the payment, or U.S. $15.00,
whichever is less, with a maximum of $16.00. Late charges will not be assessed
following declaration of default and acceleration of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute default events
under this Note:
Default Under This Note. Should Borrower default in the payment of
principal and/or Interest under this Note.
Default Under Security Agreements. Should Borrower or any guarantor
violate, or fall to comply fully with any of the terms and conditions of,
or default under any security right, instrument, document, or agreement
directly or indirectly securing repayment of this Note.
Other Defaults In Favor of Lender. Should Borrower or any guarantor of this
Note default under any other loan, extension of credit, security right,
instrument, document, or agreement, or obligation in favor of Lender.
Default In Favor of Third Parties. Should Borrower or any guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may affect any property or other collateral directly or indirectly
securing repayment of this Note.
Insolvency. Should the suspension, failure or insolvency, however
evidenced, of Borrower or any guarantor of this Note occur or exist.
Death or Interdiction. Should any guarantor of this Note die or be
interdicted.
Readjustment of Indebtedness. Should proceedings for readjustment of
indebtedness, reorganization, bankruptcy, composition or extension under
any insolvency law be brought by or against Borrower or any guarantor.
Assignment for Benefit of Creditors. Should Borrower or any guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
Receivership. Should a receiver of all or any part of Borrower's property,
or the property of any guarantor, be applied for or appointed.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Borrower or any guarantor be commenced.
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False Statements. Should any representation, warranty, or material
statement of Borrower or any guarantor made in connection with the
obtaining of the loan evidenced by this Note or any security agreement
directly or indirectly securing repayment of this Note, prove to be
incorrect or misleading in any respect.
Material Adverse Change. Should any material adverse change occur in the
financial condition of Borrower or any guarantor of this Note or should any
material discrepancy exist between the financial statements submitted by
Borrower or any guarantor and the actual financial condition of Borrower or
such guarantor.
Insecurity. Should Lender deem itself to be insecure with regard to
repayment of this Note.
LENDER'S RIGHTS UPON DEFAULT. Should any one or more default events occur or
exist under this Note as provided above, Lender shall have the right, at Its
sole option, to declare formally this Note to be In default and to accelerate
the maturity and Insist upon Immediate payment In full of the unpaid principal
balance then outstanding under this Note, plus accrued Interest, together with
reasonable attorneys' fees, costs, expenses and other fees and charges as
provided herein. Lender shall have the further right, again at its sole option,
to declare formal default and to accelerate the maturity and to Insist upon
Immediate payment In full of each and every other loan, extension of credit,
debt, liability and/or obligation of every nature and kind that Borrower may
then owe to Lender, whether direct or Indirect or by way of assignment, and
whether absolute or contingent, liquidated or unliquidated, voluntary or
Involuntary, determined or undetermined, secured or unsecured, whether Borrower
Is obligated alone or with others on a "solidary" or "Joint and several" basis,
as a principal obligor or otherwise, all without further notice or demand,
unless Lender shall otherwise elect.
INTEREST AFTER DEFAULT. If Lender declares this Note to be default, Lender has
the right prospectively to adjust and fix the simple interest rate under this
Note until this Note is paid in full, as follows: (1) If the original principal
amount of this Note Is $250,000 or less, the fixed default Interest rate shall
be equal to eighteen (18%) percent per annum, or three (3%) per cent per annum
in excess of the interest rate under this Note, whichever is greater.
ATTORNEYS' FEES. If Lender refers this Note to an attorney for collection, or
files suit against Borrower to collect this Note, or if Borrower files for
bankruptcy or other relief from creditors, Borrower agrees to pay Lender's
reasonable attorneys' fees in an amount not exceeding 25.000% of the unpaid debt
then owing under this Note.
NSF CHECK CHARGES. In the event that Borrower makes any payment under this Note
by check and Borrowers check is returned to Lender unpaid due to non-sufficient
funds in my deposit account, Borrower agrees to pay Lender an additional NSF
check charge equal to $15.00.
DEPOSIT ACCOUNTS. As collateral security for repayment of this Note and all
renewals and extensions, as well as to secure any and all other loans, notes,
indebtedness and obligations that Borrower (or any of them) may now and in the
future owe to Lender or incur in Lender's favor, whether direct or Indirect,
absolute or contingent, due or to become due, of any nature and kind whatsoever
(with the exception of any Indebtedness under a consumer credit card account),
Borrower is granting Lender a continuing security interest in any and all funds
that Borrower may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that Lender may at any time apply any funds
that Borrower may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Borrower is an account holder against the
unpaid balance of this Note and any and all other present and future
indebtedness and obligations that Borrower (or any of them) may then owe to
Lender, in principal, interest, fees, costs, expenses, and attorneys' fees.
COLLATERAL. This Note is secured by: UCC Financing Statement Collateral.
Collateral securing other loans with Lender may also secure this Note as the
result of cross-collateralization.
FINANCIAL STATEMENTS. Borrower agrees to provide Lender. with such financial
statements and other related information at such frequencies and in such detail
as Lender may reasonably request.
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<PAGE>
GOVERNING LAW. Borrower agrees that this Note and the loan evidenced hereby
shall be governed under the laws of the State of Louisiana. Specifically, this
business or commercial Note is subject to La. R.S. 9:3509 at seq.
WAIVERS. Borrower and each guarantor of this Note hereby waive demand,
presentment for payment, protest, notice of protest and notice of nonpayment,
and all pleas of division and discussion, and severally agree that their
obligations and liabilities to Lender hereunder shall be on a "solidary" or
"Joint and several" basis. Borrower and each guarantor further severally agree
that discharge or release of any party who is or may be liable to Lender for the
Indebtedness represented hereby, or the release of any collateral directly or
Indirectly securing repayment hereof, shall not have the effect of releasing any
other party or parties, who shall remain liable to Lender, or of releasing any
other collateral that is not expressly released by Lender. Borrower and each
guarantor additionally agree that Lender's acceptance of payment other than in
accordance with the terms of this Note, or Lender's subsequent agreement to
extend or modify such repayment terms, or Lenders failure or delay in exercising
any rights or remedies granted to Lender, shall likewise not have the effect of
releasing Borrower or any other party or parties from their respective
obligations to Lender, or of releasing any collateral that directly or
indirectly secures repayment hereof. In addition, any failure or delay on the
part of Lender to exercise any of the rights and remedies granted to Lender
shall not have the effect of waiving any of Lenders rights and remedies. Any
partial exercise of any rights and/or remedies granted to Lender shall
furthermore not be construed as a waiver of any other rights and remedies; it
being Borrowers Intent and agreement that Lenders rights and remedies shall be
cumulative in nature. Borrower and each guarantor further agree that, should any
default event occur or exist under this Note, any waiver or forbearance on the
part of Lender to pursue the rights and remedies available to Lender, shall be
binding upon Lender only to the extent that Lender specifically agrees to any
such waiver or forbearance in writing. A waiver or forbearance on the part of
Lender as to one default event shall not be construed as a waiver or forbearance
as to any other default. Borrower and each guarantor of this Note further agree
that any late charges provided for under this Note will not be charges for
deferral of time for payment and will not and are not intended to compensate
Lender for a grace or cure period, and no such deferral, grace or cure period
has or will be granted to Borrower in return for the imposition of any late
charge. Borrower recognizes that Borrowees failure to make timely payment of
amounts due under this Note will result in damages to Lender, including but not
limited to Lender's loss of the use of amounts due, and Borrower agrees that any
late charges imposed by Lender hereunder will represent reasonable compensation
to Lender for such damages. Failure to pay in full any installment or payment
timely when due under this Note, whether or not a late charge is assessed, will
remain and shall constitute an Event of Default hereunder.
SUCCESSORS AND ASSIGNS LIABLE. Borrower's and each guarantor's obligations and
agreements under this Note shall be binding upon Borrower's and each guarantor's
respective successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Lender under this Note shall inure
to the benefit of Lendees successors and assigns, as well as to any subsequent
holder or holders of this Note.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER:
AMERICAN FIRE RETARDANT CORPORATION
/s/ Edward E. Friloux Sr.
- -------------------------
By: Edward E. Friloux Sr.
Its: Senior Vice President
Page 4
Exhibit 10.4(c)
---------------
COMMERCIAL GUARANTY
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
Guarantor: EDWARD E. FRILOUX
204 NOTRE DAME DRIVE
LAFAYETTE, LA 70506
AMOUNT OF GUARANTY. The amount of this Guaranty Is Unlimited.
DEFINITIONS. The following terms shall have the following meanings when used in
this Agreement:
Agreement. The word "Agreement" means this Guaranty Agreement as this
Agreement may be amended or modified from time to time.
Borrower. The word "Borrower" means Individually, collectively and
Interchangeably AMERICAN FIRE RETARDANT CORPORATION.
Guarantor. The word "Guarantor" means Individually, collectively and
Interchangeably EDWARD E. FRILOUX and all other persons guaranteeing
payment and satisfaction of Borrower's Indebtedness as hereinafter defined.
Indebtedness. The word "Indebtedness" means Individually, collectively,
Interchangeably and without limitation any and all present and future
loans, loan advances, extensions of credit, obligations and/or liabilities
that Borrower may now and/or In the future owe to and/or Incur In favor of
Lender, whether direct or Indirect, or by way of assignment or purchase of
a participation interest, and whether absolute or contingent, voluntary or
involuntary, determined or undetermined, liquidated or unliquidated, due or
to become due, secured or unsecured, and whether Borrower may be liable
Individually, jointly or solidarity with others, whether primarily or
secondarily, or as a guarantor or otherwise, and whether now existing or
hereafter arising, of every nature and kind whatsoever, in principal,
Interest, costs, expenses and attorneys' fees and other fees and charges,
Including without limitation Borrower's Indebtedness and obligations under
a certain promissory note In favor of Lender dated March 11, 1997 In the
fixed principal amount of U.S. $100,090.00.
Lender. The word "Lender" means ST. MARTIN BANK & TRUST COMPANY, Lafayette
Office TIN: 720307850, its successors and assigns, and any subsequent
holder or holders of Borrower's Indebtedness.
GUARANTEE OF BORROWER'S INDEBTEDNESS. Guarantor hereby absolutely and
unconditionally agrees to, and by these presents does hereby, guarantee the
prompt and punctual payment, performance and satisfaction of any and all of
Borrower's present and future Indebtedness In favor of Lender.
CONTINUING GUARANTY. THIS IS A CONTINUING GUARANTY AGREEMENT UNDER WHICH
GUARANTOR AGREES TO GUARANTEE PAYMENT OF BORROWER'S PRESENT AND FUTURE
INDEBTEDNESS IN FAVOR OF LENDER ON A CONTINUING BASIS. Guarantor's obligations
and liability under this Agreement shall be open and continuous In effect.
Guarantor intends to and does hereby guarantee at all times the prompt and
punctual payment, performance and satisfaction of all of Borrower's present and
future Indebtedness in favor of Lender. Accordingly, any payments made on
Borrowers Indebtedness will not discharge or diminish the obligations and
liability of Guarantor under this Agreement for any remaining and succeeding
Indebtedness of Borrower In favor of Lender.
JOINT, SEVERAL AND SOLIDARY LIABILITY. Guarantor's obligations and liability
under this Agreement shall be on a "solidary" or "joint and several" basis along
with Borrower to the same degree and extent as if Guarantor had been and/or will
be a co-borrower, co-principal obligor and/or co-maker of Borrower's
Indebtedness. In the event that there is more than one Guarantor under this
Agreement, or In the event that there are other guarantors, endorsers or
sureties of all or any portion of Borrower's Indebtedness, Guarantor's
obligations and liability hereunder shall further be on a "solidary" or "joint
and several" basis along with such other guarantors, endorsers and/or sureties.
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DURATION OF GUARANTY. This Agreement and Guarantor's obligations and liability
hereunder shall remain In full force and effect until such time as this
Agreement may be cancelled or otherwise terminated by Lender under a written
cancellation instrument in favor of Guarantor (subject to the automatic
reinstatement provisions hereinbelow). It is anticipated that fluctuations may
occur In the aggregate amount of Borrower's Indebtedness guaranteed under this
Agreement and it is specifically acknowledged and agreed to by Guarantor that
reductions In the amount of Borrower's Indebtedness, even to zero ($0.00)
dollars, prior to Lender's written cancellation of this Agreement, shall not
constitute or give rise to a termination of this Agreement.
CANCELLATION OF AGREEMENT; EFFECT. Unless otherwise Indicated under such a
written cancellation instrument, Lender's agreement to terminate or otherwise
cancel this Agreement shall affect only, and shall be expressly limited to,
Guarantor's continuing obligations and liability to guarantee Borrowers
Indebtedness incurred, originated and/or extended (without prior commitment)
after the date of such a written cancellation instrument; with Guarantor
remaining fully obligated and liable under this Agreement for any and all of
Borrower's Indebtedness Incurred, originated, extended, or committed to prior to
the date of such a written cancellation Instrument. Nothing under this Agreement
or under any other agreement or understanding by and between Guarantor and
Lender, shall In any way obligate, or be construed to obligate, Lender to agree
to the subsequent termination or cancellation of Guarantor's obligations and
liability hereunder; it being fully understood and agreed to by Guarantor that
Lender has and intends to continue to rely on Guarantor's assets, Income and
financial resources In extending credit and other Indebtedness to and In favor
of Borrower. and that to release Guarantor from Guarantor's continuing
obligations and liabilities under this Agreement would so prejudice Lender that
Lender may, within its sole and uncontrolled discretion and judgment, refuse to
release Guarantor from any of its continuing obligations and liability under
this Agreement for any reason whatsoever as long as any of Borrowers
Indebtedness remains unpaid and outstanding, or otherwise.
DEFAULT. Should any event of default occur or exist under any of Borrower's
indebtedness In favor of Lender, Guarantor unconditionally and absolutely agrees
to pay Lender the then unpaid amount of Borrower's Indebtedness, In principal,
Interest, costs, expenses, attorneys' fees and other fees and charges. Such
payment or payments shall be made at Lender's offices Indicated above,
Immediately following demand by Lender.
GUARANTOR'S WAIVERS. Guarantor hereby waives:
(a) Notice of Lender's acceptance of this Agreement.
(b) Presentment for payment of Borrower's Indebtedness, notice of dishonor
and of nonpayment, notice of Intention to accelerate, notice of
acceleration, protest and notice of protest, collection or Institution of
any suit or other action by Lender In collection thereof, Including any
notice of default in payment thereof, or other notice to, or demand for
payment thereof, on any party.
(c) Any right to require Lender to notify Guarantor of any nonpayment
relating to any collateral directly or Indirectly securing Borrower's
Indebtedness, or notice of any action or nonaction on the part of Borrower,
Lender, or any other guarantor, surety or endorser of Borrower's
Indebtedness, or notice of the creation of any new or additional
Indebtedness subject to this Agreement
(d) Any rights to demand or require collateral security from the Borrower
or any other person as provided under applicable Louisiana law or
otherwise.
(e) Any right to require Lender to notify Guarantor of the terms, time and
place of any public or private sale of any collateral directly or
Indirectly securing Borrower's Indebtedness.
(f) Any "one action" or "anti-deficiency" law or any other law which may
prevent Lender from bringing any action, Including a claim for deficiency,
against Guarantor, before or after Lender's commencement or completion of
any foreclosure action. or any action In lieu of foreclosure.
(g) Any election of remedies by Lender that may destroy or Impair
Guarantor's subrogation rights or Guarantor's right to proceed for
reimbursement against Borrower or any other guarantor, surety or endorser
of Borrower's Indebtedness, Including without limitation, any loss of
rights Guarantor may suffer by reason of any law limiting, qualifying, or
discharging Borrowers Indebtedness.
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<PAGE>
(h) Any disability or other defense of Borrower, or any other guarantor,
surety or endorser, or any other person, or by reason of the cessation from
any cause whatsoever, other than payment In full of Borrower's
Indebtedness.
(i) Any statute of limitations or prescriptive period, it at the time an
action or suit brought by Lender against Guarantor Is commenced, there is
any outstanding Indebtedness of Borrower to Lender which is barred by any
applicable statute of limitations or prescriptive period.
Guarantor warrants and agrees that each of the waivers set forth above Is made
with Guarantor's full knowledge of Its significance and consequences, and that,
under the circumstances. such waivers are reasonable and not contrary to public
policy or law. If any such waiver Is determined to be contrary to any applicable
law or public policy, such waiver shall be effective only to the extent
permitted by law.
GUARANTOR'S SUBORDINATION OF RIGHTS. In the event that Guarantor should for any
reason (a) advance or lend monies to Borrower, whether or not such funds are
used by Borrower to make payment(s) under Borrower's Indebtedness, and/or (b)
make any payment(s) to Lender or others for obligations and liabilities under
this Agreement, and/or (d) If any of Guarantor's property is used to pay or
satisfy any of Borrowers Indebtedness, Guarantor hereby agrees that any and all
rights that Guarantor may have or acquire to collect from or to be reimbursed by
Borrower (or from or by any other guarantor, endorser or surety of Borrower's
Indebtedness), whether Guarantor's rights of collection or reimbursement arise
by way of subrogation to the rights of Lender or otherwise, shall In all
respects, whether or not Borrower Is presently or subsequently becomes
Insolvent, be subordinate, Inferior and junior to the rights of Lender to
collect and enforce payment, performance and satisfaction of Borrower's then
remaining Indebtedness, until such time as Borrower's Indebtedness Is fully paid
and satisfied. In the event of Borrower's Insolvency or consequent liquidation
of Borrower's assets, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of claims of both Lender and Guarantor shall be paid
to Lender and shall be first applied by Lender to Borrowers then remaining
Indebtedness. Guarantor hereby assigns to Lender all claims which it may have or
acquire against Borrower or any assignee or trustee of Borrower In bankruptcy;
provided that, such assignment shall be effective only for the purpose of
assuring to Lender full payment of Borrower's Indebtedness guaranteed under this
Agreement. If now or hereafter (a) Borrower shall be or become Insolvent, and
(b) Borrower's Indebtedness shall not at all times until paid be fully secured
by collateral pledged by Borrower. Guarantor hereby forever waives and
relinquishes In favor of Lender and Borrower, and their respective successors,
any claim or right to payment Guarantor may now have or hereafter have or
acquire against Borrower, by subrogation or otherwise, so that at no time shall
Guarantor be or become a "creditor" of Borrower within the meaning of 11 U.S.C.
section 547(b), or any successor provision of the Federal bankruptcy laws.
GUARANTOR'S RECEIPT OF PAYMENTS. Guarantor further agrees to refrain from
attempting to collect and/or enforce any of Guarantor's collection and/or
reimbursement rights against Borrower (or against any other guarantor, surety or
endorser of Borrower's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Borrower's then remaining Indebtedness In
favor of Lender Is fully paid and satisfied. In the event that Guarantor should
for any reason whatsoever receive any payment(s) from Borrower (or any other
guarantor, surety or endorser of Borrower's Indebtedness) that Borrower (or such
a third party) may owe to Guarantor for any of the reasons stated above,
Guarantor agrees to accept such payment(s) In trust for and on behalf of Lender,
advising Borrower (or the third party payee) of such fact. Guarantor further
unconditionally agrees to immediately deliver such funds to Lender, with such
funds being held by Guarantor over any interim period, In trust for Lender. In
the event that Guarantor should for any reason whatsoever receive any such funds
from Borrower (or any third party), and Guarantor should deposit such funds In
one or more of Guarantor's deposit accounts, no matter where located, Lender
shall have the right to attach any and all of Guarantors deposit accounts In
which such funds were deposited, whether or not such funds were commingled with
other monies of Guarantor, and whether or not such funds then remain on deposit
in such an account or accounts. To this end and to secure Guarantor's
obligations under this Agreement, Guarantor collaterally assigns and pledges to
Lender, and grants to Lender a continuing security Interest In, any and all of
Guarantor's present and future rights, title and Interest In and to all monies
that Guarantor may now and/or In the future maintain on deposit with banks,
savings and loan associations and other entities (other than tax deferred
accounts with Lender), In which Guarantor may at any time deposit any such funds
that may be received from Borrower (or any other guarantor, endorser or surety
of Borrower's Indebtedness) In favor of Lender.
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DEPOSIT ACCOUNTS. As collateral security for repayment of Guarantor's
obligations hereunder and under any additional guaranties previously granted or
to be granted by Guarantor In the future, and additionally as collateral
security for any present and future Indebtedness of Guarantor In favor of Lender
(with the exception of any Indebtedness under a consumer credit card account),
Guarantor Is granting Lender a continuing security Interest In any and all funds
that Guarantor may now and In the future have on deposit with Lender or In
certificates of deposit or other deposit accounts as- to which Guarantor is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Guarantor further agrees that Lender may at any time apply any funds
that Guarantor may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Guarantor Is an account holder against the
unpaid balance of any and all other present and future obligations and
Indebtedness of Guarantor to Lender, in principal, Interest, fees, costs,
expenses, and attorneys' fees.
ADDITIONAL COVENANTS. Guarantor agrees that Lender may, at its sole option, at
any time, and from time to time, without the consent of or notice to Guarantor,
or any of them, or to any other party, and without Incurring any responsibility
to Guarantor or to any other party, and without Impairing or releasing any of
Guarantor's obligations or liabilities under this Agreement:
(a) Make additional secured and/or unsecured loans to Borrower.
(b) Discharge, release or agree not to sue any party (including, but not
limited to, Borrower or any other guarantor, surety, or endorser of
Borrower's Indebtedness), who is or may be liable to Lender for any of
Borrower's Indebtedness.
(c) Sell, exchange, release, surrender, realize upon, or otherwise deal
with, In any manner and In any order, any collateral directly or Indirectly
securing repayment of any of Borrower's Indebtedness.
(d) After, renew, extend, accelerate, or otherwise change the manner,
place, terms and/or times of payment or other terms of Borrower's
Indebtedness, or any part thereof, Including any increase or decrease In
the rate or rates of Interest on any of Borrower's Indebtedness.
(e) Settle or compromise any of Borrower's Indebtedness.
(f) Subordinate and/or agree to subordinate the payment of all or any part
of Borrower's Indebtedness, or Lender's security rights In any collateral
directly or indirectly securing any such Indebtedness, to the payment
and/or security rights of any other present and/or future creditors of
Borrower.
(g) Apply any payments and/or proceeds to any of Borrower's Indebtedness In
such priority or with such preferences as Lender may determine In Its sole
discretion, regardless of which of Borrower's Indebtedness then remains
unpaid.
(h) Take or accept any other collateral security or guaranty for any or all
of Borrower's Indebtedness.
(i) Enter Into, deliver, modify, amend, or waive compliance with, any
Instrument or arrangement evidencing, securing or otherwise affecting. all
or any part of Borrower's Indebtedness.
NO IMPAIRMENT OF GUARANTOR'S OBLIGATIONS. No course of dealing between Lender
and Borrower (or any other guarantor, surety or endorser of Borrower's
Indebtedness), nor any failure or delay on the part of Lender to exercise any of
Lender's rights and remedies under this Agreement or any other agreement or
agreements by and between Lender and Borrower (or any other guarantor, surety or
endorser), shall have the effect of Impairing or releasing Guarantor's
obligations and liabilities to Lender, or of waiving any of Lender's rights and
remedies under this Agreement or otherwise. Any partial exercise of any rights
and remedies granted to Lender shall furthermore not constitute a waiver of any
of Lender's other rights and remedies; It being Guarantor's Intent and agreement
that Lender's rights and remedies shall be cumulative In nature. Guarantor
further agrees that, should Borrower default under any of its Indebtedness, any
waiver or forbearance on the part of Lender to pursue Lender's available rights
and remedies shall be binding upon Lender only to the extent that Lender
specifically agrees to such waiver or forbearance In writing. A waiver or
forbearance on the part of Lender as to one event of default shall not
constitute a waiver or forbearance as to any other default.
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NO RELEASE OF GUARANTOR. Guarantor's obligations and liabilities under this
Agreement shall not be released, Impaired, reduced, or otherwise affected by,
and shall continue In full force and effect notwithstanding the occurrence of
any event, Including without limitation any one or more of the following events:
(a) The death, insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution, or lack of authority
(whether corporate, partnership or trust) of Borrower (or any person acting
on Borrower's behalf), or of any other guarantor, surety or endorser of
Borrower's Indebtedness.
(b) Any payment by Borrower, or any other party, to Lender that Is held to
constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or any such amounts or payment which, for any reason.
Lender is required to refund or repay to Borrower or to any other person.
(c) Any dissolution of Borrower, or any sale, lease or transfer of all or
any part of Borrower's assets.
(d) Any failure of Lender to notify Guarantor of the making of additional
loans or other extensions of credit in reliance on this Agreement.
AUTOMATIC REINSTATEMENT. This Agreement and Guarantor's obligations and
liabilities hereunder shall continue to be effective, and/or shall automatically
and retroactively be reinstated, If a release or discharge has occurred, or It
at any time, any payment or part thereof to Lender with respect to any of
Borrower's Indebtedness, Is rescinded or must otherwise be restored by Lender
pursuant to any Insolvency, bankruptcy, reorganization, receivership, or any
other debt relief granted to Borrower or to any other party to Borrower's
Indebtedness or any such security therefor. In the event that Lender must
rescind or restore any payment received In total or partial satisfaction of
Borrower's Indebtedness, any prior release or discharge from the terms of this
Agreement given to Guarantor shall be without effect, and this Agreement and
Guarantor's obligations and liabilities hereunder shall automatically and
retroactively be renewed and/or reinstated and shall remain In full force and
affect to the same degree and extent as If such a release or discharge had never
been granted. It Is the Intention of Lender and Guarantor that Guarantor's
obligations and liabilities hereunder shall not be discharged except by
Guarantor's full and complete performance and satisfaction of such obligations
and liabilities; and then only to the extent of such performance.
REPRESENTATIONS AND WARRANTIES BY GUARANTOR. Guarantor represents and warrants
that:
(a) Guarantor has the lawful power to own Its properties and to engage In
Its business as presently conducted.
(b) Guarantor's guaranty of Borrower's Indebtedness and Guarantor's
execution, delivery and performance of this Agreement are not in violation
of any laws and will not result in a default under any contract, agreement,
or Instrument to which Guarantor is a party, or by which Guarantor or its
property may be bound.
(c) Guarantor has agreed and consented to execute this Agreement and to
guarantee Borrower's indebtedness in favor of Lender, at Borrower's request
and not at the request of Lender.
(d) Guarantor will receive and/or has received a direct or indirect
material benefit from the transactions contemplated herein and/or arising
out of Borrower's Indebtedness.
(e) This Agreement, when executed and delivered to Lender, will constitute
a valid, legal and binding obligation of Guarantor, enforceable In
accordance with its terms.
(f) Guarantor has established adequate means of obtaining information from
Borrower on a continuing basis regarding Borrowers financial condition. (g)
Lander has made no representations to Guarantor as to the creditworthiness
of Borrower.
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<PAGE>
ADDITIONAL OBLIGATIONS OF GUARANTOR. So long as this Agreement remains In
effect, Guarantor has not and will not, without Lander's prior written consent,
sell, lease, assign, pledge, hypothecate, encumber, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets. Guarantor agrees to
keep adequately informed of any facts, events or circumstances which might In
any way affect Guarantor's risks under this Agreement. Guarantor further agrees
that Lender shall have no obligation to disclose to Guarantor any information or
material relating to Borrower or Borrower's Indebtedness.
ADDITIONAL DOCUMENTS; FINANCIAL STATEMENTS. Upon the reasonable request of
Lender, Guarantor will, at any time, and from time to time, execute and deliver
to Lander any and all such financial Instruments and documents, and supply such
additional Information, as may be necessary or advisable in the opinion of
Lander to obtain the full benefits of this Agreement. Guarantor further agrees
to provide Lender with such financial statements and other related Information
at such frequencies and In such detail as Lender may reasonably request.
TRANSFER OF INDEBTEDNESS. This Agreement Is for the benefit of Lender and for
such other person or persons as may from time to time become or be the holders
of all or any part of Borrowers Indebtedness. This Agreement shall be
transferrable and negotiable with the same force and effect and to the same
extent as Borrower's Indebtedness may be transferrable; It being understood and
agreed to by Guarantor that, upon any transfer or assignment of all or any part
of Borrower's Indebtedness, the holder of such Indebtedness shall have all of
the rights and remedies granted to Lander under this Agreement. Guarantor
further agrees that, upon any transfer of all or any portion of Borrower's
Indebtedness, Lander may transfer and deliver any and all collateral securing
repayment of such Indebtedness (including, but not limited to, any collateral
provided by Guarantor) to the transferee of such Indebtedness, and such
collateral shall secure any and all of Borrower's Indebtedness In favor of such
a transferee. Guarantor additionally agrees that, after any such transfer or
assignment has taken place, Lender shall be fully discharged from any and all
liability and responsibility to Borrower and Guarantor with respect to such
collateral, and the transferee thereafter shall be vested with all the powers
and rights with respect to such collateral.
CONSENT TO PARTICIPATION. Guarantor recognizes and agrees that Lender may, from
time to time, one or more times, transfer all or any part of Borrower's
Indebtedness through sales of participation Interests in such Indebtedness to
one or more third party lenders. Guarantor specifically agrees and consents to
all such transfers and assignments, and Guarantor further waives any subsequent
notice of such transfers and assignments as may be provided under Louisiana law.
Guarantor additionally agrees that the purchaser. of a participation Interest In
Borrower's Indebtedness will be considered as the absolute owner of a percentage
Interest of such Indebtedness and that such a purchaser will have all of the
rights granted under any participation agreement governing the sale of such a
participation interest. Guarantor waives any rights of offset that Guarantor may
have against Lender and/or any purchaser of such a participation Interest, and
Guarantor unconditionally agrees that either Lander or such a purchaser may
enforce Guarantor's obligations and liabilities und6r this Agreement,
irrespective of the failure or Insolvency of Lender or any such purchaser.
NOTICES. Any notice provided in this Agreement must be in writing and will be
considered as given on the day It is delivered by hand or deposited in the U.S.
mail, postage prepaid, addressed to the person to whom the notice is to be given
at the address shown above or at such other addresses as any party may designate
to the other in writing. If there is more than one Guarantor under this
Agreement, notice to any Guarantor shall constitute notice to all Guarantors.
ADDITIONAL GUARANTIES. Guarantor recognizes and agrees that Guarantor may have
previously granted, and may in the future grant, one or more additional
guaranties of Borrower's Indebtedness In favor of Lander. Should this occur, the
execution of this Agreement and any additional guaranties on the part of
Guarantor will not be construed as a cancellation of this Agreement or any of
Guarantor's additional guaranties; it being Guarantor's full intent and
agreement that all such guaranties of Borrower's Indebtedness in favor of Lander
shall remain In full force and effect and shall be cumulative in nature and
effect.
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MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendment. No amendment, modification, consent or waiver of any provision
of this Agreement, and no consent to any departure by Guarantor therefrom,
shall be effective unless the same shall be in writing signed by a duly
authorized officer of Lender, and then shall be effective only as to the
specific instance and for the specific purpose for which given.
Caption Headings. Caption headings of the sections of this Agreement are
for convenience purposes only and are not to be used to interpret or to
define their provisions. In this Agreement, whenever the context so
requires, the singular Includes the plural and the plural also includes the
singular.
Severability. If any provision of this Agreement Is held to be illegal,
Invalid or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable. This Agreement shall
be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it. and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be
affected by the illegal, Invalid or unenforceable provision or by Its
severance herefrom. Furthermore. In lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of
this Agreement, a provision as similar In terms to such illegal, Invalid or
unenforceable provision as may be possible and legal, valid and
enforceable.
Successors and Assigns Bound. Guarantor's obligations and liabilities under
this Agreement shall be binding upon Guarantor's successors. heirs,
legatees, devisees, administrators, executors and assigns.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED. NO
FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED MARCH 11, 1997.
GUARANTOR
/S/ Edward E. Friloux
- -----------------------
Edward E. Friloux
Page 7
Exhibit 10.4(d)
---------------
COMMERCIAL GUARANTY
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
Guarantor: STEPHEN F. OWENS
1951 Tavern Road
Alpine, CA 70570
AMOUNT OF GUARANTY. The amount of this Guaranty Is Unlimited.
DEFINITIONS. The following terms shall have the following meanings when used in
this Agreement:
Agreement. The word "Agreement" means this Guaranty Agreement as this
Agreement may be amended or modified from time to time.
Borrower. The word "Borrower" means Individually, collectively and
Interchangeably AMERICAN FIRE RETARDANT CORPORATION.
Guarantor. The word "Guarantor" means Individually, collectively and
Interchangeably STEPHEN F. OWENS and all other persons guaranteeing payment
and satisfaction of Borrower's Indebtedness as hereinafter defined.
Indebtedness. The word "Indebtedness" means Individually,
collectively, Interchangeably and without limitation any and all
present and future loans, loan advances, extensions of credit,
obligations and/or liabilities that Borrower may now and/or In the
future owe to and/or Incur In favor of Lender, whether direct or
Indirect, or by way of assignment or purchase of a participation
interest, and whether absolute or contingent, voluntary or
involuntary, determined or undetermined, liquidated or unliquidated,
due or to become due, secured or unsecured, and whether Borrower may
be liable Individually, jointly or solidarity with others, whether
primarily or secondarily, or as a guarantor or otherwise, and whether
now existing or hereafter arising, of every nature and kind
whatsoever, in principal, Interest, costs, expenses and attorneys'
fees and other fees and charges, Including without limitation
Borrower's Indebtedness and obligations under a certain promissory
note In favor of Lender dated March 11, 1997 In the fixed principal
amount of U.S. $100,090.00.
Lender. The word "Lender" means ST. MARTIN BANK & TRUST COMPANY, Lafayette
Office TIN: 720307850, its successors and assigns, and any subsequent
holder or holders of Borrower's Indebtedness.
GUARANTEE OF BORROWER'S INDEBTEDNESS. Guarantor hereby absolutely and
unconditionally agrees to, and by these presents does hereby, guarantee the
prompt and punctual payment, performance and satisfaction of any and all of
Borrower's present and future Indebtedness In favor of Lender.
CONTINUING GUARANTY. THIS IS A CONTINUING GUARANTY AGREEMENT UNDER WHICH
GUARANTOR AGREES TO GUARANTEE PAYMENT OF BORROWER'S PRESENT AND FUTURE
INDEBTEDNESS IN FAVOR OF LENDER ON A CONTINUING BASIS. Guarantor's obligations
and liability under this Agreement shall be open and continuous In effect.
Guarantor intends to and does hereby guarantee at all times the prompt and
punctual payment, performance and satisfaction of all of Borrower's present and
future Indebtedness in favor of Lender. Accordingly, any payments made on
Borrowers Indebtedness will not discharge or diminish the obligations and
liability of Guarantor under this Agreement for any remaining and succeeding
Indebtedness of Borrower In favor of Lender.
JOINT, SEVERAL AND SOLIDARY LIABILITY. Guarantor's obligations and liability
under this Agreement shall be on a "solidary" or "joint and several" basis along
with Borrower to the same degree and extent as if Guarantor had been and/or will
be a co-borrower, co-principal obligor and/or co-maker of Borrower's
Indebtedness. In the event that there is more than one Guarantor under this
Agreement, or In the event that there are other guarantors, endorsers or
sureties of all or any portion of Borrower's Indebtedness, Guarantor's
obligations and liability hereunder shall further be on a "solidary" or "joint
and several" basis along with such other guarantors, endorsers and/or sureties.
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DURATION OF GUARANTY. This Agreement and Guarantor's obligations and liability
hereunder shall remain In full force and effect until such time as this
Agreement may be cancelled or otherwise terminated by Lender under a written
cancellation instrument in favor of Guarantor (subject to the automatic
reinstatement provisions hereinbelow). It is anticipated that fluctuations may
occur In the aggregate amount of Borrower's Indebtedness guaranteed under this
Agreement and it is specifically acknowledged and agreed to by Guarantor that
reductions In the amount of Borrower's Indebtedness, even to zero ($0.00)
dollars, prior to Lender's written cancellation of this Agreement, shall not
constitute or give rise to a termination of this Agreement.
CANCELLATION OF AGREEMENT; EFFECT. Unless otherwise Indicated under such a
written cancellation instrument, Lender's agreement to terminate or otherwise
cancel this Agreement shall affect only, and shall be expressly limited to,
Guarantor's continuing obligations and liability to guarantee Borrowers
Indebtedness incurred, originated and/or extended (without prior commitment)
after the date of such a written cancellation instrument; with Guarantor
remaining fully obligated and liable under this Agreement for any and all of
Borrower's Indebtedness Incurred, originated, extended, or committed to prior to
the date of such a written cancellation Instrument. Nothing under this Agreement
or under any other agreement or understanding by and between Guarantor and
Lender, shall In any way obligate, or be construed to obligate, Lender to agree
to the subsequent termination or cancellation of Guarantor's obligations and
liability hereunder; it being fully understood and agreed to by Guarantor that
Lender has and intends to continue to rely on Guarantor's assets, Income and
financial resources In extending credit and other Indebtedness to and In favor
of Borrower. and that to release Guarantor from Guarantor's continuing
obligations and liabilities under this Agreement would so prejudice Lender that
Lender may, within its sole and uncontrolled discretion and judgment, refuse to
release Guarantor from any of its continuing obligations and liability under
this Agreement for any reason whatsoever as long as any of Borrowers
Indebtedness remains unpaid and outstanding, or otherwise.
DEFAULT. Should any event of default occur or exist under any of Borrower's
indebtedness In favor of Lender, Guarantor unconditionally and absolutely agrees
to pay Lender the then unpaid amount of Borrower's Indebtedness, In principal,
Interest, costs, expenses, attorneys' fees and other fees and charges. Such
payment or payments shall be made at Lender's offices Indicated above,
Immediately following demand by Lender.
GUARANTOR'S WAIVERS. Guarantor hereby waives:
(a) Notice of Lender's acceptance of this Agreement.
(b) Presentment for payment of Borrower's Indebtedness, notice of dishonor
and of nonpayment, notice of Intention to accelerate, notice of
acceleration, protest and notice of protest, collection or Institution of
any suit or other action by Lender In collection thereof, Including any
notice of default in payment thereof, or other notice to, or demand for
payment thereof, on any party.
(c) Any right to require Lender to notify Guarantor of any nonpayment
relating to any collateral directly or Indirectly securing Borrower's
Indebtedness, or notice of any action or nonaction on the part of Borrower,
Lender, or any other guarantor, surety or endorser of Borrower's
Indebtedness, or notice of the creation of any new or additional
Indebtedness subject to this Agreement
(d) Any rights to demand or require collateral security from the Borrower
or any other person as provided under applicable Louisiana law or
otherwise.
(e) Any right to require Lender to notify Guarantor of the terms, time and
place of any public or private sale of any collateral directly or
Indirectly securing Borrower's Indebtedness.
(f) Any "one action" or "anti-deficiency" law or any other law which may
prevent Lender from bringing any action, Including a claim for deficiency,
against Guarantor, before or after Lender's commencement or completion of
any foreclosure action. or any action In lieu of foreclosure.
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(g) Any election of remedies by Lender that may destroy or Impair
Guarantor's subrogation rights or Guarantor's right to proceed for
reimbursement against Borrower or any other guarantor, surety or endorser
of Borrower's Indebtedness, Including without limitation, any loss of
rights Guarantor may suffer by reason of any law limiting, qualifying, or
discharging Borrowers Indebtedness.
(h) Any disability or other defense of Borrower, or any other guarantor,
surety or endorser, or any other person, or by reason of the cessation from
any cause whatsoever, other than payment In full of Borrower's
Indebtedness.
(i) Any statute of limitations or prescriptive period, it at the time an
action or suit brought by Lender against Guarantor Is commenced, there is
any outstanding Indebtedness of Borrower to Lender which is barred by any
applicable statute of limitations or prescriptive period.
Guarantor warrants and agrees that each of the waivers set forth above Is made
with Guarantor's full knowledge of Its significance and consequences, and that,
under the circumstances. such waivers are reasonable and not contrary to public
policy or law. If any such waiver Is determined to be contrary to any applicable
law or public policy, such waiver shall be effective only to the extent
permitted by law.
GUARANTOR'S SUBORDINATION OF RIGHTS. In the event that Guarantor should for any
reason (a) advance or lend monies to Borrower, whether or not such funds are
used by Borrower to make payment(s) under Borrower's Indebtedness, and/or (b)
make any payment(s) to Lender or others for obligations and liabilities under
this Agreement, and/or (d) If any of Guarantor's property is used to pay or
satisfy any of Borrowers Indebtedness, Guarantor hereby agrees that any and all
rights that Guarantor may have or acquire to collect from or to be reimbursed by
Borrower (or from or by any other guarantor, endorser or surety of Borrower's
Indebtedness), whether Guarantor's rights of collection or reimbursement arise
by way of subrogation to the rights of Lender or otherwise, shall In all
respects, whether or not Borrower Is presently or subsequently becomes
Insolvent, be subordinate, Inferior and junior to the rights of Lender to
collect and enforce payment, performance and satisfaction of Borrower's then
remaining Indebtedness, until such time as Borrower's Indebtedness Is fully paid
and satisfied. In the event of Borrower's Insolvency or consequent liquidation
of Borrower's assets, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of claims of both Lender and Guarantor shall be paid
to Lender and shall be first applied by Lender to Borrowers then remaining
Indebtedness. Guarantor hereby assigns to Lender all claims which it may have or
acquire against Borrower or any assignee or trustee of Borrower In bankruptcy;
provided that, such assignment shall be effective only for the purpose of
assuring to Lender full payment of Borrower's Indebtedness guaranteed under this
Agreement. If now or hereafter (a) Borrower shall be or become Insolvent, and
(b) Borrower's Indebtedness shall not at all times until paid be fully secured
by collateral pledged by Borrower. Guarantor hereby forever waives and
relinquishes In favor of Lender and Borrower, and their respective successors,
any claim or right to payment Guarantor may now have or hereafter have or
acquire against Borrower, by subrogation or otherwise, so that at no time shall
Guarantor be or become a "creditor" of Borrower within the meaning of 11 U.S.C.
section 547(b), or any successor provision of the Federal bankruptcy laws.
GUARANTOR'S RECEIPT OF PAYMENTS. Guarantor further agrees to refrain from
attempting to collect and/or enforce any of Guarantor's collection and/or
reimbursement rights against Borrower (or against any other guarantor, surety or
endorser of Borrower's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Borrower's then remaining Indebtedness In
favor of Lender Is fully paid and satisfied. In the event that Guarantor should
for any reason whatsoever receive any payment(s) from Borrower (or any other
guarantor, surety or endorser of Borrower's Indebtedness) that Borrower (or such
a third party) may owe to Guarantor for any of the reasons stated above,
Guarantor agrees to accept such payment(s) In trust for and on behalf of Lender,
advising Borrower (or the third party payee) of such fact. Guarantor further
unconditionally agrees to immediately deliver such funds to Lender, with such
funds being held by Guarantor over any interim period, In trust for Lender. In
the event that Guarantor should for any reason whatsoever receive any such funds
from Borrower (or any third party), and Guarantor should deposit such funds In
one or more of Guarantor's deposit accounts, no matter where located, Lender
shall have the right to attach any and all of Guarantors deposit accounts In
which such funds were deposited, whether or not such funds were commingled with
other monies of Guarantor, and whether or not such funds then remain on deposit
in such an account or accounts. To this end and to secure Guarantor's
obligations under this Agreement, Guarantor collaterally assigns and pledges to
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Lender, and grants to Lender a continuing security Interest In, any and all of
Guarantor's present and future rights, title and Interest In and to all monies
that Guarantor may now and/or In the future maintain on deposit with banks,
savings and loan associations and other entities (other than tax deferred
accounts with Lender), In which Guarantor may at any time deposit any such funds
that may be received from Borrower (or any other guarantor, endorser or surety
of Borrower's Indebtedness) In favor of Lender.
DEPOSIT ACCOUNTS. As collateral security for repayment of Guarantor's
obligations hereunder and under any additional guaranties previously granted or
to be granted by Guarantor In the future, and additionally as collateral
security for any present and future Indebtedness of Guarantor In favor of Lender
(with the exception of any Indebtedness under a consumer credit card account),
Guarantor Is granting Lender a continuing security Interest In any and all funds
that Guarantor may now and In the future have on deposit with Lender or In
certificates of deposit or other deposit accounts as- to which Guarantor is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Guarantor further agrees that Lender may at any time apply any funds
that Guarantor may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Guarantor Is an account holder against the
unpaid balance of any and all other present and future obligations and
Indebtedness of Guarantor to Lender, in principal, Interest, fees, costs,
expenses, and attorneys' fees.
ADDITIONAL COVENANTS. Guarantor agrees that Lender may, at its sole option, at
any time, and from time to time, without the consent of or notice to Guarantor,
or any of them, or to any other party, and without Incurring any responsibility
to Guarantor or to any other party, and without Impairing or releasing any of
Guarantor's obligations or liabilities under this Agreement:
(a) Make additional secured and/or unsecured loans to Borrower.
(b) Discharge, release or agree not to sue any party (including, but not
limited to, Borrower or any other guarantor, surety, or endorser of
Borrower's Indebtedness), who is or may be liable to Lender for any of
Borrower's Indebtedness.
(c) Sell, exchange, release, surrender, realize upon, or otherwise deal
with, In any manner and In any order, any collateral directly or Indirectly
securing repayment of any of Borrower's Indebtedness.
(d) After, renew, extend, accelerate, or otherwise change the manner,
place, terms and/or times of payment or other terms of Borrower's
Indebtedness, or any part thereof, Including any increase or decrease In
the rate or rates of Interest on any of Borrower's Indebtedness.
(e) Settle or compromise any of Borrower's Indebtedness.
(f) Subordinate and/or agree to subordinate the payment of all or any part
of Borrower's Indebtedness, or Lender's security rights In any collateral
directly or indirectly securing any such Indebtedness, to the payment
and/or security rights of any other present and/or future creditors of
Borrower.
(g) Apply any payments and/or proceeds to any of Borrower's Indebtedness In
such priority or with such preferences as Lender may determine In Its sole
discretion, regardless of which of Borrower's Indebtedness then remains
unpaid.
(h) Take or accept any other collateral security or guaranty for any or all
of Borrower's Indebtedness.
(i) Enter Into, deliver, modify, amend, or waive compliance with, any
Instrument or arrangement evidencing, securing or otherwise affecting. all
or any part of Borrower's Indebtedness.
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NO IMPAIRMENT OF GUARANTOR'S OBLIGATIONS. No course of dealing between Lender
and Borrower (or any other guarantor, surety or endorser of Borrower's
Indebtedness), nor any failure or delay on the part of Lender to exercise any of
Lender's rights and remedies under this Agreement or any other agreement or
agreements by and between Lender and Borrower (or any other guarantor, surety or
endorser), shall have the effect of Impairing or releasing Guarantor's
obligations and liabilities to Lender, or of waiving any of Lender's rights and
remedies under this Agreement or otherwise. Any partial exercise of any rights
and remedies granted to Lender shall furthermore not constitute a waiver of any
of Lender's other rights and remedies; It being Guarantor's Intent and agreement
that Lender's rights and remedies shall be cumulative In nature. Guarantor
further agrees that, should Borrower default under any of its Indebtedness, any
waiver or forbearance on the part of Lender to pursue Lender's available rights
and remedies shall be binding upon Lender only to the extent that Lender
specifically agrees to such waiver or forbearance In writing. A waiver or
forbearance on the part of Lender as to one event of default shall not
constitute a waiver or forbearance as to any other default.
NO RELEASE OF GUARANTOR. Guarantor's obligations and liabilities under this
Agreement shall not be released, Impaired, reduced, or otherwise affected by,
and shall continue In full force and effect notwithstanding the occurrence of
any event, Including without limitation any one or more of the following events:
(a) The death, insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution, or lack of authority
(whether corporate, partnership or trust) of Borrower (or any person acting
on Borrower's behalf), or of any other guarantor, surety or endorser of
Borrower's Indebtedness.
(b) Any payment by Borrower, or any other party, to Lender that Is held to
constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or any such amounts or payment which, for any reason.
Lender is required to refund or repay to Borrower or to any other person.
(c) Any dissolution of Borrower, or any sale, lease or transfer of all or
any part of Borrower's assets.
(d) Any failure of Lender to notify Guarantor of the making of additional
loans or other extensions of credit in reliance on this Agreement.
AUTOMATIC REINSTATEMENT. This Agreement and Guarantor's obligations and
liabilities hereunder shall continue to be effective, and/or shall automatically
and retroactively be reinstated, If a release or discharge has occurred, or It
at any time, any payment or part thereof to Lender with respect to any of
Borrower's Indebtedness, Is rescinded or must otherwise be restored by Lender
pursuant to any Insolvency, bankruptcy, reorganization, receivership, or any
other debt relief granted to Borrower or to any other party to Borrower's
Indebtedness or any such security therefor. In the event that Lender must
rescind or restore any payment received In total or partial satisfaction of
Borrower's Indebtedness, any prior release or discharge from the terms of this
Agreement given to Guarantor shall be without effect, and this Agreement and
Guarantor's obligations and liabilities hereunder shall automatically and
retroactively be renewed and/or reinstated and shall remain In full force and
affect to the same degree and extent as If such a release or discharge had never
been granted. It Is the Intention of Lender and Guarantor that Guarantor's
obligations and liabilities hereunder shall not be discharged except by
Guarantor's full and complete performance and satisfaction of such obligations
and liabilities; and then only to the extent of such performance.
REPRESENTATIONS AND WARRANTIES BY GUARANTOR. Guarantor represents and warrants
that:
(a) Guarantor has the lawful power to own Its properties and to engage In
Its business as presently conducted.
(b) Guarantor's guaranty of Borrower's Indebtedness and Guarantor's
execution, delivery and performance of this Agreement are not in violation
of any laws and will not result in a default under any contract, agreement,
or Instrument to which Guarantor is a party, or by which Guarantor or its
property may be bound.
(c) Guarantor has agreed and consented to execute this Agreement and to
guarantee Borrower's indebtedness in favor of Lender, at Borrower's request
and not at the request of Lender.
(d) Guarantor will receive and/or has received a direct or indirect
material benefit from the transactions contemplated herein and/or arising
out of Borrower's Indebtedness.
(e) This Agreement, when executed and delivered to Lender, will constitute
a valid, legal and binding obligation of Guarantor, enforceable In
accordance with its terms.
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(f) Guarantor has established adequate means of obtaining information from
Borrower on a continuing basis regarding Borrowers financial condition. (g)
Lander has made no representations to Guarantor as to the creditworthiness
of Borrower.
ADDITIONAL OBLIGATIONS OF GUARANTOR. So long as this Agreement remains In
effect, Guarantor has not and will not, without Lander's prior written consent,
sell, lease, assign, pledge, hypothecate, encumber, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets. Guarantor agrees to
keep adequately informed of any facts, events or circumstances which might In
any way affect Guarantor's risks under this Agreement. Guarantor further agrees
that Lender shall have no obligation to disclose to Guarantor any information or
material relating to Borrower or Borrower's Indebtedness.
ADDITIONAL DOCUMENTS; FINANCIAL STATEMENTS. Upon the reasonable request of
Lender, Guarantor will, at any time, and from time to time, execute and deliver
to Lander any and all such financial Instruments and documents, and supply such
additional Information, as may be necessary or advisable in the opinion of
Lander to obtain the full benefits of this Agreement. Guarantor further agrees
to provide Lender with such financial statements and other related Information
at such frequencies and In such detail as Lender may reasonably request.
TRANSFER OF INDEBTEDNESS. This Agreement Is for the benefit of Lender and for
such other person or persons as may from time to time become or be the holders
of all or any part of Borrowers Indebtedness. This Agreement shall be
transferrable and negotiable with the same force and effect and to the same
extent as Borrower's Indebtedness may be transferrable; It being understood and
agreed to by Guarantor that, upon any transfer or assignment of all or any part
of Borrower's Indebtedness, the holder of such Indebtedness shall have all of
the rights and remedies granted to Lander under this Agreement. Guarantor
further agrees that, upon any transfer of all or any portion of Borrower's
Indebtedness, Lander may transfer and deliver any and all collateral securing
repayment of such Indebtedness (including, but not limited to, any collateral
provided by Guarantor) to the transferee of such Indebtedness, and such
collateral shall secure any and all of Borrower's Indebtedness In favor of such
a transferee. Guarantor additionally agrees that, after any such transfer or
assignment has taken place, Lender shall be fully discharged from any and all
liability and responsibility to Borrower and Guarantor with respect to such
collateral, and the transferee thereafter shall be vested with all the powers
and rights with respect to such collateral.
CONSENT TO PARTICIPATION. Guarantor recognizes and agrees that Lender may, from
time to time, one or more times, transfer all or any part of Borrower's
Indebtedness through sales of participation Interests in such Indebtedness to
one or more third party lenders. Guarantor specifically agrees and consents to
all such transfers and assignments, and Guarantor further waives any subsequent
notice of such transfers and assignments as may be provided under Louisiana law.
Guarantor additionally agrees that the purchaser. of a participation Interest In
Borrower's Indebtedness will be considered as the absolute owner of a percentage
Interest of such Indebtedness and that such a purchaser will have all of the
rights granted under any participation agreement governing the sale of such a
participation interest. Guarantor waives any rights of offset that Guarantor may
have against Lender and/or any purchaser of such a participation Interest, and
Guarantor unconditionally agrees that either Lander or such a purchaser may
enforce Guarantor's obligations and liabilities und6r this Agreement,
irrespective of the failure or Insolvency of Lender or any such purchaser.
NOTICES. Any notice provided in this Agreement must be in writing and will be
considered as given on the day It is delivered by hand or deposited in the U.S.
mail, postage prepaid, addressed to the person to whom the notice is to be given
at the address shown above or at such other addresses as any party may designate
to the other in writing. If there is more than one Guarantor under this
Agreement, notice to any Guarantor shall constitute notice to all Guarantors.
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ADDITIONAL GUARANTIES. Guarantor recognizes and agrees that Guarantor may have
previously granted, and may in the future grant, one or more additional
guaranties of Borrower's Indebtedness In favor of Lander. Should this occur, the
execution of this Agreement and any additional guaranties on the part of
Guarantor will not be construed as a cancellation of this Agreement or any of
Guarantor's additional guaranties; it being Guarantor's full intent and
agreement that all such guaranties of Borrower's Indebtedness in favor of Lander
shall remain In full force and effect and shall be cumulative in nature and
effect.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendment. No amendment, modification, consent or waiver of any provision
of this Agreement, and no consent to any departure by Guarantor therefrom,
shall be effective unless the same shall be in writing signed by a duly
authorized officer of Lender, and then shall be effective only as to the
specific instance and for the specific purpose for which given.
Caption Headings. Caption headings of the sections of this Agreement are
for convenience purposes only and are not to be used to interpret or to
define their provisions. In this Agreement, whenever the context so
requires, the singular Includes the plural and the plural also includes the
singular.
Severability. If any provision of this Agreement Is held to be illegal,
Invalid or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable. This Agreement shall
be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it. and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be
affected by the illegal, Invalid or unenforceable provision or by Its
severance herefrom. Furthermore. In lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of
this Agreement, a provision as similar In terms to such illegal, Invalid or
unenforceable provision as may be possible and legal, valid and
enforceable.
Successors and Assigns Bound. Guarantor's obligations and liabilities under
this Agreement shall be binding upon Guarantor's successors. heirs,
legatees, devisees, administrators, executors and assigns.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED. NO
FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED MARCH 11, 1997.
GUARANTOR
/S/ Stephen F. Owens
- -----------------------
Stephen F. Owens
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Exhibit 10.4(e)
---------------
COMMERCIAL GUARANTY
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
Guarantor: ANGELA M. RAIDL
1951 Tavern Road
Alpine, CA 70570
AMOUNT OF GUARANTY. The amount of this Guaranty Is Unlimited.
DEFINITIONS. The following terms shall have the following meanings when used in
this Agreement:
Agreement. The word "Agreement" means this Guaranty Agreement as this
Agreement may be amended or modified from time to time.
Borrower. The word "Borrower" means Individually, collectively and
Interchangeably AMERICAN FIRE RETARDANT CORPORATION.
Guarantor. The word "Guarantor" means Individually, collectively and
Interchangeably ANGELA M. RAIDL and all other persons guaranteeing payment
and satisfaction of Borrower's Indebtedness as hereinafter defined.
Indebtedness. The word "Indebtedness" means Individually, collectively,
Interchangeably and without limitation any and all present and future
loans, loan advances, extensions of credit, obligations and/or liabilities
that Borrower may now and/or In the future owe to and/or Incur In favor of
Lender, whether direct or Indirect, or by way of assignment or purchase of
a participation interest, and whether absolute or contingent, voluntary or
involuntary, determined or undetermined, liquidated or unliquidated, due or
to become due, secured or unsecured, and whether Borrower may be liable
Individually, jointly or solidarity with others, whether primarily or
secondarily, or as a guarantor or otherwise, and whether now existing or
hereafter arising, of every nature and kind whatsoever, in principal,
Interest, costs, expenses and attorneys' fees and other fees and charges,
Including without limitation Borrower's Indebtedness and obligations under
a certain promissory note In favor of Lender dated March 11, 1997 In the
fixed principal amount of U.S. $100,090.00.
Lender. The word "Lender" means ST. MARTIN BANK & TRUST COMPANY, Lafayette
Office TIN: 720307850, its successors and assigns, and any subsequent
holder or holders of Borrower's Indebtedness.
GUARANTEE OF BORROWER'S INDEBTEDNESS. Guarantor hereby absolutely and
unconditionally agrees to, and by these presents does hereby, guarantee the
prompt and punctual payment, performance and satisfaction of any and all of
Borrower's present and future Indebtedness In favor of Lender.
CONTINUING GUARANTY. THIS IS A CONTINUING GUARANTY AGREEMENT UNDER WHICH
GUARANTOR AGREES TO GUARANTEE PAYMENT OF BORROWER'S PRESENT AND FUTURE
INDEBTEDNESS IN FAVOR OF LENDER ON A CONTINUING BASIS. Guarantor's obligations
and liability under this Agreement shall be open and continuous In effect.
Guarantor intends to and does hereby guarantee at all times the prompt and
punctual payment, performance and satisfaction of all of Borrower's present and
future Indebtedness in favor of Lender. Accordingly, any payments made on
Borrowers Indebtedness will not discharge or diminish the obligations and
liability of Guarantor under this Agreement for any remaining and succeeding
Indebtedness of Borrower In favor of Lender.
JOINT, SEVERAL AND SOLIDARY LIABILITY. Guarantor's obligations and liability
under this Agreement shall be on a "solidary" or "joint and several" basis along
with Borrower to the same degree and extent as if Guarantor had been and/or will
be a co-borrower, co-principal obligor and/or co-maker of Borrower's
Indebtedness. In the event that there is more than one Guarantor under this
Agreement, or In the event that there are other guarantors, endorsers or
sureties of all or any portion of Borrower's Indebtedness, Guarantor's
obligations and liability hereunder shall further be on a "solidary" or "joint
and several" basis along with such other guarantors, endorsers and/or sureties.
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DURATION OF GUARANTY. This Agreement and Guarantor's obligations and liability
hereunder shall remain In full force and effect until such time as this
Agreement may be cancelled or otherwise terminated by Lender under a written
cancellation instrument in favor of Guarantor (subject to the automatic
reinstatement provisions hereinbelow). It is anticipated that fluctuations may
occur In the aggregate amount of Borrower's Indebtedness guaranteed under this
Agreement and it is specifically acknowledged and agreed to by Guarantor that
reductions In the amount of Borrower's Indebtedness, even to zero ($0.00)
dollars, prior to Lender's written cancellation of this Agreement, shall not
constitute or give rise to a termination of this Agreement.
CANCELLATION OF AGREEMENT; EFFECT. Unless otherwise Indicated under such a
written cancellation instrument, Lender's agreement to terminate or otherwise
cancel this Agreement shall affect only, and shall be expressly limited to,
Guarantor's continuing obligations and liability to guarantee Borrowers
Indebtedness incurred, originated and/or extended (without prior commitment)
after the date of such a written cancellation instrument; with Guarantor
remaining fully obligated and liable under this Agreement for any and all of
Borrower's Indebtedness Incurred, originated, extended, or committed to prior to
the date of such a written cancellation Instrument. Nothing under this Agreement
or under any other agreement or understanding by and between Guarantor and
Lender, shall In any way obligate, or be construed to obligate, Lender to agree
to the subsequent termination or cancellation of Guarantor's obligations and
liability hereunder; it being fully understood and agreed to by Guarantor that
Lender has and intends to continue to rely on Guarantor's assets, Income and
financial resources In extending credit and other Indebtedness to and In favor
of Borrower. and that to release Guarantor from Guarantor's continuing
obligations and liabilities under this Agreement would so prejudice Lender that
Lender may, within its sole and uncontrolled discretion and judgment, refuse to
release Guarantor from any of its continuing obligations and liability under
this Agreement for any reason whatsoever as long as any of Borrowers
Indebtedness remains unpaid and outstanding, or otherwise.
DEFAULT. Should any event of default occur or exist under any of Borrower's
indebtedness In favor of Lender, Guarantor unconditionally and absolutely agrees
to pay Lender the then unpaid amount of Borrower's Indebtedness, In principal,
Interest, costs, expenses, attorneys' fees and other fees and charges. Such
payment or payments shall be made at Lender's offices Indicated above,
Immediately following demand by Lender.
GUARANTOR'S WAIVERS. Guarantor hereby waives:
(a) Notice of Lender's acceptance of this Agreement.
(b) Presentment for payment of Borrower's Indebtedness, notice of dishonor
and of nonpayment, notice of Intention to accelerate, notice of
acceleration, protest and notice of protest, collection or Institution of
any suit or other action by Lender In collection thereof, Including any
notice of default in payment thereof, or other notice to, or demand for
payment thereof, on any party.
(c) Any right to require Lender to notify Guarantor of any nonpayment
relating to any collateral directly or Indirectly securing Borrower's
Indebtedness, or notice of any action or nonaction on the part of Borrower,
Lender, or any other guarantor, surety or endorser of Borrower's
Indebtedness, or notice of the creation of any new or additional
Indebtedness subject to this Agreement
(d) Any rights to demand or require collateral security from the Borrower
or any other person as provided under applicable Louisiana law or
otherwise.
(e) Any right to require Lender to notify Guarantor of the terms, time and
place of any public or private sale of any collateral directly or
Indirectly securing Borrower's Indebtedness.
(f) Any "one action" or "anti-deficiency" law or any other law which may
prevent Lender from bringing any action, Including a claim for deficiency,
against Guarantor, before or after Lender's commencement or completion of
any foreclosure action. or any action In lieu of foreclosure.
(g) Any election of remedies by Lender that may destroy or Impair
Guarantor's subrogation rights or Guarantor's right to proceed for
reimbursement against Borrower or any other guarantor, surety or endorser
of Borrower's Indebtedness, Including without limitation, any loss of
rights Guarantor may suffer by reason of any law limiting, qualifying, or
discharging Borrowers Indebtedness.
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(h) Any disability or other defense of Borrower, or any other guarantor,
surety or endorser, or any other person, or by reason of the cessation from
any cause whatsoever, other than payment In full of Borrower's
Indebtedness.
(i) Any statute of limitations or prescriptive period, it at the time an
action or suit brought by Lender against Guarantor Is commenced, there is
any outstanding Indebtedness of Borrower to Lender which is barred by any
applicable statute of limitations or prescriptive period.
Guarantor warrants and agrees that each of the waivers set forth above Is made
with Guarantor's full knowledge of Its significance and consequences, and that,
under the circumstances. such waivers are reasonable and not contrary to public
policy or law. If any such waiver Is determined to be contrary to any applicable
law or public policy, such waiver shall be effective only to the extent
permitted by law.
GUARANTOR'S SUBORDINATION OF RIGHTS. In the event that Guarantor should for any
reason (a) advance or lend monies to Borrower, whether or not such funds are
used by Borrower to make payment(s) under Borrower's Indebtedness, and/or (b)
make any payment(s) to Lender or others for obligations and liabilities under
this Agreement, and/or (d) If any of Guarantor's property is used to pay or
satisfy any of Borrowers Indebtedness, Guarantor hereby agrees that any and all
rights that Guarantor may have or acquire to collect from or to be reimbursed by
Borrower (or from or by any other guarantor, endorser or surety of Borrower's
Indebtedness), whether Guarantor's rights of collection or reimbursement arise
by way of subrogation to the rights of Lender or otherwise, shall In all
respects, whether or not Borrower Is presently or subsequently becomes
Insolvent, be subordinate, Inferior and junior to the rights of Lender to
collect and enforce payment, performance and satisfaction of Borrower's then
remaining Indebtedness, until such time as Borrower's Indebtedness Is fully paid
and satisfied. In the event of Borrower's Insolvency or consequent liquidation
of Borrower's assets, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of claims of both Lender and Guarantor shall be paid
to Lender and shall be first applied by Lender to Borrowers then remaining
Indebtedness. Guarantor hereby assigns to Lender all claims which it may have or
acquire against Borrower or any assignee or trustee of Borrower In bankruptcy;
provided that, such assignment shall be effective only for the purpose of
assuring to Lender full payment of Borrower's Indebtedness guaranteed under this
Agreement. If now or hereafter (a) Borrower shall be or become Insolvent, and
(b) Borrower's Indebtedness shall not at all times until paid be fully secured
by collateral pledged by Borrower. Guarantor hereby forever waives and
relinquishes In favor of Lender and Borrower, and their respective successors,
any claim or right to payment Guarantor may now have or hereafter have or
acquire against Borrower, by subrogation or otherwise, so that at no time shall
Guarantor be or become a "creditor" of Borrower within the meaning of 11 U.S.C.
section 547(b), or any successor provision of the Federal bankruptcy laws.
GUARANTOR'S RECEIPT OF PAYMENTS. Guarantor further agrees to refrain from
attempting to collect and/or enforce any of Guarantor's collection and/or
reimbursement rights against Borrower (or against any other guarantor, surety or
endorser of Borrower's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Borrower's then remaining Indebtedness In
favor of Lender Is fully paid and satisfied. In the event that Guarantor should
for any reason whatsoever receive any payment(s) from Borrower (or any other
guarantor, surety or endorser of Borrower's Indebtedness) that Borrower (or such
a third party) may owe to Guarantor for any of the reasons stated above,
Guarantor agrees to accept such payment(s) In trust for and on behalf of Lender,
advising Borrower (or the third party payee) of such fact. Guarantor further
unconditionally agrees to immediately deliver such funds to Lender, with such
funds being held by Guarantor over any interim period, In trust for Lender. In
the event that Guarantor should for any reason whatsoever receive any such funds
from Borrower (or any third party), and Guarantor should deposit such funds In
one or more of Guarantor's deposit accounts, no matter where located, Lender
shall have the right to attach any and all of Guarantors deposit accounts In
which such funds were deposited, whether or not such funds were commingled with
other monies of Guarantor, and whether or not such funds then remain on deposit
in such an account or accounts. To this end and to secure Guarantor's
obligations under this Agreement, Guarantor collaterally assigns and pledges to
Lender, and grants to Lender a continuing security Interest In, any and all of
Guarantor's present and future rights, title and Interest In and to all monies
that Guarantor may now and/or In the future maintain on deposit with banks,
savings and loan associations and other entities (other than tax deferred
accounts with Lender), In which Guarantor may at any time deposit any such funds
that may be received from Borrower (or any other guarantor, endorser or surety
of Borrower's Indebtedness) In favor of Lender.
Page 3
<PAGE>
DEPOSIT ACCOUNTS. As collateral security for repayment of Guarantor's
obligations hereunder and under any additional guaranties previously granted or
to be granted by Guarantor In the future, and additionally as collateral
security for any present and future Indebtedness of Guarantor In favor of Lender
(with the exception of any Indebtedness under a consumer credit card account),
Guarantor Is granting Lender a continuing security Interest In any and all funds
that Guarantor may now and In the future have on deposit with Lender or In
certificates of deposit or other deposit accounts as- to which Guarantor is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Guarantor further agrees that Lender may at any time apply any funds
that Guarantor may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Guarantor Is an account holder against the
unpaid balance of any and all other present and future obligations and
Indebtedness of Guarantor to Lender, in principal, Interest, fees, costs,
expenses, and attorneys' fees.
ADDITIONAL COVENANTS. Guarantor agrees that Lender may, at its sole option, at
any time, and from time to time, without the consent of or notice to Guarantor,
or any of them, or to any other party, and without Incurring any responsibility
to Guarantor or to any other party, and without Impairing or releasing any of
Guarantor's obligations or liabilities under this Agreement:
(a) Make additional secured and/or unsecured loans to Borrower.
(b) Discharge, release or agree not to sue any party (including, but not
limited to, Borrower or any other guarantor, surety, or endorser of
Borrower's Indebtedness), who is or may be liable to Lender for any of
Borrower's Indebtedness.
(c) Sell, exchange, release, surrender, realize upon, or otherwise deal
with, In any manner and In any order, any collateral directly or Indirectly
securing repayment of any of Borrower's Indebtedness.
(d) After, renew, extend, accelerate, or otherwise change the manner,
place, terms and/or times of payment or other terms of Borrower's
Indebtedness, or any part thereof, Including any increase or decrease In
the rate or rates of Interest on any of Borrower's Indebtedness.
(e) Settle or compromise any of Borrower's Indebtedness.
(f) Subordinate and/or agree to subordinate the payment of all or any part
of Borrower's Indebtedness, or Lender's security rights In any collateral
directly or indirectly securing any such Indebtedness, to the payment
and/or security rights of any other present and/or future creditors of
Borrower.
(g) Apply any payments and/or proceeds to any of Borrower's Indebtedness In
such priority or with such preferences as Lender may determine In Its sole
discretion, regardless of which of Borrower's Indebtedness then remains
unpaid.
(h) Take or accept any other collateral security or guaranty for any or all
of Borrower's Indebtedness.
(i) Enter Into, deliver, modify, amend, or waive compliance with, any
Instrument or arrangement evidencing, securing or otherwise affecting. all
or any part of Borrower's Indebtedness.
NO IMPAIRMENT OF GUARANTOR'S OBLIGATIONS. No course of dealing between Lender
and Borrower (or any other guarantor, surety or endorser of Borrower's
Indebtedness), nor any failure or delay on the part of Lender to exercise any of
Lender's rights and remedies under this Agreement or any other agreement or
agreements by and between Lender and Borrower (or any other guarantor, surety or
endorser), shall have the effect of Impairing or releasing Guarantor's
obligations and liabilities to Lender, or of waiving any of Lender's rights and
remedies under this Agreement or otherwise. Any partial exercise of any rights
and remedies granted to Lender shall furthermore not constitute a waiver of any
of Lender's other rights and remedies; It being Guarantor's Intent and agreement
that Lender's rights and remedies shall be cumulative In nature. Guarantor
further agrees that, should Borrower default under any of its Indebtedness, any
waiver or forbearance on the part of Lender to pursue Lender's available rights
and remedies shall be binding upon Lender only to the extent that Lender
specifically agrees to such waiver or forbearance In writing. A waiver or
forbearance on the part of Lender as to one event of default shall not
constitute a waiver or forbearance as to any other default.
Page 4
<PAGE>
NO RELEASE OF GUARANTOR. Guarantor's obligations and liabilities under this
Agreement shall not be released, Impaired, reduced, or otherwise affected by,
and shall continue In full force and effect notwithstanding the occurrence of
any event, Including without limitation any one or more of the following events:
(a) The death, insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution, or lack of authority
(whether corporate, partnership or trust) of Borrower (or any person acting
on Borrower's behalf), or of any other guarantor, surety or endorser of
Borrower's Indebtedness.
(b) Any payment by Borrower, or any other party, to Lender that Is held to
constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or any such amounts or payment which, for any reason.
Lender is required to refund or repay to Borrower or to any other person.
(c) Any dissolution of Borrower, or any sale, lease or transfer of all or
any part of Borrower's assets.
(d) Any failure of Lender to notify Guarantor of the making of additional
loans or other extensions of credit in reliance on this Agreement.
AUTOMATIC REINSTATEMENT. This Agreement and Guarantor's obligations and
liabilities hereunder shall continue to be effective, and/or shall automatically
and retroactively be reinstated, If a release or discharge has occurred, or It
at any time, any payment or part thereof to Lender with respect to any of
Borrower's Indebtedness, Is rescinded or must otherwise be restored by Lender
pursuant to any Insolvency, bankruptcy, reorganization, receivership, or any
other debt relief granted to Borrower or to any other party to Borrower's
Indebtedness or any such security therefor. In the event that Lender must
rescind or restore any payment received In total or partial satisfaction of
Borrower's Indebtedness, any prior release or discharge from the terms of this
Agreement given to Guarantor shall be without effect, and this Agreement and
Guarantor's obligations and liabilities hereunder shall automatically and
retroactively be renewed and/or reinstated and shall remain In full force and
affect to the same degree and extent as If such a release or discharge had never
been granted. It Is the Intention of Lender and Guarantor that Guarantor's
obligations and liabilities hereunder shall not be discharged except by
Guarantor's full and complete performance and satisfaction of such obligations
and liabilities; and then only to the extent of such performance.
REPRESENTATIONS AND WARRANTIES BY GUARANTOR. Guarantor represents and warrants
that:
(a) Guarantor has the lawful power to own Its properties and to engage In
Its business as presently conducted.
(b) Guarantor's guaranty of Borrower's Indebtedness and Guarantor's
execution, delivery and performance of this Agreement are not in violation
of any laws and will not result in a default under any contract, agreement,
or Instrument to which Guarantor is a party, or by which Guarantor or its
property may be bound.
(c) Guarantor has agreed and consented to execute this Agreement and to
guarantee Borrower's indebtedness in favor of Lender, at Borrower's request
and not at the request of Lender.
(d) Guarantor will receive and/or has received a direct or indirect
material benefit from the transactions contemplated herein and/or arising
out of Borrower's Indebtedness.
(e) This Agreement, when executed and delivered to Lender, will constitute
a valid, legal and binding obligation of Guarantor, enforceable In
accordance with its terms.
(f) Guarantor has established adequate means of obtaining information from
Borrower on a continuing basis regarding Borrowers financial condition. (g)
Lander has made no representations to Guarantor as to the creditworthiness
of Borrower.
ADDITIONAL OBLIGATIONS OF GUARANTOR. So long as this Agreement remains In
effect, Guarantor has not and will not, without Lander's prior written consent,
sell, lease, assign, pledge, hypothecate, encumber, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets. Guarantor agrees to
keep adequately informed of any facts, events or circumstances which might In
any way affect Guarantor's risks under this Agreement. Guarantor further agrees
that Lender shall have no obligation to disclose to Guarantor any information or
material relating to Borrower or Borrower's Indebtedness.
Page 5
<PAGE>
ADDITIONAL DOCUMENTS; FINANCIAL STATEMENTS. Upon the reasonable request of
Lender, Guarantor will, at any time, and from time to time, execute and deliver
to Lander any and all such financial Instruments and documents, and supply such
additional Information, as may be necessary or advisable in the opinion of
Lander to obtain the full benefits of this Agreement. Guarantor further agrees
to provide Lender with such financial statements and other related Information
at such frequencies and In such detail as Lender may reasonably request.
TRANSFER OF INDEBTEDNESS. This Agreement Is for the benefit of Lender and for
such other person or persons as may from time to time become or be the holders
of all or any part of Borrowers Indebtedness. This Agreement shall be
transferrable and negotiable with the same force and effect and to the same
extent as Borrower's Indebtedness may be transferrable; It being understood and
agreed to by Guarantor that, upon any transfer or assignment of all or any part
of Borrower's Indebtedness, the holder of such Indebtedness shall have all of
the rights and remedies granted to Lander under this Agreement. Guarantor
further agrees that, upon any transfer of all or any portion of Borrower's
Indebtedness, Lander may transfer and deliver any and all collateral securing
repayment of such Indebtedness (including, but not limited to, any collateral
provided by Guarantor) to the transferee of such Indebtedness, and such
collateral shall secure any and all of Borrower's Indebtedness In favor of such
a transferee. Guarantor additionally agrees that, after any such transfer or
assignment has taken place, Lender shall be fully discharged from any and all
liability and responsibility to Borrower and Guarantor with respect to such
collateral, and the transferee thereafter shall be vested with all the powers
and rights with respect to such collateral.
CONSENT TO PARTICIPATION. Guarantor recognizes and agrees that Lender may, from
time to time, one or more times, transfer all or any part of Borrower's
Indebtedness through sales of participation Interests in such Indebtedness to
one or more third party lenders. Guarantor specifically agrees and consents to
all such transfers and assignments, and Guarantor further waives any subsequent
notice of such transfers and assignments as may be provided under Louisiana law.
Guarantor additionally agrees that the purchaser. of a participation Interest In
Borrower's Indebtedness will be considered as the absolute owner of a percentage
Interest of such Indebtedness and that such a purchaser will have all of the
rights granted under any participation agreement governing the sale of such a
participation interest. Guarantor waives any rights of offset that Guarantor may
have against Lender and/or any purchaser of such a participation Interest, and
Guarantor unconditionally agrees that either Lander or such a purchaser may
enforce Guarantor's obligations and liabilities und6r this Agreement,
irrespective of the failure or Insolvency of Lender or any such purchaser.
NOTICES. Any notice provided in this Agreement must be in writing and will be
considered as given on the day It is delivered by hand or deposited in the U.S.
mail, postage prepaid, addressed to the person to whom the notice is to be given
at the address shown above or at such other addresses as any party may designate
to the other in writing. If there is more than one Guarantor under this
Agreement, notice to any Guarantor shall constitute notice to all Guarantors.
ADDITIONAL GUARANTIES. Guarantor recognizes and agrees that Guarantor may have
previously granted, and may in the future grant, one or more additional
guaranties of Borrower's Indebtedness In favor of Lander. Should this occur, the
execution of this Agreement and any additional guaranties on the part of
Guarantor will not be construed as a cancellation of this Agreement or any of
Guarantor's additional guaranties; it being Guarantor's full intent and
agreement that all such guaranties of Borrower's Indebtedness in favor of Lander
shall remain In full force and effect and shall be cumulative in nature and
effect.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendment. No amendment, modification, consent or waiver of any provision
of this Agreement, and no consent to any departure by Guarantor therefrom,
shall be effective unless the same shall be in writing signed by a duly
authorized officer of Lender, and then shall be effective only as to the
specific instance and for the specific purpose for which given.
Caption Headings. Caption headings of the sections of this Agreement are
for convenience purposes only and are not to be used to interpret or to
define their provisions. In this Agreement, whenever the context so
requires, the singular Includes the plural and the plural also includes the
singular.
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<PAGE>
Severability. If any provision of this Agreement Is held to be illegal,
Invalid or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable. This Agreement shall
be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it. and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be
affected by the illegal, Invalid or unenforceable provision or by Its
severance herefrom. Furthermore. In lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of
this Agreement, a provision as similar In terms to such illegal, Invalid or
unenforceable provision as may be possible and legal, valid and
enforceable.
Successors and Assigns Bound. Guarantor's obligations and liabilities under
this Agreement shall be binding upon Guarantor's successors. heirs,
legatees, devisees, administrators, executors and assigns.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED. NO
FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED MARCH 11, 1997.
GUARANTOR
/S/ Angela M. Raidl
- -----------------------
Angela M. Raidl
Page 7
Exhibit 10.4(f)
---------------
PROMISSORY NOTE
Principal Loan Date Maturity Loan No. Call
$250,040.00 05-21-1997 05-21-1998 5010001202 B
- -------------------------------------------------------------------------------
Collateral Account Officer Initials
030 011J
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
- -------------------------------------------------------------------------------
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307860
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
===============================================================================
Principal Amount: $250,040.00 Initial Rate: 11.7500% Date of Note: May 21, 1997
===============================================================================
PROMISE TO PAY. AMERICAN FIRE RETARDANT CORPORATION ("Borrower") promises to pay
to the order of ST. MARTIN BANK & TRUST COMPANY ("Lender"), In lawful money of
the United States of America the sum of Two Hundred Fifty Thousand Forty &
00/100 Dollars (U.S. $250,040.00) or such other or lesser amounts as may be
reflected from time to time on the books and records of Lender as evidencing the
aggregate unpaid principal balance of loan advances made to Borrower on a
revolving line of credit basis as provided below, together with simple Interest
assessed on a variable rate basis at the rate per annum equal to 2.000
percentage points over the Index provided below, as the Index under this Note
may be adjusted from time to time, one or more times, with Interest being
assessed on the unpaid principal balance of this Note as outstanding from time
to time, commencing on May 21, 1998 and continuing until this Note is paid In
full, or until default under this Note with Interest thereafter being subject to
the default interest rate provisions set forth herein.
LINE OF CREDIT. This Note evidences a revolving a line of credit "master note".
Advances under this Note, as well as directions for payment from Borrower's
accounts, may be requested orally or In writing by Borrower or by an authorized
person. Lender may, but need not, require that all oral requests be confirmed in
writing. The following party or parties are authorized to request advances under
the line of credit until Lender receives from Borrower at Lender's address shown
above written notice of revocation of their authority: EDWARD E FRILOUX, SR.,
SENIOR VICE PRESIDENT. Borrower agrees to be liable for all sums either (a)
advanced In accordance with the Instructions of an authorized person or (b)
credited to any of Borrowers deposit accounts with Lender. -The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on this
Note or by Lender's Internal records, Including daily computer print-outs.
Lender will have no obligation to advance funds under this Note If: (a) Borrower
or any guarantor Is In default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, Including any agreement made In
connection with the signing of this Note; (b) Borrower or any guarantor ceases
doing business or Is Insolvent; (c) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; (d) Borrower has applied funds provided pursuant to
this Note for purposes other than those acceptable to Lender; or (a) Lender In
good faith deems Itself Insecure under this Note or any other agreement between
Lender and Borrower.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in one
payment of all outstanding principal plus all accrued unpaid Interest on August
21, 1998. In addition, Borrower will pay regular monthly payments of accrued
unpaid Interest beginning Jun e21, 1998, and all subsequent Interest payments
are due on the some day of each month after that until this Note is paid In
full. Interest on this Note Is computed on a 365/360 simple Interest basis; that
Is, by applying the ratio to the annual Interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance Is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate In
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid Interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
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<PAGE>
VARIABLE INTEREST RATE. The Interest rate on this Note Is subject to change from
time to time based on changes in an Index which is the ST MARTIN BANK PRIME RATE
ADJUSTED DAILY (the "Index"). The Index Is not necessarily the lowest rate
charged by Lender on Its loans and Is set by Lender In Its sole discretion. If
the Index becomes unavailable during the term of this loan, Lender may designate
a substitute Index after notifying Borrower. Lender will tell Borrower the
current Index rate upon Borrowers request. Borrower understands that Lender may
make loans based on other rates as well. The Interest rate change will not occur
more often than each DAY. The Index currently Is 9.500% per annum. The Interest
rate to be applied to the unpaid principal balance of this Note will be at a
rate of 2.000 percentage points over the Index, resulting In an Initial rate of
11.500% per annum. Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may prepay this Note in full at any time by paying the then
unpaid principal balance of this Note, plus' accrued simple Interest and any
unpaid late charges through date of prepayment. If Borrower prepays this Note in
full, or if Lender accelerates payment, Borrower understands that unless
otherwise required by law, any prepaid fees or charges will not be subject to
rebate and will be earned by Lender at the time this Note is signed. Unless
otherwise agreed to in writing, early payments under this Note will not relieve
Borrower of Borrower's obligation to continue to a regularly scheduled payments
under the above payment schedule. Early payments will instead reduce the
principal balance due, and Borrower may be required to make fewer payments under
this Note.
LATE CHARGE. If Borrower falls to pay any payment under this Note In full within
10 days of when due, Borrower agrees to pay Lender a late payment fee in an
amount equal to 5.000% of the unpaid amount of the payment, or U.S. $15.00,
whichever is less, with a maximum of $16.00. Late charges will not be assessed
following declaration of default and acceleration of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute default events
under this Note:
Default Under This Note. Should Borrower default in the payment of
principal and/or Interest under this Note.
Default Under Security Agreements. Should Borrower or any guarantor
violate, or fall to comply fully with any of the terms and conditions of,
or default under any security right, instrument, document, or agreement
directly or indirectly securing repayment of this Note.
Other Defaults In Favor of Lender. Should Borrower or any guarantor of this
Note default under any other loan, extension of credit, security right,
instrument, document, or agreement, or obligation in favor of Lender.
Default In Favor of Third Parties. Should Borrower or any guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may affect any property or other collateral directly or indirectly
securing repayment of this Note.
Insolvency. Should the suspension, failure or insolvency, however
evidenced, of Borrower or any guarantor of this Note occur or exist.
Death or Interdiction. Should any guarantor of this Note die or be
interdicted.
Readjustment of Indebtedness. Should proceedings for readjustment of
indebtedness, reorganization, bankruptcy, composition or extension under
any insolvency law be brought by or against Borrower or any guarantor.
Assignment for Benefit of Creditors. Should Borrower or any guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
Receivership. Should a receiver of all or any part of Borrower's property,
or the property of any guarantor, be applied for or appointed.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Borrower or any guarantor be commenced.
False Statements. Should any representation, warranty, or material
statement of Borrower or any guarantor made in connection with the
obtaining of the loan evidenced by this Note or any security agreement
directly or indirectly securing repayment of this Note, prove to be
incorrect or misleading in any respect.
Page 2
<PAGE>
Material Adverse Change. Should any material adverse change occur in the
financial condition of Borrower or any guarantor of this Note or should any
material discrepancy exist between the financial statements submitted by
Borrower or any guarantor and the actual financial condition of Borrower or
such guarantor.
Insecurity. Should Lender deem itself to be insecure with regard to
repayment of this Note.
LENDER'S RIGHTS UPON DEFAULT. Should any one or more default events occur or
exist under this Note as provided above, Lender shall have the right, at its
sole option, to declare formally this Note to be In default and to accelerate
the maturity and Insist upon Immediate payment In full of the unpaid principal
balance then outstanding under this Note, plus accrued Interest, together with
reasonable attorneys' fees, costs, expenses and other fees and charges as
provided herein. Lender shall have the further right, again at its sole option,
to declare formal default and to accelerate the maturity and to insist upon
immediate payment in full of each and every other loan, extension of credit,
debt, liability and/or obligation of every nature and kind that Borrower may
then owe to Lender, whether direct or indirect or by way of assignment, and
whether absolute or contingent, liquidated or unliquidated, voluntary or
involuntary, determined or undetermined, secured or unsecured, whether Borrower
is obligated alone or with others on a "solidary" or "Joint and several" basis,
as a principal obligor or otherwise, all without further notice or demand,
unless Lender shall otherwise elect.
INTEREST AFTER DEFAULT. If Lender declares this Note to be default, Lender has
the right prospectively to adjust and fix the simple interest rate under this
Note until this Note is paid in full, as follows: (1) If the original principal
amount of this Note Is $250,000 or less, the fixed default Interest rate shall
be equal to eighteen (18%) percent per annum, or three (3%) per cent per annum
in excess of the interest rate under this Note, whichever is greater.
ATTORNEYS' FEES. If Lender refers this Note to an attorney for collection, or
files suit against Borrower to collect this Note, or if Borrower files for
bankruptcy or other relief from creditors, Borrower agrees to pay Lender's
reasonable attorneys' fees in an amount not exceeding 25.000% of the unpaid debt
then owing under this Note.
NSF CHECK CHARGES. In the event that Borrower makes any payment under this Note
by check and Borrowers check is returned to Lender unpaid due to nonsufficient
funds in my deposit account, Borrower agrees to pay Lender an additional NSF
check charge equal to $15.00.
DEPOSIT ACCOUNTS. As collateral security for repayment of this Note and all
renewals and extensions, as well as to secure any and all other loans, notes,
indebtedness and obligations that Borrower (or any of them) may now and in the
future owe to Lender or incur in Lender's favor, whether direct or Indirect,
absolute or contingent, due or to become due, of any nature and kind whatsoever
(with the exception of any Indebtedness under a consumer credit card account),
Borrower is granting Lender a continuing security interest in any and all funds
that Borrower may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that Lender may at any time apply any funds
that Borrower may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Borrower is an account holder against the
unpaid balance of this Note and any and all other present and future
indebtedness and obligations that Borrower (or any of them) may then owe to
Lender, in principal, interest, fees, costs, expenses, and attorneys' fees.
COLLATERAL. This Note is secured by: UCC Financing Statement Collateral.
Collateral securing other loans with Lender may also secure this Note as the
result of cross-collateralization.
FINANCIAL STATEMENTS. Borrower agrees to provide Lender. with such financial
statements and other related information at such frequencies and in such detail
as Lender may reasonably request.
GOVERNING LAW. Borrower agrees that this Note and the loan evidenced hereby
shall be governed under the laws of the State of Louisiana. Specifically, this
business or commercial Note is subject to La. R.S. 9:3509 at seq.
Page 3
<PAGE>
WAIVERS. Borrower and each guarantor of this Note hereby waive demand,
presentment for payment, protest, notice of protest and notice of nonpayment,
and all pleas of division and discussion, and severally agree that their
obligations and liabilities to Lender hereunder shall be on a "solidary" or
"Joint and several" basis. Borrower and each guarantor further severally agree
that discharge or release of any party who is or may be liable to Lender for the
Indebtedness represented hereby, or the release of any collateral directly or
Indirectly securing repayment hereof, shall not have the effect of releasing any
other party or parties, who shall remain liable to Lender, or of releasing any
other collateral that is not expressly released by Lender. Borrower and each
guarantor additionally agree that Lender's acceptance of payment other than in
accordance with the terms of this Note, or Lender's subsequent agreement to
extend or modify such repayment terms, or Lenders failure or delay in exercising
any rights or remedies granted to Lender, shall likewise not have the effect of
releasing Borrower or any other party or parties from their respective
obligations to Lender, or of releasing any collateral that directly or
indirectly secures repayment hereof. In addition, any failure or delay on the
part of Lender to exercise any of the rights and remedies granted to Lender
shall not have the effect of waiving any of Lendees rights and remedies. Any
partial exercise of any rights and/or remedies granted to Lender shall
furthermore not be construed as a waiver of any other rights and remedies; it
being Borrowers Intent and agreement that Lendees rights and remedies shall be
cumulative in nature. Borrower and each guarantor further agree that, should any
default event occur or exist under this Note, any waiver or forbearance on the
part of Lender to pursue the rights and remedies available to Lender, shall be
binding upon Lender only to the extent that Lender specifically agrees to any
such waiver or forbearance in writing. A waiver or forbearance on the part of
Lender as to one default event shall not be construed as a waiver or forbearance
as to any other default. Borrower and each guarantor of this Note further agree
that any late charges provided for under this Note will not be charges for
deferral of time for payment and will not and are not intended to compensate
Lender for a grace or cure period, and no such deferral, grace or cure period
has or will be granted to Borrower in return for the imposition of any late
charge. Borrower recognizes that Borrowees failure to make timely payment of
amounts due under this Note will result in damages to Lender, including but not
limited to Lender's loss of the use of amounts due, and Borrower agrees that any
late charges imposed by Lender hereunder will represent reasonable compensation
to Lender for such damages. Failure to pay in full any installment or payment
timely when due under this Note, whether or not a late charge is assessed, will
remain and shall constitute an Event of Default hereunder.
SUCCESSORS AND ASSIGNS LIABLE. Borrower's and each guarantor's obligations and
agreements under this Note shall be binding upon Borrower's and each guarantor's
respective successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Lender under this Note shall inure
to the benefit of Lendees successors and assigns, as well as to any subsequent
holder or holders of this Note.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER:
AMERICAN FIRE RETARDANT CORPORATION
/s/ Edward E. Friloux Sr.
- -------------------------
By: Edward E. Friloux Sr.
Its: Senior Vice President
Page 4
Exhibit 10.4(g)
---------------
BUSINESS LOAN AGREEMENT
Principal Loan Date Maturity Loan No. Call
$172,725.873 08-18-1998 11-16-1998 5010001204 CPB
- -------------------------------------------------------------------------------
Collateral Account Officer Initials
0100 11M
- -------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
- -------------------------------------------------------------------------------
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
===============================================================================
THIS BUSINESS LOAN AGREEMENT between AMERICAN FIRE RETARDANT CORPORATION
("Borrower") and ST. MARTIN BANK & TRUST COMPANY ("Lender") Is made and executed
on the following terms and conditions. Borrower has applied to Lender for a loan
or loans and other financial accommodations, Including those which may be
described on any exhibit or schedule attached to this Agreement.
DEFINITIONS. The following words shall have the following meanings when used In
this Agreement. Terms not otherwise defined In this Agreement shall have the
meanings attributed to such terms In the Louisiana Commercial Laws (La. R.S. 10:
9-101, et seq.). All references to dollar amounts shall mean amounts in lawful
money of the United States of America.
Agreement. The word "Agreement" means this Business Loan Agreement, as this
Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached or to be attached to this
Business Loan Agreement from time to time.
Borrower. The word "Borrower' means individually, collectively and
interchangeably AMERICAN FIRE RETARDANT CORPORATION and all other persons
and entities signing Borrower's Note. The word "Borrower' also Includes, as
applicable, all subsidiaries and affiliates of Borrower as provided below
In the paragraph titled "Subsidiaries and Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Collateral. The word "Collateral" means and Includes Individually,
collectively, Interchangeably and without limitation all property and
assets granted as collateral security for a Loan, whether real or personal
property, whether granted directly or Indirectly, whether granted now or in
the future, and whether granted In the form of a security Interest,
mortgage, collateral mortgage, deed of trust, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
factor's lion, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
Event of Default. The words "Event of Default mean individually,
collectively, and interchangeably any of the Events of Default set forth
below in the section titled "EVENTS OF DEFAULT."
Page 1
<PAGE>
Grantor. The word "Grantor" means and Includes Individually, collectively,
Interchangeably and without limitation each and all of the persons or
entities granting a Security Interest In any Collateral for the
Indebtedness, Including without limitation all Borrowers granting such a
Security Interest.
Guarantor. The word "Guarantor" means and Includes Individually,
collectively, Interchangeably and without limitation each and all of the
guarantors, sureties, and accommodation parties In connection with any
Indebtedness.
Indebtedness. The word "Indebtedness" means and Includes Individually,
collectively, Interchangeably and without limitation, any and all present
and future loans, extensions of credit, liabilities and/or obligations of
every nature and kind whatsoever that Borrower may now and In the future
owe to or Incur In favor of Lender and Its successors or assigns, Including
without limitation, Borrower's Indebtedness In favor of Lender under the
Note, whether such loans, extensions of credit, liabilities and/or
obligations are direct or Indirect, or by way of assignment, and whether
related or unrelated, or whether committed or purely discretionary, and
whether absolute or contingent, voluntary or Involuntary, determined or
undetermined, liquidated or unliquidated, due or to become due, together
with Interest, costs, expenses, attorneys' fees and other fees and charges,
whether or not any such Indebtedness may be barred under any statute of
limitations or may be otherwise unenforceable or voidable for any reason.
Lender. The word "Lender" means ST. MARTIN BANK & TRUST COMPANY TIN:
72-0307850, Its successors and assigns, and any subsequent holder or
holders of Borrower's Loan and Note, or any Interest therein.
Loan. The words "Loan" and "Loans" mean and Include any and all loans and
financial accommodations from Lender to Borrower (or any of them) whether
now or hereafter existing, and however evidenced, Including without
limitation those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement from time
to time, and further Including any and all subsequent amendments,
additions, substitutions, renewals and refinancings of Borrower's Loan.
Note. The word "Note means and Includes without limitation Borrower's
promissory note or notes evidencing Borrower's Loan obligations In favor of
Lender, as well as any substitute, replacement or refinancing note or notes
therefor.
Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being
contested In good faith; (c) liens of materialmen, mechanics, warehousemen,
or carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (d) -purchase money
liens or purchase money security Interests upon or In any property acquired
or hold by Borrower In the ordinary course of business to secure
Indebtedness outstanding on the date of this Agreement or permitted to be
Incurred under the paragraph of this Agreement titled "Indebtedness and
Liens"; (e) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing;
and (f) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to
the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean and Include
Individually, collectively, Interchangeably and without limitation all
promissory notes, credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, mortgages, collateral
mortgages, deeds of trust, and all other Instruments, agreements and
documents, whether now or hereafter existing, executed In connection with
the Indebtedness.
Security Agreement. The words "Security Agreement" mean and Include
individually, collectively, Interchangeably and without limitation any
agreements. promises, covenants, arrangements, understandings or other
agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest.
Page 2
<PAGE>
Security Interest. The words "Security Interest" mean and include
individually, collectively, Interchangeably and without limitation any and
all present and future mortgages, pledges, crop pledges, assignments and
other security agreements directly or indirectly securing the repayment of
Borrower's Loan and Note, whether created by law, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
APPLICATION FOR AND PURPOSE OF THE LOAN. Borrower has applied to Lender for a
Loan in the aggregate principal amount of $172,725.73 for the following purpose:
RENEWAL OF CASH FLOW MANAGER LOC INTO TERM LOAN.
BORROWER'S LOAN. Lender has agreed to extend a Loan to Borrower in the amount of
$172,725.73 subject to the terms and conditions of this Agreement and Borrower's
attached Note. Borrower agrees to be bound and obligated under the terms and
conditions of this Agreement and Borrower's Note, as well as any and all
Security Agreements directly or Indirectly securing repayment of the same.
BORROWER'S NOTE. Borrower's Loan in favor of Lender shall be evidenced under
Borrower's attached Note dated August 18, 1998, in the amount of $172,725.73.
Borrower's Loan and Note will bear Interest at the rate or rates, and will be
repayable In accordance with the repayment terms as set forth therein.
TERM. This Agreement shall be effective as of the date of its execution, and
shall continue In full force and effect until such time as all of Borrower's
Loan obligations In favor of Lender have been paid In full, In principal,
Interest, costs, expenses, attorneys' fees, and other fees and charges, or until
such time as the parties may agree in writing to terminate this Agreement.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the Initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth In this Agreement and In the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security Interests In the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d) evidence
of Insurance as required below; and (e) any other documents required under
this Agreement or by Lender or Its counsel, Including without limitation
any assignments of life Insurance described below and any guaranties
described below.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents, and such other authorizations and other documents and
Instruments as Lender or its counsel, in their sole discretion, may
require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified In
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement
or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Page 3
<PAGE>
Organization. Borrower Is a corporation which Is duly organized, validly
existing, and In good standing under the laws of the State of Louisiana.
Authorization. Borrower's execution, delivery and performance of this
Agreement have been duly authorized, and do not conflict with, and will not
result In a violation of, or constitute or give rise to an event of default
under Borrower's Articles of Incorporation or Bylaws, or any agreement or
other Instrument which may be binding upon Borrower, or under any law or
governmental regulation or court decree or order applicable to Borrower
and/or Its properties. Borrower has the power and authority to enter Into
Borrower's Loan and Note and to grant collateral security therefor.
Borrower has the further power and authority to own and to hold all of Its
assets and properties, and to carry on Its business as presently conducted.
Financial Information. Borrower's financial statements previously furnished
to Lender are and were complete and correct, and were prepared in
accordance with generally accepted accounting principles, and fairly
represent Borrower's financial condition as of the date or date thereof. To
the best of Borrower's knowledge, Borrower has no contingent obligations or
liabilities that were not disclosed or reserved against In Borrower's
financial statements or In the notes thereto. Since the dates of such
financial statements, there has been no material adverse change In
Borrower's financial condition or business.
Properties. Except as contemplated by this Agreement or as previously
disclosed In Borrower's financial statements or In writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled In Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., 6r other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. Except as disclosed to and
acknowledged by Lender In writing, Borrower represents and warrants that:
(a) During the period of Borrower's ownership of the properties, there has
been no use, generation, manufacture, storage, treatment, disposal, release
or threatened release of any hazardous waste or substance by any person on,
under, about or from any of the properties. (b) Borrower has no knowledge
of, or reason to believe that there has been (i) any use, generation,
manufacture, storage, treatment, disposal, release, or threatened release
of any hazardous waste or substance on, under, about or from the properties
by any prior owners or occupants of any of the properties, or (ii) any
actual or threatened litigation or claims of any kind by any person
relating to such matters. (c) Neither Borrower nor any tenant, contractor,
agent or other authorized user of any of the properties shall use,
generate, manufacture, store, treat, dispose of, or release any hazardous
waste or substance on, under, about or from any of the properties; and any
such activity shall be conducted In compliance with all applicable federal,
state, and local laws, regulations, and ordinances, Including without
limitation those laws, regulations and ordinances described above. Borrower
authorizes Lender and Its agents to enter upon the properties to make such
inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
Inspections or tests made by Lender shall be at Borrower's expense and for
Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are based
on Borrower's due diligence In investigating the properties for hazardous
waste and hazardous substances. Borrower hereby (a) releases and waives any
future claims against Lender for indemnity or contribution In the event
Borrower becomes liable for cleanup or other costs under any such laws, and
(b) agrees to indemnity and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender
may directly or Indirectly sustain or suffer resulting from a breach of
this section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release of a
hazardous waste or substance on the properties. The provisions of this
section of the Agreement. including the obligation to Indemnity, shall
survive the payment of the Indebtedness and the termination or expiration
of this agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
Page 4
<PAGE>
Litigation. There are no suits or proceedings pending, or to the knowledge
of Borrower, threatened against or affecting Borrower or its assets, before
any court or by any governmental agency, other than those previously
disclosed to Lender In writing, which, If adversely determined, may have a
material adverse effect on Borrower's financial condition or business.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid In full,
except those presently being or to be contested by Borrower in good faith
in the ordinary course of business and for which adequate reserves have
been provided.
Lien Priority. Unless otherwise previously disclosed to Lender In writing,
Borrower has not entered Into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or Indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may In any way be
superior to Lender's Security Interests and rights In and to such
Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly
or Indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally enforceable In
accordance with their respective terms.
Commercial Purposes. Borrower Intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined In ERISA) has occurred with respect to
any such plan, (ii) Borrower has not withdrawn from any such plan or
Initiated steps to do so, (iii) no steps have been taken to terminate any
such plan, and (iv) there are no unfunded liabilities other than those
previously disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of business,
or Borrower's Chief executive office, if Borrower has more than one place
of business, is located at 110 BRUSH ROAD, BROUSSARD, LA 7051 S. Unless
Borrower has designated otherwise in writing this location is also the
office or offices where Borrower keeps its records concerning the
Collateral.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate In every material respect on the date as of which
such Information Is dated or certified; and none of such Information is or
will be Incomplete by omitting to state any material fact necessary to make
such Information not misleading.
Survival of Representations and Warranties. Borrower understands and agrees
that Lender, without Independent Investigation, Is relying upon the above
representations and warranties In making the above referenced Loan to
Borrower. Borrower further agrees that the foregoing representations and
warranties shall be continuing In nature and shall remain In full force and
effect until such time as Borrower's Indebtedness shall be paid In full, or
until this Agreement shall be terminated In the manner provided above,
whichever Is the last to occur.
Page 5
<PAGE>
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains In effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, Investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but in no
event later than ninety (90) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended, audited
by a certified public accountant satisfactory to Lender, and, as soon as
available, but in no event later than thirty (30) days after the and of
each fiscal quarter, Borrower's balance sheet and profit and loss statement
for the period ended, prepared and certified as correct to the best
knowledge and belief by Borrower's chief financial officer or other officer
or person acceptable to Lender. All financial reports required to be
provided under this Agreement shall be prepared In accordance with
generally accepted accounting principles, applied on a consistent basis,
and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns. and other reports
with respect to Borrower's financial condition and business operations as
Lender may request from time to time. In addition, Borrower shall furnish
Lender with, as soon as available, but In no event later than ninety (90)
days after the and of each fiscal year, copies of Borrower's tax returns
and a detailed projected cash flow statement In form and content acceptable
to Lender based upon planned operations for the following year.
Insurance. Maintain fire and other risk Insurance, public liability
insurance, and such other Insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
Insurance companies reasonably acceptable to Lender. Borrower, upon request
of Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, Including
stipulations that coverages will not be cancelled or diminished without at
least thirty (30) days' prior written notice to Lender. Each Insurance
policy also shall Include an endorsement providing that coverage In favor
of Lender will not be Impaired In any way by any act, omission or default
of Borrower or any other person. In connection with all policies covering
assets In which Lender holds or Is offered a security Interest for the
Loans, Borrower will provide Lender with such lender's loss payable or
other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing Insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured; (e) the then current property values on the
basis of which Insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will
have an Independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.
Life Insurance. As soon as practical, obtain and maintain life insurance in
form and with Insurance companies reasonably acceptable to Lender on the
following Individuals In the amounts indicated below and, at Lender's
option, cause such Insurance coverage to be pledged, made payable to, or
assigned to Lender on Lender's forms. Lender, at Its discretion, may apply
the proceeds of any Insurance policy to the unpaid balances of any
Indebtedness:
Names of Insured Amount
------------------ -----------
STEPHEN F. OWENS $750,000.00
EDWARD E. FRILOUX $250,000.00
Page 6
<PAGE>
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantors
named below, on Lender's forms, and in the amounts and under the conditions
spelled out in those guaranties.
Guarantors Amount
------------------ -----------
ANGELA M. RAIDL $172,725.73
EDWARD E. FRILOUX $172,725.73
STEPHEN F. OWENS $172,725.73
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender Immediately In writing of any default In
connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations or as otherwise described above, unless specifically consented
to the contrary by Lender In writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
Indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
Imposed upon Borrower or Its properties, Income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, If
unpaid, might become a lien or charge upon any of Borrower's properties,
Income, or profits. Provided however, Borrower will not be required to pay
and discharge any such assessment, tax, charge, levy, lien or claim so long
as (a) the legality of the same shall be contested In good faith by
appropriate proceedings, and (b) Borrower shall have established on Its
books adequate reserves with respect to such contested assessment, tax,
charge, levy, lien, or claim In accordance with generally accepted
accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies,
liens and claims and will authorize the appropriate governmental official
to deliver to Lender at any time a written statement of any assessments,
taxes, charges, levies, liens and claims against Borrower's properties,
Income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change In
executive and management personnel; conduct Its business affairs In a
reasonable and prudent manner and In compliance with sit applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting Its properties, charters, businesses and operations, Including
without limitation, compliance with the Americans With Disabilities Act and
with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
Inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) In the possession of
a third party, Borrower, upon request of Lender, shall notify such party to
permit Lender free access to such records at all reasonable times and to
provide Lender with copies of any records it may request, all at Borrower's
expense.
Change of Location. Immediately notify Lender In writing of any additions
to or changes In the location of Borrower's businesses.
Title to Assets and Property. Maintain good and marketable title to all of
Borrower's assets and properties.
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Notice of Default, Litigation and ERISA Matters. Forthwith upon learning of
the occurrence of any of the following, Borrower shall provide Lender with
written notice thereof, describing the same and the steps being taken by
Borrower with respect thereto: (i) the occurrence of any Event of Default,
or (ii) the institution of, or any adverse determination In, any
litigation, arbitration proceeding or governmental proceeding, or (iii) the
occurrence of a Reportable Event under, or the institution of steps by
Borrower to withdraw from, or the institution ,of any steps to terminate,
any employee benefit plan as to which Borrower may have any liability.
Other Information. From time to time Borrower will provide Lender with such
other Information as Lender may reasonably request.
Employee Benefit Plans. So long as this Agreement remains in effect,
Borrower will maintain each employee benefit plan as to which it may have
any liability, In compliance with all applicable requirements of law and
regulations.
Other Agreements. Borrower will not enter into any agreement containing any
provision which would be violated or breached by the performance of Its
obligations It hereunder or In connection herewith.
Compliance Certificate. Unless waived In writing by Lender, provide Lender
at least annually and at the time of each disbursement of Loan proceeds
with a certificate executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that the representations
and warranties set forth In this Agreement are true and correct as of the
date of the certificate and further certifying that, as of the date of the
certificate, no Event of Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply In all respects
with all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
Intentional or unintentional action or omission on its part or on the part
of any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless
such environmental activity Is pursuant to and In compliance with the
conditions of a permit Issued by the appropriate federal, state or local
governmental authorities; shall furnish to Lender promptly and In any event
within thirty (30) days after receipt thereof a copy of any notice,
summons, lien, citation, directive, letter or other communication from any
governmental agency or Instrumentality concerning any intentional or
unintentional action or omission on Borrowers' part In connection with any
environmental activity whether or not there Is damage to the environment
and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that as long as
this Agreement remains in effect, Borrower shall not, without the prior written
consent of Lender:
Indebtedness and Liens. (a) Except for trade debt Incurred In the normal
course of business and Indebtedness to Lender contemplated by this
Agreement, create, Incur or assume Indebtedness for borrowed money,
Including capital leases, (b) except as allowed as a Permitted Lien, sell,
transfer, mortgage, assign, pledge, lease, grant a security Interest In, or
encumber any of Borrower's assets, or (c) sell with recourse any of
Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage In any business activities
substantially different than those In which Borrower Is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change Its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, (c) pay
any dividends on Borrower's stock (other than dividends payable in its
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stock), provided. however that notwithstanding the foregoing, but only so
long as no Event of Default has occurred and Is continuing or would result
from may pay cash dividends on Its stock to its shareholders from time to
time In amounts necessary to enable the shareholders to pay income taxes
and make estimated income tax payments to satisfy their liabilities under
federal and state law which arise solely from their status as Shareholders
of a Subchapter S Corporation because of their ownership of shares of stock
of Borrower, or (d) purchase or retire any of Borrower's outstanding shares
or alter or amend Borrowers capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any Interest In any other
enterprise or entity, or (c) Incur any obligation as surety or guarantor
other than in the ordinary course of business.
DEPOSIT ACCOUNTS. As collateral security for repayment of Borrower's Note and
all renewals and extensions, as well as to secure any and all other loans,
notes, Indebtedness and obligations that Borrower (or any of them) may now and
In the future owe to Lender or Incur In Lender's favor, whether direct or
Indirect, absolute or contingent, due or to become due, of any nature and kind
whatsoever (with the exception of any Indebtedness under a consumer credit card
account), Borrower Is granting Lender a continuing security Interest In any and
all funds that Borrower may now and In the future have on deposit with Lender or
In certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that Lender may at any time apply any funds
that Borrower may have on deposit with Lender or In certificates of deposit or
other deposit accounts as to which Borrower is an account holder against the
unpaid balance of Borrower's Note and any and all other present and future
Indebtedness and obligations that Borrower (or any of them) may then owe to
Lender, In principal, interest, fees, costs, expenses, and attorneys' fees.
EVENTS OF DEFAULT. The following actions or inactions or both shall constitute
Events of Default under this Agreement:
Default under the Indebtedness. Should Borrower default in the payment of
principal or Interest under any of the Indebtedness.
Default under this Agreement. Should Borrower violate, or fail to comply
fully with any of the terms and conditions of, or default under this
Agreement.
Default Under Other Agreements. Should any event of default occur or exist
under any Related Document which directly or Indirectly secures repayment
of the Loan and any of the Indebtedness.
Other Defaults In Favor of Lender. Should Borrower or any Guarantor default
under any other loan, extension of credit, security agreement, or
obligation In favor of Lender.
Default In Favor of Third Parties. Should Borrower or any Guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, In favor of any other creditor or person
that may materially affect any of Borrower's property, or Borrower's or any
Guarantor's ability to perform their respective obligations under this
Agreement, or any Related Document, or pertaining to the Indebtedness.
Insolvency. Should the suspension, failure or Insolvency, however
evidenced, of Borrower or any Guarantor occur or exist.
Readjustment of Indebtedness. Should proceedings for readjustment of
indebtedness. reorganization. composition or extension under any Insolvency
law be brought by or against Borrower or any Guarantor.
Assignment for Benefit of Creditors. Should Borrower or any Guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
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Receivership. Should a receiver of all or any part of Borrower's property,
or the property of any Guarantor, be applied for or appointed. Dissolution
Proceedings. Should proceedings for the dissolution or appointment of a
liquidator of Borrower or any Guarantor be commenced.
False Statements. Should any representation or warranty of Borrower or any
Guarantor made in connection with the Loan prove to be incorrect or
misleading in any respect.
Insecurity. Should Lender deem itself to be insecure with regard to
repayment of the Loan.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided In this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement Immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described In the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise.
Lender shall have the right at its sole option, to accelerate payment of
Borrower's Note in full, in principal, interest, costs, expenses, attorneys'
fees, and other fees and charges, as well as to accelerate the maturity of any
and all other loans and/or obligations that Borrower may then owe to Lender,
whether direct or indirect, or by way of assignment or purchase of a
participation Interest, and whether absolute or contingent, liquidated or
unliquidated, voluntary or Involuntary, determined or undetermined, due or to
become due, and whether now existing or hereafter arising, and whether Borrower
is obligated alone or with others on a "solidary" or "joint and several" basis,
as a principal obligor or as a surety, of every nature and kind whatsoever,
whether any such Indebtedness may be barred under any statute of limitations or
otherwise may be unenforceable or voidable for any reason whatsoever.
Lender shall have the additional right, again at its sole option, to file an
appropriate collection action against Borrower and/or against any guarantor or
guarantors of Borrower's Loan and Note, and/or to proceed or exercise any rights
against any Collateral then securing repayment of Borrower's Loan and Note.
Borrower and each guarantor further agree that Lender's remedies shall be
cumulative In nature and nothing under this Agreement or otherwise, shall be
construed as to limit or restrict the options and remedies available to Lender
following any event of default under this Agreement or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise Its rights and remedies.
ADDITIONAL DOCUMENTS. Borrower shall provide Lender with the following
additional documents:
Corporate Resolution. Borrower has provided or will provide Lender with a
certified copy of resolutions property adopted by Borrower's Board of
Directors, and certified by Borrower's corporate secretary or assistant
secretary, under which Borrower's Board of Directors authorized one or more
designated officers or employees to execute this Agreement on behalf of
Borrower and to execute the above referenced Note and any and all Security
Agreements directly or Indirectly securing repayment of the same, and to
consummate the borrowings and other transactions as contemplated hereunder,
and to consent to the remedies following Borrower's default as provided
herein and under the above referenced Security Agreements.
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Certification. Where required by Lender, Borrower has provided or will
provide Lender with a certificate executed by Borrower's principle
executive officer, certifying that the representations and warranties set
forth in this Agreement are true and correct, and further certifying in the
Event of Default presently exists under this Agreement, or under Borrower's
Note, or under any Security Agreement directly or indirectly repayment of
the same, as of the date hereof.
Opinion of Counsel. Where required by Lender, Borrower has provided or will
provide Lender with an opinion of Borrower's counsel certifying to and
that: (a) this Agreement and Borrower's Note and Security Agreements
constitute valid and binding obligations on the part of Borrower that are
enforceable In accordance with their respective terms; (b) Borrower Is
validly existing and In good standing; (c) Borrower has authority to enter
Into this Agreement and to consummate the transactions contemplated
hereunder; and (d) such other matters as may have been requested by Lender
or by Lender's counsel.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth In this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given In writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender In the State of Louisiana. This Agreement shall be governed by and
construed In accordance with the laws of the State of Louisiana.
Caption Headings. Caption headings In this Agreement are for convenience
purposes only and are not to be used to Interpret or define the provisions
of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
Interests In the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation whatsoever,
to any one or more purchasers, or potential purchasers, any Information or
knowledge Lender may have about Borrower or about any other matter relating
to the Loan, and Borrower hereby waives any rights to privacy It may have
with respect to such matters. Borrower additionally waives any and all
notices of sale of participation Interests, as well as all notices of any
repurchase of such participation interests. Borrower also agrees that the
purchasers of any such participation Interests will be considered as the
absolute owners of such Interests In the Loans and will have all the rights
granted under the participation agreement or agreements governing the sale
of such participation Interests. Borrower further waives all rights of
offset or counterclaim that It may have now or later against Lender or
against any purchaser of such a participation Interest and unconditionally
agrees that either Lender or such purchaser may enforce Borrower's
obligation under the Loans Irrespective of the. failure or Insolvency of
any holder of any Interest In the Loans. Borrower further agrees that the
purchaser of any such participation Interests may enforce its Interests
Irrespective of any personal claims or defenses that Borrower may have
against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, Including without limitation attorneys' fees, Incurred In
connection with the preparation, execution, enforcement, modification and
collection of this Agreement or In connection with the Loans made pursuant
to this Agreement. Lender may pay someone else to help collect the Loans
and to enforce this Agreement, and Borrower will pay that amount. This
Includes, subject to any limits under applicable law, Lender's attorneys'
fees and Lender's legal expenses, whether or not there Is a lawsuit,
Including attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or Injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any
court costs, In addition to all other sums provided by law.
Notices. To give Borrower any notice required under this Agreement, Lender
may hand deliver or mail such notice to Borrower. Lender will deliver or
mail any notice to Borrower (or any of them If more than one) at any
address which Borrower may have given Lender by written notice as provided
In this paragraph. In the event that there Is more than one Borrower under
this Agreement, notice to a single Borrower shall be considered as notice
to all Borrowers. To give Lender any notice under this Agreement, Borrower
(or any Borrower) shall mail the notice to Lender by registered or
certified mail at the address specified In this Agreement, or at any other
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address that Lender may have given to Borrower (or any Borrower) by written
notice as provided In this paragraph. All notices required or permitted
under this Agreement must be In writing and will be considered as given on
the day It Is delivered by hand or deposited In the U.S. Mail, by
registered or certified mail to the address specified in this Agreement.
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be Invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision Invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, If the offending provision
cannot be so modified, It shall be stricken and all other provisions of
this Agreement In all other respects shall remain valid and enforceable.
Sole Discretion of Lender. Whenever Lender's consent or approval Is
required under this Agreement, the decision as to whether or not to consent
or approve shall be In the sole and exclusive discretion of Lender and
Lender's decision shall be final and conclusive.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes It appropriate, Including without
limitation any representation, warranty or covenant, the word "Borrower" as
used herein shall Include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall Inure to
the benefit of Lender, Its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
Interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other Instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any Investigation made by
Lender or on Lender's behalf.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Borrower, or between Lender and any
Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor as to any future transactions.
Whenever the consent of Lender Is required under this Agreement, the
granting of such consent by Lender in any instance shall not constitute
continuing consent in subsequent instances where such consent is required,
and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
AUGUST 18, 1998.
BORROWER:
AMERICAN FIRE RETARDANT CORPORATION
/S/ Angela M. Raidl
- ---------------------------------------------
By: ANGELA M. RAIDL, EXECUTIVE VICE PRESIDENT
LENDER:
ST. MARTIN BANK & TRUST COMPANY
- ---------------------------------------------
By:
Authorized Officer
Page 12
Exhibit 10.4(h)
---------------
PROMISSORY NOTE
Principal Loan Date Maturity Loan No. Call
$172,725.73 08-18-1998 11-16-1998 5010001204 CPB
- -------------------------------------------------------------------------------
Collateral Account Officer Initials
010 11M
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
- -------------------------------------------------------------------------------
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
===============================================================================
Principal Amount: $172,725.73
Initial Rate: 11.750%
Date of Note: August 18, 1998
===============================================================================
PROMISE TO PAY. AMERICAN FIRE RETARDANT CORPORATION ("Borrower") promises to pay
to the order of ST. MARTIN BANK & TRUST COMPANY ("Lender"), In lawful money of
the United States of America the sum of One Hundred Seventy Two Thousand Seven
Hundred Twenty Five & 73/100 Dollars (U.S. $172,726.73), together with simple
Interest assessed on a variable rate basis at the rate per annum equal to 2.000
percentage points over the index provided below, as the index under this Note
may be adjusted from time to time, one or more times, with Interest being
assessed on the unpaid principal balance of this Note as outstanding from time
to time, commencing on August 18, 1998 and continuing until this Note Is paid in
full.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in one
principal payment of One Hundred Seventy Two Thousand Seven Hundred Twenty Five
& 73/100 Dollars ($172,725.73) due on November 16, 1998. In addition, Borrower
will pay regular monthly payments of all accrued unpaid Interest due as of each
payment date, beginning September 16, 1998, with all subsequent Interest
payments to be due on the same day of each month after that. The annual Interest
rate for this Note is computed on a 365/360 basis; that is, by applying the
ratio of the annual Interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding. Borrower will pay Lender at Lender's address
shown above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid Interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The Interest rate on this Note is subject to change from
time to time based on changes in an Index which is the ST MARTIN BANK PRIME RATE
ADJUSTED DAILY (the "Index"). The Index is not necessarily the lowest rate
charged by Lender on its loans and is set by Lender in its sole discretion. If
the Index becomes unavailable during the term of this loan, Lender may designate
a substitute Index after notifying Borrower. Lender will tell Borrower the
current Index rate upon Borrower's request. Borrower understands that Lender may
make loans based on other rates as well. The Interest rate change will not occur
more often than each DAY. The Index currently Is 9.760% per annum. The Interest
rate to be applied to the unpaid principal balance of this Note will be at a
rate of 2.000 percentage points over the Index, resulting In an Initial rate of
11.750% per annum. Under no circumstances will the Interest rate on this Note be
more than the maximum rate allowed by applicable law.
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PREPAYMENT. Borrower may prepay this Note in full at any time by paying the then
unpaid principal balance of this Note, plus accrued simple Interest and any
unpaid late charges through date of prepayment. If Borrower prepays this Note in
full, or if Lender accelerates payment, Borrower understands that, unless
otherwise required by law, any prepaid fees or charges will not be subject to
rebate and will be earned by Lender at the time this Note is signed. Unless
otherwise agreed to in writing, early payments under this Note will not relieve
Borrower of Borrower's obligation to continue to make regularly scheduled
payments under the above payment schedule. Early payments will instead reduce
the principal balance due under this Note.
LATE CHARGE. If Borrower falls to pay any payment under this Note in full within
10 days of when due, Borrower agrees to pay Lender a late payment fee In an
amount equal to 5.000% of the unpaid amount of interest then due and owing under
this Note, or U.S. $15.00, whichever is less, with a maximum of $15.00. Late
charges will not be assessed following declaration of default and acceleration
of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute default events
under this Note:
Default Under Loan Agreement. Should an event of default occur or exist
under the terms of Borrower's Loan Agreement in favor of Lender.
Default Under This Note. Should Borrower default In the payment of
principal and/or Interest under this Note.
Default Under Security Agreements. Should Borrower or any guarantor
violate, or fail to comply fully with any of the terms and conditions of,
or default under any security right, instrument, document, or agreement
directly or indirectly securing repayment of this Note.
Other Defaults In Favor of Lender. Should Borrower or any guarantor of this
Note default under any other loan, extension of credit, security right,
instrument, document, or agreement, or obligation in favor of Lender. I
Default In Favor of Third Parties. Should Borrower or any guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, In favor of any other creditor or person
that may affect any property or other collateral directly or Indirectly
securing repayment of this Note.
Insolvency. Should the suspension, failure or Insolvency, however
evidenced, of Borrower or any guarantor of this Note occur or exist.
Death or Interdiction. Should any guarantor of this Note die or be
interdicted.
Readjustment of Indebtedness. Should proceedings for readjustment of
Indebtedness, reorganization, bankruptcy, composition or extension under
any insolvency law be brought by or against Borrower or any guarantor.
Assignment for Benefit of Creditors. Should Borrower or any guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
Receivership. Should a receiver of all or any part of Borrower's property,
or the property of any guarantor, be applied for or appointed.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Borrower or any guarantor be commenced.
False Statements. Should any representation, warranty, or material
statement of Borrower or any guarantor made In connection with the
obtaining of the loan evidenced by this Note or any security agreement
directly or indirectly securing repayment of this Note, prove to be
incorrect or misleading in any respect.
Material Adverse Change. Should any material adverse change occur in the
financial condition of Borrower or any guarantor of this Note or should any
material discrepancy exist between the financial statements submitted by
Borrower or any guarantor and the actual financial condition of Borrower or
such guarantor.
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Insecurity. Should Lender deem itself to be insecure with regard to
repayment of this Note.
LENDER'S RIGHTS UPON DEFAULT. Should any one or more default events occur or
exist under this Note as provided above, Lender shall have the right, at its
sole option, to declare formally this Note to be in default and to accelerate
the maturity and insist upon immediate payment in full of the unpaid principal
balance then outstanding under this Note, plus accrued interest, together with
reasonable attorneys' fees, costs, expenses and other fees and charges as
provided herein. Lender shall have the further right, again at its sole option,
to declare formal default and to accelerate the maturity and to Insist upon
immediate payment In full of each and every other loan, extension of credit,
debt, liability and/or obligation of every nature and kind that Borrower may
then owe to Lender. whether direct or Indirect or by way of assignment, and
whether absolute or contingent, liquidated or unliquidated, voluntary or
involuntary, determined or undetermined, secured or unsecured, whether Borrower
is obligated alone or with others on a "solidary" or "Joint and several" basis,
as a principal obligor or otherwise, all without further notice or demand,
unless Lender shall otherwise elect.
ATTORNEYS' FEES. If Lender refers this Note to an attorney for collection, or
files suit against Borrower to collect this Note. or if Borrower files for
bankruptcy or other relief from creditors, Borrower agrees to pay Lender's
reasonable attorneys' fees In an amount not exceeding 25.000% of the unpaid debt
then owing under this Note.
NSF CHECK CHARGES. In the event that Borrower makes any payment under this Note
by check and Borrower's check is returned to Lender unpaid due to non-sufficient
funds in my deposit account. Borrower agrees to pay Lender an additional NSF
check charge equal to $15.00.
DEPOSIT ACCOUNTS. As collateral security for repayment of this Note and all
renewals and extensions, as well as to secure any and all other loans, notes,
Indebtedness and obligations that Borrower (or any of them) may now and in the
future owe to Lender or incur in Lender's favor, whether direct or indirect,
absolute or contingent, due or to become due, of any nature and kind whatsoever
(with the exception of any indebtedness under a consumer credit card account),
Borrower is granting Lender a continuing security interest in any and all funds
that Borrower may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that Lender may at any time apply any funds
that Borrower may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Borrower is an account holder against the
unpaid balance of this Note and any and all other present and future
indebtedness and obligations that Borrower (or any of them) may then owe to
Lender, In principal, Interest, fees, costs, expenses, and attorneys' fees.
COLLATERAL. This Note is secured by: a Collateral Mortgage from Borrower to
Lender dated August 18, 1998 in the amount of $180,000; a Commercial Security
Agreement from Borrower to Lender dated May 21, 1997 covering all inventory,
accounts, and equipment; an Assignment of Life Insurance Policy from Stephen F.
Owens to Lender dated April 21, 1997; an Assignment of Life Insurance Policy
from Edward E. Friloux to Lender dated April 22, 1997. Collateral securing other
loans with Lender may also secure this Note as the result of
cross-collateralization.
FINANCIAL STATEMENTS. Borrower agrees to provide Lender with such financial
statements and other related information at such frequencies and in such detail
as Lender may reasonably request.
GOVERNING LAW. Borrower agrees that this Note and the loan evidenced hereby
shall be governed under the laws of the State of Louisiana. Specifically, this
business or commercial Note is subject to La. R.S. 9:3509 at seq.
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<PAGE>
WAIVERS. Borrower and each guarantor of this Note hereby waive demand,
presentment for payment, protest, notice of protest and notice of nonpayment,
and all pleas of division and discussion, and severally agree that their
obligations and liabilities to Lender hereunder shall be on a "solidary" or
"Joint and several" basis. Borrower and each guarantor further severally agree
that discharge or release of any party who is or may be liable to Lender for the
indebtedness represented hereby, or the release of any collateral directly or
Indirectly securing repayment hereof, shall not have the effect of releasing any
other party or parties, who shall remain liable to Lender, or of releasing any
other collateral that is not expressly released by Lender. Borrower and each
guarantor additionally agree that Lender's acceptance of payment other than in
accordance with the terms of this Note, or Lender's subsequent agreement to
extend or modify such repayment terms, or Lender's failure or delay In
exercising any rights or remedies granted to Lender, shall likewise not have the
effect of releasing Borrower or any other party or parties from their respective
obligations to Lender, or of releasing any collateral that directly or
Indirectly secures repayment hereof. In addition, any failure or delay on the
part of Lender to exercise any of the rights and remedies granted to Lender
shall not have the effect of waiving any of Lender's rights and remedies. Any
partial exercise of any .rights and/or remedies granted to Lender shall
furthermore not be construed as a waiver of any other rights and remedies-, It
being Borrower's Intent and agreement that Lender's rights and remedies shall be
cumulative in nature. Borrower and each guarantor further agree that, should any
default event Occur or exist under this Note, any waiver or forbearance on the
part of Lender to pursue the rights and remedies available to Lender, shall be
binding upon Lender only to the extent that Lender specifically agrees to any
such waiver or forbearance In writing. A waiver or forbearance on the part of
Lender as to one default event shall not be construed as a waiver or forbearance
as to any other default. Borrower and each guarantor of this Note further agree
that any late charges provided for under this Note will not be charges for
deferral of time for payment and will not and are not Intended to compensate
Lender for a grace or cure period, and no such deferral, grace or cure period
has or will be granted to Borrower In return for the imposition of any late
charge. Borrower recognizes that Borrower's failure to make timely payment of
amounts due under this Note will result In damages to Lender, Including but not
limited to Lender's loss of the use of amounts due, and Borrower agrees that any
late charges Imposed by Lender hereunder will represent reasonable compensation
to Lender for such damages. Failure to pay In full any Installment or payment
timely when due under this Note, whether or not a late charge Is assessed, will
remain and shall constitute an Event of Default hereunder.
SUCCESSORS AND ASSIGNS LIABLE. Borrower's and each guarantor's obligations and
agreements under this Note shall be binding upon Borrower's and each guarantor's
respective successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Lender under this note shall inure
to the benefit of Lenders successors and assigns, as well as to any subsequent
holder or holders of this note.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
PRIOR NOTE. the Promissory Note from Borrower to Lender dated May 21, 1998.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER:
AMERICAN FIRE RETARDANT CORPORATION
/S/ Angela M. Raidl
- ---------------------------------------------
By: ANGELA M. RAIDL, EXECUTIVE VICE PRESIDENT
Page 4
Exhibit 10.4(i)
---------------
COMMERCIAL GUARANTY
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
Guarantor: EDWARD E. FRILOUX
204 NOTRE DAME DRIVE
LAFAYETTE, LA 70506
================================================================================
AMOUNT OF GUARANTY. This is a guaranty of payment of the Note, including without
limitation the principal Note amount of One Hundred Seventy Two Thousand Seven
Hundred Twenty Five & 73/100 Dollars (U.S. $172,726.73).
DEFINITIONS. The following terms shall have the following meanings when used In
this Agreement:
Agreement. The word "Agreement" means this Guaranty Agreement as this
Agreement may be amended or modified from time to time.
Borrower. The word "Borrower" means individually, collectively and
interchangeably AMERICAN FIRE RETARDANT CORPORATION.
Guarantor. The word "Guarantor" means Individually, collectively and
Interchangeably EDWARD E. FRILOUX and all other persons guaranteeing
payment and satisfaction of Borrower's Indebtedness as hereinafter defined.
Indebtedness. 'The word "Indebtedness" means Borrower's Indebtedness and
obligations in favor of Lender under the Note, and all Interest, costs,
expenses and attorneys' fees and other fees and charges relating thereto,
and all amendments thereto and/or substitutions therefor, and any and all
renewals, extensions and/or refinancings thereof.
Lender. The word "Lender" means ST. MARTIN BANK & TRUST COMPANY, JOHNSTON
STREET BRANCH, LAFAYETTE TIN: 72-0307850, its successors and assigns, and
any subsequent holder or holders of Borrower's indebtedness.
Note. The word "Note" means the promissory note or credit agreement dated
August 18, 1998, in the original principal amount of $172,725.73 from
Borrower to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for
the promissory note or agreement.
GUARANTEE OF BORROWER'S INDEBTEDNESS. Guarantor hereby absolutely and
unconditionally agrees to, and by these presents does hereby, guarantee the
prompt and punctual payment, performance and satisfaction of Borrower's
Indebtedness in favor of Lender.
JOINT, SEVERAL AND SOLIDARY LIABILITY. Guarantor's obligations and liability
under this Agreement shall be on a "solidary" or "Joint and several" basis along
with Borrower to the same degree and extent as if Guarantor had been and/or,
will be a co-borrower, co-principal obligor and/or co-maker of Borrower's
indebtedness. in the event that there is more than one Guarantor under this
Agreement, or in the event that there are other guarantors, endorsers or
sureties of all or any portion of Borrower's Indebtedness, Guarantor's
obligations and liability hereunder shall further be on a "solidary" or "joint
and several" basis along with such other .guarantors, endorsers and/or sureties.
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<PAGE>
DURATION OF GUARANTY. This Agreement and Guarantor's obligations and liability
hereunder shall remain in full force and effect until such time as Borrower's
indebtedness shall be paid, performed and satisfied in full, in principal,
interest, costs, expenses and attorneys' fees, and other fees and charges.
DEFAULT. Should any event of default occur or exist under Borrower's
indebtedness in favor of Lender, Guarantor unconditionally and absolutely agrees
to pay Lender the then unpaid amount of Borrower's Indebtedness, in principal,
interest, costs, expenses, attorneys' fees and other fees and charges, subject
to the maximum principal dollar amount limitations set forth above. Such payment
or payments shall be made at Lender's offices indicated above, immediately
following demand by Lender.
GUARANTOR'S WAIVERS. Guarantor hereby waives:
(a) Notice of Lender's acceptance of this Agreement.
(b) Presentment for payment of Borrower's Indebtedness, notice of dishonor
and of nonpayment, notice of intention to accelerate, notice of
acceleration, protest and notice of protest, collection or institution of
any suit or other action by Lender in collection thereof, including any
notice of default In payment thereof, or other notice to, or demand for
payment thereof, on any party.
(c) Any right to require Lender to notify Guarantor of any nonpayment
relating to any collateral directly or indirectly securing Borrower's
indebtedness, or notice of any action or non-action on the part of
Borrower, Lender, or any other guarantor, surety or endorser of Borrower's
indebtedness
(d) Any rights to demand or require collateral security from the Borrower
or any other person as provided under applicable Louisiana law or
otherwise.
(e) Any right to require Lender to notify Guarantor of the terms, time and
place of any public or private sale of any collateral directly or
Indirectly securing Borrower's Indebtedness.
(f) Any "one action" or "anti-deficiency" law or any other law which may
prevent Lender from bringing any action, Including a claim for deficiency,
against Guarantor, before or after Lender's commencement or completion of
any foreclosure action, or any action in lieu of foreclosure.
(g) Any election of remedies by Lender that may destroy or impair
Guarantor's subrogation rights or Guarantor's right to proceed for
reimbursement against Borrower or any other guarantor, surety or endorser
of Borrowers indebtedness, including without limitation, any loss of fights
Guarantor may suffer by reason of any law limiting, qualifying, or
discharging Borrowers indebtedness.
(h) Any disability or other defense of Borrower, or any other guarantor,
surety or endorser, or any other person. or by reason of the cessation from
any cause whatsoever, other than payment in full of Borrower's
indebtedness.
(i) Any statute of limitations or prescriptive period, if at the time an
action or suit brought by Lender against Guarantor is commenced, there is
any outstanding indebtedness of Borrower to Lender which is barred by any
applicable statute of limitations or prescriptive period.
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<PAGE>
Guarantor warrants and agrees that each of the waivers set forth above is made
with Guarantor's full knowledge of its significance and consequences, and that,
under the circumstances, such waivers are reasonable and not contrary to public
policy or law. If any such waiver is determined to be contrary to any applicable
law or public policy, such waiver shall be effective only to the extent
permitted by law.
GUARANTOR'S SUBORDINATION OF RIGHTS. In the event that Guarantor should for any
reason (a) advance or lend monies to Borrower, whether or not such funds are
used by Borrower to make payment(s) under Borrower's Indebtedness, and/or (b)
make any payment(s) to Lender or others for and on behalf of Borrower under
Borrower's Indebtedness, and/or (c) make any payment to Lender In total or
partial satisfaction of Guarantor's obligations and liabilities under this
Agreement, and/or (d) It any of Guarantor's property Is used to pay or satisfy
any of Borrower's Indebtedness, Guarantor hereby agrees that any and all rights
that Guarantor may have or acquire to collect from or to be reimbursed by
Borrower (or from or by any other guarantor, endorser or surety of Borrower's
Indebtedness), whether Guarantor's rights of collection or reimbursement arise
by way of subrogation to the rights of Lender or otherwise, shall In all
respects, whether or not Borrower Is presently or subsequently becomes
Insolvent, be subordinate, inferior and junior to the rights of Lender to
collect and enforce payment, performance and satisfaction of Borrower's then
remaining Indebtedness, until such time as Borrower's Indebtedness Is fully paid
and satisfied. In the event of Borrower's Insolvency or consequent liquidation
of Borrower's assets, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of claims of both Lender and Guarantor shall be paid
to Lender and shall be first applied by Lender to Borrower's then remaining
indebtedness. Guarantor hereby assigns to Lender all claims which it may have or
acquire against Borrower or any assignee or trustee of Borrower in bankruptcy;
provided that, such assignment shall be effective only for the purpose of
assuring to Lender full payment of Borrower's Indebtedness guaranteed under this
Agreement.
If now or hereafter (a) Borrower shall be or become Insolvent, and (b) Borrowers
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes In favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
GUARANTOR'S RECEIPT OF PAYMENTS. Guarantor further agrees to refrain from
attempting to collect and/or enforce any of Guarantor's collection and/or
reimbursement rights against Borrower (or against any other guarantor, surety or
endorser of Borrower's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Borrower's then remaining Indebtedness in
favor of Lender is fully paid and satisfied. In the event that Guarantor should
for any reason whatsoever receive any payments(s) from borrower (or any other
guarantor, surety or endorser of Borrower's Indebtedness) that Borrower (or such
a third party) may owe to Guarantor for any of the reasons stated above,
Guarantor agrees to accept such payment(s) In trust for and on behalf of Lender,
advising Borrower (or the third party payee) of such fact. Guarantor further
unconditionally agrees to immediately deliver such funds to Lender, with such
funds being held by Guarantor over any interim period, in trust for Lender. in
the event that Guarantor should for any reason whatsoever receive any such funds
from Borrower (or any third party), and Guarantor should deposit such funds in
one or more of Guarantor's deposit accounts, no matter where located, Lender
shall have the right to attach any and all of Guarantor's deposit accounts in
which such funds were deposited, whether or not such funds were commingled with
other monies of Guarantor, and whether or not such funds then remain on deposit
In such an account or accounts. To this end and to secure Guarantor's
obligations under this Agreement, Guarantor collaterally assigns and pledges to
Lender, and grants to Lender a continuing security Interest In, any and all of
Guarantor's present and future rights, title and Interest In and to all monies
that Guarantor may now and/or In the future maintain on deposit with banks,
savings and loan associations and other entities (other than tax deferred
accounts with Lender), In which Guarantor may at any time deposit any such funds
that may be received from Borrower (or any other guarantor, endorser or surety
of Borrower's Indebtedness) In favor of Lender.
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<PAGE>
DEPOSIT ACCOUNTS. As collateral security for repayment of Guarantor's
obligations hereunder and under any additional guaranties previously granted or
to be granted by Guarantor in the future, and additionally as collateral
security for any present and future indebtedness of Guarantor in favor of Lender
(with the exception of any indebtedness under a consumer credit card account),
Guarantor is granting Lender a continuing security interest in any and all funds
that Guarantor may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Guarantor Is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Guarantor further agrees that Lender may at any lime apply any funds
that Guarantor may have on deposit with Lender or In certificates of deposit or
other deposit. accounts as to which Guarantor is an account holder against the
unpaid balance of any and all other present and future obligations and
Indebtedness of Guarantor to Lender, In principal, Interest, fees, costs,
expenses, and attorneys' fees.
ADDITIONAL COVENANTS. Guarantor agrees that Lender may, at its sole option, at
any time, and from time to time, without the consent of or notice to Guarantor,
or any of them, or to any other party, and without incurring any responsibility
to Guarantor or to any other party, and without impairing or releasing any of
Guarantor's obligations or liabilities under this Agreement:
(a) Make additional secured and/or unsecured loans to Borrower.
(b) Discharge, release or agree not to sue any party (including, but not
limited to, Borrower or any other guarantor, surety, or endorser of
Borrower's Indebtedness), who is or may be liable to Lender for any of
Borrower's indebtedness.
(c) Sell, exchange, release, surrender, realize upon, or otherwise deal
with, in any manner and in any order, any collateral directly or indirectly
securing repayment of any of Borrower's indebtedness.
(d) Alter, renew, extend, accelerate, or otherwise change the manner,
place, terms and/or times of payment or other terms of Borrower's
indebtedness, or any part thereof, including any increase or decrease in
the rate or rates of interest on any of Borrower's indebtedness.
(e) Settle or compromise any of Borrower's Indebtedness.
(f) Subordinate and/or agree to subordinate the payment of all or any part
of Borrower's Indebtedness, or Lender's security rights in any collateral
directly or indirectly securing any such indebtedness, to the payment
and/or security rights of any other present and/or future creditors of
Borrower. (g) Apply any payments and/or proceeds received from Borrower or
others to other loans and/or obligations that Borrower may then owe to
Lender, whether or not Borrower's Indebtedness subject to this Agreement
then remains unpaid.
(h) Enter into, deliver, modify, amend, or waive compliance with, any
instrument or arrangement evidencing, securing or otherwise affecting, all
or any part of Borrower's Indebtedness.
NO IMPAIRMENT OF GUARANTOR'S OBLIGATIONS. No course of dealing between Lender
and Borrower (or any other guarantor, surety or endorser of Borrower's
Indebtedness), nor any failure or delay on the part of Lender to exercise any of
Lender's rights and remedies under this Agreement or any other agreement or
agreements by and between Lender and Borrower (or any other guarantor, surety or
endorser), shall have the effect of Impairing or releasing Guarantor's
obligations and liabilities to Lender, or of waiving any of Lender's rights and
remedies under this Agreement or otherwise. Any partial exercise of any rights
and remedies granted to Lender shall furthermore not constitute a waiver of any
of Lender's other rights and remedies; It being Guarantor's Intent and agreement
that Lender's rights and remedies shall be cumulative In nature. Guarantor
further agrees that, should Borrower default under any of Its Indebtedness, any
waiver or forbearance on the part of Lender to pursue Lender's available rights
and remedies shall be binding upon Lender only to the extent that Lender
specifically agrees to such waiver or forbearance In writing. A waiver or
forbearance on the part of Lender as to one event of default shall not
constitute a waiver or forbearance as to any other default.
NO RELEASE OF GUARANTOR. Guarantor's obligations and liabilities under this
Agreement shall not be released, Impaired, reduced, or otherwise affected by,
and shall continue In full force and effect notwithstanding the occurrence of
any event, Including without limitation any one or more of the following events:
(a) The death, Insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution, or lack of authority
(whether corporate, partnership or trust) of Borrower (or any person acting
on Borrower's behalf), or of any other guarantor, surety or endorser of
Borrower's Indebtedness.
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<PAGE>
(b) Any payment by Borrower, or any other party, to Lender that is held to
constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or any such amounts or payment which, for any reason,
Lender Is required to refund or repay to Borrower or to any other person.
(c) Any dissolution of Borrower, or any sale, lease or transfer of all or
any part of Borrower's assets.
AUTOMATIC REINSTATEMENT. This Agreement and Guarantor's obligations and
liabilities hereunder shall continue to be effective, and/or shall automatically
and retroactively be reinstated, if a release or discharge has occurred, or if
at any time, any payment or part thereof to Lender with respect to Borrower's
indebtedness, is rescinded or must otherwise be restored by Lender pursuant to
any insolvency, bankruptcy, reorganization, receivership, or any other debt
relief granted to Borrower or to any other party to Borrower's indebtedness or
any such security therefor. in the event that Lender must rescind or restore any
payment received in total or partial satisfaction of Borrower's indebtedness,
any prior release or discharge from the terms of this Agreement given to
Guarantor shall be without effect, and this Agreement and Guarantor's
obligations and liabilities hereunder shall automatically and retroactively be
renewed and/or reinstated and shall remain in full force and effect to the same
degree and extent as if such a release or discharge had never been granted. it
is the intention of Lender and Guarantor that Guarantor's obligations and
liabilities hereunder shall not be discharged except by Guarantor's full and
complete performance and satisfaction of such obligations and liabilities; and
then only to the extent of such performance.
REPRESENTATIONS AND WARRANTIES BY GUARANTOR. Guarantor represents and warrants
that:
(a) Guarantor has the lawful power to own its properties and to engage in
its business as presently conducted. (b) Guarantor's guaranty of Borrower's
Indebtedness and Guarantor's execution, delivery and performance of this
Agreement are not in violation of any laws and will not result In a default
under any contract, agreement, or Instrument to which Guarantor Is a party,
or by which Guarantor or its property may be bound.
(c) Guarantor has agreed and consented to execute this Agreement and to
guarantee Borrower's indebtedness in favor of Lender, at Borrower's request
and not at the request of Lender.
(d) Guarantor will receive and/or has received a direct or indirect
material benefit from the transactions contemplated herein and/or arising
out of Borrower's Indebtedness.
(e) This Agreement, when executed and delivered to Lender, will constitute
a valid, legal and binding obligation of Guarantor, enforceable in
accordance with its terms.
(f) Guarantor has established adequate means of obtaining Information from
Borrower on a continuing basis regarding Borrower's financial condition.
(g) Lender has made no representations to Guarantor as to the
creditworthiness of Borrower.
ADDITIONAL OBLIGATIONS OF GUARANTOR. So long as this Agreement remains in
effect, Guarantor has not and will not, without Lender's prior written consent,
sell, lease, assign, pledge, hypothecate, encumber, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets. Guarantor agrees to
keep adequately informed of any facts, events or circumstances which might in
any way affect Guarantor's risks under this Agreement. Guarantor further agrees
that Lender shall have no obligation to disclose to Guarantor any information or
material relating to Borrower or Borrower's indebtedness.
ADDITIONAL DOCUMENTS; FINANCIAL STATEMENTS. Upon the reasonable request of
Lender, Guarantor will, at any time, and from time to time, execute and deliver
to Lender any and all such financial instruments and documents, and supply such
additional information, as may be necessary or advisable in the opinion of
Lender to obtain the full benefits of this Agreement. Guarantor further agrees
to provide Lender with such financial statements and other related information
at such frequencies and in such detail as Lender may reasonably request.
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TRANSFER OF INDEBTEDNESS. This agreement is for the benefit of Lender and for
such other person or persons as may from time to time become or be the holders
of all or any part of Borrower's indebtedness. This Agreement shall be
transferrable and negotiable with the same force and effect and to the same
extent as Borrower's indebtedness may be transferrable; it being understood and
agreed to by Guarantor that, upon any transfer or assignment of all or any part
of Borrower's indebtedness, the holder of such indebtedness shall have all of
the rights and remedies granted to Lender under this Agreement. Guarantor
further agrees that, upon any transfer of all or any portion of Borrower's
indebtedness, Lender may transfer and deliver any and all collateral securing
repayment of such indebtedness (including, but not limited to, any collateral
provided by Guarantor) to the transferee of such indebtedness, and such
collateral shall secure any and all of Borrower's indebtedness in favor of such
a transferee. Guarantor additionally agrees that, after any such transfer or
assignment has taken place, Lender shall be fully discharged from any and all
liability and responsibility to Borrower and Guarantor with respect to such
collateral, and the transferee thereafter shall be vested with all the powers
and rights with respect to such collateral.
CONSENT TO PARTICIPATION. Guarantor recognizes and agrees that Lender may, from
time to time, one or more times, transfer all or any part of Borrower's
indebtedness through sales of participation interests in such indebtedness to
one or more third party lenders. Guarantor specifically agrees and consents to
all such transfers and assignments, and Guarantor further waives any subsequent
notice of such transfers and assignments as may be provided under Louisiana law.
Guarantor additionally agrees that the purchaser of a participation interest in
Borrower's indebtedness will be considered as the absolute owner of a percentage
interest of such indebtedness and that such a purchaser will have all of the
rights granted under any participation agreement governing the sale of such a
participation interest. Guarantor waives any rights of offset that Guarantor may
have against Lender and/or any purchaser of such a participation interest, and
Guarantor unconditionally agrees that either Lender or such a purchaser may
enforce Guarantor's obligations and liabilities under this Agreement,
irrespective of the failure or insolvency of Lender or any such purchaser.
NOTICES. Any notice provided in this Agreement must be in writing and will be
considered as given on the day it is delivered by hand or deposited in the U.S.
mail, postage prepaid, addressed to the person to whom the notice is to be given
at the address shown above or at such other addresses as any party may designate
to the other in writing. if there is more than one Guarantor under this
Agreement, notice to any Guarantor shall constitute notice to all Guarantors.
ADDITIONAL GUARANTIES. Guarantor recognizes and agrees that Guarantor may have
previously granted, and may in the future grant, one or more additional
guaranties of Borrower's indebtedness in favor of Lender. Should this occur, the
execution of this Agreement and any additional guaranties on the part of
Guarantor will not be construed as a cancellation of this Agreement or any of
Guarantor's additional guaranties; It being Guarantor's full intent and
agreement that all such guaranties of Borrower's Indebtedness in favor of Lender
shall remain in full force and affect and shall be cumulative in nature and
effect.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendment. No amendment, modification, consent or waiver of any provision
of this Agreement, and no consent to any departure by Guarantor therefrom,
shall be effective unless the same shall be in writing signed by a duly
authorized officer of Lender, and then shall be effective only as to the
specific instance and for the specific purpose for which given.
Applicable Law. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Louisiana. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Louisiana.
Caption Headings. Caption headings of the sections of this Agreement are
for convenience purposes only and are not to be used to interpret or to
define their provisions. in this Agreement, whenever the context so
requires, the .singular includes the plural and the plural also includes
the singular.
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Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable. This Agreement shall
be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining provisions of
this Agreement shall remain in full force and affect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of
this Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and legal, valid and
enforceable.
Successors and Assigns Bound. Guarantors obligations and liabilities under
this Agreement shall be binding upon Guarantor's Successors, heirs,
legatees, devisees, administrators, executors and assigns.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED. NO
FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED AUGUST 18, 1998.
GUARANTOR:
/S/ Edward E. Friloux
- -------------------------
By: EDWARD E. FRILOUX
Page 7
Exhibit 10.4(j)
---------------
COMMERCIAL GUARANTY
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
Guarantor: STEPHEN F. OWENS
1951 Tavern Road
Alpine, CA 70570
================================================================================
AMOUNT OF GUARANTY. This is a guaranty of payment of the Note, including without
limitation the principal Note amount of One Hundred Seventy Two Thousand Seven
Hundred Twenty Five & 73/100 Dollars (U.S. $172,726.73).
DEFINITIONS. The following terms shall have the following meanings when used In
this Agreement:
Agreement. The word "Agreement" means this Guaranty Agreement as this
Agreement may be amended or modified from time to time.
Borrower. The word "Borrower" means individually, collectively and
interchangeably AMERICAN FIRE RETARDANT CORPORATION.
Guarantor. The word "Guarantor" means Individually, collectively and
Interchangeably STEPHEN F. OWENS and all other persons guaranteeing payment
and satisfaction of Borrower's Indebtedness as hereinafter defined.
Indebtedness. 'The word "Indebtedness" means Borrower's Indebtedness and
obligations in favor of Lender under the Note, and all Interest, costs,
expenses and attorneys' fees and other fees and charges relating thereto,
and all amendments thereto and/or substitutions therefor, and any and all
renewals, extensions and/or refinancings thereof.
Lender. The word "Lender" means ST. MARTIN BANK & TRUST COMPANY, JOHNSTON
STREET BRANCH, LAFAYETTE TIN: 72-0307850, its successors and assigns, and
any subsequent holder or holders of Borrower's indebtedness.
Note. The word "Note" means the promissory note or credit agreement dated
August 18, 1998, in the original principal amount of $172,725.73 from
Borrower to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for
the promissory note or agreement.
GUARANTEE OF BORROWER'S INDEBTEDNESS. Guarantor hereby absolutely and
unconditionally agrees to, and by these presents does hereby, guarantee the
prompt and punctual payment, performance and satisfaction of Borrower's
Indebtedness in favor of Lender.
JOINT, SEVERAL AND SOLIDARY LIABILITY. Guarantor's obligations and liability
under this Agreement shall be on a "solidary" or "Joint and several" basis along
with Borrower to the same degree and extent as if Guarantor had been and/or,
will be a co-borrower, co-principal obligor and/or co-maker of Borrower's
indebtedness. in the event that there is more than one Guarantor under this
Agreement, or in the event that there are other guarantors, endorsers or
sureties of all or any portion of Borrower's Indebtedness, Guarantor's
obligations and liability hereunder shall further be on a "solidary" or "joint
and several" basis along with such other .guarantors, endorsers and/or sureties.
Page 1
<PAGE>
DURATION OF GUARANTY. This Agreement and Guarantor's obligations and liability
hereunder shall remain in full force and effect until such time as Borrower's
indebtedness shall be paid, performed and satisfied in full, in principal,
interest, costs, expenses and attorneys' fees, and other fees and charges.
DEFAULT. Should any event of default occur or exist under Borrower's
indebtedness in favor of Lender, Guarantor unconditionally and absolutely agrees
to pay Lender the then unpaid amount of Borrower's Indebtedness, in principal,
interest, costs, expenses, attorneys' fees and other fees and charges, subject
to the maximum principal dollar amount limitations set forth above. Such payment
or payments shall be made at Lender's offices indicated above, immediately
following demand by Lender.
GUARANTOR'S WAIVERS. Guarantor hereby waives:
(a) Notice of Lender's acceptance of this Agreement.
(b) Presentment for payment of Borrower's Indebtedness, notice of dishonor
and of nonpayment, notice of intention to accelerate, notice of
acceleration, protest and notice of protest, collection or institution of
any suit or other action by Lender in collection thereof, including any
notice of default In payment thereof, or other notice to, or demand for
payment thereof, on any party.
(c) Any right to require Lender to notify Guarantor of any nonpayment
relating to any collateral directly or indirectly securing Borrower's
indebtedness, or notice of any action or non-action on the part of
Borrower, Lender, or any other guarantor, surety or endorser of Borrower's
indebtedness
(d) Any rights to demand or require collateral security from the Borrower
or any other person as provided under applicable Louisiana law or
otherwise.
(e) Any right to require Lender to notify Guarantor of the terms, time and
place of any public or private sale of any collateral directly or
Indirectly securing Borrower's Indebtedness.
(f) Any "one action" or "anti-deficiency" law or any other law which may
prevent Lender from bringing any action, Including a claim for deficiency,
against Guarantor, before or after Lender's commencement or completion of
any foreclosure action, or any action in lieu of foreclosure.
(g) Any election of remedies by Lender that may destroy or impair
Guarantor's subrogation rights or Guarantor's right to proceed for
reimbursement against Borrower or any other guarantor, surety or endorser
of Borrowers indebtedness, including without limitation, any loss of fights
Guarantor may suffer by reason of any law limiting, qualifying, or
discharging Borrowers indebtedness.
(h) Any disability or other defense of Borrower, or any other guarantor,
surety or endorser, or any other person. or by reason of the cessation from
any cause whatsoever, other than payment in full of Borrower's
indebtedness.
(i) Any statute of limitations or prescriptive period, if at the time an
action or suit brought by Lender against Guarantor is commenced, there is
any outstanding indebtedness of Borrower to Lender which is barred by any
applicable statute of limitations or prescriptive period.
Page 2
<PAGE>
Guarantor warrants and agrees that each of the waivers set forth above is made
with Guarantor's full knowledge of its significance and consequences, and that,
under the circumstances, such waivers are reasonable and not contrary to public
policy or law. If any such waiver is determined to be contrary to any applicable
law or public policy, such waiver shall be effective only to the extent
permitted by law.
GUARANTOR'S SUBORDINATION OF RIGHTS. In the event that Guarantor should for any
reason (a) advance or lend monies to Borrower, whether or not such funds are
used by Borrower to make payment(s) under Borrower's Indebtedness, and/or (b)
make any payment(s) to Lender or others for and on behalf of Borrower under
Borrower's Indebtedness, and/or (c) make any payment to Lender In total or
partial satisfaction of Guarantor's obligations and liabilities under this
Agreement, and/or (d) It any of Guarantor's property Is used to pay or satisfy
any of Borrower's Indebtedness, Guarantor hereby agrees that any and all rights
that Guarantor may have or acquire to collect from or to be reimbursed by
Borrower (or from or by any other guarantor, endorser or surety of Borrower's
Indebtedness), whether Guarantor's rights of collection or reimbursement arise
by way of subrogation to the rights of Lender or otherwise, shall In all
respects, whether or not Borrower Is presently or subsequently becomes
Insolvent, be subordinate, inferior and junior to the rights of Lender to
collect and enforce payment, performance and satisfaction of Borrower's then
remaining Indebtedness, until such time as Borrower's Indebtedness Is fully paid
and satisfied. In the event of Borrower's Insolvency or consequent liquidation
of Borrower's assets, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of claims of both Lender and Guarantor shall be paid
to Lender and shall be first applied by Lender to Borrower's then remaining
indebtedness. Guarantor hereby assigns to Lender all claims which it may have or
acquire against Borrower or any assignee or trustee of Borrower in bankruptcy;
provided that, such assignment shall be effective only for the purpose of
assuring to Lender full payment of Borrower's Indebtedness guaranteed under this
Agreement.
If now or hereafter (a) Borrower shall be or become Insolvent, and (b) Borrowers
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes In favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
GUARANTOR'S RECEIPT OF PAYMENTS. Guarantor further agrees to refrain from
attempting to collect and/or enforce any of Guarantor's collection and/or
reimbursement rights against Borrower (or against any other guarantor, surety or
endorser of Borrower's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Borrower's then remaining Indebtedness in
favor of Lender is fully paid and satisfied. In the event that Guarantor should
for any reason whatsoever receive any payments(s) from borrower (or any other
guarantor, surety or endorser of Borrower's Indebtedness) that Borrower (or such
a third party) may owe to Guarantor for any of the reasons stated above,
Guarantor agrees to accept such payment(s) In trust for and on behalf of Lender,
advising Borrower (or the third party payee) of such fact. Guarantor further
unconditionally agrees to immediately deliver such funds to Lender, with such
funds being held by Guarantor over any interim period, in trust for Lender. in
the event that Guarantor should for any reason whatsoever receive any such funds
from Borrower (or any third party), and Guarantor should deposit such funds in
one or more of Guarantor's deposit accounts, no matter where located, Lender
shall have the right to attach any and all of Guarantor's deposit accounts in
which such funds were deposited, whether or not such funds were commingled with
other monies of Guarantor, and whether or not such funds then remain on deposit
In such an account or accounts. To this end and to secure Guarantor's
obligations under this Agreement, Guarantor collaterally assigns and pledges to
Lender, and grants to Lender a continuing security Interest In, any and all of
Guarantor's present and future rights, title and Interest In and to all monies
that Guarantor may now and/or In the future maintain on deposit with banks,
savings and loan associations and other entities (other than tax deferred
accounts with Lender), In which Guarantor may at any time deposit any such funds
that may be received from Borrower (or any other guarantor, endorser or surety
of Borrower's Indebtedness) In favor of Lender.
Page 3
<PAGE>
DEPOSIT ACCOUNTS. As collateral security for repayment of Guarantor's
obligations hereunder and under any additional guaranties previously granted or
to be granted by Guarantor in the future, and additionally as collateral
security for any present and future indebtedness of Guarantor in favor of Lender
(with the exception of any indebtedness under a consumer credit card account),
Guarantor is granting Lender a continuing security interest in any and all funds
that Guarantor may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Guarantor Is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Guarantor further agrees that Lender may at any lime apply any funds
that Guarantor may have on deposit with Lender or In certificates of deposit or
other deposit. accounts as to which Guarantor is an account holder against the
unpaid balance of any and all other present and future obligations and
Indebtedness of Guarantor to Lender, In principal, Interest, fees, costs,
expenses, and attorneys' fees.
ADDITIONAL COVENANTS. Guarantor agrees that Lender may, at its sole option, at
any time, and from time to time, without the consent of or notice to Guarantor,
or any of them, or to any other party, and without incurring any responsibility
to Guarantor or to any other party, and without impairing or releasing any of
Guarantor's obligations or liabilities under this Agreement:
(a) Make additional secured and/or unsecured loans to Borrower.
(b) Discharge, release or agree not to sue any party (including, but not
limited to, Borrower or any other guarantor, surety, or endorser of
Borrower's Indebtedness), who is or may be liable to Lender for any of
Borrower's indebtedness.
(c) Sell, exchange, release, surrender, realize upon, or otherwise deal
with, in any manner and in any order, any collateral directly or indirectly
securing repayment of any of Borrower's indebtedness.
(d) Alter, renew, extend, accelerate, or otherwise change the manner,
place, terms and/or times of payment or other terms of Borrower's
indebtedness, or any part thereof, including any increase or decrease in
the rate or rates of interest on any of Borrower's indebtedness.
(e) Settle or compromise any of Borrower's Indebtedness.
(f) Subordinate and/or agree to subordinate the payment of all or any part
of Borrower's Indebtedness, or Lender's security rights in any collateral
directly or indirectly securing any such indebtedness, to the payment
and/or security rights of any other present and/or future creditors of
Borrower. (g) Apply any payments and/or proceeds received from Borrower or
others to other loans and/or obligations that Borrower may then owe to
Lender, whether or not Borrower's Indebtedness subject to this Agreement
then remains unpaid.
(h) Enter into, deliver, modify, amend, or waive compliance with, any
instrument or arrangement evidencing, securing or otherwise affecting, all
or any part of Borrower's Indebtedness.
NO IMPAIRMENT OF GUARANTOR'S OBLIGATIONS. No course of dealing between Lender
and Borrower (or any other guarantor, surety or endorser of Borrower's
Indebtedness), nor any failure or delay on the part of Lender to exercise any of
Lender's rights and remedies under this Agreement or any other agreement or
agreements by and between Lender and Borrower (or any other guarantor, surety or
endorser), shall have the effect of Impairing or releasing Guarantor's
obligations and liabilities to Lender, or of waiving any of Lender's rights and
remedies under this Agreement or otherwise. Any partial exercise of any rights
and remedies granted to Lender shall furthermore not constitute a waiver of any
of Lender's other rights and remedies; It being Guarantor's Intent and agreement
that Lender's rights and remedies shall be cumulative In nature. Guarantor
further agrees that, should Borrower default under any of Its Indebtedness, any
waiver or forbearance on the part of Lender to pursue Lender's available rights
and remedies shall be binding upon Lender only to the extent that Lender
specifically agrees to such waiver or forbearance In writing. A waiver or
forbearance on the part of Lender as to one event of default shall not
constitute a waiver or forbearance as to any other default.
NO RELEASE OF GUARANTOR. Guarantor's obligations and liabilities under this
Agreement shall not be released, Impaired, reduced, or otherwise affected by,
and shall continue In full force and effect notwithstanding the occurrence of
any event, Including without limitation any one or more of the following events:
(a) The death, Insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution, or lack of authority
(whether corporate, partnership or trust) of Borrower (or any person acting
on Borrower's behalf), or of any other guarantor, surety or endorser of
Borrower's Indebtedness.
Page 4
<PAGE>
(b) Any payment by Borrower, or any other party, to Lender that is held to
constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or any such amounts or payment which, for any reason,
Lender Is required to refund or repay to Borrower or to any other person.
(c) Any dissolution of Borrower, or any sale, lease or transfer of all or
any part of Borrower's assets.
AUTOMATIC REINSTATEMENT. This Agreement and Guarantor's obligations and
liabilities hereunder shall continue to be effective, and/or shall automatically
and retroactively be reinstated, if a release or discharge has occurred, or if
at any time, any payment or part thereof to Lender with respect to Borrower's
indebtedness, is rescinded or must otherwise be restored by Lender pursuant to
any insolvency, bankruptcy, reorganization, receivership, or any other debt
relief granted to Borrower or to any other party to Borrower's indebtedness or
any such security therefor. in the event that Lender must rescind or restore any
payment received in total or partial satisfaction of Borrower's indebtedness,
any prior release or discharge from the terms of this Agreement given to
Guarantor shall be without effect, and this Agreement and Guarantor's
obligations and liabilities hereunder shall automatically and retroactively be
renewed and/or reinstated and shall remain in full force and effect to the same
degree and extent as if such a release or discharge had never been granted. it
is the intention of Lender and Guarantor that Guarantor's obligations and
liabilities hereunder shall not be discharged except by Guarantor's full and
complete performance and satisfaction of such obligations and liabilities; and
then only to the extent of such performance.
REPRESENTATIONS AND WARRANTIES BY GUARANTOR. Guarantor represents and warrants
that:
(a) Guarantor has the lawful power to own its properties and to engage in
its business as presently conducted. (b) Guarantor's guaranty of Borrower's
Indebtedness and Guarantor's execution, delivery and performance of this
Agreement are not in violation of any laws and will not result In a default
under any contract, agreement, or Instrument to which Guarantor Is a party,
or by which Guarantor or its property may be bound.
(c) Guarantor has agreed and consented to execute this Agreement and to
guarantee Borrower's indebtedness in favor of Lender, at Borrower's request
and not at the request of Lender.
(d) Guarantor will receive and/or has received a direct or indirect
material benefit from the transactions contemplated herein and/or arising
out of Borrower's Indebtedness.
(e) This Agreement, when executed and delivered to Lender, will constitute
a valid, legal and binding obligation of Guarantor, enforceable in
accordance with its terms.
(f) Guarantor has established adequate means of obtaining Information from
Borrower on a continuing basis regarding Borrower's financial condition.
(g) Lender has made no representations to Guarantor as to the
creditworthiness of Borrower.
ADDITIONAL OBLIGATIONS OF GUARANTOR. So long as this Agreement remains in
effect, Guarantor has not and will not, without Lender's prior written consent,
sell, lease, assign, pledge, hypothecate, encumber, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets. Guarantor agrees to
keep adequately informed of any facts, events or circumstances which might in
any way affect Guarantor's risks under this Agreement. Guarantor further agrees
that Lender shall have no obligation to disclose to Guarantor any information or
material relating to Borrower or Borrower's indebtedness.
ADDITIONAL DOCUMENTS; FINANCIAL STATEMENTS. Upon the reasonable request of
Lender, Guarantor will, at any time, and from time to time, execute and deliver
to Lender any and all such financial instruments and documents, and supply such
additional information, as may be necessary or advisable in the opinion of
Lender to obtain the full benefits of this Agreement. Guarantor further agrees
to provide Lender with such financial statements and other related information
at such frequencies and in such detail as Lender may reasonably request.
Page 5
<PAGE>
TRANSFER OF INDEBTEDNESS. This agreement is for the benefit of Lender and for
such other person or persons as may from time to time become or be the holders
of all or any part of Borrower's indebtedness. This Agreement shall be
transferrable and negotiable with the same force and effect and to the same
extent as Borrower's indebtedness may be transferrable; it being understood and
agreed to by Guarantor that, upon any transfer or assignment of all or any part
of Borrower's indebtedness, the holder of such indebtedness shall have all of
the rights and remedies granted to Lender under this Agreement. Guarantor
further agrees that, upon any transfer of all or any portion of Borrower's
indebtedness, Lender may transfer and deliver any and all collateral securing
repayment of such indebtedness (including, but not limited to, any collateral
provided by Guarantor) to the transferee of such indebtedness, and such
collateral shall secure any and all of Borrower's indebtedness in favor of such
a transferee. Guarantor additionally agrees that, after any such transfer or
assignment has taken place, Lender shall be fully discharged from any and all
liability and responsibility to Borrower and Guarantor with respect to such
collateral, and the transferee thereafter shall be vested with all the powers
and rights with respect to such collateral.
CONSENT TO PARTICIPATION. Guarantor recognizes and agrees that Lender may, from
time to time, one or more times, transfer all or any part of Borrower's
indebtedness through sales of participation interests in such indebtedness to
one or more third party lenders. Guarantor specifically agrees and consents to
all such transfers and assignments, and Guarantor further waives any subsequent
notice of such transfers and assignments as may be provided under Louisiana law.
Guarantor additionally agrees that the purchaser of a participation interest in
Borrower's indebtedness will be considered as the absolute owner of a percentage
interest of such indebtedness and that such a purchaser will have all of the
rights granted under any participation agreement governing the sale of such a
participation interest. Guarantor waives any rights of offset that Guarantor may
have against Lender and/or any purchaser of such a participation interest, and
Guarantor unconditionally agrees that either Lender or such a purchaser may
enforce Guarantor's obligations and liabilities under this Agreement,
irrespective of the failure or insolvency of Lender or any such purchaser.
NOTICES. Any notice provided in this Agreement must be in writing and will be
considered as given on the day it is delivered by hand or deposited in the U.S.
mail, postage prepaid, addressed to the person to whom the notice is to be given
at the address shown above or at such other addresses as any party may designate
to the other in writing. if there is more than one Guarantor under this
Agreement, notice to any Guarantor shall constitute notice to all Guarantors.
ADDITIONAL GUARANTIES. Guarantor recognizes and agrees that Guarantor may have
previously granted, and may in the future grant, one or more additional
guaranties of Borrower's indebtedness in favor of Lender. Should this occur, the
execution of this Agreement and any additional guaranties on the part of
Guarantor will not be construed as a cancellation of this Agreement or any of
Guarantor's additional guaranties; It being Guarantor's full intent and
agreement that all such guaranties of Borrower's Indebtedness in favor of Lender
shall remain in full force and affect and shall be cumulative in nature and
effect.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendment. No amendment, modification, consent or waiver of any provision
of this Agreement, and no consent to any departure by Guarantor therefrom,
shall be effective unless the same shall be in writing signed by a duly
authorized officer of Lender, and then shall be effective only as to the
specific instance and for the specific purpose for which given.
Applicable Law. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Louisiana. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Louisiana.
Caption Headings. Caption headings of the sections of this Agreement are
for convenience purposes only and are not to be used to interpret or to
define their provisions. in this Agreement, whenever the context so
requires, the .singular includes the plural and the plural also includes
the singular.
Page 6
<PAGE>
Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable. This Agreement shall
be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining provisions of
this Agreement shall remain in full force and affect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of
this Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and legal, valid and
enforceable.
Successors and Assigns Bound. Guarantors obligations and liabilities under
this Agreement shall be binding upon Guarantor's Successors, heirs,
legatees, devisees, administrators, executors and assigns.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED. NO
FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED AUGUST 18, 1998.
GUARANTOR:
/S/ Stephen F. Owens
- -------------------------
By: Stephen F. Owens
Page 7
Exhibit 10.4(k)
---------------
COMMERCIAL GUARANTY
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
Guarantor: ANGELA M. RAIDL
1951 Tavern Road
Alpine, CA 70570
================================================================================
AMOUNT OF GUARANTY. This is a guaranty of payment of the Note, including without
limitation the principal Note amount of One Hundred Seventy Two Thousand Seven
Hundred Twenty Five & 73/100 Dollars (U.S. $172,726.73).
DEFINITIONS. The following terms shall have the following meanings when used In
this Agreement:
Agreement. The word "Agreement" means this Guaranty Agreement as this
Agreement may be amended or modified from time to time.
Borrower. The word "Borrower" means individually, collectively and
interchangably AMERICAN FIRE RETARDANT CORPORATION.
Guarantor. The word "Guarantor" means Individually, collectively and
Interchangeably ANGELA M. RAIDL and all other persons guaranteeing payment
and satisfaction of Borrower's Indebtedness as hereinafter defined.
Indebtedness. 'The word "Indebtedness" means Borrower's Indebtedness and
obligations in favor of Lender under the Note, and all Interest, costs,
expenses and attorneys' fees and other fees and charges relating thereto,
and all amendments thereto and/or substitutions therefor, and any and all
renewals, extensions and/or refinancings thereof.
Lender. The word "Lender" means ST. MARTIN BANK & TRUST COMPANY, JOHNSTON
STREET BRANCH, LAFAYETTE TIN: 72-0307850, its successors and assigns, and
any subsequent holder or holders of Borrower's indebtedness.
Note. The word "Note" means the promissory note or credit agreement dated
August 18, 1998, in the original principal amount of $172,725.73 from
Borrower to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for
the promissory note or agreement.
GUARANTEE OF BORROWER'S INDEBTEDNESS. Guarantor hereby absolutely and
unconditionally agrees to, and by these presents does hereby, guarantee the
prompt and punctual payment, performance and satisfaction of Borrower's
Indebtedness in favor of Lender.
JOINT, SEVERAL AND SOLIDARY LIABILITY. Guarantor's obligations and liability
under this Agreement shall be on a "solidary" or "Joint and several" basis along
with Borrower to the same degree and extent as if Guarantor had been and/or,
will be a co-borrower, co-principal obligor and/or co-maker of Borrower's
indebtedness. in the event that there is more than one Guarantor under this
Agreement, or in the event that there are other guarantors, endorsers or
sureties of all or any portion of Borrower's Indebtedness, Guarantor's
obligations and liability hereunder shall further be on a "solidary" or "joint
and several" basis along with such other .guarantors, endorsers and/or sureties.
Page 1
<PAGE>
DURATION OF GUARANTY. This Agreement and Guarantor's obligations and liability
hereunder shall remain in full force and effect until such time as Borrower's
indebtedness shall be paid, performed and satisfied in full, in principal,
interest, costs, expenses and attorneys' fees, and other fees and charges.
DEFAULT. Should any event of default occur or exist under Borrower's
indebtedness in favor of Lender, Guarantor unconditionally and absolutely agrees
to pay Lender the then unpaid amount of Borrower's Indebtedness, in principal,
interest, costs, expenses, attorneys' fees and other fees and charges, subject
to the maximum principal dollar amount limitations set forth above. Such payment
or payments shall be made at Lender's offices indicated above, immediately
following demand by Lender.
GUARANTOR'S WAIVERS. Guarantor hereby waives:
(a) Notice of Lender's acceptance of this Agreement.
(b) Presentment for payment of Borrower's Indebtedness, notice of dishonor
and of nonpayment, notice of intention to accelerate, notice of
acceleration, protest and notice of protest, collection or institution of
any suit or other action by Lender in collection thereof, including any
notice of default In payment thereof, or other notice to, or demand for
payment thereof, on any party.
(c) Any right to require Lender to notify Guarantor of any nonpayment
relating to any collateral directly or indirectly securing Borrower's
indebtedness, or notice of any action or non-action on the part of
Borrower, Lender, or any other guarantor, surety or endorser of Borrower's
indebtedness
(d) Any rights to demand or require collateral security from the Borrower
or any other person as provided under applicable Louisiana law or
otherwise.
(e) Any right to require Lender to notify Guarantor of the terms, time and
place of any public or private sale of any collateral directly or
Indirectly securing Borrower's Indebtedness.
(f) Any "one action" or "anti-deficiency" law or any other law which may
prevent Lender from bringing any action, Including a claim for deficiency,
against Guarantor, before or after Lender's commencement or completion of
any foreclosure action, or any action in lieu of foreclosure.
(g) Any election of remedies by Lender that may destroy or impair
Guarantor's subrogation rights or Guarantor's right to proceed for
reimbursement against Borrower or any other guarantor, surety or endorser
of Borrowers indebtedness, including without limitation, any loss of fights
Guarantor may suffer by reason of any law limiting, qualifying, or
discharging Borrowers indebtedness.
(h) Any disability or other defense of Borrower, or any other guarantor,
surety or endorser, or any other person. or by reason of the cessation from
any cause whatsoever, other than payment in full of Borrower's
indebtedness.
(i) Any statute of limitations or prescriptive period, if at the time an
action or suit brought by Lender against Guarantor is commenced, there is
any outstanding indebtedness of Borrower to Lender which is barred by any
applicable statute of limitations or prescriptive period.
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<PAGE>
Guarantor warrants and agrees that each of the waivers set forth above is made
with Guarantor's full knowledge of its significance and consequences, and that,
under the circumstances, such waivers are reasonable and not contrary to public
policy or law. If any such waiver is determined to be contrary to any applicable
law or public policy, such waiver shall be effective only to the extent
permitted by law.
GUARANTOR'S SUBORDINATION OF RIGHTS. In the event that Guarantor should for any
reason (a) advance or lend monies to Borrower, whether or not such funds are
used by Borrower to make payment(s) under Borrower's Indebtedness, and/or (b)
make any payment(s) to Lender or others for and on behalf of Borrower under
Borrower's Indebtedness, and/or (c) make any payment to Lender In total or
partial satisfaction of Guarantor's obligations and liabilities under this
Agreement, and/or (d) It any of Guarantor's property Is used to pay or satisfy
any of Borrower's Indebtedness, Guarantor hereby agrees that any and all rights
that Guarantor may have or acquire to collect from or to be reimbursed by
Borrower (or from or by any other guarantor, endorser or surety of Borrower's
Indebtedness), whether Guarantor's rights of collection or reimbursement arise
by way of subrogation to the rights of Lender or otherwise, shall In all
respects, whether or not Borrower Is presently or subsequently becomes
Insolvent, be subordinate, inferior and junior to the rights of Lender to
collect and enforce payment, performance and satisfaction of Borrower's then
remaining Indebtedness, until such time as Borrower's Indebtedness Is fully paid
and satisfied. In the event of Borrower's Insolvency or consequent liquidation
of Borrower's assets, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of claims of both Lender and Guarantor shall be paid
to Lender and shall be first applied by Lender to Borrower's then remaining
indebtedness. Guarantor hereby assigns to Lender all claims which it may have or
acquire against Borrower or any assignee or trustee of Borrower in bankruptcy;
provided that, such assignment shall be effective only for the purpose of
assuring to Lender full payment of Borrower's Indebtedness guaranteed under this
Agreement.
If now or hereafter (a) Borrower shall be or become Insolvent, and (b) Borrowers
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes In favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
GUARANTOR'S RECEIPT OF PAYMENTS. Guarantor further agrees to refrain from
attempting to collect and/or enforce any of Guarantor's collection and/or
reimbursement rights against Borrower (or against any other guarantor, surety or
endorser of Borrower's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Borrower's then remaining Indebtedness in
favor of Lender is fully paid and satisfied. In the event that Guarantor should
for any reason whatsoever receive any payments(s) from borrower (or any other
guarantor, surety or endorser of Borrower's Indebtedness) that Borrower (or such
a third party) may owe to Guarantor for any of the reasons stated above,
Guarantor agrees to accept such payment(s) In trust for and on behalf of Lender,
advising Borrower (or the third party payee) of such fact. Guarantor further
unconditionally agrees to immediately deliver such funds to Lender, with such
funds being held by Guarantor over any interim period, in trust for Lender. in
the event that Guarantor should for any reason whatsoever receive any such funds
from Borrower (or any third party), and Guarantor should deposit such funds in
one or more of Guarantor's deposit accounts, no matter where located, Lender
shall have the right to attach any and all of Guarantor's deposit accounts in
which such funds were deposited, whether or not such funds were commingled with
other monies of Guarantor, and whether or not such funds then remain on deposit
In such an account or accounts. To this end and to secure Guarantor's
obligations under this Agreement, Guarantor collaterally assigns and pledges to
Lender, and grants to Lender a continuing security Interest In, any and all of
Guarantor's present and future rights, title and Interest In and to all monies
that Guarantor may now and/or In the future maintain on deposit with banks,
savings and loan associations and other entities (other than tax deferred
accounts with Lender), In which Guarantor may at any time deposit any such funds
that may be received from Borrower (or any other guarantor, endorser or surety
of Borrower's Indebtedness) In favor of Lender.
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<PAGE>
DEPOSIT ACCOUNTS. As collateral security for repayment of Guarantor's
obligations hereunder and under any additional guaranties previously granted or
to be granted by Guarantor in the future, and additionally as collateral
security for any present and future indebtedness of Guarantor in favor of Lender
(with the exception of any indebtedness under a consumer credit card account),
Guarantor is granting Lender a continuing security interest in any and all funds
that Guarantor may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Guarantor Is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Guarantor further agrees that Lender may at any lime apply any funds
that Guarantor may have on deposit with Lender or In certificates of deposit or
other deposit. accounts as to which Guarantor is an account holder against the
unpaid balance of any and all other present and future obligations and
Indebtedness of Guarantor to Lender, In principal, Interest, fees, costs,
expenses, and attorneys' fees.
ADDITIONAL COVENANTS. Guarantor agrees that Lender may, at its sole option, at
any time, and from time to time, without the consent of or notice to Guarantor,
or any of them, or to any other party, and without incurring any responsibility
to Guarantor or to any other party, and without impairing or releasing any of
Guarantor's obligations or liabilities under this Agreement:
(a) Make additional secured and/or unsecured loans to Borrower.
(b) Discharge, release or agree not to sue any party (including, but not
limited to, Borrower or any other guarantor, surety, or endorser of
Borrower's Indebtedness), who is or may be liable to Lender for any of
Borrower's indebtedness.
(c) Sell, exchange, release, surrender, realize upon, or otherwise deal
with, in any manner and in any order, any collateral directly or indirectly
securing repayment of any of Borrower's indebtedness.
(d) Alter, renew, extend, accelerate, or otherwise change the manner,
place, terms and/or times of payment or other terms of Borrower's
indebtedness, or any part thereof, including any increase or decrease in
the rate or rates of interest on any of Borrower's indebtedness.
(e) Settle or compromise any of Borrower's Indebtedness.
(f) Subordinate and/or agree to subordinate the payment of all or any part
of Borrower's Indebtedness, or Lender's security rights in any collateral
directly or indirectly securing any such indebtedness, to the payment
and/or security rights of any other present and/or future creditors of
Borrower. (g) Apply any payments and/or proceeds received from Borrower or
others to other loans and/or obligations that Borrower may then owe to
Lender, whether or not Borrower's Indebtedness subject to this Agreement
then remains unpaid.
(h) Enter into, deliver, modify, amend, or waive compliance with, any
instrument or arrangement evidencing, securing or otherwise affecting, all
or any part of Borrower's Indebtedness.
NO IMPAIRMENT OF GUARANTOR'S OBLIGATIONS. No course of dealing between Lender
and Borrower (or any other guarantor, surety or endorser of Borrower's
Indebtedness), nor any failure or delay on the part of Lender to exercise any of
Lender's rights and remedies under this Agreement or any other agreement or
agreements by and between Lender and Borrower (or any other guarantor, surety or
endorser), shall have the effect of Impairing or releasing Guarantor's
obligations and liabilities to Lender, or of waiving any of Lender's rights and
remedies under this Agreement or otherwise. Any partial exercise of any rights
and remedies granted to Lender shall furthermore not constitute a waiver of any
of Lender's other rights and remedies; It being Guarantor's Intent and agreement
that Lender's rights and remedies shall be cumulative In nature. Guarantor
further agrees that, should Borrower default under any of Its Indebtedness, any
waiver or forbearance on the part of Lender to pursue Lender's available rights
and remedies shall be binding upon Lender only to the extent that Lender
specifically agrees to such waiver or forbearance In writing. A waiver or
forbearance on the part of Lender as to one event of default shall not
constitute a waiver or forbearance as to any other default.
NO RELEASE OF GUARANTOR. Guarantor's obligations and liabilities under this
Agreement shall not be released, Impaired, reduced, or otherwise affected by,
and shall continue In full force and effect notwithstanding the occurrence of
any event, Including without limitation any one or more of the following events:
(a) The death, Insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution, or lack of authority
(whether corporate, partnership or trust) of Borrower (or any person acting
on Borrower's behalf), or of any other guarantor, surety or endorser of
Borrower's Indebtedness.
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<PAGE>
(b) Any payment by Borrower, or any other party, to Lender that is held to
constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or any such amounts or payment which, for any reason,
Lender Is required to refund or repay to Borrower or to any other person.
(c) Any dissolution of Borrower, or any sale, lease or transfer of all or
any part of Borrower's assets.
AUTOMATIC REINSTATEMENT. This Agreement and Guarantor's obligations and
liabilities hereunder shall continue to be effective, and/or shall automatically
and retroactively be reinstated, if a release or discharge has occurred, or if
at any time, any payment or part thereof to Lender with respect to Borrower's
indebtedness, is rescinded or must otherwise be restored by Lender pursuant to
any insolvency, bankruptcy, reorganization, receivership, or any other debt
relief granted to Borrower or to any other party to Borrower's indebtedness or
any such security therefor. in the event that Lender must rescind or restore any
payment received in total or partial satisfaction of Borrower's indebtedness,
any prior release or discharge from the terms of this Agreement given to
Guarantor shall be without effect, and this Agreement and Guarantor's
obligations and liabilities hereunder shall automatically and retroactively be
renewed and/or reinstated and shall remain in full force and effect to the same
degree and extent as if such a release or discharge had never been granted. it
is the intention of Lender and Guarantor that Guarantor's obligations and
liabilities hereunder shall not be discharged except by Guarantor's full and
complete performance and satisfaction of such obligations and liabilities; and
then only to the extent of such performance.
REPRESENTATIONS AND WARRANTIES BY GUARANTOR. Guarantor represents and warrants
that:
(a) Guarantor has the lawful power to own its properties and to engage in
its business as presently conducted. (b) Guarantor's guaranty of Borrower's
Indebtedness and Guarantor's execution, delivery and performance of this
Agreement are not in violation of any laws and will not result In a default
under any contract, agreement, or Instrument to which Guarantor Is a party,
or by which Guarantor or its property may be bound.
(c) Guarantor has agreed and consented to execute this Agreement and to
guarantee Borrower's indebtedness in favor of Lender, at Borrower's request
and not at the request of Lender.
(d) Guarantor will receive and/or has received a direct or indirect
material benefit from the transactions contemplated herein and/or arising
out of Borrower's Indebtedness.
(e) This Agreement, when executed and delivered to Lender, will constitute
a valid, legal and binding obligation of Guarantor, enforceable in
accordance with its terms.
(f) Guarantor has established adequate means of obtaining Information from
Borrower on a continuing basis regarding Borrower's financial condition.
(g) Lender has made no representations to Guarantor as to the
creditworthiness of Borrower.
ADDITIONAL OBLIGATIONS OF GUARANTOR. So long as this Agreement remains in
effect, Guarantor has not and will not, without Lender's prior written consent,
sell, lease, assign, pledge, hypothecate, encumber, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets. Guarantor agrees to
keep adequately informed of any facts, events or circumstances which might in
any way affect Guarantor's risks under this Agreement. Guarantor further agrees
that Lender shall have no obligation to disclose to Guarantor any information or
material relating to Borrower or Borrower's indebtedness.
ADDITIONAL DOCUMENTS; FINANCIAL STATEMENTS. Upon the reasonable request of
Lender, Guarantor will, at any time, and from time to time, execute and deliver
to Lender any and all such financial instruments and documents, and supply such
additional information, as may be necessary or advisable in the opinion of
Lender to obtain the full benefits of this Agreement. Guarantor further agrees
to provide Lender with such financial statements and other related information
at such frequencies and in such detail as Lender may reasonably request.
Page 5
<PAGE>
TRANSFER OF INDEBTEDNESS. This agreement is for the benefit of Lender and for
such other person or persons as may from time to time become or be the holders
of all or any part of Borrower's indebtedness. This Agreement shall be
transferrable and negotiable with the same force and effect and to the same
extent as Borrower's indebtedness may be transferrable; it being understood and
agreed to by Guarantor that, upon any transfer or assignment of all or any part
of Borrower's indebtedness, the holder of such indebtedness shall have all of
the rights and remedies granted to Lender under this Agreement. Guarantor
further agrees that, upon any transfer of all or any portion of Borrower's
indebtedness, Lender may transfer and deliver any and all collateral securing
repayment of such indebtedness (including, but not limited to, any collateral
provided by Guarantor) to the transferee of such indebtedness, and such
collateral shall secure any and all of Borrower's indebtedness in favor of such
a transferee. Guarantor additionally agrees that, after any such transfer or
assignment has taken place, Lender shall be fully discharged from any and all
liability and responsibility to Borrower and Guarantor with respect to such
collateral, and the transferee thereafter shall be vested with all the powers
and rights with respect to such collateral.
CONSENT TO PARTICIPATION. Guarantor recognizes and agrees that Lender may, from
time to time, one or more times, transfer all or any part of Borrower's
indebtedness through sales of participation interests in such indebtedness to
one or more third party lenders. Guarantor specifically agrees and consents to
all such transfers and assignments, and Guarantor further waives any subsequent
notice of such transfers and assignments as may be provided under Louisiana law.
Guarantor additionally agrees that the purchaser of a participation interest in
Borrower's indebtedness will be considered as the absolute owner of a percentage
interest of such indebtedness and that such a purchaser will have all of the
rights granted under any participation agreement governing the sale of such a
participation interest. Guarantor waives any rights of offset that Guarantor may
have against Lender and/or any purchaser of such a participation interest, and
Guarantor unconditionally agrees that either Lender or such a purchaser may
enforce Guarantor's obligations and liabilities under this Agreement,
irrespective of the failure or insolvency of Lender or any such purchaser.
NOTICES. Any notice provided in this Agreement must be in writing and will be
considered as given on the day it is delivered by hand or deposited in the U.S.
mail, postage prepaid, addressed to the person to whom the notice is to be given
at the address shown above or at such other addresses as any party may designate
to the other in writing. if there is more than one Guarantor under this
Agreement, notice to any Guarantor shall constitute notice to all Guarantors.
ADDITIONAL GUARANTIES. Guarantor recognizes and agrees that Guarantor may have
previously granted, and may in the future grant, one or more additional
guaranties of Borrower's indebtedness in favor of Lender. Should this occur, the
execution of this Agreement and any additional guaranties on the part of
Guarantor will not be construed as a cancellation of this Agreement or any of
Guarantor's additional guaranties; It being Guarantor's full intent and
agreement that all such guaranties of Borrower's Indebtedness in favor of Lender
shall remain in full force and affect and shall be cumulative in nature and
effect.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
Amendment. No amendment, modification, consent or waiver of any provision
of this Agreement, and no consent to any departure by Guarantor therefrom,
shall be effective unless the same shall be in writing signed by a duly
authorized officer of Lender, and then shall be effective only as to the
specific instance and for the specific purpose for which given.
Applicable Law. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Louisiana. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Louisiana.
Caption Headings. Caption headings of the sections of this Agreement are
for convenience purposes only and are not to be used to interpret or to
define their provisions. in this Agreement, whenever the context so
requires, the .singular includes the plural and the plural also includes
the singular.
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Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable. This Agreement shall
be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining provisions of
this Agreement shall remain in full force and affect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of
this Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and legal, valid and
enforceable.
Successors and Assigns Bound. Guarantors obligations and liabilities under
this Agreement shall be binding upon Guarantor's Successors, heirs,
legatees, devisees, administrators, executors and assigns.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED. NO
FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED AUGUST 18, 1998.
GUARANTOR:
/S/ Angela M. Raidl
- -------------------------
By: Angela M. Raidl
Page 7
Exhibit 10.4(l)
---------------
COMMERCIAL PLEDGE AGREEMENT
Principal Loan Date Maturity Loan No. Call
$172,725.73 08-18-1998 11-16-1998 5010001204 CPB
- -------------------------------------------------------------------------------
Collateral Account Officer Initials
010 11M
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
- -------------------------------------------------------------------------------
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
===============================================================================
THIS COMMERCIAL PLEDGE AGREEMENT is entered into between AMERICAN FIRE RETARDANT
CORPORATION (referred to below as "Grantor"); and ST. MARTIN BANK & TRUST
COMPANY (referred to below as "Lender").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a continuing security interest in the Collateral to secure the indebtedness and
agrees that Lender shall have the rights stated in this Agreement with respect
to the Collateral, in addition to all other rights which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement:
Agreement. The word "Agreement" means this Commercial Pledge Agreement, as
this Commercial Pledge Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached or to be attached
to this Commercial Pledge Agreement from time to time.
Collateral. The word "Collateral" means individually, .collectively and
interchangeably Grantor's present and future rights, title and interest in
and to the following, together with any and all present and future
additions thereto, substitutions therefore, and replacements thereof,
together with any and all present and future certificates and/or
instruments evidencing any investment property, and further together with
all income and proceeds as described below:
Commercial Security Agreement dated May 21,1997 covering all inventory,
accounts, and equipment
Encumbrances. The word "Encumbrances" means individually, collectively and
interchangeably any and all presently existing and/or future mortgages,
liens, privileges and other contractual and/or statutory security interests
and rights of every nature and kind that, now and/or in the future, may
affect the Collateral or any part or parts thereof.
Event of Default. The words "Event of Default" mean individually,
collectively, and interchangeably any of the Events of Default set forth
below in the section titled "Events of Default."
Grantor. The word "Grantor" means individually, collectively and
interchangeably AMERICAN FIRE RETARDANT CORPORATION, Its successors and
assigns.
Guarantor. The word "Guarantor" means and includes individually,
collectively, interchangeably and without limitation each and all of the
guarantors, sureties, and accommodation parties in connection with the
indebtedness.
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Income and Proceeds. "The words Income and Proceeds" mean all present and
future income, proceeds, earnings, increases, and substitutions from or for
the Collateral of every kind and nature, including without limitation all
payments, interest. profits, distributions. benefits, rights, options,
warrants, dividends, stock dividends of every type and description, stock
splits, stock rights, regulatory dividends, distributions, subscriptions,
monies, claims for money due and to become due, proceeds of any insurance
on the Collateral, and all other types of proceeds, shares of stock of
different par value or no par value issued in substitution or exchange for
shares included in the Collateral, and all other property of every type and
description which Grantor is entitled to receive on account of such
Collateral, including accounts, documents, instruments, chattel paper, and
general intangibles. The words "Income and Proceeds" also specifically
include, without limitation, (a) any and all of Grantor's present and
future options, warrants and/or rights accruing from, or arising out of, or
in any way connected with the Collateral, including without limitation,
Grantor's rights to exercise and/or enforce such options, warrants or
rights; (b) any and all of Grantor's present and future rights. title and
interest in and to any and all distributions, of every type and
description, to be paid or payable under, or on account of, or attributable
to the Collateral, Including without limitation, Grantor's rights to
receive and to collect such distributions and Grantor's rights to enforce
performance, collection and/or payment thereof; (c) any and all of
Grantor's present and future rights, title and Interest in and to all
Interest, Income, profits and other benefits and distributions, of every
type and description, derived or to be derived from the Collateral,
Including without limitation, Grantor's rights to receive such Interest,
Income, profits, benefits and other distributions and Grantor's rights to
enforce performance, collection and/or payment thereof; (d) all general
Intangibles In any way related to the Collateral; and (e) any and all of
Grantees present and future rights, title and interest in and to any and
all proceeds, of every type and description, derived or to be derived from
the sale, transfer, assignment and/or other distribution of the Collateral,
including the right to receive such proceeds and Grantor's rights to
enforce performance, collection and/or payment thereof.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note, in principal, interest, costs, expenses and attorneys' fees and
all other fees and charges, together with all other indebtedness and costs
and expenses for which Grantor is responsible under this Agreement or under
any of the Related Documents. in addition, the word "Indebtedness" also
includes any and all other loans, extensions of credit, obligations, debts
and liabilities, plus interest thereon, of Grantor, or any one or more of
them, that may now and in the future be owed to or incurred in favor of
Lender, as well as all claims by Lender against Grantor, or any one or more
of them, whether existing now or later; whether they are voluntary or
involuntary, whether related or unrelated, whether committed or purely
discretionary, due or to become due, direct or indirect or by way of
assignment, determined or undetermined, absolute or contingent, liquidated
or unliquidated; whether Grantor may be liable individually or jointly with
others, of every nature and kind whatsoever, in principal, interest, costs,
expenses and attorneys' fees and all other fees and charges; whether
Grantor may be obligated as guarantor, surety, accommodation party or
otherwise; whether recovery upon such indebtedness may be or hereafter may
become barred by the statute of limitations; and whether such indebtedness
may be or hereafter may become void or otherwise unenforceable. (initial
___)
Lender. The word "Lender" means ST. MARTIN BANK & TRUST COMPANY TIN:
72-0307850, Its successors and assigns, and any subsequent holder or
holders of the Note, or any interest therein.
Note. The word "Note" means the note or credit agreement dated August 18,
1998, in the principal amount of $172,725.73 from AMERICAN FIRE RETARDANT
CORPORATION to Lender, together with all substitute or replacement notes
therefor, as well as all renewals, extensions, modifications, refinancings,
consolidations and substitutions of and for the note or credit agreement.
Obligor. The word "Obligor" means and includes individually, collectively
and interchangeably without limitation any and all persons or entities
obligated to pay money or to perform some other act under the Collateral.
in the context of Grantor's Collateral, the word "Obligor" means the issuer
or issuers of the Collateral.
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<PAGE>
Related Documents. The words "Related Documents" mean and include
individually, collectively, interchangeably and without limitation all
promissory notes, credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, mortgages, collateral
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with
the Indebtedness.
DELIVERY OF COLLATERAL. Contemporaneous with the execution of this Agreement,
Grantor has delivered or will deliver to Lender or Lender's designated agent the
above described Collateral, including without limitation, any and all
certificates and/or instruments evidencing Grantor's Collateral subject to this
Agreement, appropriately endorsed in blank, together with irrevocable stock
powers also endorsed in blank. As long as this Agreement remains in effect,
Grantor further agrees to immediately deliver to Lender, or Lender's designated
agent, any and all additions to and/or substitutions or replacements for the
Collateral. In the event that Grantor is unable to deliver any of the Collateral
to Lender or Lender's designated agent at the time this Agreement is executed
,or should Grantor ever withdraw or obtain temporary possession of any of the
Collateral while this Agreement remains in effect, either under a trust receipt
or otherwise, Grantor unconditionally agrees to deliver Immediately to Lender
the Collateral or, alternatively, such substitute or replacement collateral
security as may then be satisfactory to Lender.
CONTINUING SECURITY INTEREST TO SECURE PRESENT AND FUTURE INDEBTEDNESS. Grantor
affirms that Grantor has granted a continuing security interest in the
Collateral in favor of Lender to secure any and all present and future
indebtedness of Grantor in favor of Lender, as may be outstanding from time to
time, in principal, interest, costs, expenses, attorneys' fees and other fees
and charges, with the continuing preferences and priorities provided under
applicable Louisiana law.
DURATION. This Agreement shall remain in full force and effect until such time
as this Agreement and the security interests created hereby are terminated and
cancelled by Lender under a written cancellation instrument in favor of Grantor.
GRANTOR'S OBLIGATIONS TO DELIVER COLLATERAL CERTIFICATES, DISTRIBUTIONS, ETC. In
the event that Grantor should ever receive any: (a) certificates and/or
instruments representing any of the Collateral, including without limitation,
any certificates and/or instruments representing Collateral issued in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off, or
split-off of any renewal or refinancing of any Collateral; (b) options, warrants
or rights, whether as an addition to or in substitution of, or exchange for, any
of the Collateral, or otherwise; (c) distributions payable in property,
including securities issued by third parties other than the Issuer(s) of the
Collateral; (d) cash and/or cash equivalent interest or other distributions;
and/or (e) proceeds and/or payments, whether in cash or otherwise, derived or to
be derived from the sale, transfer, assignment - delivery or other distribution
of the Collateral; then Grantor shall accept the same as Lender's agent, in
trust for and on behalf of Lender, and Grantor shall deliver them forthwith to
Lender in the exact form received, with Grantor's endorsement in blank, when
necessary, and/or with Irrevocable Collateral powers duly executed by Lender in
blank, with the same to be held in pledge by Lender, subject to the terms and
conditions of this Agreement, as collateral security for repayment of the
indebtedness, as heretofore stated.
LENDER'S RIGHT TO REGISTER COLLATERAL IN LENDER'S NAME. Grantor unconditionally
agrees that Lender may, at Lender's sole and exclusive option, and at any time,
whether or not an Event of Default has occurred or exists under this Agreement,
require that the Collateral and any and all certificates issued thereunder, be
registered in Lender's name or in the name of Lender's designated nominee.
Grantor additionally agrees that, upon Lender's request, Grantor will cause the
Collateral Issuer(s), transfer agent(s), or registrar(s) to effect such
registration.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. Grantor
represents and warrants to Lender that:
Ownership. Grantor at all times will continue to be the legal and lawful
owner of the Collateral free and clear of all security interests, liens,
Encumbrances and claims of others except as disclosed to and accepted by
Lender in writing prior to execution of this Agreement.
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Right to Pledge. Grantor has the right, power and authority to enter into
this Agreement and to grant a continuing security Interest in the
Collateral in favor of Lender.
Authorization. Grantor's execution, delivery and performance of this
Agreement have been duly authorized, and do not conflict with, and will not
result in a violation of, or constitute or give rise to an event of default
under Grantor's Articles of Incorporation or Bylaws, or any agreement or
other Instrument which may be binding upon Grantor, or under any law or
governmental regulation or court decree or order applicable to Grantor
and/or Grantor's properties.
Perfection of Security Interest. Upon delivery of the Collateral to Lender,
including without limitation delivery of the certificates and/or
instruments evidencing and representing the Collateral, this Agreement
shall create a valid first lien upon, and perfect a security interest in
the Collateral subject to no prior security interest, lien, charge,
Encumbrance or other agreement purporting to grant to any third party a
security interest in the Collateral.
Binding Effect. This Agreement is binding upon Grantor, as well as
Grantor's heirs, successors, representatives and assigns, and is legally
enforceable in accordance with its terms.
No Further Assignment. Grantor has not, and will not, sell, assign,
transfer, encumber or otherwise dispose of any of Grantor's rights in the
Collateral except as provided in this Agreement.
No Defaults. There are no defaults existing under the Collateral, and there
are no offsets or counterclaims to the same. Grantor will strictly and
promptly perform each of the terms, conditions, covenants and agreements
contained in the Collateral which are to be performed by Grantor, if any.
No Violation. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
Survivorship of Representations and Warranties. The foregoing
representations and warranties and all other representations and warranties
of Grantor under this Agreement shall be continuing in nature and shall
survive the termination of this Agreement.
LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO COLLATERAL. Lender shall have
the following rights in addition to all other rights it may have by law:
Maintenance and Protection of Collateral. Lender may, but shall not be
obligated to, take such steps as it deems necessary or desirable to
protect, maintain, insure, store, or care for the Collateral, including
payment of any liens or claims against the Collateral. Lender may charge
any cost incurred in so doing to Grantor.
Income and Proceeds from the Collateral. Lender shall have the right,
whether or not an Event of Default exists under this Agreement, to directly
collect and receive any and all income and Proceeds as such become due and
payable. In order to permit the foregoing, Grantor unconditionally agrees
to deliver to Lender, immediately following demand, any and all such Income
and Proceeds that may be received by or that may be payable to Grantor.
Grantor further unconditionally agrees that Lender shall have the right to
notify the Issuer(s) of the Collateral and all other Obligors to pay and/or
deliver such Income and Proceeds directly to Lender or Lender's nominee at
an address to be designated by Lender, and to do any and all other things
as Lender may deem necessary and proper, within Lender's sole discretion,
to carry out the terms and intent of this Agreement. Lender shall have the
further right, where appropriate, and within Lender's sole discretion, to
file suit, either In Lender's own name or in the name of Grantor, to
collect and/or enforce performance, payment and/or delivery of any and all
such Income and Proceeds.
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Where it is necessary for Lender to enforce performance, payment and/or
delivery of any such income and Proceeds from the Obligor therefor, Grantor
unconditionally agrees that Lender may compromise or take such other
actions, either In Grantor's name or in the name of Lender, as Lender may
deem appropriate, within Lender's sole judgment, with regard to
performance, collection and/or payment of the same, without affecting the
obligations and liabilities of Grantor under this Agreement and/or any
indebtedness secured hereby. in order to further permit the foregoing,
Grantor agrees that Lender shall have the additional irrevocable rights,
coupled with an Interest, to: (a) receive, open and dispose of all mail
addressed to Grantor pertaining to any of the Collateral; (b) notify the
postal authorities to change the address and delivery of mail addressed to
Grantor pertaining to any of the Collateral to such address as Lender may
designate; and (c) endorse Grantor's name on any and all notes,
acceptances, checks, drafts, money orders or other Instruments of payment
of such Income and Proceeds that may come into Lender's possession, and to
deposit or otherwise collect the same, applying such funds to the unpaid
balance of the indebtedness in the manner provided below.
In the event that Grantor should, for any reason, receive any income and
Proceeds subject to this Agreement, and Grantor should deposit such funds
into one or more of Grantor's deposit accounts, no matter where located,
Lender shall have the additional right following any Event of Default under
this Agreement, to attach any and all of Grantor's deposit accounts in
which such funds may have been deposited, whether or not any such funds
were commingled with other funds of Grantor, and whether or not any such
funds then remain on deposit in such an account or accounts. to this end,
Grantor additionally collaterally assigns and pledges to Lender and grants
to Lender a continuing security interest in and to any and all of Grantor's
present and future rights, title and interest in and to any and all funds
that Grantor may now and/or in the future maintain on deposit with banks,
savings and loan associations and other financial institutions, as well as
money market accounts with other types of entities, in which Grantor at any
time may deposit any such Income and Proceeds.
Application of Cash. At Lender's option, Lender may apply any cash, whether
included in the Collateral or received as. Income and Proceeds or through
liquidation, sale, or retirement, of the Collateral, to the satisfaction of
the, indebtedness or such portion thereof as Lender shall choose, whether
or not matured. Lender may alternatively and at its sole option and
election hold such cash as additional "cash collateral" to secure the
Indebtedness.
Transactions with Others. Lender may (a) extend time for payment or other
performance, (b) grant a renewal or change In terms or conditions, or (c)
compromise, compound or release any obligation, with any one or more
Obligors, endorsers, or Guarantors of the Indebtedness as Lender deems
advisable, without obtaining the prior written consent of Grantor, and no
such act or failure to act shall affect Lender's rights against Grantor or
the Collateral.
All Collateral Secures Indebtedness. All Collateral shall be security for
the Indebtedness, whether the Collateral Is located at one or more offices
or branches of Lender and whether or not the office or branch where the
Indebtedness Is created Is aware of or relies upon the Collateral.
EXPENDITURES BY LENDER. Grantor recognizes and agrees that Lender may incur
certain expenses In connection with Lender's exercise of rights under this
Agreement. if not discharged or paid when due, Lender may (but shall not be
obligated to) discharge or pay any amounts required to be discharged or paid by
Grantor under this Agreement, Including without limitation all taxes,
Encumbrances and other claims, at any time levied or placed on the Collateral.
Lender also may (but shall not be obligated to) pay all costs for Insuring,
maintaining and preserving the Collateral, Including without limitation, the
purchase of Insurance protecting only Lender's Interest In the Collateral.
Lender may further take such other action or actions and incur such additional
expenditures as Lender may deem to be necessary and proper to cure or rectify
any actions or inactions on Grantor's part as may be required under this
Agreement. Nothing under this Agreement or otherwise shall obligate Lender to
take any such actions or to incur any such additional expenditures on Grantor's
behalf, or as making Lender in any way responsible or liable for any loss,
damage, or injury to the Collateral, to Grantor, or to any other person or
persons, resulting from Lender's election not to take such actions or to incur
such additional expenses. In addition, Lender's election to take any such
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actions or to incur such additional expenditures shall not constitute a waiver
or forbearance by Lender of any Event of Default under this Agreement. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment. All such expenses shall become a part of the
Indebtedness and, at Lender's option, will (a) be payable on demand, (b) be
added to the balance of the Note and be apportioned among and be payable with
any payments to become due during either (i) the term of any applicable
Insurance policy or (ii) the remaining term of the Note, or (c) be treated as a
balloon payment which will be due and payable at the Note's maturity. This
Agreement also will secure payment of these amounts. Such right shall be In
addition to all other rights and remedies to which Lender may be entitled upon
the occurrence of an Event of Default.
LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care
in the physical preservation and custody of the Collateral in Lender's
possession, but shall have no other obligation to protect the Collateral or Its
value. In particular, but without limitation, Lender shall have no
responsibility for (a) any depreciation In value of the Collateral or for the
collection or protection of any Income and Proceeds from the Collateral, (b)
preservation of rights against parties to the Collateral or against third
persons, (c) ascertaining any maturities, calls, conversions, exchanges, offers,
tenders. or similar matters relating to any of the Collateral, or (d) Informing
Grantor about any of the above, whether or not Lender has or is deemed to have
knowledge of such matters. Except as provided above, Lender shall have no
liability for depreciation or deterioration of the Collateral.
EVENTS OF DEFAULT. The following actions or inactions or both shall constitute
Events of Default under this Agreement:
Default Under Loan Agreement. Should an event of default occur or exist
under the terms of Grantor's Loan Agreement in favor of Lender.
Default under the Indebtedness. Should Grantor default In the payment of
principal or interest under any of the indebtedness.
Default under this Agreement. Should Grantor violate, or fall to comply
fully with any of the terms and conditions of, or default under this
Agreement.
Default Under Other Agreements. Should any event of default occur or exist
under any Related Document which directly or indirectly secures repayment
of any of the Indebtedness.
Other Defaults In Favor of Lender. Should Grantor or any Guarantor default
under any other loan, extension of credit, security agreement, or
obligation in favor of Lender.
Default In Favor of Third Parties. Should Grantor or any Guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Grantor's property, or Grantor's or any
Guarantor's ability to perform their respective obligations under this
Agreement, or any Related Document, or pertaining to the indebtedness.
Insolvency. Should the suspension, failure or Insolvency, however
evidenced, of Grantor or any Guarantor occur or exist.
Readjustment of Indebtedness. Should proceedings for readjustment of
Indebtedness, reorganization, composition or extension under any insolvency
law be brought by or against Grantor or any Guarantor.
Assignment for Benefit of Creditors. Should Grantor or any Guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
Receivership. Should a receiver of all or any part of Grantor's property,
or the property of any Guarantor, be applied for or appointed.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Grantor or any Guarantor be commenced.
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False Statements. Should any representation or warranty of Grantor or any
Guarantor made in connection with the indebtedness prove to be incorrect or
misleading in any respect.
Insecurity. Should Lender deem itself to be insecure with regard to
repayment of the Indebtedness.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender may exercise any one or more of the
following rights and remedies:
Accelerate Indebtedness. Lender, at its sole option, may accelerate the
maturity and declare and demand immediate payment in full of any and all
indebtedness secured hereby in principal, interest, costs, expenses,
attorneys' fees and other fees and charges.
Collect the Collateral. Collect any of the Collateral and, at Lender's
option retain possession thereof while suing on the indebtedness.
Sell the Collateral. Sell the Collateral, at Lender's discretion, as a unit
or in parcels, at one or more public or private sales, or through any
exchange or broker, at such prices and on such terms as Lender may deem
best, for cash or on credit or future delivery, without assumption of any
credit risk, without any further demand or notice upon Grantor for
performance, without appraisal, without the Intervention of any court and
without any formalities other than those provided herein. For purposes of
selling the Collateral, Lender has been and Is hereby made and constituted
the agent of Grantor, such agency being coupled with an Interest. Unless
the Collateral is perishable or threatens to decline speedily in value or
Is of a type customarily sold on a recognized market, Lender shall give or
mail to Grantor, or any of them, notice at least ten (10) days in advance
of the time and place of any public sale, or of the date after which any
private sale may be made. Grantor agrees that any requirement of reasonable
notice is satisfied if Lender mails notice by ordinary mail addressed to
Grantor, or any of them, at the last address Grantor has given Lender in
writing. If a public sale Is held, there shall be sufficient compliance
with all requirements of notice to the public by a single publication In
any newspaper of general circulation in the parish or county where the
Collateral Is located, setting forth the time and place of sale and a brief
description of the property to be sold. Lender may be a purchaser at any
public sale. Grantor agrees that any such sale shall be conclusively deemed
to be conducted in a commercially reasonable manner If It is made
consistent with the standard of similar sales of collateral by commercial
banks In Lafayette, Louisiana.
Rights and Remedies with Respect to Investment Property, Financial Assets
and Related Collateral. In addition to other rights and remedies granted
under this Agreement and under applicable law, Lender may exercise any or
all of the following rights and remedies, at any time, and from time to
time, whether or not an Event of Default has occurred or exists: (a)
register with any Issuer or broker or other securities Intermediary any of
the Collateral consisting of Investment property or financial assets
(collectively herein, 'Investment property") In Lender's sole name or In
the name of Lender's broker, agent or nominee; (b) cause any Issuer, broker
or other securities Intermediary to deliver to Lender any of the Collateral
consisting of securities, or Investment property capable of being
delivered; (c) enter Into a control agreement or power of attorney with any
Issuer or securities Intermediary with respect to any Collateral consisting
of Investment property, on such terms as Lender may deem appropriate, In
Its sole discretion. Including without limitation, an agreement granting to
Lender any of the rights provided hereunder without further notice to or
consent by Grantor; (d) execute any such control agreement on behalf of and
In the name of Grantor, with Grantor hereby irrevocably appointing Lender
as Its agent and attorney-4n-fact, coupled with an Interest, for the
purpose of executing such control agreement on behalf of Grantor; (e)
exercise any and all rights of Lender under any such control agreement or
power of attorney; (f) exercise any voting, conversion, registration,
purchase, option, or other rights with respect to any Collateral; (g)
collect, with or without legal action, and Issues receipts concerning, any
notes, checks, drafts, remittances or distributions that are paid or
payable with respect to any Collateral consisting of Investment property.
Any control agreement entered with respect to any Investment property shall
contain the following provisions, at Lender's discretion. Lender shall be
authorized to Instruct the Issuer, broker or other securities Intermediary
to take or to refrain from taking such actions with respect to the
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Investment property as Lender may Instruct, without further notice to or
consent by Grantor. Such actions may Include without limitation the
Issuance of entitlement orders, account Instructions, general trading or
buy or sell orders, transfer and redemption orders, and stop loss orders.
Lender shall be further entitled to Instruct the Issuer, broker or
securities Intermediary to sell or to liquidate any Investment property, or
to pay the cash surrender or account termination value with respect to any
and all Investment property, and to deliver all such payments and
liquidation proceeds to Lender. Any such control agreement shall contain
such authorizations as are necessary to place Lender In "control" of such
Investment collateral, as contemplated under the provisions of the Uniform
Commercial Code, and shall fully authorize Lender to Issue "entitlement
orders" concerning the transfer, redemption, liquidation or disposition of
Investment collateral, In conformance with the provisions of the Uniform
Commercial Code.
Foreclosure. Maintain a judicial suit for foreclosure and sale of the
Collateral.
Specific Performance. Lender may, in addition to the foregoing remedies, or
in lieu thereof, and in Lender's sole discretion, commence an appropriate
action or actions against Grantor seeking specific performance of any
covenants contained herein, or in aid of the execution or enforcement of
any power herein granted.
Transfer Title. Effect transfer of title upon sale of all or part of the
Collateral. For this purpose, Grantor Irrevocably appoints Lender as its
attorney-in-fact to execute endorsements, assignments and Instruments in
the name of Grantor and each of them (if more than one) as shall be
necessary or reasonable.
Other Rights and Remedies. Have and exercise any or all of the rights and
remedies of a secured creditor under the provisions of the Louisiana
Commercial Laws (La. R.S. 10: 9-101, at seq.), at law, In equity, or
otherwise.
Application of Proceeds and Payments. Any and all proceeds, interest,
profits, and income and Proceeds that Lender actually receives and
collects, whether resulting from the public or private sale of the
Collateral and/or collection or exercise of any of Lender's rights provided
hereunder, shall be applied first to reimburse Lender for its costs of
collecting the same (including, but not limited to, any attorneys' fees
incurred by Lender and Lender's court costs, whether or not there is a
lawsuit, Including any fees on appeal incurred by Lender In connection with
the collection or sale of the Collateral), with the balance being applied
to principal, interest, costs, expenses, attorneys' fees and other fees and
charges under the Indebtedness, in such order and with such preferences and
priorities as Lender shall determine within its sole discretion.
Cumulative Remedies. All of Lender's rights and remedies, whether evidenced
by this Agreement or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. Election by Lender to pursue any
remedy shall not exclude pursuit of any other remedy, and an election to
make expenditures or to take action to perform an obligation of Grantor
under this Agreement, after Grantor's failure to perform, shall not affect
Lender's right to declare a default and to exercise Its remedies. Nothing
under this Agreement or otherwise shall be construed so as to not affect
Lender's right to declare a default and to exercise its remedies. Nothing
under this agreement, after Grantor's failure to perform, shall not affect
Lender's right to declare a default and to exercise its remedies. Nothing
under this Agreement or otherwise shall be construed so as to limit or
restrict the rights and remedies available to Lender following an Event of
Default, or in any way to limit or restrict the rights and ability of
Lender to proceed directly against Grantor and/or against any Guarantor
and/or to proceed against any other collateral directly or indirectly
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ASSIGNMENT OF INDEBTEDNESS; TRANSFER OF COLLATERAL. Grantor hereby recognizes
and agrees that Lender may assign all or any portion of the Indebtedness to one
or more third party creditors. Such transfers may Include, but are not limited
to, sales of participation Interests in the Indebtedness. Grantor specifically
agrees and consents to all such transfers and assignments and further waives any
subsequent notice of such transfers or assignments as may be provided under
applicable Louisiana law. Grantor additionally agrees that any and all of
Grantor's other and future loans, extensions of credit, liabilities and
obligations In favor of such a third party assignee will be secured by the
Collateral. Grantor further agrees that Lender may transfer all or any portion
of the Collateral to such a third party assignee, in which case Lender will be
fully released from any and all of Lender's obligations and responsibilities to
Grantor with regard to the transferred Collateral. Any third party creditor to
whom the Collateral is transferred will acquire all of Lender's rights and
powers with respect to the transferred Collateral, with Lender retaining all
powers and rights with regard to any of the Collateral which Is not transferred
to another party.
PROTECTION OF LENDER'S SECURITY RIGHTS. Grantor agrees to appear In and to
defend all actions or proceedings purporting to affect Lender's security rights
and Interests granted under this Agreement. In the event that Lender elects to
defend any such action or proceeding, Grantor agrees to reimburse Lender for
Lender's costs associated therewith, Including without limitation, Lender's
attorneys' fees, which additional costs and expenses shall be secured by this
Agreement.
INDEMNIFICATION OF LENDER. Grantor agrees to Indemnify, to defend and to save
and hold Lender harmless from any and all claims, suits, obligations, damages,
losses, costs, expenses (including without limitation, Lender's reasonable
attorneys' fees), demands, liabilities, penalties, fines and forfeitures of any
nature whatsoever which may be asserted against or Incurred by Lender, arising
out of or In any manner occasioned by this Agreement or the rights and remedies
granted to Lender hereunder. The foregoing Indemnity provision shall survive the
cancellation of this Agreement as to all matters arising or accruing prior to
such cancellation, and the foregoing Indemnity provision shall further survive
In the event that Lender elects to exercise any of the remedies as provided
under this Agreement following any Event of Default hereunder.
ADDITIONAL OBLIGATIONS OF GRANTOR. Grantor shall have the following additional
obligations under this Agreement:
Additional Collateral. In the event that any of the Collateral should at
any time decline In value or become unsatisfactory to Lender for any
reason, Grantor agrees to Immediately provide Lender with such additional
collateral security as may then be acceptable to Lender.
No Sale or Encumbrance. As long as this Agreement remains In effect,
Grantor unconditionally agrees not to sell, option, assign, pledge, or
create or permit to exist any lion or security Interest In or against any
of the Collateral In favor of any person other than Lender.
No Settlement or Compromise of Rights. Grantor will not, without the prior
written consent of Lender, compromise, settle, adjust or extend payment
under any of Grantor's Collateral.
Notice to Obligors. Upon request by Lender, Grantor will immediately notify
Individual obligors under Grantor's Collateral and/or Rights, advising such
obligors of the fact that their obligations have been collaterally assigned
and pledged to Lender. - In the event that Grantor should fail to provide
such notices for any reason, upon request by Lender, Grantor agrees that
Lender may forward appropriate notices to such obligors, either In Lender's
name or In the name of Grantor.
Additional Pledge Agreement; Effect. Grantor acknowledges and agrees that
Grantor may, from time to time, one or more times, enter Into additional
pledge and security agreements with Lender under which Grantor may
undertake to pledge or grant to Lender a security interest In the same
Collateral. Grantor further acknowledges and agrees that the execution of
such additional agreements, Including any such agreements now in effect,
will not have the effect of cancelling, novating or otherwise modifying
this Agreement; It being Grantor's full Intent and agreement that all such
pledge agreements (including this Agreement) shall be cumulative In nature
and shall remain In full force and effect until expressly cancelled by
Lender under a written cancellation Instrument delivered to Grantor.
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Additional Documents. Grantor agrees, at any time, from time to time, one
or more times, upon written request by Lender, to execute and deliver such
further documents and do such further acts and things as Lender may
reasonably request, within Lender's sole discretion, to effect the purposes
of this Agreement.
Notification of Lender. Grantor will promptly deliver to Lender all written
notices, and will promptly give Lender written notice of any other notices
received by Grantor with respect to the Collateral.
EFFECT OF WAIVERS. Grantor has waived, and/or does by these presents waive,
presentment for payment, protest, notice of protest and notice of nonpayment
under all of the Indebtedness secured by this Agreement. Grantor has further
waived, and/or does by these presents waive, all pleas of division and
discussion, and all similar rights with regard to the Indebtedness, and agrees
that Grantor shall remain liable, together with any and all Guarantors of the
Indebtedness, on a "solidary" or "Joint and several" basis. Grantor further
agrees that discharge or release of any party who is, may, or will be liable to
Lender under any of the Indebtedness, or the release of the Collateral or any
other collateral directly or Indirectly securing repayment of the same, shall
not have the effect of releasing or otherwise diminishing or reducing the actual
or potential liability of Grantor and/or any other party or parties guaranteeing
payment of the Indebtedness, who shall remain liable to Lender, and/or remain
liable to Lender, and/or of releasing any Collateral or other collateral that Is
not expressly released by Lender.
Grantor additionally agrees that Lenders acceptance of payments other than In
accordance with the terms of any agreement, or agreements governing repayment of
the Indebtedness, or Lender's subsequent agreement to extend or modify such
repayment terms, shall likewise not have the effect of releasing Grantor, and/or
any other party or parties guaranteeing payment of the Indebtedness, from their
respective obligations to Lender, and/or of releasing any of the Collateral or
other collateral directly or indirectly securing repayment of the Indebtedness.
In addition, no course of dealing between Grantor and Lender, nor any failure or
delay on the part of Lender to exercise any of the rights and remedies granted
to Lender under this Agreement, or under any other agreement or agreements by
and between Grantor and Lender, shall have the effect of waiving any of Lender's
rights and remedies. Any partial exercise of any rights and remedies granted to
Lender shall furthermore not constitute a waiver of any of Lender's other rights
and remedies, It being Grantor's Intent and agreement that Lender's rights and
remedies shall be cumulative In nature. Grantor further agrees that, upon the
occurrence of any Event of Default under this Agreement, any waiver or
forbearance on the part of Lender to pursue the rights and remedies available to
Lender, shall be binding upon Lender only to the extent that Lender specifically
agrees to any such waiver or forbearance In writing. A waiver or forbearance as
to one Event of Default shall not constitute a waiver or forbearance as to any
other Event of Default. None of the warranties, conditions, provisions and terms
contained In this Agreement or any other agreement, document, or Instrument now
or hereafter executed by Grantor and delivered to Lender, shall be deemed to
have been waived by any act or knowledge of Lender, Lender's agents, officers or
employees; but only by an Instrument in writing specifying such waiver, signed
by a duly authorized officer of Lender and delivered to Grantor.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth In this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given In writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment. Applicable Law. This Agreement has been delivered to Lender and
accepted by Lender In the State of Louisiana. This Agreement shall be
governed by and construed In accordance with the laws of the State of
Louisiana.
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Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of
Lender's costs and expenses, Including attorneys' fees and Lender's legal
expenses, Incurred In connection with the enforcement of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and expenses
Include Lender's attorneys' fees and legal expenses whether or not there Is
a lawsuit, Including attorneys' fees and legal expenses for bankruptcy
proceedings (and Including efforts to modify or vacate any automatic stay
or Injunction), appeals, and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such additional fees
as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to Interpret or define the provisions
of this Agreement.
Notices. To give Grantor any notice required under this Agreement, Lender
may hand deliver or mail such notice to Grantor. Lender will deliver or
mall any notice to Grantor (or any of them if more than one) at any address
which Grantor may have given Lender by written notice as provided in this
paragraph. In the event that there is more than one Grantor under this
Agreement, notice to a single Grantor shall be considered as notice to all
Grantors. To give Lender any notice under this Agreement, Grantor (or any
Grantor) shall mall the notice to Lender by registered or certified mall at
the address specified In this Agreement, or at any other address that
Lender may have given to Grantor (or any Grantor) by written notice as
provided In this paragraph. All notices required or permitted under this
Agreement must be In writing and will be considered as given on the day It
Is delivered by hand or deposited In the U.S. Mail, by registered or
certified mall to the address specified In this Agreement.
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however. If the offending provision
cannot be so modified, It shall be stricken and all other provisions of
this Agreement In all other respects shall remain valid and enforceable.
Sole Discretion of Lender. Whenever Lenders consent or approval is required
under this Agreement, the decision as to whether or not to consent or
approve shall be in the sole and exclusive discretion of Lender and
Lender's decision shall be final and conclusive.
Successors and Assigns Bound; Solidary Liability. Grantor's obligations and
agreements under this Agreement shall be binding upon Grantor's successors,
heirs, legatees, devisees, administrators, executors and assigns. In the
event that there is more than one Grantor under this Agreement, all of the
agreements and obligations made and/or incurred by Grantors under this
Agreement shall be on a "solidary" or "joint and several" basis.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS PLEDGE AGREEMENT,
AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AUGUST 18, 1998.
GRANTOR:
AMERICAN FIRE RETARDANT CORPORATION
/s/ Angela M. Raidl
- ---------------------------------------------
By: ANGELA M. RAIDL, EXECUTIVE VICE PRESIDENT
Page 11
Exhibit 10.4(m)
---------------
PLEDGE OF COLLATERAL MORTGAGE NOTE
Principal Loan Date Maturity Loan No. Call
$172,725.73 08-18-1998 11-16-1998 5010001204 CPB
- -------------------------------------------------------------------------------
Collateral Account Officer Initials
010 11M
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
- -------------------------------------------------------------------------------
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
===============================================================================
PLEDGE OF COLLATERAL MORTGAGE NOTE UNITED STATES OF AMERICA
BY: AMERICAN FIRE RETARDANT CORPORATION STATE OF LOUISIANA
PARISH OF LAFAYETTE
IN FAVOR OF: ST. MARTIN BANK & TRUST COMPANY
JOHNSTON STREET BRANCH, LAFAYETTE
And Any Future Holder or Holders
BE IT KNOWN, that on the 18th day of August, 1998;
PERSONALLY CAME AND APPEARED:
AMERICAN FIRE RETARDANT CORPORATION (TlN: 72-1261941) a corporation duly
organized, validity existing and in good standing under the laws of the State of
Louisiana, an has its registered offices at 110 BRUSH ROAD, BROUSSARD, LA 70518
appearing herein through its duly authorized representative(s) pursuant to a
resolution of its Board of Directors, a certified copy of which is attached
hereto and expressly made a part hereof;
WHO DECLARED THAT:
TERMS AND CONDITIONS:
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement:
Agreement. The word "Agreement" means this Pledge Agreement and all
subsequent amendments to said Agreement as it may be amended or modified
from time to time.
Event of Default. The words "Event of Default" mean Individually,
collectively and Interchangeably any event of default described below In
the section titled "EVENTS OF DEFAULT."
Grantor. The word "Grantor" means Individually, collectively and
Interchangeably AMERICAN FIRE RETARDANT CORPORATION.
Indebtedness. The word "Indebtedness" means Individually. collectively and
Interchangeably any and all present and future loans, advances and other
extensions of credit obtained or to be obtained by Grantor from Lender,
from time to time, one or more times, now and in the future, under a
certain Loan Agreement dated August 18, 1998 and any and all promissory
notes evidencing such present and/or future loans or other credit advances,
including without limitation, Grantor's promissory note dated August is,
1998, in the amount of U.S. $172,726.73, and any and all amendments thereto
and/or substitutions therefor, and/or renewals, extensions and refinancings
thereof, as well as any and all other obligations and liabilities that
Page 1
<PAGE>
Grantor may now and in the future owe to or incur in favor of Lender,
whether direct or indirect, or by way ,of assignment or purchase of a
participation interest, and whether absolute or contingent, liquidated or
unliquidated, voluntary or involuntary, determined or undetermined, due or
to become due, whether individually or with others on a joint, several or
solidary basis, as a principal obligor or as a surety, of every nature and
kind whatsoever, In principal, Interest, costs, expenses, attorneys' fees
and other fees and charges, whether or not any of the Indebtedness may
become barred under any statute of limitations or prescriptive period or
may be or become unenforceable or voidable for any reason
Lender. The word "Lender" means ST. MARTIN BANK & TRUST COMPANY, JOHNSTON
STREET BRANCH, LAFAYETTE TIN: 72-0307850, its successors and assigns, and
any subsequent holder or holders of the Note or any interest therein.
Note. The word "Note" means the Collateral Mortgage Note described below.
Pledgee. The word "Pledgee" means ST. MARTIN BANK & TRUST COMPANY, JOHNSTON
STREET BRANCH, LAFAYETTE, its successors and assigns, and any future holder
or holders of the Note or any interest therein.
COLLATERAL MORTGAGE NOTE. Desiring to secure the prompt and punctual payment and
satisfaction of any and all present and future indebtedness as may be
outstanding from time to time, one or more times, Grantor has executed a certain
Collateral Mortgage Note dated August 18, 1998, In the amount of U.S.
$180,000.00, payable to the order of Bearer, on demand, at the offices of
Lender, a copy of which Note is attached hereto and is expressly made a part
hereof by reference.
COLLATERAL MORTGAGE. The aforesaid Note is in turn secured by a Collateral
Mortgage dated even date therewith (Grantor's "Collateral Mortgage"), executed
by Grantor in favor of ST. MARTIN BANK & TRUST COMPANY, JOHNSTON STREET BRANCH,
LAFAYETTE and any future holder or holders of the aforesaid Note.
PLEDGE OF NOTE. AND NOW, in order to secure the prompt and punctual payment and
satisfaction of any and all present and future Indebtedness, Grantor hereby
pledges, transfers, convoys, delivers and grants a continuing security interest
in the aforesaid Note to and in favor of Lender, together with any and all of
Grantor's rights, title, interest and obligations in, to and under the aforesaid
Note and the Collateral Mortgage securing the same.
CONTINUING SECURITY INTEREST TO SECURE PRESENT AND FUTURE INDEBTEDNESS. Grantor
affirms that Grantor's continuing security interest in the aforesaid Note is
intended to and shall secure any and all present and future indebtedness of
Grantor in favor of Lender, as may be outstanding from time to time, one or more
times, with the continuing preferences and priorities provided under Louisiana
law. Grantor's Collateral Mortgage securing the aforesaid Note shall further be
entitled to the continuing preferences and priorities provided under applicable
Louisiana law.
DURATION. This Agreement shall remain in full force and effect, and Lender shall
have the right to continue to retain possession of the aforesaid Note, until
such time as this Agreement and the' security Interests created hereby are
terminated and cancelled by Lender under a written cancellation instrument, and
the Note is returned by Lender marked "PAID" or "CANCELLED".
EVENTS OF DEFAULT. The following shall constitute Events of Default under this
Agreement:
Default under Indebtedness. Should Grantor default in the payment of
principal and/or Interest under any of the Indebtedness.
Default under Loan Agreement. Should a default occur or exist under the
terms of the aforesaid Loan Agreement.
Default under Other Agreement(s). Should Grantor fail to comply fully with
any of the terms and conditions of, or default under any other loan
agreement or agreements governing any of the Indebtedness.
Page 2
<PAGE>
Default under Mortgage. Should Grantor violate, or fall to comply fully
with any of the terms and conditions of, or default under this Agreement or
the Collateral Mortgage executed In connection herewith, and/or under any
of the additional obligations Incurred or assumed by Grantor hereunder or
thereunder.
Other Defaults In Favor of Lender. Should Grantor or any guarantor default
under any other extension of credit, or security agreement, or obligation
In favor of Lender.
Default In Favor of Third Parties. Should Grantor or any guarantor default
under any loan, extension of credit, security agreement, or purchase or
sales agreement, In favor of any other creditor or person, that may affect
any of the property subject to the above referenced Collateral Mortgage, or
Grantor's or any guarantor's ability to perform their obligations hereunder
and/or pertaining to the Indebtedness.
Insolvency. Should the suspension. failure or insolvency. however
evidenced. of Grantor or any guarantor occur or exist
Readjustment of Indebtedness. Should proceedings for readjustment of
indebtedness, reorganization, composition or extension under any insolvency
law, be brought by or against Grantor or any guarantor.
Assignment for the Benefit of Creditors. Should Grantor or any guarantor
file proceedings for a respite or make a general assignment for the benefit
of creditors.
Receivership. Should a receiver of all or any part of Grantor's property,
or the property of any guarantor be applied for or appointed.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Grantor or any guarantor, be commenced.
False Statements. Should any representation or warranty of Grantor or any
guarantor made in this Agreement, or otherwise in connection with the
obtaining of any indebtedness secured by the aforesaid Note, prove to be
incorrect or misleading in any respect.
Insecurity. Should Lender deem itself insecure with regard to repayment of
any of the Indebtedness.
PLEDGEE'S RIGHTS TO ACCELERATE PAYMENT UPON DEFAULT. Should any one or more
Events of Default occur or exist under this agreement as provided above, Pledgee
shall have the right, at its sole option, to accelerate the maturity of and
declare immediately due and payable in full, and all of the Indebtedness secured
by the aforesaid Note. Pledgee shall have the additional right, again at its
sole option, to declare the aforesaid Note to be immediately due and payable, in
principal, interest, costs and attorneys' fees. Pledgee shall then have the
right, again, at its sole option, to commence appropriate foreclosure
proceedings under the aforesaid Collateral Mortgage and/or to exercise the
additional remedies provided thereunder and/or hereunder.
CUMULATIVE REMEDIES. Pledgee's remedies upon the occurrence of any default under
this Agreement shall be cumulative in nature, and nothing under this Agreement
or otherwise shall be construed to limit or restrict the options and remedies
available to Pledgee following default, or to in any way limit or restrict the
rights and ability of Pledgee to proceed directly against Borrower, Grantor
and/or against any other co-makers, guarantors, sureties and/or endorsers of the
Indebtedness, and/or to proceed against any other collateral directly or
indirectly securing such indebtedness. Pledgee's election to exercise any rights
or remedies against a part, but not all, of the property subject to the above
referenced Collateral Mortgage shall not preclude Pledgee from, separately and
subsequently, exercising the same or any other rights or remedies against any
other such property, with Pledgee reserving the right to proceed against any
part or parts of such property, time to time after the occurrence of any Event
of Default, in such order as Pledgee may determine in its sole discretion.
Page 3
<PAGE>
APPLICATION OF PROCEEDS. Any and all proceeds that Pledgee actually receives and
collects, whether resulting from the public or private sale of the Note or
foreclosure under the aforesaid Collateral Mortgage, shall be applied first to
reimburse Pledgee for its costs of collecting the same (including, but not
limited to, any attorneys' fees incurred by Pledgee), and then to Additional
Advances that Pledgee may make on Grantor's behalf as provided under the
aforesaid Collateral Mortgage, together with interest thereon; with the balance
being applied to principal, interest, costs, expenses, attorneys' fees and other
fees and charges under the Indebtedness, in such order and with such preferences
and priorities as Pledgee shall determine within its sole discretion.
PRESCRIPTION. Grantor hereby acknowledges and reaffirms the indebtedness
represented by the Note, and specifically interrupts and renounces the effect of
any prescriptive period that may have commenced or run with respect to the Note.
TRANSFER OF INDEBTEDNESS. Grantor hereby recognizes and agrees that Pledgee may
transfer all or a portion of the Indebtedness to one or more third party
creditors. Such transfers may include, but are not limited to, sales of
participation interests on the Indebtedness. Grantor specifically agrees and
consents to all such transfers and further waives any notice of any such
transfers as may be provided for under applicable law. Grantor agrees that, upon
any transfer of all or any portion of the Indebtedness, Pledgee may transfer and
deliver any of the collateral securing repayment of the Indebtedness (including,
but not limited to, the aforesaid Note) to the transferee of such Indebtedness,
and such transfers shall not affect the priority and ranking of the Collateral
Mortgage, and such collateral shall secure any and all present and/or future
Indebtedness in favor of such a transferee in principal, interest, costs,
expenses, attorneys' fees and other fees and charges. Grantor additionally
agrees that, after any such transfer has taken place, Pledgee shall be fully
discharged from any and all liability and responsibility to Grantor with respect
to any collateral so transferred, and the transferee thereafter shall be vested
with all of the powers and rights with respect to such transferred collateral,
with Pledgee retaining all powers and rights with respect to any of the pledged
collateral that is not transferred to another party.
REPRESENTATIONS AND WARRANTIES OF GRANTOR. Grantor represents and warrants to
Pledgee that: (a) Grantor is the legal and beneficial owner of and the obligor
under the Note; (b) Grantor has the right, power and authority to enter into
this Agreement and to pledge and grant a continuing security interest in the
above described Note to Pledgee; (c) Grantor's execution and delivery of this
Agreement and Grantor's performance hereunder, will not violate or constitute a
default under the terms of any agreement, Indenture or other instrument,
license, judgment, decree, order, law, statute, ordinance or other governmental
rule or regulation applicable to Grantor and/or any of its property; and (d)
this Agreement is binding upon Grantor, as well as Grantors heirs, successors,
representatives and assigns, and Is legally enforceable in accordance with its
terms. The foregoing representations and warranties are and shall be continuing
In nature and shall remain in full force and effect until such time as this
Agreement is cancelled in the manner provided hereinabove.
PROTECTION OF PLEDGEE'S SECURITY RIGHTS. Grantor agrees to appear in and to
defend all actions or proceedings purporting to affect Pledgee's security rights
and interests granted under this Agreement. In the event that Pledgee elects to
defend any such action or proceeding, Grantor agrees to reimburse Pledgee for
Pledgee's costs associated therewith, including without limitation, Pledgee's
reasonable attorneys' fees, which additional costs and expenses shall be secured
by this Agreement.
ADDITIONAL SECURITY AGREEMENTS. Grantor may, from time to time, one or more
times, enter into additional security agreement with Lender under which Grantor
may undertake to grant a continuing security interest in the same Note. Grantor
acknowledges and agrees that the execution of such additional security
agreements, including any pledge agreements now in effect, will not have the
effect of cancelling, novating, or otherwise modifying this Agreement or any
other pledge agreement; it being Grantor's full intent that all such pledge
agreements (including this Agreement) shall be cumulative in nature and shall
each and all remain in full force and effect until expressly cancelled by Lender
under a written cancellation instrument delivered to Grantor.
EXECUTION OF ADDITIONAL DOCUMENTS. Grantor agrees to execute all additional
documents that Lender may deem necessary and proper within its sole discretion,
to better reflect the true Intent of this Agreement. Grantor additionally agrees
to execute whatever acknowledgments, and to furnish Lender with such other
security, as Lender may require prior to the date on which repayment of the
aforesaid Note may be barred under any applicable statute of limitations or
prescriptive period.
Page 4
<PAGE>
EFFECT OF WAIVERS. Grantor has waived, and/or does by these presents waive,
presentment for payment, protest, notice of protest and notice of nonpayment
under all of the Indebtedness secured by this Agreement. Grantor has further
waived, and/or does by these presents waive, all pleas of division and
discussion with regard to the Indebtedness, and agrees that Grantor shall remain
liable together with any and all guarantors, endorsers and sureties of the
Indebtedness on a "Joint and several" or "solidary" basis. Grantor further
agrees that discharge or release of any party who is or will be liable to Lender
under any of the Indebtedness, or the release of any collateral directly or
Indirectly securing repayment of the same, shall not have the effect of
releasing Grantor, and/or the Note, and/or any other party or parties
guaranteeing payment of the Indebtedness, who shall remain liable to Lender,
and/or of releasing any other collateral that is not expressly released by
Lender.
Grantor additionally agrees that Lender's acceptance of payments other than in
accordance with the terms of any agreement or agreements governing repayment of
the Indebtedness, or Lender's subsequent agreement to extend or modify such
repayment terms, shall likewise not have the effect of releasing Grantor, and/or
of releasing the Note, and/or any other party or parties guaranteeing payment of
the Indebtedness from their respective obligations to Lender, and/or of
releasing any other collateral directly or indirectly securing repayment of the
Indebtedness. In addition, no course of dealing between Grantor and Lender, nor
any failure or delay on the part of the Lender to exercise any of the rights and
remedies granted under this Agreement, or under any other agreement or
agreements by and between Grantor and Lender, shall have the effect of waiving
any of Lender's rights and remedies. Any partial exercise of any rights and
remedies granted to Lender shall furthermore not constitute a waiver of any of
Lender's other rights and remedies, it being Grantor's intent and agreement that
Lender's rights and remedies shall be cumulative in nature. Grantor further
agrees that, upon the occurrence of any Event of Default under this Agreement,
any waiver or forbearance on the part of Lender to pursue the rights and
remedies available to Lender, shall be binding upon Lender only to the extent
that Lender specifically agrees to any such waiver of writing. A waiver or
forbearance as to one Event of Default shall not constitute a waiver or
forbearance as to any other default.
SUCCESSORS AND ASSIGNS BOUND; SOLIDARY LIABILITY. Grantor's obligations and
agreements under this Agreement shall be binding upon Grantor's successors,
heirs, legatees, devisees, administrators, executors and assigns. The rights and
remedies granted to Lender under this Agreement shall inure to the benefit of
Lender's successors and assigns, as well as to all subsequent holder or holders
of the Indebtedness. In the event that there is more than one Grantor Under this
Agreement, each Grantor severally agrees that any Grantor, acting alone or with
others, may enter into additional loans and other extensions of credit with
Lender secured by the aforesaid Note, without the further necessity that all of
the Grantors agree or consent to, or concur in, or be given notice of, each such
additional loan or other extension of credit.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this document:
Acceptance. This Agreement and the delivery of the Grantor's Note in pledge
is accepted by Lender in the State of Louisiana.
Caption Headings. Caption headings of the sections of this Agreement are
for convenience purposes only and are not to be used to interpret or to
define their provisions. IN this Agreement, whenever the context so
requires, the singular includes the plural and the plural also includes the
singular.
Severability. If any provision of this Agreement is held to be invalid,
illegal or unenforceable by any court, that provision shall be deleted from
this Agreement and the balance of this Agreement shall be interpreted as if
the deleted provision never existed.
I HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS ACKNOWLEDGMENT AND AGREE
TO ITS TERMS. THIS ACKNOWLEDGMENT IS DATED AUGUST 18, 1998.
THUS DONE AND SIGNED, on the day, month and year first written above.
GRANTOR:
AMERICAN FIRE RETARDANT CORPORATION
/S/ Angela M. Raidl
- ---------------------------------------------
By: ANGELA M. RAIDL, EXECUTIVE VICE PRESIDENT
Page 5
Exhibit 10.4(n)
---------------
AGREEMENT TO PROVIDE INSURANCE
Principal Loan Date Maturity Loan No. Call
$172,725.73 08-18-1998 11-16-1998 5010001204 CPB
- -------------------------------------------------------------------------------
Collateral Account Officer Initials
010 11M
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
- -------------------------------------------------------------------------------
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
===============================================================================
INSURANCE REQUIREMENTS. AMERICAN FIRE RETARDANT CORPORATION ("Grantor")
understands that insurance coverage is required In connection with the extending
of a loan or the providing of other financial accommodations to Grantor by
Lender. These requirements are set forth In the security documents. The
following minimum Insurance coverages must be provided on the following
described collateral (the "Collateral"):
Collateral: Real Estate at 110 BRUSH ROAD, BROUSSARD, LA 70518.
Type. Fire and extended coverage.
Amount. Full Insurable value.
Basis. Replacement value.
Endorsements. Standard mortgagee's clause naming Lender as
non-contributory lender loss-payee and further stipulating that
coverage will not be cancelled or diminished without a minimum of
thirty (30) days' prior written notice to Lender, and without
disclaimer of the insurer's liability for failure to give such
notice.
INSURANCE COMPANY. Grantor may obtain Insurance from any Insurance company
Grantor may choose that Is reasonably acceptable to Lender.
FLOOD INSURANCE. Flood Insurance for property given as security for this loan is
described as follows:
Real Estate at 110 BRUSH ROAD, BROUSSARD, LA 7051 S.
Should the Collateral at any time be deemed to be located In an area
designated by the Director of the Federal Emergency Management Agency as a
special flood hazard area and should Federal Flood Insurance covering the
Collateral ever become available, Grantor agrees to obtain and maintain
Federal Flood Insurance, for the full unpaid principal balance of the loan,
up to the maximum policy limits set under the National Flood Insurance
Program, or as otherwise required, and to maintain such Insurance for the
term of the loan.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to purchase and maintain any
required flood Insurance within 45 days following notice given by Lender.
Additionally, Grantor agrees to deliver to Lender, tan (10) days from the date
of this Agreement, evidence that Grantor has purchased the insurance required
under my Mortgage or other security agreement, naming Lender as non-contributory
loss payee beneficiary, which Insurance coverage must have an effective date of
August 18, 1998, or earlier.
CONFLICTING PROVISIONS. To the extent any provisions of this Agreement conflict
with provisions of Grantor's Mortgage or other security agreement, the specific
provisions of Grantor's Mortgage or other security agreement will prevail.
AUTHORIZATION. For purposes of Insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all Information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
Page 1
<PAGE>
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AUGUST 18, 1998.
GRANTOR:
AMERICAN FIRE RETARDANT CORPORATION
/S/ Angela M. Raidl
- ---------------------------------------------
By: ANGELA M. RAIDL, EXECUTIVE VICE PRESIDENT
FOR LENDER USE ONLY
INSURANCE VERIFICATION
Date: _________ Phone: (318) 236-8866
AGENT'S NAME: David Daniel
ADDRESS: P.O. Drawer 51187, Lafayette, LA 70505-1187
INSURANCE COMPANY: Hartford Fire Insurance Co.
POLICY NUMBER(S): 43UECLE6487
EFFECTIVE DATES:
COMMENTS:
Page 2
ACT OF LOUISIANA UNITED STATES OF AMERICAN
STATE OF LOUISIANA
COLLATERAL MORTGAGE PARISH OF LAFAYETTE
BY: AMERICAN FIRE RETARDANT CORPORATION
IN FAVOR OF
ST. MARTIN BANK & TRUST CO. ST. MARTINVILLE, LOUISIANA
BE IT KNOWN, that on this 18th day of August 1998,
BEFORE William Hugh Mouton a Notary Public, in and for the Parish of
Lafayette, State of Louisiana, and in the presence of the undersigned witnesses;
PERSONALLY CAME AND APPEARED:
AMERICAN FIRE RETARDANT CORPORATION, a corporation organized under the laws
of the State of Louisiana, having its principal place of business at 11O.
Brush Road, Broussard, Louisiana 70518, appearing herein through Angela M.
Raidl, its duly authorized Executive Vice President, pursuant to resolution
passes by the Board of Directors of said corporation, a copy of which
resolution is annexed hereto Exhibit "A" and specifically made a part
hereof by reference.
who after being duly sworn declared:
As used in this Mortgage, the terms "I" "me", "my", "we", "us" and "our"
refer to the mortgagor or collectively and interchangeably to the mortgagors
named above. The terms "you" and "your" refer to the mortgagee, ST. MARTIN BANK
& TRUST CO., ST. MARTINVILLE, Louisiana, and any subsequent holder or holders of
the Note secured by this Mortgage, whether in pledge or otherwise,
I hereby declare and acknowledge a debt to you in the amount of ONE HUNDRED
EIGHTY THOUSAND AND NO/100, ($180,000.00) DOLLARS. To evidence this debt, I have
executed as Maker, on August 18, 1998, a Collateral Mortgage Note, in the amount
of ONE HUNDRED EIGHTY THOUSAND AND NO/100 DOLLARS, ($180,000.00) DOLLARS, which
bears interest at the rate of EIGHTEEN (18.0 %) per cent per annum from date
until paid, which is payable on demand to the order of Bearer, which Note has
been paraphed "Ne Varietur" by the Notary Public before whom this Mortgage was
passed. (A copy of my "Note" is attached to this Mortgage as Exhibit "A" and
made a part hereof.)
And now, in order to secure repayment of my Note, which will be pledged to
you as security for a loan or loans which you may have made or may make to me
(or Individually or jointly to any of us) from time to time, one or more times,
in principal, interest, costs, attorney's fees and all other sums which you may
advance on my behalf as provided under this Mortgage, I am granting you a
security Interest in the form of a mortgage (this "Mortgage") on the property
described on Exhibit "B" to this Mortgage (my "Property"), together with all
presently existing and future improvements, additions and accessions to the
mortgaged Property. I am further assigning to you all of my rights to receive
rentals. Income, royalties, revenues and proceeds derived and to be derived from
the mortgaged Property of every type and description.
I declare that I am the legal owner of the Property subject to this
Mortgage and that there are no present mortgages, lions or encumbrances against
or affecting the mortgaged Property, other than those previously disclosed to
you in writing, which would in any way result In you not obtaining a priority
security interest on the mortgaged Property as a result of this Mortgage.
In the event that I. (or we) should default under my (or our) loan or loans
secured by the pledge of my Note, or under this Mortgage, you have the right to
accelerate payment of all amounts which I (or we) may owe. to you, and to demand
payment under my pledged Note, which will then entitle you to foreclose under
this Mortgage and to cause the mortgaged Property to be immediately seized and
sold under ordinary or executory process, with or without appraisal, in regular
session of court or in vacation, in accordance with Louisiana law. without the
necessity of demanding payment from me or of notifying me and placing me In
default.
For purposes of foreclosure under Louisiana executory process procedures, I
confess judgment in your favor up to the full amount of my Note, in principal,
interest, late charges, costs and attorney's fees, and in the amount of all
other funds which you may advance on my behalf under this Mortgage for the
payment of Insurance, or taxes, or for the preservation of the mortgaged
Property, or to cure events of default with regard to other security interests
affecting the mortgaged Property, up to a total amount equal to four times the
face amount of my Note.
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To the extent permitted under applicable Louisiana law, I additionally
waive: (a) the benefit of appraisal as provided In Articles 2332, 2336, 2723 and
2724 of the Louisiana Code of Civil Procedure, and all other laws with regard to
appraisal upon judicial sale, (b) the demand and three (3) days' delay as
provided under Articles 2639 and 2721 of the Louisiana Code of Civil Procedure;
(c) the notice of seizure as provided under Articles 2293 and 2721 of the
Louisiana Code of Civil Procedure; (d) the three (3) days' delay provided under
Articles 2331 and 2722 of the Louisiana Code of Civil Procedure; and (9).all
other benefits provided under Articles 2331, 2722 and 2723 of the Louisiana Code
of Civil Procedure and all other Articles not specifically mentioned above,
I agree that my Property is to remain mortgaged to you until the full and
final payment of all loans you, may have made or may make to me (or individually
or jointly to any of us) which are secured by the pledge of my Note. I
additionally agree not to sell, transfer or lease the mortgaged Property or to
allow any additional security Interest to be placed on the mortgaged Property
while this Mortgage remains In effect, without your prior written consent. In
the event that I should sell, transfer or lease the mortgaged Property or allow
any other security Interests to be placed on the mortgaged Property without
first obtaining your written consent, I agree that such an unauthorized act will
constitute a breach of this Mortgage, which will entitle you to cause the
mortgaged Property to be immediately seized and sold in accordance with
applicable law.
You may condition your consent to allow me to sell or transfer the
mortgaged Property with assumption of this Mortgage upon your approval of the
purchaser's or purchasers' creditworthiness, and further upon the payment of an
Assumption Fee and an Increase In the rate of Interest under my (or our) loan or
loans with you, as you may require in your sole discretion. Upon the sale or
transfer of the mortgaged Property with assumption of this Mortgage, you have
the option of releasing me from any further personal liability to you without
prejudicing your rights against the mortgaged Property or in any way affecting
the validity, enforceability or priority ranking of this Mortgage.
I agree not to abandon the mortgaged Property while this Mortgage remains
in effect and to abide by all laws, rules and regulations with regard to use of
the Property. I additionally agree that you have the right to inspect the
mortgaged Property at reasonable times.
I agree to maintain insurance on the mortgaged Property at my expense for
as long as this Mortgage remains In effect. This insurance is to be in the
amounts and of the types required by you (including flood insurance where
applicable) and must be Issued by a financially responsible Insurance company or
companies acceptable to you. I additionally agree that you will be named as a
loss payee beneficiary under my Insurance policy or policies which are to
contain non-contributory loss payable clauses in your favor. I further agree to
provide you with original copies of my insurance policies along with evidence
that I have paid the policy premiums and all renewal premiums.
I agree to promptly pay all taxes, assessments and governmental charges
which may be assessed against the mortgaged Property and to furnish you with
evidence that such taxes, assessments and charges have been paid.
I further agree to make all necessary repairs to the mortgaged Property
while this Mortgage remains In effect. In the event that I fall to maintain
Insurance on the mortgaged Property. or fall to pay taxes, assessments and
governmental charges when due, or if I fail to maintain to maintain the
mortgaged Property as required under this Mortgage, then you shall have the
right (at your sole option and without any responsibility or liability to do so)
to purchase such insurance on my behalf (including insurance protecting only
your Interests In the mortgaged Property), to pay taxes, assessments or
governmental charges, or to make necessary repairs to the mortgaged Property.
I (We) additionally agree to promptly make all payments on present and
future loans or other extensions of credit which may directly or indirectly be
secured by the mortgaged Property. In the event that I (or we) should default
under any such loan or other extension of credit, and/or should my Property
subject to this Mortgage become subject to or threatened with seizure and/or
sale, then you shall have the right (at your sole option and without obligation,
responsibility or liability to do so) to cure or to cause such event of default
to be cured, whether by making payments on my behalf or taking such other
actions as you may elect in your sole discretion.
All additional sums which you may advance on my behalf during the existence
of this Mortgage for the purchase of Insurance, the payment of taxes,
assessments and governmental charges, for maintenance of or repair to the
mortgaged Property, and for the purpose of curing any event of default with
regard to any other security Interests affecting the mortgaged Property shall be
secured by this Mortgage up to four times the face amount Note. I agree to
immediately reimburse you for all additional sums which you may advance for such
purposes, together with Interest at the rate together with interest at the rate
of twenty-one (21%) per cent per annum from the date of each such advance until
I repay you in full.
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I agree that my pledged Note and this Mortgage may secure additional loans
or advances which you may have made or may make to me (or individually or
jointly to any of us), whether such loans are now in existence or may be made In
the future. In the event, that any, of my (or our) loans with you, which are
secured by my pledged Note and Indirectly secured by this Mortgage, are made*
for construction purposes, I agree that this Mortgage will be entitled to
preferences and priorities provided by the Louisiana Private Works Act (La. R.S.
9:4801, at seq.). as that Act maybe amended from time to time. Nothing herein
shall, however, be construed as to limit the duration of this Mortgage or the
purpose or purposes of loans secured by the pledge of my Note and Indirectly
secured by this Mortgage.
I additionally agree that, if my Note Is pledged to secure a loan or loans
with you which mature beyond the applicable statute of limitations with regard
to repayment of my pledged demand Note, I will sign whatever acknowledgments or
furnish you with such other security as you may require prior to the date on
which repayment under my pledged demand Note may be barred by any applicable
statute of limitations.
I (We) further agree that my obligations under this Mortgage shall be
binding upon my (our) heirs, administrators, executors, successors and assigns
as well upon any person, firm or corporation subsequently acquiring title to the
mortgaged Property, whether in whole or in part. Where there is more than one
mortgagor under this Mortgage, our obligations to you are joint, several and in
solido.
I additionally agree that all of the rights granted to you under this
Mortgage may be exercised by your heirs, administrators, executors, successors
or assigns or by any future holder or holders of my Note. In the event that
there should be any change In Louisiana or Federal law with regard to taxation
of mortgages, I agree to pay any taxes, assessments or charges which may be
Imposed upon you as a result of this Mortgage. I additionally agree that, should
it become necessary for you to foreclose under this Mortgage, you may appoint a
Keeper of the mortgaged Property as provided under. La. R.S. 9:5136, et seq. I
further agree that, should you have to foreclose under this Mortgage, any
declarations of fact made by authentic act before a Notary Public in the
presence of two witnesses, by a person declaring that such facts lie within his
or her knowledge, shall constitute authentic evidence of such .facts for
purposes of executory process.
In granting this Mortgage to you, I further waive any homestead or other
exemptions from seizure of the mortgaged Property to which I may be entitled
under the Constitution and laws of the State of Louisiana.
AND NOW INTO THESE PRESENTS INTERVENES n/a, spouse, appearing herein for
the limited purpose of concurring with the granting of this Mortgage on the
community-owned property described herein in accordance with the terms and
conditions of this Mortgage, consistent with Article 2347 of the Louisiana Civil
Code as amended by Act 709 of 1979, without creating any liability with regard
to my spouse's separate property, as well as (where applicable) for the purpose
of waiving any homestead or other exemptions from seizure with regard to the
mortgaged Property as may be granted under Louisiana law. My spouse further
agrees and concurs that I, acting alone, may pledge and repledge the Note
secured by this Mortgage to you and/or to any subsequent holder or holders of my
Note to secure additional loans made or to be made to me alone (or Individually
or jointly to any of us where there Is more than one mortgagor under this
mortgage), without the necessity that my spouse further agree to and concur In
each such pledge or loan.
AND FURTHER INTO THESE PRESENTS INTERVENES April Fontenot, a person of age
and resident of Lafayette Parish, Louisiana, who on your behalf and on behalf of
any future holder or holders of my a pledged Note, accepts all of the
stipulations of this Mortgage.
It is further agreed and understood that, should I obtain possession of my
pledged Note at any time, my obligations under the Note and under this Mortgage
shall not be released or extinguished. and that I have the right to pledge and
to repledge the Note from time to time, at my sole discretion, without in any
way extinguishing or affecting my obligations under this Note or the security of
this Mortgage.
In the event that I and other persons (including my spouse) have signed
this Mortgage as co-mortgagors. we agree that either or any of, us, acting
Alone, may pledge and repledge the Note secured by this Mortgage, from time to
time. one or more times, to you or to any future holder or holders of our Note,
to secure additional loans made either to me or to any of us Individually or
jointly, without the necessity that both or all of us agree, concur or join In
each such pledge or loan.
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The parties to this Mortgage hereby waive the production of Mortgage and
Conveyance Certificates and relieve and release the Notary before whom this
Mortgage is passed from all responsibilities and liabilities in connection
therewith.
If any provision of this Mortgage is deemed to be Invalid or unenforceable,
such Invalidity or unenforceability will not affect the validity and
enforceability, of the remaining provisions of this Mortgage.
THUS DONE AND SIGNED, in Lafayette, Louisiana, on the day, month and year
first written above, In the presence of the undersigned Notary and the
undersigned competent witnesses, who hereunto sign their names with said
appearers, after reading of the whole.
WITNESSES: MORTGAGOR(S):
American Fire Retardant Corporation
/s/ Barbara C. Miu /s/ Angela M. Raidl
---------------------------------------
By: Angela M. Raidl
Its: Executive Vice President
/s/ Linda B. Ouellette INTERVENOR (SPOUSE): N/A
INTERVENOR ON BEHALF OF MORTAGAGEE:
/s/ April Fontenot
---------------------------------------
April Fontenot
Notary Public
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Legal Description
Attached to Act of Collateral Mortgage
Dated: August 18, 1998
From
American Fire Retardant Corporation
In Favor of
St. Martin Bank & Trust, Co.
That certain parcel of ground, with improvements, being known and designated as
LOT 1, BUTCHER BUSINESS PARK Parish of Lafayette, Louisiana. Said parcel has a
frontage of 100 feet on Brush Road and has the further dimension, measurements,
boundaries, shape, form, location and configuration as will be shown on a plat
of survey of Butcher Business Park which is recorded under Entry No. 82-34558 of
the records of the Clerk of Courts Office for the Parish of Lafayette, Louisiana
and made a part hereof by reference thereto.
American Fire Retardant Corporation
/s/ Angela M. Raidl
- ---------------------------------------------
By: Angela M. Raidl, Executive Vice President
August 17, 1998
Exhibit 10.4(p)
---------------
PROMISSORY NOTE
Principal Loan Date Maturity Loan No
$154,059.29 02-04-1999 04-20-2006 5010001206
Call Collateral Account Officer
CPB 10 11M
- --------------------------------------------------------------------------------
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: ST. MARTIN BANK & TRUST COMPANY TIN: 720307850
Lafayette Office
2810 Johnston Street
Lafayette, LA 70503
================================================================================
Principal Amount: $154,059.29 Initial Rate: 9.750%
Date of Note: February 4, 1999
PROMISE TO PAY. AMERICAN FIRE RETARDANT CORPORATION ("Borrower") promises to pay
to the order of ST. MARTIN BANK & TRUST COMPANY ("Lender"), in lawful money of
the United States of America the sum of One Hundred Fifty Four Thousand Fifty
Nine & 29/100 Dollars (U.S. $154,059.29), together with simple interest assessed
on a variable rate basis at the rate per annum equal to the index provided
below, as the Index under this Note may be adjusted from time to time, one or
more times, with Interest being assessed on the unpaid principal balance of this
Note as outstanding from time to time, commencing on February 4,1999 and
continuing until this Note is paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the index,
Borrower will pay this loan on demand, or it no demand is made, in 84 payments
of $2,600.57 each payment. Borrower's first payment is due May 20, 1999, and all
subsequent payments are due on the same day of each month after that. Borrower's
final payment due on April 20, 2006, may be greater if Borrower does not make
payments as scheduled. The annual interest rate for this Note is computed on a
365/360 basis; that is, by applying the ratio of the annual interest rate over a
year of 360 days, multiplied by the outstanding principal balance, multiplied by
the actual number of days the principal balance is outstanding. Borrower will
pay Lender at Lender's address shown above or at such other place as Lender may
designate in writing. Unless otherwise agreed or required by applicable law,
payments will be applied first to accrued unpaid interest, then to principal,
and any remaining amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The Interest rate on this Note is subject to change from
time to time based on changes in an Index which is the ST MARTIN BANK PRIME RATE
ADJUSTED DAILY (the "Index'). The Index is not necessarily the lowest rate
charged by Lender on its loans and is set by Lender in its sole discretion. If
the Index becomes unavailable during the term of this loan, Lender may designate
a substitute index after notifying Borrower. Lender will tell Borrower the
current Index rate upon Borrower's request. Borrower understands that Lender may
make loans based on other rates as well. The Interest rate change will not occur
more often than each DAY. The Index currently is 9.750% per annum. The interest
rate to be applied to the unpaid principal balance of this Note will be at a
rate equal to the Index, resulting in an initial rate of 9.750% per annum. Under
no circumstances will the interest rate on this Note be more than the maximum
rate allowed by applicable law. Whenever increases occur in the interest rate,
Lender, at its option, may do one or more of the following: (a) Increase
Borrower's payments to ensure Borrower's loan will pay off by its original final
maturity date, (b) increase Borrower's payments to cover accruing interest, (c)
increase the number of Borrower's payments, and (d) continue Borrower's payments
at the same amount and increase Borrower's final payment.
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PREPAYMENT. Borrower may prepay this Note in full at any time by paying the then
unpaid principal balance of this Note, plus accrued simple interest and any
unpaid late charges through date of prepayment. If Borrower prepays this Note in
full, or if Lender accelerates payment, Borrower understands that, unless
otherwise required by law, any prepaid fees or charges will not be subject to
rebate and will be earned by Lender at the time this Note is signed. Unless
otherwise agreed to in writing, early payments under this Note will not relieve
Borrower of Borrower's obligation to continue to make regularly scheduled
payments under the above payment schedule. Early payments will instead reduce
the principal balance due, and Borrower may be required to make fewer payments
under this Note.
LATE CHARGE. If Borrower falls to pay any payment under this Note in full within
10 days of when due, Borrower agrees to pay Lender a late payment fee in an
amount equal to 5.000% of the unpaid amount of the payment, or U.S. $15.00,
whichever is less, with a maximum of $15.00. Late charges will not be assessed
following declaration of default and acceleration of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute default events
under this Note:
Default Under This Note. Should Borrower default in the payment of
principal and/or interest under this Note.
Default Under Security Agreements. Should Borrower or any guarantor
violate, or fall to comply fully with any of the terms and conditions of,
or default under any security right, instrument, document, or agreement
directly or indirectly securing repayment of this Note.
Other Defaults In Favor of Lender. Should Borrower or any guarantor of this
Note default under any other loan, extension of credit, security right,
instrument, document, or agreement, or obligation in favor of Lender.
Default In Favor of Third Parties. Should Borrower or any guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may affect any property or other collateral directly or indirectly
securing repayment of this Note.
Insolvency. Should the suspension, failure or Insolvency, however
evidenced, of Borrower or any guarantor of this Note occur or exist.
Death or Interdiction. Should any guarantor of this Note die or be
interdicted.
Readjustment of Indebtedness. Should proceedings for readjustment of
indebtedness, reorganization, bankruptcy, composition or extension under
any insolvency law be brought by or against Borrower or any guarantor.
Assignment for Benefit of Creditors. Should Borrower or any guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
Receivership. Should a receiver of all or any part of Borrower's property,
or the property of any guarantor, be applied for or appointed.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Borrower or any guarantor be commenced.
False Statements. Should any representation, warranty, or material
statement of Borrower or any guarantor made in connection with the
obtaining of the loan evidenced by this Note or any security agreement
directly or indirectly securing repayment of this Note, prove to be
incorrect or misleading in any respect.
Material Adverse Change. Should any material adverse change occur in the
financial condition of Borrower or any guarantor of this Note or should any
material discrepancy exist between the financial statements submitted by
Borrower or any guarantor and the actual financial condition of Borrower or
such guarantor.
Insecurity. Should Lender deem itself to be insecure with regard to
repayment of this Note.
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LENDER'S RIGHTS UPON DEFAULT. Should any one or more default events occur or
exist under this Note as provided above, Lender shall have the right, at its
sole option, to declare formally this Note to be in default and to accelerate
the maturity and insist upon immediate payment in full of the unpaid principal
balance then outstanding under this Note, plus accrued interest, together with
reasonable attorneys' fees, costs, expenses and other fees and charges as
provided herein. Lender shall have the further right, again at its sole option,
to declare formal default and to accelerate the maturity and to insist upon
immediate payment in full of each and every other loan, extension of credit,
debt, liability and/or obligation of every nature and kind that Borrower may
then owe to Lender, whether direct or Indirect or by way of assignment, and
whether absolute or contingent, liquidated or unliquidated, voluntary or
involuntary, determined or undetermined, secured or unsecured, whether Borrower
is obligated alone or with others on a "solidary" or "Joint and several" basis,
as a principal obligor or otherwise, all without further notice or demand,
unless Lender shall otherwise elect.
ATTORNEYS' FEES. If Lender refers this Note to an attorney for collection, or
files suit against Borrower to collect this Note, or if Borrower files for
bankruptcy or other relief from creditors, Borrower agrees to pay Lender's
reasonable attorneys' fees in an amount not exceeding 25.000% of the unpaid debt
then owing under this Note.
NSF CHECK CHARGES. In the event that Borrower makes any payment under this Note
by check and Borrower's check is returned to Lender unpaid due to nonsufficient
funds in my deposit account, Borrower agrees to pay Lender an additional NSF
check charge equal to $15.00.
DEPOSIT ACCOUNTS. As collateral security for repayment of this Note and all
renewals and extensions, as well as to secure any and all other loans, notes,
indebtedness and obligations that Borrower (or any of them) may now and in the
future owe to Lender or Incur in Lender's favor, whether direct or indirect,
absolute or contingent, due or to become due, of any nature and kind whatsoever
(with the exception of any indebtedness under a consumer credit card account),
Borrower is granting Lender a continuing security interest in any and all funds
that Borrower may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that Lender may at any time apply any funds
that Borrower may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Borrower is an account holder against the
unpaid balance of this Note and any and all other present and future
indebtedness and obligations that Borrower (or any of them) may, then owe to
Lender. in principal. interest, fees, costs expenses, and attorney's fees.
COLLATERAL. This note is secured by: a Collateral Mortgage from Borrower to
Lender dated August 18, 1998 in the amount of $180,000.00; a
Commercial Security Agreement from Borrower to Lender dated May 21, 1997
covering all inventory, accounts, and equipment; an Assignment of Life Insurance
Policy from Stephen F. Owens to Lender dated April 21, 1997; an Assignment of
Life Insurance Policy from Edward E. Friloux to Lender dated April 22, 1997.
Collateral securing other loans with Lender may also secure this Note as the
result of cross-collateralization.
FINANCIAL STATEMENTS. Borrower agrees to provide Lender with such financial
statements and other related Information at such frequencies and In such detail
as Lender may reasonably request.
GOVERNING LAW. Borrower agrees that this Note and the loan evidenced hereby
shall be governed under the laws of the State of Louisiana. Specifically, this
business or commercial Note is subject to La. R.S. 9:3509 at seq.
WAIVERS. Borrower and each guarantor of this Note hereby waive demand,
presentment for payment, protest, notice of protest and notice of nonpayment,
and all pleas of division and discussion, and severally agree that their
obligations and liabilities to Lender hereunder shall be on a "solidary" or
*joint and several" basis. Borrower and each guarantor further severally agree
that discharge or release of any party who is or may be liable to Lender for the
Indebtedness represented hereby, or the release of any collateral directly or
Indirectly securing repayment hereof, shall not have the effect of releasing any
other party or parties, who shall remain liable to Lender, or of releasing any
other collateral that is not expressly released by Lender. Borrower and each
guarantor additionally agree that Lender's acceptance of payment other than in
accordance with the terms of this Note, or Lender's subsequent agreement to
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<PAGE>
extend or modify such repayment terms, or Lender's failure or delay in
exercising any rights or remedies granted to Lender, shall likewise not have the
effect of releasing Borrower or any other party or parties from their respective
obligations to Lender, or of releasing any collateral that directly or
Indirectly secures repayment hereof. In addition, any failure or delay on the
part of Lender to exercise any of the rights and remedies granted to Lender
shall not have the effect of waiving any of Lender's rights and remedies. Any
partial exercise of any rights and/or remedies granted to Lender shall
furthermore not be construed as a waiver of any other rights and remedies; It
being Borrower's Intent and agreement that Lender's rights and remedies shall be
cumulative In nature. Borrower and each guarantor further agree that, should any
default event occur or exist under this Note, any waiver or forbearance on the
part of Lender to pursue the rights and remedies available to Lender, shall be
binding upon Lender only to the extent that Lender specifically agrees to any
such waiver or forbearance In writing. A waiver or forbearance on the part of
Lender as to one default event shall not be construed as a waiver or forbearance
as to any other default. Borrower and each guarantor of this Note further agree
that any late charges provided for under this Note will not be charges for
deferral of time for payment and will not and are not Intended to compensate
Lender for a grace or cure period, and no such deferral, grace or cure period
has or will be granted to Borrower In return for the imposition of any late
charge. Borrower recognizes that Borrower's failure to make timely payment of
amounts due under this Note will result In damages to Lender, Including but not
limited to Lender's loss of the use of amounts due, and Borrower agrees that any
late charges Imposed by Lender hereunder will represent reasonable compensation
to Lender for such damages. Failure to pay In full any Installment or payment
timely when due under this Note, whether or not a late charge Is assessed, will
remain and shall constitute an Event of Default hereunder.
SUCCESSORS AND ASSIGNS LIABLE. Borrower's and each guarantor's obligations and
agreements under this Note shall be binding upon Borrower's and each guarantor's
respective successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Lender under this Note shall inure
to the benefit of Lender's successors and assigns, as well as to any subsequent
holder or holders of this note.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
PRIOR NOTE, the Promissory Note from Borrower to Lender dated December 7, 1998.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER:
AMERICAN FIRE RETARDANT CORPORATION
/s/ Stephen F. Owens
- ---------------------------------
By: STEPHEN F. OWENS
Its PRESIDENT
Page 4
<PAGE>
- -------------------------------------------------------------------------------
GUARANTY
Guarantor hereby agrees on a "solidary" or "Joint and several" basis to
guarantee the prompt and punctual payment and satisfaction of the above Note and
any and all renewals, extensions and refinancings of the Note, and agrees to all
of the Note's terms and conditions.
/S/ Angela M. Raidl
--------------------------
ANGELA M. RAIDL
- --------------------------------------------------------------------------------
GUARANTY
Guarantor hereby agrees on a "solidary" or "Joint and several" basis to
guarantee the prompt and punctual payment and satisfaction of the above Note and
any and all renewals, extensions and refinancings of the Note, and agrees to all
of the Note's terms and conditions.
/S/
------------------------
EDWARD E. FRILOUX
- --------------------------------------------------------------------------------
GUARANTY
Guarantor hereby agrees on a "solidary" or "Joint and several" basis to
guarantee the prompt and punctual payment and satisfaction of the above Note and
any and all renewals, extensions and refinancings of the Note, and agrees to all
of the Note's terms and conditions.
/S/ Stephen F. Ownens
---------------------------------
STEPHEN F. OWENS
Page 5
Exhibit 10.5(a)
---------------
PURCHASE AND SECURITY AGREEMENT
THIS PURCHASE AND SECURITY AGREEMENT made this 17th day of April 19,
1997, by and between American Fire Retardant Corporation with its principal
place of business located in Lafayette, Louisiana (hereinafter referred to as
"Seller"), and PRIVATE CAPITAL, INC., with its principal place of business
located in Lafayette, Louisiana (hereinafter referred to as "Purchaser"):
WITNESSETH THAT:
1. Purchase and Sale. For the consideration hereinafter set forth, but
subject to the terms, provisions, covenants, and conditions herein contained,
Seller hereby offers to sell to Purchaser accounts receivable arising out of
sales of merchandise or service made by Seller during the term of this Agreement
(hereinafter referred to as "Account" or "Accounts"), and agrees to sell to
Purchaser those Accounts which Purchaser approves for purchase as hereinafter
provided. Purchaser hereby agrees to purchase all Accounts that it deems
acceptable. Seller may. from time to time, submit orders to Purchaser for credit
approval prior to acceptance by Seller, however, Purchaser shall not be
obligated to purchase any Account arising out of any such order if unacceptable
to Purchaser. A credit investigation shall not be construed as an acceptance of
an Account. Seller shall be free to deal in such manner as it may desire with
any Account not approved for purchase by Purchaser.
2. Accounts Receivable. Except as Purchaser may otherwise agree in writing,
the terms of all Accounts submitted to Purchaser shall not exceed "net 30 days".
After Purchaser purchases an Account hereunder, Seller shall not vary the terms
of sale set forth in the invoice relating to such Account without Purchaser's
written consent. If any such variation in terms is requested by Seller,
Purchaser shall be entitled to receive, as a condition for its approval of such
change. an amount equal to any decrease in the "net amount" of the Account,
which would result from the variation in terms, along with negotiated additional
discounts. The terms "net amount" shall mean the gross amount payable on the
invoice, less all permitted discounts, deductions, and allowances calculated on
the basis of the shortest selling terms provided. The "Seller" shall immediately
notify "Purchaser" in writing of any changes and/or credits issued against any
purchased account.
3. Purchase Price. Purchaser shall purchase an acceptable Account at a
purchase price equal to the net amount of the acceptable Account, less a
discount equal to 8% of the net amount of the acceptable Account. At the time of
purchase of an Account, Purchaser shall remit to Seller the net amount of such
Account, less Purchaser's discount, as provided for above and an amount
necessary for the Reserve Fund hereinafter referred to. As an inducement to
Seller to sell the accounts from which prompt payment can be expected, Purchaser
agrees to rebate to client 2% on each account that is paid to Purchaser within
30 days. Any account that pays after 30 days will be charged the full discount,
as noted above, plus 2 % for any part of a 30 day increment, exceeding 60 days
from the date, an acceptable account is purchased from the "Seller". Any account
purchased by Purchaser from Seller unpaid for a period in excess of ninety (90)
days from the date of said purchase by Purchaser, Seller agrees to pay to
Purchaser additional sums equal to and calculated according to the "Purchase
Price". This rebate shall be paid when the Reserve Fund is due. This rebate
money owing to Seller may be held by Purchaser at Purchaser's sole discretion as
a further security for payment of any and all obligations owing by Seller to
Purchaser.
4. Transfer. Seller hereby sells, transfers, conveys, and assigns to
Purchaser all its right, title, and interest in and to all Accounts accepted by
Purchaser for purchase, together with all guarantees and security therefor, and
all its right, title and interest in the merchandise purchased and represented
by such Accounts (hereinafter referred to as the "Merchandise"), including, all
Seller's rights of stoppage in transit, replevin, and reclamation as an unpaid
Vendor. Seller further transfers, conveys, sells and assigns to Purchaser any
and all rights, liens. privileges and security which Seller has or may have to
Page 1
<PAGE>
enforce payment of sums due under the account, including without limitation,
vendors privileges, materialmen liens, rights on open account. Seller agrees to
execute and deliver to Purchaser such notices of assignment and other documents
and to make such reasonable entries and markings upon its books and records as
Purchaser may request to better protect the sale and assignment of Accounts
hereunder. Seller hereby authorizes any of its officers and any employee
authorized by its officers to execute and deliver any assignment or document
referred to it this paragraph as noted in the "Signature Authorization Sheet".
5. Reserve Fund. Any and all Accounts shall be purchased with recourse and
rights of charge back against tile Seller as any and all to the financial
inability or failure of customers to pay according to the terms of' the invoice,
and all losses from the financial inability or failure of customers to pay the
Accounts shall be Seller's sole responsibility, Purchaser shall create and
maintain a reserve fund (hereinafter referred to as the "Reserve Fund") out of
payments and credits otherwise to be made or given by Purchaser to Seller, in
the amount of 22% of the then aggregate unpaid gross amount of all Accounts
purchased. Purchaser may charge against the Reserve Fund and/or the Seller
directly for all rights of recourse and obligations which arise under this
Agreement or otherwise. In order to provide for account debtor claims, Purchaser
shall have the rights to revise the amount or the percentage of tile Reserve
Fund to cover such contingencies. In the even( "Purchaser" has no debtor claims
against "Seller", the "Reserves" will normally be paid by "Purchaser" to
"Seller" on the first working day after the 15th and the first working day after
the last day of the month.
6. Security. In order to secure the payment of any indebtedness that may
become due and owing to Purchaser from Seller by reason as a charge back to
Seller of any Account, which obligation or deficiency is not covered by the
Reserve Fund, and to secure the performance of all obligations of Seller and of
each and every representation, covenant, agreement, Seller hereby grants to
Purchaser a security interest in (a) Seller's inventory now owned or hereafter
acquired by way of replacement, substitution, addition, or otherwise) by Seller
located at American Fire Retardant Corporation 110 Brush Road Broussard La 70258
and (b) all accounts receivable, deposit accounts with purchaser, equipment,
general intangibles, goods, instruments and chattel piper of Seller now existing
or hereafter arising (hereinafter collectively referred to as the "Collateral"),
and (c) all proceeds of tile Collateral. The Collateral is also given to secure
payment and performance of all debts, obligations, and liabilities of every kind
and character of Seller, now or hereafter existing in favor of Purchaser,
whether such debts, obligations. or liabilities be direct or indirect, primary
or secondary, joint or several, fixed or contingent. Purchaser shall have all
the rights and remedies provided in this Security Agreement and in the Louisiana
Law. as amended (hereinafter referred to as the "Code").
7. Representations and Warranties. Seller hereby represents and warrants to
Purchaser.
a. If Seller is a corporation, it is duly organized and under the
laws of tile incorporation State and is duly qualified and in
good standing in every other State in which it is doing business,
and the execution, delivery and performance of the Agreement are
within its corporate powers, have been duly authorized as
evidenced by the Certificate of Secretary attached hereto as
Exhibit A. Further, Seller is not in contravention of any law or
the powers of its charter, bylaws, or other incorporation papers,
or of any indenture, agreement, or understanding to which Seller
is a party of by which it is bound.
b. Seller has good and clear title to the Accounts that will be sold
to Purchaser hereunder, and such sale will vest absolute
ownership of such Accounts in Purchaser, free of any claims or
liens of third parties.
c. Seller is the full and sole owner of the Collateral and has good
right and authority to grant a security interest to Purchaser in
the Collateral, and there is no presently outstanding lien,
security interest, or encumbrance in or on the Collateral or its
proceeds, and there is no financing statement covering the
Collateral or its proceeds on file in any public office except as
shown in Exhibit B attached hereto.
Page 2
<PAGE>
d. All balance sheets, earnings statements, and other financial date
which may have been or may hereafter be furnished to Purchaser by
Seller to induce it to enter into this Agreement or otherwise in
connection with it, do or shall fairly represent the financial
condition of Seller as of tile dates stated and the results of
Seller's operations for the period for which the same are
furnished, and all other information, reports, and other papers
and date furnished to Purchaser are or shall be at the time same
are so furnished, accurate and correct in all material respects
and complete insofar as necessary to five Purchaser a true and
accurate knowledge of the subject matter.
e. Each Account assigned and sold to Purchaser shall be based upon a
bonafide sale and actual shipment of the Merchandise or service
performed and Shall be it valid and enforceable obligation of the
customer, with no rights of recoupment, offset or counterclaims
or return of merchandise which could reduce the amount of such
Account.
8. Invoices. Seller agrees to deliver to Purchaser the original and one
copy of customer invoices related to tile Accounts purchased hereunder, together
with evidence of shipment of the Merchandise purchased, along with a written
assignment of the Account. In addition, upon Purchaser's request, Seller agrees
to deliver to Purchaser the original purchase order from each customer. All
invoices shall plainly state on their face that amounts payable thereunder have
been assigned to and are payable to Purchaser at Purchaser's notice address
herein. and billing on such invoices shall constitute an assignment to Purchaser
of the Accounts thereby represented, whether or not it specific assignment is
executed. Purchaser shall mail at Seller's expenses all customer invoices
representing Accounts accepted by Purchaser.
9. Customer Claims. Seller shall immediately notify Purchaser of the
assertion of any customer claim, including any defense, dispute offset or claim
asserted by a customer with respect to an Account or the Merchandise or service.
Purchaser may in its sole discretion settle any customer claim directly with
tile customer involved at the Seller's expenses, upon such terms as Purchaser
may deem advisable. In tile event of any customer claim or breach of any
representations hereunder as to in), Account, Purchaser may reassign to Seller,
without recourse, the unpaid balance of such Account (or any disputed portion
thereof) to the Reserve Fund, or a ( Purchaser's option, Seller shall pay such
amounts to Purchaser upon demand, in the event Purchaser exercises its right to
settle and compromise customer claims, Seller hereby specifically agrees to the
terms, conditions, and provisions of any and all settlements, compromises, and
other agreements, oral or written, entered into by Purchaser on behalf of
Seller. and Purchaser is further specifically vested with a power of attorney to
act in Seller's name. place and stead, tile same its Seller could do in person,
and is authorized hereby to execute all releases, settlements, or compromise
agreements, and receive for and in Seller's name. all money and other property
that Purchaser may received in settlement, release, or compromise of customer
claims. The foregoing is discretionary upon the part of Purchaser, and Seller
shall have no right to demand or require Purchaser's undertaking of the
aforesaid functions.
10. Collections Remittances Received by Seller. Purchaser is hereby given
the right to notify any account debtor to make payment on any account sold to or
securing Purchaser, directly to Purchaser rather than Seller. All remittances
received by Seller on any Account sold to Purchaser shall be held by Seller in
trust for Purchaser, separate and apart from Seller's own properties and funds,
and shall be immediately delivered to Purchaser in the identical form in which
received. In the event any of the Merchandise shall be returned to, or
repossessed by Seller, such Merchandise shall be held by Seller in trust for
Purchaser, separate and apart from Seller's own property and Subject to
Purchaser's direction and control.
11. Seller's. Mail. Seller hereby authorizes Purchaser to the extent
reasonably necessary to protect Purchaser's interest, to receive, open, and
dispose of Seller's mail received at Purchaser's notice address and to endorse
Seller's name to checks payable to Seller which represent payment for the
Merchandise and on the Accounts sold under this Agreement.
Page 3
<PAGE>
12. Other Security. Notwithstanding any other provisions of this Agreement,
Purchaser shall be entitled at all times before or after the termination of this
Agreement to hold all sums for credit of Seller as security for any and all of
Seller's obligations to Purchaser, however arising, and any amounts which
Purchaser is authorized hereunder to charge to Seller or for which Seller is
obligated to Purchaser may be withheld and deducted by Purchaser at any tune in
Purchaser's sole discretion from any remittances, payments, or credits otherwise
to be made by Purchaser hereunder.
13. Sales Taxes. All taxes and governmental charges imposed with respect to
sales of the Merchandise shall be charged to and paid by Seller.
14. Financial Statements. Seller agrees to furnish Purchaser within twenty
(20) days after the close of each quarter-annual accounting period of Seller, a
profit and loss statement for such period, and a balance sheet as of the close
of such period, both to be prepared and certified by an accountant acceptable to
Purchaser, and shall furnish Purchaser such additional financial information as
Purchaser shall request Purchaser and Purchaser's agents shall have the right,
at all times during normal business hours, after reasonable notice, to examine
and make extracts from all books and records of Seller. Seller shall keep its
books and records in accordance with generally accepted accounting principles,
consistently applied.
15. Default. The term "default" is used in this Agreement shall mean the
occurrence of any of the following events:
a. The failure to Seller punctually and properly to observe, keep,
or perform, any covenant, agreement, or condition herein required
to be observed, kept or performed.
b. The representations and warranties made by Seller in this
Agreement shall prove to be untrue.
c. The failure of Seller to deliver to Purchaser remittances
received by Seller on an Account Sold to Purchaser.
d. Seller becomes insolvent or makes an assignment for the benefit
of creditors.
e. A receiver is appointed for all or substantially all the
properties of Seller or of the Collateral or any part hereof.
f. Seller is adjudicated a bankrupt or request, either by way of
petition or answer, that Seller be adjudicated a bankrupt of that
Seller be allowed or granted any composition, rearrangement,
extension, reorganization, or other relief under any bankruptcy
law or any other law for the relief of debtors now or hereafter
existing.
g. The death, dissolution, or termination of Seller.
h. If any guarantee of' the obligation of Seller hereunder shall be
terminated by the guarantor.
i. Purchaser deems itself insecure.
16. Rights Of Purchaser upon Seller's Default. Upon the occurrence of
default, and during the continuation thereof, Purchaser may (a) its a secured
party exercise it rights of enforcement under the Code. (b) immediately
terminate this Agreement as to future transactions, without affection the rights
and obligations of the parties accruing with respect to prior transactions: and
(c) exercise all other rights conferred by law and under this Agreement and
resort to any remedy existing at law or tit equity for the collection of any
indebtedness accrued hereby and for the enforcement of the covenants and
agreements contained herein including without limitation notifying account
debtors of and collecting the Collateral. The resort to any particular remedy
shall not prevent the concurrent or subsequent employment of any other
appropriate remedy or remedies.
Page 4
<PAGE>
17. Term. This Agreement shall be effective from the date hereof and shall
continue in full force and effect until "terminated". This Agreement can be
terminated by either party by the delivery of written notice of termination to
the other party at least thirty (30) days prior to such termination date, but
such termination shall not effect or impair Purchaser's security interest in
thee Collateral as to any defaults that may have occurred prior to such
termination. Regardless of the above if Purchaser purchases or advances any sum
against any Account for or for Seller at termination of this agreement said
purchase and advance as well as the obligations of Seller shall he those
evidenced by this agreement unless a separate agreement is executed by all
parties.
18. Notice. Any notice. communication, assignment, or payment, required to
permitted hereunder. shall be send by United States mail, postage prepaid,
registered or certified mail. addressed is follows:
To Seller:
-----------------------------------
American Fire Retardant Corporation
110 Brush Road
Broussard, Louisiana 70298
To Purchaser
-----------------------------------
Private Capital, Inc.
207 Heymann Blvd.
Lafayette, Louisiana 70503
19. Attorney's Fees Seller agrees to reimburse Purchaser upon demand for
all attorney's fees. court costs, and other expenses incurred by Purchaser in
enforcing any of Purchaser's rights against Seller under this Agreement.
20. Indemnification Seller shall indemnify and hold Purchaser harmless from
and against all liability for any acts or omissions of Seller, its agents and
employees, including any attorney's fees and expenses incurred by Purchaser in
defending against any such claims asserted against Purchaser.
21. Severability Each and every provision, condition, covenant and
representation contained in this Agreement is, and shall be construed to be a
separate and independent covenant and agreement. If any term or provision of
this Agreement shall be any extent be invalid or unenforceable. the remainder of
the Agreement shall not be affected thereby.
22. No Waiver. Failure by Purchaser to exercise any of Purchaser's rights
hereunder shall not be deemed to be a waiver by Purchaser of such or any other
rights, nor in any manner impair the subsequent exercise of the same or any
other rights, and any waiver by Purchaser of any default shall not constitute a
waiver of any subsequent default.
23. Laws. This Agreement shall be construed according to the laws of the
State of Louisiana.
24. Complete Agreement. This Agreement embodies the complete agreement
between the parties hereto and cannot be varied or terminated except by the
written agreement of the parties. Purchaser has not made any promises,
representations or warranties not expressly stated herein.
Page 5
<PAGE>
25. Paragraph Headings. The paragraph headings contained in this Agreement
are for convenience only and shall in no way enlarge or limit the scope or
meaning of the various and several paragraphs hereof.
26. Applicability. The terms and provisions of this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives and assigns.
27. Effective. This Agreement becomes effective when it is accepted and
executed by the Authorized officers of Private Capital, Inc.
28. Transfer\Assignment. Seller may not pledge, encumber, transfer or
assign any of its rights granted under this Agreement. Purchaser may assign,
sell, transfer or encumber all or any of its rights, interests or collateral
here under without notice to Seller and without affecting Seller's obligations
here under.
Executed this 17th day of April, 1997 at Lafayette, Louisiana American Fire
Retardant Corporation
American Fire Retardant Corporation Private Capital, Inc.
(Client) (Purchaser)
/s/ Stephen F. Owens /s/ John W. Forbes
- ----------------------------------- -----------------------------
By: Stephen F. Owens By: John W. Forbes
Title: President Title: Vice President
/s/ Edward L. Friloux
- -----------------------------------
By: Edward L. Friloux
Title: Secretary
Corporate Resolution Attached (X) Yes
( ) No
Page 6
Exhibit 10.5(b)
---------------
CONTINUING GUARANTY & WAIVER
Reference is made to the Security Agreement (herein "AGREEMENT") dated APRIL 17,
1997 and entered into between AMERICAN FIRE RETARDANT CORPORATION (herein
"COMPANY") and PRIVATE CAPITAL, INCORPORATED (herein PURCHASER)
For valuable consideration and to induce PURCHASER to enter into AGREEMENT, the
undersigned agree as follows:
1. GUARANTY OF OBLIGATION: The undersigned, jointly and severally,
unconditionally guaranty to PURCHASER full payment and prompt and faithful
performance by the company of all its present and future indebtness and
obligations to PURCHASER which may arise pursuant to AGREEMENT. The words
"indebtedness" and "obligations" are used herein their most comprehensive sense
and include any and all advances, debts, obligations, and liabilities of the
Company heretofore, whether due or not due, absolute or contingent, liquidated
or unliquidated, determined, or undetermined, and whether the Company any be
liable individually or jointly with others, or whether recovery may be or
hereafter become barred by any statue of limitations or otherwise become
unenforceable. Said indebtedness and obligations guaranteed hereunder shall be
collectively referred to herein as "Obligations".
2. RIGHTS ARE INDEPENDENT: The Obligations of the undersigned are
independent of the obligations of the Company under AGREEMENT, or separate
action or actions may be brought and prosecuted by PURCHASER against the
undersigned whether or not an action is brought against the Company or whether
the Company is joined in any such action or actions.
3. WAIVER OF DEFENSE: The undersigned waive any right to require PURCHASER
to proceed against the Company, the account-debtor or customer of the Company,
or any other person, or proceed against or exhaust any security, or pursue any
other remedy in PURCHASER'S power.
4. CONTINUING GUARANTY: It is the intention of the undersigned that this
Agreement shall constitute a continuing guaranty of the Obligations of the
Company under AGREEMENT and addendums or modifications thereto.
5. DEFAULT: Any one or more or the following shall be a default hereunder:
(a) any default in payment or performance of any instrument, or of the
Obligations hereby guaranteed: or (b) any warranty, representation, statement,
or report made or delivered to PURCHASER by or on behalf of the Company, or the
undersigned, is incorrect, false, untrue or misleading when given in any
material respect whatever: or (c) there shall occur the dissolution of the
Company of the transfer, hypothecation or liquidation of all or substantially
Page 1
<PAGE>
all of the Company's assets: or (d) the undersigned shall sell, transfer, convey
or in any manner alienate its interest in the Company. In the event of any of
the foregoing, the obligations hereby guaranteed shall become, for the purpose
of the Agreement, due and payable by the undersigned forthwith without demand or
notice.
6. AUTHORITY OF OFFICERS: It is not necessary for PURCHASER co inquire into
the powers of the Company or the officers, directors, agents, acting or
purporting to act in its behalf and any obligations made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.
7. PARTNERSHIP OF ASSOCIATION: When the Company is a partnership or other
association, the Agreement is to extend to the person or persons for the time
being and from time to time carrying on the business now conducted by the
Company, notwithstanding any change or changes in the name, structure and/or
membership of the Company.
8. FINANCIAL CONDITION OF COMPANY: The undersigned represent to PURCHASER
that they are now and will be completely familiar with the business, waive and
relinquish any duty on the part of PURCHASER to disclose any matter, fact or
thing relating to the business, operation or financial condition of the Company
now known or hereafter known by PURCHASER.
9. GUARANTOR'S DIRECT BENEFIT: The undersigned hereby represent and warrant
that it is in the undersigned's direct interest to assist the Company because of
the undersigned's position(s) and in economic relation(s) with the Company.
10. ATTORNEY'S FEES: Whether or not suit be instituted, the undersigned
agree to pay reasonable attorney's fees and all other costs and expenses
incurred by PURCHASER in enforcing this Agreement and in any action or
proceedings arising out of or relating to this Agreement.
11. SUCCESSORS AND ASSIGNS: This Agreement shall bind the successors and
assigns of the undersigned and shall inure to PURCHASER'S successors and
assigns.
12. GOVERNING LAW: This Agreement shall be governed by, and construed in
accordance with the laws of the state of
13. SEVERABILITY; In case any right of PURCHASER herein shall be held to be
invalid, illegal, or unenforceable, such invalidity, illegality and/or
unenforceability, shall not affect any other right granted hereby.
14. JOINT AND SEVERAL: All of the obligations of the undersigned hereunder
shall be joint and several.
Page 2
<PAGE>
Executed on this 13th day of July 1998 at ____ (city), ____ (state)
/s/ Angela M. Raidl
- ---------------------------------
Angela M. Raidl
1951 Tavern Rd.
Alpine, CA 91901
Page 3
Exhibit 10.5(c)
---------------
CONTINUING GUARANTY & WAIVER
Reference is made to the Security Agreement (herein "AGREEMENT") dated APRIL 17,
1997 and entered into between AMERICAN FIRE RETARDANT CORPORATION (herein
"COMPANY") and PRIVATE CAPITAL, INCORPORATED (herein PURCHASER)
For valuable consideration and to induce PURCHASER to enter into AGREEMENT, the
undersigned agree as follows:
1. GUARANTY OF OBLIGATION: The undersigned, jointly and severally,
unconditionally guaranty to PURCHASER full payment and prompt and faithful
performance by the company of all its present and future indebtness and
obligations to PURCHASER which may arise pursuant to AGREEMENT. The words
"indebtedness" and "obligations" are used herein their most comprehensive sense
and include any and all advances, debts, obligations, and liabilities of the
Company heretofore, whether due or not due, absolute or contingent, liquidated
or unliquidated, determined, or undetermined, and whether the Company any be
liable individually or jointly with others, or whether recovery may be or
hereafter become barred by any statue of limitations or otherwise become
unenforceable. Said indebtedness and obligations guaranteed hereunder shall be
collectively referred to herein as "Obligations".
2. RIGHTS ARE INDEPENDENT: The Obligations of the undersigned are
independent of the obligations of the Company under AGREEMENT, or separate
action or actions may be brought and prosecuted by PURCHASER against the
undersigned whether or not an action is brought against the Company or whether
the Company is joined in any such action or actions.
3. WAIVER OF DEFENSE: The undersigned waive any right to require PURCHASER
to proceed against the Company, the account-debtor or customer of the Company,
or any other person, or proceed against or exhaust any security, or pursue any
other remedy in PURCHASER'S power.
4. CONTINUING GUARANTY: It is the intention of the undersigned that this
Agreement shall constitute a continuing guaranty of the Obligations of the
Company under AGREEMENT and addendums or modifications thereto.
5. DEFAULT: Any one or more or the following shall be a default hereunder:
(a) any default in payment or performance of any instrument, or of the
Obligations hereby guaranteed: or (b) any warranty, representation, statement,
or report made or delivered to PURCHASER by or on behalf of the Company, or the
undersigned, is incorrect, false, untrue or misleading when given in any
material respect whatever: or (c) there shall occur the dissolution of the
Company of the transfer, hypothecation or liquidation of all or substantially
Page 1
<PAGE>
all of the Company's assets: or (d) the undersigned shall sell, transfer, convey
or in any manner alienate its interest in the Company. In the event of any of
the foregoing, the obligations hereby guaranteed shall become, for the purpose
of the Agreement, due and payable by the undersigned forthwith without demand or
notice.
6. AUTHORITY OF OFFICERS: It is not necessary for PURCHASER co inquire into
the powers of the Company or the officers, directors, agents, acting or
purporting to act in its behalf and any obligations made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.
7. PARTNERSHIP OF ASSOCIATION: When the Company is a partnership or other
association, the Agreement is to extend to the person or persons for the time
being and from time to time carrying on the business now conducted by the
Company, notwithstanding any change or changes in the name, structure and/or
membership of the Company.
8. FINANCIAL CONDITION OF COMPANY: The undersigned represent to PURCHASER
that they are now and will be completely familiar with the business, waive and
relinquish any duty on the part of PURCHASER to disclose any matter, fact or
thing relating to the business, operation or financial condition of the Company
now known or hereafter known by PURCHASER.
9. GUARANTOR'S DIRECT BENEFIT: The undersigned hereby represent and warrant
that it is in the undersigned's direct interest to assist the Company because of
the undersigned's position(s) and in economic relation(s) with the Company.
10. ATTORNEY'S FEES: Whether or not suit be instituted, the undersigned
agree to pay reasonable attorney's fees and all other costs and expenses
incurred by PURCHASER in enforcing this Agreement and in any action or
proceedings arising out of or relating to this Agreement.
11. SUCCESSORS AND ASSIGNS: This Agreement shall bind the successors and
assigns of the undersigned and shall inure to PURCHASER'S successors and
assigns.
12. GOVERNING LAW: This Agreement shall be governed by, and construed in
accordance with the laws of the state of
13. SEVERABILITY; In case any right of PURCHASER herein shall be held to be
invalid, illegal, or unenforceable, such invalidity, illegality and/or
unenforceability, shall not affect any other right granted hereby.
14. JOINT AND SEVERAL: All of the obligations of the undersigned hereunder
shall be joint and several.
Page 2
<PAGE>
Executed on this 17th day of April 1997 at ____ (city), ____ (state)
/s/ Stephen F. Owens /s/ Edward L. Friloux
- -------------------------------- ---------------------------------------
Angela M. Raidl Edward L. Friloux
Page 3
Exhibit 10.6
---------------
PROMISSORY NOTE
Principal Loan Date Maturity Loan No. Call
$15,030.00 06-16-1997 09-14-1997 8342085 57
- -------------------------------------------------------------------------------
Collateral Account Officer Initials
60 SCG
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
- -------------------------------------------------------------------------------
Borrower: AMERICAN FIRE RETARDANT CORPORATION TIN: 72-1261941
110 BRUSH ROAD
BROUSSARD, LA 70518
Lender: BANK OF ERATH TIN: 72-0124900
ABBEVILLE BRANCH
P.O. BOX 308
1309 CHARITY STREET
ABBEVILLE, LA 70510
===============================================================================
Principal Amount: $15,030.00 Initial Rate: 12.500% Date of Note: June 16, 1997
===============================================================================
PROMISE TO PAY. AMERICAN FIRE RETARDANT CORPORATION ("Borrower") promises to pay
to the order of BANK OF ERATH ("Lender"), In lawful money of the United States
of America the sum of Fifteen Thousand Thirty & 00/100 Dollars (U.S. $15,030.00)
together with simple interest at the rate of 12.500% per annum assessed on the
unpaid principal balance of this Note as outstanding from time to time,
commencing on June 16, 1997 and continuing until this Note is paid in full, or
until default under this Note with interest thereafter being subject to the
default interest rate provisions set forth herein, with Interest being
assessed on the unpaid principal balance of this Note as outstanding from time
to time, commencing on May 21, 1998 and continuing until this Note is paid In
full, or until default under this Note with Interest thereafter being subject to
the default interest rate provisions set forth herein.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in one
payment of $15,0303.00 plus accrued interest on September 14, 1997. This payment
due September 14, 1997, will be for all principal and accrued interest not yet
paid. Interest on this Note is computed on a 365/365 simple interest basis; that
is, by applying the ratio of the annual interest rate over the number of days in
a year, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. Borrower will pay
Lender at Lender's address shown above or at such other place as Lender may
designate in writing. Unless otherwise agreed or required by applicable law,
payments will be applied first to any unpaid collection costs and any late
charges, then to any unpaid interest, and any remaining amount to principal.
Page 1
<PAGE>
PREPAYMENT. Borrower may prepay this Note in full at any time by paying the then
unpaid principal balance of this Note, plus accrued simple interest and any
unpaid late charges through date of prepayment. If Borrower prepays this Note in
full, or if Lender accelerates payment, Borrower understands that unless
otherwise required by law, any prepaid fees or charges will not be subject to
rebate and will be earned by Lender at the time this Note is signed. Unless
otherwise agreed to in writing, early payments under this Note will not relieve
Borrower of Borrower's obligation to continue to a regularly scheduled payments
under the above payment schedule. Early payments will instead reduce the
principal balance due, and Borrower may be required to make fewer payments under
this Note.
LATE CHARGE. If Borrower falls to pay any payment under this Note In full within
10 days of when due, Borrower agrees to pay Lender a late payment fee in an
amount equal to 5.000% of the unpaid amount of the payment, or U.S. $15.00,
whichever is less. Late charges will not be assessed following declaration of
default and acceleration of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute default events
under this Note:
Default Under This Note. Should Borrower default in the payment of
principal and/or Interest under this Note.
Default Under Security Agreements. Should Borrower or any guarantor
violate, or fall to comply fully with any of the terms and conditions of,
or default under any security right, instrument, document, or agreement
directly or indirectly securing repayment of this Note.
Other Defaults In Favor of Lender. Should Borrower or any guarantor of this
Note default under any other loan, extension of credit, security right,
instrument, document, or agreement, or obligation in favor of Lender.
Default In Favor of Third Parties. Should Borrower or any guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may affect any property or other collateral directly or indirectly
securing repayment of this Note.
Insolvency. Should the suspension, failure or insolvency, however
evidenced, of Borrower or any guarantor of this Note occur or exist.
Death or Interdiction. Should any guarantor of this Note die or be
interdicted.
Readjustment of Indebtedness. Should proceedings for readjustment of
indebtedness, reorganization, bankruptcy, composition or extension under
any insolvency law be brought by or against Borrower or any guarantor.
Assignment for Benefit of Creditors. Should Borrower or any guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
Receivership. Should a receiver of all or any part of Borrower's property,
or the property of any guarantor, be applied for or appointed.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Borrower or any guarantor be commenced.
False Statements. Should any representation, warranty, or material
statement of Borrower or any guarantor made in connection with the
obtaining of the loan evidenced by this Note or any security agreement
directly or indirectly securing repayment of this Note, prove to be
incorrect or misleading in any respect.
Material Adverse Change. Should any material adverse change occur in the
financial condition of Borrower or any guarantor of this Note or should any
material discrepancy exist between the financial settlements submitted by
Borrower or any guarantor and the actual financial condition of Borrower or
such guarantor.
Insecurity. Should Lender deem itself to be insecure with regard to
repayment of this Note.
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LENDER'S RIGHTS UPON DEFAULT. Should any one or more default events occur or
exist under this Note as provided above, Lender shall have the right, at Its
sole option, to declare formally this Note to be In default and to accelerate
the maturity and Insist upon Immediate payment In full of the unpaid principal
balance then outstanding under this Note, plus accrued Interest, together with
reasonable attorneys' fees, costs, expenses and other fees and charges as
provided herein. Lender shall have the further right, again at its sole option,
to declare formal default and to accelerate the maturity and to Insist upon
Immediate payment In full of each and every other loan, extension of credit,
debt, liability and/or obligation of every nature and kind that Borrower may
then owe to Lender, whether direct or Indirect or by way of assignment, and
whether absolute or contingent, liquidated or unliquidated, voluntary or
Involuntary, determined or undetermined, secured or unsecured, whether Borrower
Is obligated alone or with others on a "solidary" or "Joint and several" basis,
as a principal obligor or otherwise, all without further notice or demand,
unless Lender shall otherwise elect.
INTEREST AFTER DEFAULT. If Lender declares this Note to be default, Lender has
the right prospectively to adjust and fix the simple interest rate under this
Note until this Note is paid in full, as follows: (1) If the original principal
amount of this Note Is $250,000 or less, the fixed default Interest rate shall
be equal to eighteen (18%) percent per annum, or three (3%) per cent per annum
in excess of the interest rate under this Note, whichever is greater. (2) If the
original principal amount of this Note is more than $250,000, the fixed default
interest rate shall be equal to twenty-one (21%) percent per annum, or three
(3%) per cent per annum in excess of the interest rate under this Note at the
time of default, whichever is greater.
ATTORNEYS' FEES. If Lender refers this Note to an attorney for collection, or
files suit against Borrower to collect this Note, or if Borrower files for
bankruptcy or other relief from creditors, Borrower agrees to pay Lender's
reasonable attorneys' fees in an amount not exceeding 25.000% of the unpaid debt
then owing under this Note.
NSF CHECK CHARGES. In the event that Borrower makes any payment under this Note
by check and Borrowers check is returned to Lender unpaid due to nonsufficient
funds in my deposit account, Borrower agrees to pay Lender an additional NSF
check charge equal to $15.00.
DEPOSIT ACCOUNTS. As collateral security for repayment of this Note and all
renewals and extensions, as well as to secure any and all other loans, notes,
indebtedness and obligations that Borrower (or any of them) may now and in the
future owe to Lender or incur in Lender's favor, whether direct or Indirect,
absolute or contingent, due or to become due, of any nature and kind whatsoever
(with the exception of any Indebtedness under a consumer credit card account),
Borrower is granting Lender a continuing security interest in any and all funds
that Borrower may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that Lender may at any time apply any funds
that Borrower may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Borrower is an account holder against the
unpaid balance of this Note and any and all other present and future
indebtedness and obligations that Borrower (or any of them) may then owe to
Lender, in principal, interest, fees, costs, expenses, and attorneys' fees.
COLLATERAL. This Note is secured by: UCC Financing Statement Collateral.
Collateral securing other loans with Lender may also secure this Note as the
result of cross-collateralization.
FINANCIAL STATEMENTS. Borrower agrees to provide Lender. with such financial
statements and other related information at such frequencies and in such detail
as Lender may reasonably request.
GOVERNING LAW. Borrower agrees that this Note and the loan evidenced hereby
shall be governed under the laws of the State of Louisiana. Specifically, this
business or commercial Note is subject to La. R.S. 9:3509 at seq.
WAIVERS. Borrower and each guarantor of this Note hereby waive demand,
presentment for payment, protest, notice of protest and notice of nonpayment,
and all pleas of division and discussion, and severally agree that their
obligations and liabilities to Lender hereunder shall be on a "solidary" or
"Joint and several" basis. Borrower and each guarantor further severally agree
that discharge or release of any party who is or may be liable to Lender for the
Indebtedness represented hereby, or the release of any collateral directly or
Indirectly securing repayment hereof, shall not have the effect of releasing any
other party or parties, who shall remain liable to Lender, or of releasing any
other collateral that is not expressly released by Lender. Borrower and each
guarantor additionally agree that Lender's acceptance of payment other than in
accordance with the terms of this Note, or Lender's subsequent agreement to
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extend or modify such repayment terms, or Lenders failure or delay in exercising
any rights or remedies granted to Lender, shall likewise not have the effect of
releasing Borrower or any other party or parties from their respective
obligations to Lender, or of releasing any collateral that directly or
indirectly secures repayment hereof. In addition, any failure or delay on the
part of Lender to exercise any of the rights and remedies granted to Lender
shall not have the effect of waiving any of Lendees rights and remedies. Any
partial exercise of any rights and/or remedies granted to Lender shall
furthermore not be construed as a waiver of any other rights and remedies; it
being Borrowers Intent and agreement that Lendees rights and remedies shall be
cumulative in nature. Borrower and each guarantor further agree that, should any
default event occur or exist under this Note, any waiver or forbearance on the
part of Lender to pursue the rights and remedies available to Lender, shall be
binding upon Lender only to the extent that Lender specifically agrees to any
such waiver or forbearance in writing. A waiver or forbearance on the part of
Lender as to one default event shall not be construed as a waiver or forbearance
as to any other default. Borrower and each guarantor of this Note further agree
that any late charges provided for under this Note will not be charges for
deferral of time for payment and will not and are not intended to compensate
Lender for a grace or cure period, and no such deferral, grace or cure period
has or will be granted to Borrower in return for the imposition of any late
charge. Borrower recognizes that Borrowees failure to make timely payment of
amounts due under this Note will result in damages to Lender, including but not
limited to Lender's loss of the use of amounts due, and Borrower agrees that any
late charges imposed by Lender hereunder will represent reasonable compensation
to Lender for such damages. Failure to pay in full any installment or payment
timely when due under this Note, whether or not a late charge is assessed, will
remain and shall constitute an Event of Default hereunder.
SUCCESSORS AND ASSIGNS LIABLE. Borrower's and each guarantor's obligations and
agreements under this Note shall be binding upon Borrower's and each guarantor's
respective successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Lender under this Note shall inure
to the benefit of Lendees successors and assigns, as well as to any subsequent
holder or holders of this Note.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY
ACTION,PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST
THE OTHER.
BORROWER:
AMERICAN FIRE RETARDANT CORPORATION
/s/ Stephen F. Owens
- ---------------------------------------
By: Stephen F. Owens
Its: President
/s/ Angela M. Raidl
- ---------------------------------------
By: Angela M. Raidl
Its: Executive Vice President/Treasurer
/s/ Edward Friloux, Sr.
- ---------------------------------------
By: Edward Friloux, Sr.
Its: Senior Vice President/Secretary
Page 4
Exhibit 10.7
---------------
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-GROSS
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
February 21, 1997 1997 is made by and between Darwin E. Zavadil ("Lessor") and
American Fire Retardant Corporation ("Lessee") (collectively the "Parties," or
individually a "Party").
1.2 Promises: That certain real property, Including all Improvements
therein or to be provided by Lessor under the forms of this Lease, and commonly
known by the street address of 9337 Bond Ave. located In the County of San Diego
State of CA and generally described as (describe briefly the nature of 119
property) Approximately 7,554 square feet of office and industrial 'space with
fenced parking (Premises"). See Paragraph 2 for further provisions.)
1.3 Term: Five years and 0 months ("Original Term") commencing June 1, 1997
("Commencement Date") and ending - May 31, 2002 ("Expiration Date"). (See
Paragraph 3 for further provisions.)
1.4 Early Possession: ---------------------------------- ("Early Possession
Date"). (See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 Base Rent: $ 4,155.00 per month ("Base Rent"), payable on the 1st day
of each month commencing July 1, 1997 (See Paragraph 4 for further provisions.)
X If this box is checked, there are provisions In this Lease for the Base Rent
to be adjusted.
1.6 Base Rent Paid Upon Execution: $ 4,155 as Base Rent for the period June
1, 1997 through June 30, 1997
1.7 Security Deposit: $4,155.00 ("Security Deposit"). (See Paragraph 5 for
further provisions.)
1.8 Permitted Use: Office and Warehouse for flame proofing company (See
Paragraph 6 for further provisions.)
1.9 Insuring Party: Lessor is the "Insuring Party." $ 1997 invoice is the
"(Base Premium." (See Paragraph 8 for further provisions.)
1.10 Real Estate Brokers: The following real estate brokers (collectively,
the "Brokers") and brokerage relationship exist in this transaction and are
consented to by the Parties (check applicable boxes): Wiese & Associates
represents X Lessor exclusively ("Lessor's Broker"); -- both Lessor and Lessee,
and East County Properties represents X Lessee exclusively ("Lessee's Broker");
- -- both Lessee and Lessor. (See paragraph 15 for further provisions.)
1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by Angela Raidl ("Guarantor"). (See Paragraph 37 for further
provisions)
1.12 Addenda. Attached hereto is an Addendum or Addenda consisting of
Paragraphs ---- through -- through -- and Exhibits -- all of which constitute a
part of this Lease.
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth In this Lease. Unless otherwise provided
herein, any statement of square footage sot forth in this Lease, or that may
have been used in calculating rental, is an approximation which Lessor and
Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
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2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free
of debris on the Commencement Data and warrants to Lessee that the existing
plumbing, fire sprinkler system, lighting, air conditioning, heating, and
loading doors, if any, in the Promises, other than those constructed by Lessee,
shall be in good operating condition on the Commencement Date. If a
non-compliance with said warranty exists as of the Commencement Data, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity of its nature and
extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with it's warranty within
thirty (30) days after the Commencement Date, correction of that non-compliance
shall be the obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor
warrants to Lessee that the Improvements on the Promises comply will) all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances In effect on the Commencement Date. Said warranty
does not apply to the use to which Lessee will put the Promises or to any
Alterations or Utility Installations (as defined In Paragraph 7.3(a)) made or to
be made by Lessee. If the Promises do not comply with said warranty, Lessor
shall, except as otherwise provided in this Lease, promptly after recall)[ of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within six (6)
months following the Commencement Date, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense.
2.4 Acceptance of Promises. Lessee hereby acknowledges: (a) that It has
been advised by the Brokers to satisfy itself with respect to :1,0 condition of
the Promises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined In Paragraph 6.3) and the present and future suitability of the Promises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents,
ties made any oral or written representations or warranties with respect to the
said matters other than as set forth In this Lease.
2.5 Lessee Prior Owner/Occupant. The warranties made by Lessor In this
Paragraph 2 shall be of no force or effect if immediately prior to the date set
forth in Paragraph 1.1 Lessee was the owner or occupant of the Promises. In such
event, Lessee shall, at Lessee's sole cost and expense, correct any
non-compliance of the Premises with said warranties.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease, however,
shall be in effect during such period. Any such early possession shall not
affect nor advance the Expiration Date of the Original Term.
3.3 Delay In Possession. If for any reason Lessor cannot deliver possession
of the Premises to Lessee as agreed herein by the Early Possession Date, if one
is specified in Paragraph 1.4, or, if no Early Possession Date is specified, by
the Commencement Date, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but In such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Promises to Lessee. If possession of the Premises is not
delivered to Lessee within sixty (60) days after the Commencement Date, Lessee
may, at its option. by notice In writing to Lessor within ten (10) days
thereafter, cancel this Lease, in which event the Parties shall be discharged
from all obligations hereunder; provided, however, that if such written notice
by Lessee is not received by Lessor within said ten (10) day period, Lessee's
right to cancel this Lease shall terminate and be of no further force or effect.
Except as may be otherwise provided, and regardless of when the term actually
commences, if possession is not tendered to Lessee when required by this Lease
and Lessee does not terminate this Lease, as aforesaid, the period free of the
obligation to pay Base Rent, If any, that Lessee would otherwise have enjoyed
shall run from the date of delivery of possession and continue for a period
equal to what Lessee would otherwise have enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or emissions of Lessee.
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4.Rent.
4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by Lessor
in lawful money of the United States, without offset or deduction, on or before
the day on which It Is due under the terms of this Lease. Base Rent and all
other rent and charges for any period during the term hereof which Is for less
than one (1) full calendar month shall be prorated based upon the actual number
of days of the calendar month Involved. Payment of Base Rent and other charges
shall be made to Lessor at Its address stated herein or to such other persons or
at such other addresses as Lessor may from lime to time designate in writing to
Lessee.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit set forth In Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee falls
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined In Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount duo
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorney's~ fees) which Lessor may stiffer or incur by
reason thereof. It Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefor
deposit moneys with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Any time the Base Rent increases during the
term of this Lease, Lessee shall; upon written request from Lessor, deposit
additional moneys with Lessor sufficient to maintain the same ratio between the
Security Deposit and the Base Rent as those amounts are specified In the Basic
Provisions. Lessor shall not be required to keep all or any part of the Security
Deposit separate from its general accounts. Lessor shall, at the expiration or
earlier termination of the term hereof and after Lessee has vacated the
Premises, return to Lessee (or, at Lessor's option, to the last assignee, It
any. of Lessee's Interest herein), that portion of the Security Deposit not used
or applied by Lessor. Unless otherwise expressly agreed In writing by Lessor, no
part of the Security Deposit shall be considered to be field In trust, to bear
interest or other Increment for its use. or to be prepayment for any moneys to
be paid by Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Promises only for the purposes set
forth In Paragraph 1 .8, or any other use which Is comparable thereto, and for
no other purpose. Lessee shall not use or permit the use of the Promises In a
manner that creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to. neighboring promises or properties. Lessor
hereby agrees to not unreasonably withhold or delay its consent to any written
request by Lessee, Lessees assignees or subtenants, and by prospective assignees
and subtenants of the Lessee, Its assignees and subtenants, for a modification
of said permitted purpose for which the promises may be used or occupied, so
long as the same will not Impair the structural integrity of the improvements on
the Promises, the mechanical or electrical systems therein, Is not significantly
more burdensome to the Premises and the improvements thereon, and is otherwise
permissible pursuant to this Paragraph 6. It Lessor elects to withhold such
consent, Lessor shall within five (5) business days give a written notification
of same, which notice shall include an explanation of Lessor's reasonable
objections. to the change In use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as used
In this Lease shall mean any product, substance, chemical, material or waste
whose presence, nature, quantity and/or Intensity of existence, use,
manufacture, disposal, transportation, spill, release or affect, either by
itself or In combination with other materials expected to be on the Premises, is
either: (I) potentially injurious to the public health, safety or welfare, the
environment or the Promises, (it) regulated or monitored by any governmental
authority, or (It) a basis lot liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substance shall Include, but not be limited to, hydrocarbons, petroleum,
gasoline, crude oil or any products, by products or fractions thereof. Lessee
shall not engage In any activity In, on or about the Promises which constitutes
a Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Law (as defined in Paragraph
6.3). "Reportable Use" shall mean (1) the Installation of use of any above or
below ground storage tank, (it) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
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is required to be filed with, any governmental authority. Reportable Use shall
also include Lessees being responsible for the presence In, on or about the
Promises of a Hazardous Substance with respect to which any Applicable Law
requires that a notice be given to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the foregoing, Lessee may, without
Lessor's prior consent, but In compliance with all Applicable Law, use any
ordinary and customary materials reasonably required to be used by Lessee In the
normal course of Lessee's business permitted on the Promises, so long as such
use Is not a Reportable Use and does not expose the Promises or neighboring
properties to any meaningful risk of contamination or damage or expose Lessor to
any liability therefor. In addition, Lessor may (but without any obligation to
do so) condition its consent to the use or presence of any Hazardous Substance,
activity or storage tank by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, In its reasonable discretion, deems necessary to protect
Itself, the public, the Promises and the environment against damage,
contamination or Injury and/or liability therefrom or therefor, Including, but
not limited to, the Installation (and removal on or before Lease expiration or
earlier termination) of reasonably necessary protective modifications to the
Promises (such as concrete encasements) and/or the deposit of an additional
Security Deposit under Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance, or a condition involving or resulting from
same, has coma to be located In, on, under or about the Promises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice
of such fact to Lessor. Lessee shall also Immediately give Lessor a copy of any
statement, report, notice, registration, application. permit, business plan,
license, claim, action or proceeding given to. or received from, any
governmental authority or private party, or persons entering or occupying the
Premises, concerning the presence, spill, release, discharge of, or exposure to,
any Hazardous Substance or contamination In, on, of about the Promises,
Including but not limited to all such documents as may be involved in any
Reportable Uses Involving the Promises.
(c) Indemnification. Lessee shall Indemnify, protect, defend and hold
Lessor, Its agents, employees, lenders and ground lessor, If any. and the
Promises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Promises by or for Lessee or under
Lessee's control. Lessees obligations under this Paragraph 6 shall Include, but
not be limited to, the effects of any contamination or Injury to parson,
property or the environment created or suffered by Lessee, and the cost of
Investigation (Including consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein Involved, and shall survive the expiration or earlier termination of
this Lease, No termination, cancellation or release agreement entered Into by
Lessor and Lessee shall release Lessee from Its obligations under this Lease
with respect to Hazardous Substances or storage tanks, unless specifically so
agreed by Lessor In writing at the time of such agreement.
6.3 Lessee's Compliance with Law. Except as otherwise provided In this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and
in a timely manner, comply with all "Applicable Law:' which term Is used In this
Lease to Include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire Insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any manner
to the Promises (including but not limited to matters pertaining to (1)
Industrial hygiene, III) environmental conditions on, in, under or about the
Premises, Including soil and groundwater conditions, and (111) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change In policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and Information, Including, but not limited to,
permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall Immediately upon receipt, notify Lessor in writing (with copies of any
documents Involved) of any threatened of actual claim. notice, citation.
warning, complaint or report pertaining to or involving failure by Lessee or the
Promises to comply with any Applicable Law.
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6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined in
Paragraph 8.3(a)) shall have the right to enter the Promises at any time, In the
case of an emergency, and otherwise at reasonable times, for the purpose of
Inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease and all Applicable Laws (as defined In Paragraph 6.3), and to
employ experts and/or consultants In connection therewith and/or to advise
Lessor with respect to Lessee's activities, Including but not limited to the
Installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Promises. The costs and
expenses of any such Inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to exist
or be imminent. or unless the Inspection Is requested or ordered by a
governmental authority as the result of any such existing of imminent violation
or contamination. In any such case, Lessee shall upon request reimburse Lessor
or Lessor's Lender, as the case may be, for the costs and expenses of such
Inspections.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty as to
condition), 23 (Lessor's warranty as to compliance with covenants, etc.), 7.2
(Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessee's sole cost and expense and at all
times, keep the Promises and every part thereof In good order, condition and
repair, (whether or not such portion of the Premises requiring repair, or the
means of repairing the same, are reasonably or readily accessible to Lessee, and
whether or not the need for such repairs occurs as a result of Lessee's use, any
prior use, the elements or the age of such portion of the Promises), Including,
without limiting the generality of the foregoing, all equipment or facilities
serving the Promises, such as plumbing, heating, air conditioning, ventilating,
electrical, lighting facilities, boilers, fired or unfired pressure vessels,
fire sprinkler and/or standpipe and hose or other automatic fire extinguishing
system, Including fire alarm and/or smoke detection systems and equipment, fire
hydrants, fixtures, walls (interior and exterior), ceilings, floors, windows,
doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located In, on, about, or
adjacent to the Promises, but excluding foundations, the exterior roof and the
structural aspects of the Promises. Lessee shall not cause or permit any
Hazardous Substance to be spilled or released in, on, under or about the
Premises (including through the plumbing or sanitary sewer system) and shall
promptly, at Lessee's expense, take all investigatory and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or
monitoring of, the Premises, the elements surrounding same, or neighboring
properties, that was caused or materially contributed to by Lessee, of
pertaining to or involving any Hazardous Substance and/or storage tank brought
onto the Promises by or for Lessee or under Its control. Lessee, In keeping the
Promises in good order, condition and repair, shall exercise and perform good
maintenance practices. Lessee's obligations shall include restorations,
replacements or renewals when necessary to keep the Premises and all
Improvements thereon or a part thereof in good order, condition and state of
repair.
(b) Lessee shall, at Lessee's sole cost and expense, procure and maintain
contracts, with copies to Lessor, in customary form and substance for, and with
contractors specializing and experienced In, the Inspection. maintenance and
service of the following equipment and improvements, It any, located on the
Promises: (i) heating, air conditioning and ventilation equipment, (ii) boiler,
fired or unfired pressure vessels, (iii) fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing systems, including fire alarm and/or
smoke detection, (iv) landscaping and Irrigation systems, (v) roof covering and
drain maintenance and (vi) asphalt and parking lot maintenance.
7.2 Lessor's Obligations. Upon receipt of written notice of the need for
such repairs and subject to Paragraph 13.5, Lessor shall, at Lessors expense,
keep the foundations, exterior roof and structural aspects of the Promises in
good order, condition and repair, Lessor shall not, however, be obligated to
paint the exterior surface of the exterior walls or to maintain the windows,
doors or plate glass or the Interior surface of exterior walls. Lessor shall
not, In any event, have any obligation to make any repairs until Lessor receives
written notice of the need for such repairs. It Is the Intention of the Parties
that the terms of this Lease govern the respective obligations of the Parties as
to maintenance and repair of the Premises. Lessee and Lessor expressly waive the
benefit of any statute now or hereafter In effect to the extent It is
inconsistent with the terms of this Lease with respect to, or which affords
Lessee the right to make repairs at the expense of Lessor or to terminate this
Lease by reason of, any needed repairs.
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7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations" is used
in this Lease to refer to all carpeting, window coverings, air lines, power
panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing. and fencing in, on or about the Promises. The
term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be
removed without doing material damage to the Promises. The term "Alterations"
shall mean any modification of the Improvements on the Promises from that which
are provided by Lessor under the terms of this Lease, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by lessee that are not yet owned by Lessor as defined
In Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations In, on, under or about the Promises without Lessor's prior written
consent. Lessee may, however, make non-structural Utility Installations to the
Interior of the Promises (excluding the roof). as long as they are not visible
from the outside, do not involve puncturing, relocating or removing the roof or
any existing walls, and the cumulative cost thereof during the term of this
Lease as extended does not exceed $25,000.
(b) Consent. Any Alterations or Utility Installations that Lessee shall
desire to make and which require the consent of the Lessor shall be presented to
Lessor in written form with proposed detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be doomed conditioned upon: (1) Lessee's acquiring all applicable permits
required by governmental authorities, (it) the furnishing if copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon, and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done In a good and workmanlike manner,
with good and sufficient materials, and in compliance with all Applicable Law.
Losses shall promptly upon completion thereof furnish Lessor with as-built plans
and specifications therefor. Lessor may (but without obligation to do so)
condition its consent to any requested Alteration or Utility Installation that
costs $10,000 or more upon Lessee's providing Lessor with a lien and completion
bond In an amount equal to one and one-half times the estimated cost of such
Alteration or Utility Installation and/or upon Lessee's posting an additional
Security Deposit with Lessor under Paragraph 36 hereof.
(c) Indemnification. Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanics' or
materialmen's lion against the Promises or any interest therein. Lessee shall
give Lessor not less than ton (10) days' notice prior to the commencement of any
work in, on or about the Premises. and Lessor shall have the right to post
notices of non-responsibility in or on the Promises as provided by law. If
Lessee shall, In good faith, contest the validity of any such lien. claim or
demand, then Lessee shall, at Its sole expense defend and protect Itself, Lessor
and the Promises against the same and shall pay and satisfy no such adverse
judgment that may be tendered thereon before the enforcement thereof against the
Lessor or the Promises. 11 Lessor shall require, Lessee shall furnish to Lessor
a surely bond satisfactory to Lessor In an amount equal to one and one-half
times the amount of such contested lien claim or demand. Indemnifying Lessor
against liability for the same, as required by law for the holding of the
Promises free from the affect of such lion or claim. In addition, Lessor may
require Lessee to pay Lessor's attorney's fees and costs In participating In
such action it Lessor shall decide it is to its best Interest to do so.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal or become
the owner thereof as hereinafter provided In this Paragraph 7.4, all Alterations
and Utility Additions made to the Promises by Lessee shall be the properly of
and owned by Lessee, but considered a part of the Premises. Lessor may, at any
time and at Its option, elect In writing to Lessee to be the owner of all or any
specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise Instructed per subparagraph 7.4(b) hereof, all Lessor Owned
Alterations and Utility Installations shall, at the expiration or earlier
termination of this Lease, become the property of Lessor and remain upon and be
surrendered by Lessee with the Premises.
(b) Removal. Unless otherwise agreed In writing, Lessor may require that
any or all Lessee Owned Alterations or Utility Installations be removed by the
expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Lessor May require the
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removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Promises by the end
of the last day of the Lease term or any earlier termination with all of the
improvements, parts and surfaces thereof clean and tree of debris and in good
operating order, condition and state of repair, ordinary wear and fear excepted.
"Ordinary wear and fear" shall not Include any damage or deterioration that
would have been prevented by good maintenance practice or by Lessee performing
all of Its obligations under this Lease. Except as otherwise agreed or specified
in writing by Lessor, the Promises, as surrendered, shall include the Utility
Installations. The obligation of Lessee shall Include the repair of any damage
occasioned by the Installation, maintenance or removal of Lessee's Trade
Fixtures, furnishings, equipment, and Alterations and/or Utility Installations,
as well as the removal of any storage tank installed by or for Lessee, and the
removal, replacement, or remediation of any soil, material or ground water
contaminated by Lessee, all as may then be required by Applicable Law and/or
good service practice. Lessee's Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee subject to its obligation to repair and
restore the Promises per this Lease.
8. Insurance; Indemnity.
8.1 Payment of Premium Increases.
(a) Lessee shall pay to Lessor any Insurance cost Increase ("Insurance Cost
Increase") occurring during the term of tills Lease. "Insurance Cost Increase"
Is defined as any Increase In the actual cost of the Insurance required under
Paragraphs 8.2(b), 8.3(a) and 8.3(b). ("Required Insurance"), over and above the
Base Premium, as hereinafter defined, calculated on an annual basis. "Insurance
Cost Increase" shall Include, but not be limited to, Increases resulting from
the nature of Lessee's occupancy, any act or omission of Lessee, requirements of
the holder of a mortgage or deed of trust covering the Promises, Increased
valuation of the Promises, and/or a premium rate Increase. It the parties Insert
a dollar amount In Paragraph 1.9, such amount shall be considered the "Base
Premium:' In lieu thereof, If the Premises have been previously occupied, the
"Base Premium" shall be the annual premium applicable to the most recent
occupancy. It the Premises have never been occupied, the "Base Premium" shall be
the lowest annual premium reasonably obtainable for the Required Insurance as of
the commencement of the Original Term, assuming the most nominal use possible of
the Premises. In no event, however, shall Lessee be responsible for any portion
of the premium cost attributable to liability Insurance coverage In excess of
$1,000,000 procured under Paragraph 8.2(b) (Liability Insurance Carried By
Lessor).
(b) Lessee shall pay any such Insurance Cost Increase to Lessor within
thirty (30) days after receipt by Lessee of a copy of the premium statement or
other reasonable evidence of the amount due. If the Insurance policies
maintained hereunder cover other property besides the Premises, Lessor shall
also deliver to Lessee a statement of the amount of such Insurance Cost Increase
attributable only to the Promises showing In reasonable detail the manner In
which such amount was computed. Premiums for policy periods commencing prior to,
or extending beyond, the term of this Lease shall be prorated to coincide with
the corresponding Commencement or Expiration of the Lease term.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep In force during the
term of this Lease a Commercial General Liability policy of insurance protecting
Lessee and Lessor (as an additional Insured) against claims for bodily Injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage In an amount not less than $1,000,000 per occurrence with
an Additional Insured-Managers or Lessors of Premises" Endorsement and contain
the "Amendment of the Pollution Exclusion" for damage caused by heat, smoke or
fumes from a hostile fire. The policy shall not contain any intra-insured
exclusions as between Insured persons or organizations, but shall Include
coverage for liability assumed under this Lease as an "insured contract" for the
performance of Lessee's Indemnity obligations under this Lease. The limits of
said Insurance required by this Lease or as carried by Lessee shall not,
however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All Insurance to be carried by Lessee shall be primary to and not
contributory with any similar Insurance carried by Lessor, whose Insurance shall
be considered excess insurance only.
(b) Carried By Lessor. In the event Lessor Is the Insuring Party, Lessor
shall also maintain liability Insurance described In Paragraph 8.2(a), above, in
addition to, and not in lieu of, the Insurance required to be maintained by
Losses. Losses shall not be named as an additional Insured therein.
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8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. The Insuring Party shall obtain and keep In
force during the term of this Lease a policy or policies In the name of Lessor,
with loss payable to Lessor and to the holders of any mortgages, deeds of trust
or ground losses on the Premises ("Lender(s)"), Insuring loss or damage to the
Promises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time. or the amount
required by Lenders, but In no event more than the commercially reasonable and
available Insurable value thereof If, by reason of the unique nature or age of
the Improvements Involved, such latter amount is less than full replacement
cost. Lessee Owned Alterations and Utility Installations shall be Insured by
Lessee under Paragraph 8.4. It the coverage Is available and commercially
appropriate, such policy or policies shall Insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), Including coverage for any additional costs resulting
from debris removal and reasonable amounts of coverage for the enforcement of
any ordinance or law regulating the reconstruction or replacement of any
undamaged sections of (he Premises required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered cause of loss, but not including plate glass Insurance.
Said policy or policies shall also contain an agreed valuation provision In lieu
of any coinsurance clause, waiver of subrogation, and Inflation guard protection
causing an Increase In the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to whore the Premises are located.
(b) Rental Value. Lessor shall, In addition, obtain and keep In force
during the term of this Lease a policy or policies In the name of Lessor, with
loss payable to Lessor and Lender(s), Insuring the loss of the full rental and
other charges payable by Lessee to Lessor under this Lease for one (1) year
(including all real estate taxes, Insurance costs, and any scheduled rental
increases). Said Insurance shall provide that In the event the Lease is
terminated by reason of, an Insured loss, the period of Indemnity for such
coverage shall be extended beyond the date of the completion of repairs or
replacement of the Promises, to provide for one full year's loss of rental
revenues from the date of any such loss. Said Insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental Income,
property taxes, Insurance premium costs and other expenses, It any, otherwise
payable by Lessee, for the next twelve (12) month period.
(c) Adjacent Promises. It the Promises are part of a larger building, or if
the Promises are part of a group at buildings owned by Lessor which are adjacent
to the Premises, the Lessee shall pay for any Increase In the premiums for the
property Insurance of such building or buildings If said increase is caused by
Lessee's acts, omissions, use or occupancy of the Promises.
(d) Tenant's Improvements. Since Lessor Is the Insuring Party, the Lessor
shall not be required to Insure Lessee Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.
8.4 Lessee's Property Insurance. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option.
by endorsement to a policy already carried, maintain Insurance coverage on all
of Lessee's personal property, Lessee Owned Alterations and Utility
Installations In, on, or about the Premises similar In coverage to that carried
by the Insuring Party under Paragraph 8.3. Such Insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such Insurance shall be used by Lessee for the
replacement of personal property or the restoration of Lessee Owned Alterations
and Utility Installations. Lessee shall be the Insuring Party with respect to
the insurance required by this Paragraph 8.4 and shall provide Lessor with
written evidence that such Insurance Is in force.
8.5 Insurance Policies. Insurance required hereunder shall be In companies
duly licensed to transact business In the state where the Promises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender having a lion
on the Premises, as sat forth in the most current Issue of "Best's Insurance
Guide." Lessee shall not do or permit to be done anything which shall invalidate
the Insurance policies referred to In this Paragraph 8. Lessee shall cause to be
delivered to Lessor certified copies of. or certificates evidencing the
existence and amounts of, the Insurance, and with the additional insureds,
required under Paragraph 8.2(a) and 8.4. No such policy shall be cancelable or
subject to modification except after thirty (30) days prior written notice to
Lessor. Lessee shall at least thirty (30) days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or "Insurance binders"
evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand.
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8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor ("Waiving Party") each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's property arising
out of or Incident to the perils required to be Insured against under Paragraph
8. The effect of such releases and waivers of the right to recover damages shall
not be limited by the amount of Insurance carried or required, or by any
deductibles applicable thereto.
8.7 Indemnity. Except for Lessor's negligence and/or breach of express
warranties. Lessee shall Indemnity, protect, defend and hold harmless the
Promises. Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments. penalties, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of, Involving. or In dealing with, the
occupancy of the Promises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee In the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall Include, but not be limited to, the defense or pursuit of any
claim or any action or proceeding Involved therein, and whether or not (In the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well founded or not. In case any action or proceeding be brought against
Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor
shall defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee In such defense. Lessor need not
have first paid any such claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
Injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Promises, whether such damage or Injury Is caused by or
results from fire, steam. electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures. or from any other
cause, whether the said Injury or damage results from conditions arising upon
the Promises or upon other portions of the building of which the Promises are a
part, or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of Income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Promises Partial Damage" shall moan damage or destruction to the
Improvements on the Promises, other than Lessee Owned Alterations and Utility
Installations, the repair cost of which damage or destruction Is less than 50%
of the then Replacement Cost of the Premises Immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(b) "Premises Total Destruction" shall mean damage or destruction to the
Promises, other than Lessee Owned Alterations and Utility Installations the
repair cost of which damage or destruction Is 50% or more of the then
Replacement Cost of the Premises Immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction to Improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations. which
was caused by an event required to be covered by the Insurance described In
Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits
Involved.
(d) "Replacement Cost" shall mean the cost to repairer rebuild the
Improvements owned by Lessor at the time of the occurrence to their condition
existing Immediately prior thereto, Including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances of
laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or discovery
of a condition Involving the presence of, or a contamination by, a Hazardous
Substance as defined in Paragraph 6.2(a), In, on, or under the Premises.
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9.2 Partial Damage-insured Loss. It a Premises Partial Damage that Is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue In
full force and effect. Notwithstanding the foregoing, It the required Insurance
was not in force or the insurance proceeds are not sufficient to effect such
repair, the Insuring Party shall promptly contribute the shortage in proceeds as
and when required to complete said repairs. In the event, however, the shortage
in proceeds was due to the fact that, by reason of the unique nature of the
Improvements, lull replacement cost Insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the
shortage In Insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, of adequate
assurance thereof, within ton (10) days following receipt of written notice of
such shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said ton (10) day period, the party responsible for
making the repairs shall complete them as soon as reasonably possible and this
Lease shall remain in full force and effect. It Lessor does not receive such
funds or assurance within said period, Lessor may nevertheless elect by written
notice to Lessee within ton (10) days thereafter to make such restoration and
repair as is commercially reasonable with Lessor paying any shortage In
proceeds. in which case this Lease shall remain In full force and affect. If in
such case Lessor does not so elect. then this Lease shall terminate sixty (60)
days following the occurrence of [he damage or destruction. Unless otherwise
agreed, Losses shall In no event have any right to reimbursement from Lessor for
any funds contributed by Lessee to repair any such damage or destruction.
Promises Partial Damage due to flood or earthquake shall be subject to Paragraph
9.3 rather than Paragraph 9.2, notwithstanding that there may be some Insurance
coverage, but the not proceeds of any such Insurance shall be made available for
the repairs it made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Promises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (In which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option, either: (1) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue In full force and effect, or (it) give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's Intention to terminate this Lease, Lessee
shall have the right within tan (10) days after the receipt of such notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage totally at Lessee's expense and without reimbursement from Lessor.
Lessee shall provide Lessor with the required funds or satisfactory assurance
thereof within thirty (30) days following Lessee's said commitment. In such
event this Lease shall continue In full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the funds
or assurance thereof within the times specified above, this Lease shall
terminate as of the date specified In Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, It a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Promises Total Destruction, whether or not the damage
or destruction Is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee, Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6) months
of the term of this Lease there Is damage for which the cost to repair exceeds
one (1) month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, If Lessee at that time has an exercisable option to
extend this Lease or to purchase the Promises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("Exercise Period"), (1) exercising such option and (it)
providing Lessor with any shortage In insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessor duly exercises such option during
said Exercise Period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage In Insurance proceeds, Lessor shall, at Lessor's
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expense repair such damage as soon as reasonably possible and this Lease shall
continue In full force and affect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision In the grant of
option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described In Paragraph 9.2 (Partial Damage-
Insured), whether or not Lessor or Lessee repairs or restores the Promises, the
Base Rent, Real Property Taxes, Insurance premiums, and other charges, If. any,
payable by Lessee hereunder for the period dining which such damage, Its repair
or the restoration continues (not to exceed the period for which rental value
Insurance Is required under Paragraph 13.0(b)), shall be abated In proportion to
the degree to which Lessee's use of the Premises Is Impaired. Except for
abatement of Base Rent. Real Property Taxes, Insurance premiums, and other
charges, if any, as aforesaid, all other obligations of Lessee hereunder shall
be performed by Lessee, and Lessee shall have no claim against Lessor for any
damage suffered by reason of any such repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Promises under
the provisions of this Paragraph 9 and shall not commence, in a substantial and
meaningful way, the repair or restoration of the Premises within ninety (90)
days after such obligation shall accrue, Lessee may, at any time prior to the
commencement of such repair or restoration. give written notice to Lessor and to
any Lenders of which Lessee has actual notice of Lessor's election to terminate
this Lease on a date not less than sixty (60) days following the giving of such
notice. If Lessee gives such notice to Lessor and such Lenders and such repair
or restoration Is not commenced within thirty (30) days after receipt of such
notice, this Lease shall terminate as of the date specified in said notice. If
Lessor or a Lender commences the repair or restoration of the Promises within
thirty (30) days after receipt of such notice, this Lease shall continue in full
force and effect. "Commence". as used In this Paragraph shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
9.7 Hazardous Substance Conditions. It a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable Law
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13), Lessor may at Lessor's option either (i) investigate
and remediate such Hazardous Substance Condition, it required, as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and affect, or (ii) if the estimated cost to investigate,
and remediate such condition exceeds twelve (12) times the then monthly Base
Rent of $100,000, whichever is greater, give written notice to Lender within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition of Lessor's desire to terminal, this Lease as of
the date sixty (60) days following the giving of such notice. In the event
Lessor elects to give such notice of Lessor's intention to terminate this lease,
Lessee shall have the right within ten (10) days after the receipt of such
notice to give written notice to Lessor of Lessee's commitment to pay for the
Investigation and remediation of such Hazardous Substance Condition totally at
Lessee's expense and without reimbursement from Lessor except to the extent of
an amount equal to twelve (12) times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with the funds required of
Lessee or satisfactory assurance thereof within thirty (30) days following
Lessee's said commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such Investigation and remediation
as soon as reasonably possible and the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the times specified above, this Lease shall terminate as of the date
specified In Lessor's notice of termination. If a Hazardous Substance Condition
occurs for which Lessee is not legally responsible, there shall be abatement of
Lessee's obligations under this Lease to the same extent as provided In
Paragraph 9.6(a) for a period of not to exceed twelve (12) months.
9.8 Termination-Advance Payments. Upon termination of this Lease pursuant
to this Paragraph 9, an equitable adjustment shall be made concerning advance
Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall,
in addition. return to Lessee so much of Lessee's Security Deposit as has not
been. or Is not then required to be, used by Lessor under the terms of this
Lease.
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9.9 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Promises with
respect, to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
10.1 (a) Payment of Taxes. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Promises;
(b) deleted in its entirety.
(c) Additional Improvements. Notwithstanding Paragraph 10.1 (a) hereof,
Lessee shall pay to Lessor upon demand therefor the entirety of any Increase In
Real Property Taxes assessed by reason of Alterations or Utility Installations
placed upon the Promises by Lessee or at Lessee's request.
10.2 Definition of "Real Property Taxes: As used herein, the term "Real
Property Taxes" shall Include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) Imposed upon the Premises by any authority
having the direct or Indirect power to tax, Including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, levied against any legal or equitable
interest of Lessor in the Promises or in the real property of which the Premises
are a part, Lessor's right to rent or other income therefrom, and/or Lessor's
business of leasing the Premises. The term "Real Property Taxes" shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring, or changes in applicable law taking
affect. during the term of this Lease, including but not limited to a change In
the ownership of the Promises or in the Improvements thereon, the execution of
this Lease, or any modification, amendment or transfer thereof, and whether or
not contemplated by the Parties.
10.3 Joint Assessment. It the Promises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and Improvements Included within the tax parcel assessed,
such proportion to be determined by Lessor from the respective valuations
assigned In the assessor's work sheets or such other information as may be
reasonably available. Lessor's reasonable determination thereof, In good faith,
shall be conclusive.
10.4 Personal Property Taxes. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained In the Premises or elsewhere. When possible, Lessee shall
cause Its Trade Fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor. It any of
Lessee's said personal property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Losses within ten (10) days
after receipt of a written statement setting forth the taxes applicable to
Lessee's property or, at Lessor's option, as provided In Paragraph 10.1(b).
11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered with other promises.
12.Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or otherwise transfer or encumber (collectively, "assignment") or
sublet all or any part of Lessee's Interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.
(b) A change In the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of twenty-five
percent (25%) or more of the voting control of Lessee shall constitute a change
in control for this purpose.
(c) The involvement of Lessee or Its assets In any transaction, or series
of transactions (by way of merger, sale, acquisition, financing, refinancing.
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result In a reduction of the Not Worth of Lessee, as hereinafter defined, by an
amount equal to or greater than twenty-five percent (25%) of such Net Worth of
Lessee as it was represented to Lessor at the time of the execution by Lessor of
this Lease or at the time of the most recent assignment to which Lessor has
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consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, at whichever time said Not Worth of Lessee was or
is greater, shall be considered an assignment of this Lease by Lessee to which
Lessor may reasonably withhold its consent. "Not Worth of Lessee" for purposes
of this Lease shall be the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles consistently applied.
(d) An assignment or Subletting of Lessee's Interest In this Lease without
Lessor's specific prior written consent shall, at Lessor's option, be a Default
curable alter notice per Paragraph 13.1(c), or a noncurable Breach without the
necessity of any notice and grace period. If Lessor elects to treat such
unconsented to assignment or subletting as a noncurable Breach, Lessor shall
have the right to either: (1) terminate this Lease, or (11) upon thirty (30)
days written notice ("Lessor's Notice"), Increase the monthly Base Rent to fair
market rental value or one hundred ten percent (110%) of the Base Rent then in
effect, whichever is greater. Pending determination of the now fair market
rental value, If disputed by Lessee, Lessee shall pay the amount set forth in
Lessor's Notice, with any overpayment credited against the next Installment(s)
of Base Rent coming due, and any underpayment for the period retroactively to
the effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, In the event of such Breach and market value
adjustment, (i) the purchase price of any option to purchase the Promises hold
by Lessee shall be subject to similar adjustment to the then fair market value
(without the Lease being considered an encumbrance or any deduction for
depreciation or obsolescence, and considering the Premises at its highest and
best use and in good condition), or one hundred ten percent (110%) of the price
previously in affect, whichever is greater, (ii) any index-oriented rental or
price adjustment formulas contained in this Lease shall be adjusted to require
that the base index be determined with reference to the index applicable to the
time of such adjustment, and (iii) any fixed rental adjustments scheduled during
the remainder of the Lease term shall be Increased In the same ratio as the now
market rental bears to the Base Rent In affect Immediately prior to the market
value adjustment.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor shall
be limited to compensatory damages and Injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting shall not:
(i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of
any obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Base Rent and other sums due Lessor hereunder or for the
performance of any other obligations to be performed by Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay In the approval or disapproval of such assignment nor the
acceptance of any rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for the Default or Breach by Lessee of
any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the sublessee. However,
Lessor may consent to subsequent sublettings and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or anyone else
liable on the Lease or sublease and without obtaining their consent, and such
action shall not relieve such persons from liability under this Lease or
sublease.
(d) In the event of any Default or Breach of Lessee's obligations under
this Lease, Lessor may proceed directly against Lessee, any Guarantors or any
one else responsible for the performance of the Lessee's obligations under this
Lease, Including the sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor. or any
security hold by Lessor or Lessee.
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(e) Each request for consent to an assignment or subletting shall be in
writing, accompanied by Information relevant to Lessor's determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, Including but not limited to the Intended use and/or
required modification of the Promises, it any, together with a non-refundable
deposit of $1,000 or ten percent (10%) of the current monthly Base Rent,
whichever is greater, as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering Into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation heroin to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to of Inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented In writing.
(g) The occurrence of a transaction described In Paragraph 12. 1 (c) shall
give Lessor the right (but not the obligation) to require that the Security
Deposit be increased to an amount equal to six (6) times the then monthly Base
Rent, and Lessor may make the actual receipt by Lessor of the amount required to
establish such Security Deposit a condition to Lessor's consent to such
transaction.
(h) Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment structure of the rent
payable under this Lease be adjusted to what Is then the market value and/or
adjustment structure for property similar to the Premises as then constituted.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Promises and shall be deemed Included In all subleases under
this Lease whether or not expressly Incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's Interest
In all rentals and Income arising from any sublease of all or a portion of the
Promises heretofore or hereafter made by Lessee, and Lessor may collect such
rent and income and apply same toward Lessee's obligations under this Lease;
provided, however, that until a Breach (as defined in Paragraph 13.1) shall
occur in the performance of Lessee's obligations under this Lease, Lessee may,
except as otherwise provided In this Lease, receive. collect and enjoy the rents
accruing under such sublease. Lessor shall not. by reason of this or any other
assignment of such sublease to Lessor, nor by reason of the collection of the
rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. Lessee hereby Irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists In the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents and other charges due and to become due under. the sublease.
Sublessee shall rely upon any such statement and request from Lessor and shall
pay such rents and other charges to Lessor without any obligation or right to
Inquire as to whether such Breach exists and notwithstanding any notice from or
claim from Lessee to the contrary. Lessee shall have no right or claim against
said sublesses, or, until the Breach has been cured, against Lessor, for any
such rents and other charges so paid by said sublessee to Lessor.
(b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease. Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, In which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior Defaults
or Breaches of such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.
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13. Default; Breach; Remedies.
13.1 Default; Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor In connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may Include the cost of such services and costs In said
notice as rent due and payable to cure said Default. A "Default" is defined as a
failure by the Lessee to observe, comply with or perform any of the terms.
covenants, conditions or rules applicable to Lessee under this Lease. A "Breach"
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice Is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, shall entitle Lessor to pursue the remedies set forth In Paragraphs
13.2 and/or 13.3:
(a) The vacating of the Promises without the Intention to reoccupy same, or
the abandonment of the Promises.
(b) Except as expressly otherwise provided in this Lease. the failure by
Lessee to make any payment of base rent or any other monetary payment required
to be made by Lessee hereunder, whether to Lessor or to a third party, as and
when due, the failure by Lessee to provide Lessor with reasonable evidence of
insurance or surely bond required under this Lease, or the failure of Lessee to
fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of three (3) days following
written notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided In this Lease, the failure by
Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with applicable law per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1 (b). (iii) the recission of an unauthorized assignment or
subletting per Paragraph 12.1 (b), (iv) a Tenancy Statement per Paragraphs 16 or
37, (v) the subordination or non-subordination of this Lease per Paragraph 30,
(vi) the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of ton (10) days
following written notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease. or of the rules adopted under Paragraph 40 hereof,
that are to be observed, complied with or performed by Lessee, other than those
described In subparagraphs (a), (b) or (c), above, where such Default continues
for a period of thirty (30) days after written notice thereof by or on behalf of
Lessor to Lessee; provided, however, that if the nature of Lessee's Default is
such that more than thirty (30) days are reasonably required for its cure, than
it shall not be deemed to be a Breach of this Lease by Lessee if Lessee
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
(e) The occurrence of any of the following events: (1) The making by lessee
of any general arrangement or assignment for the benefit of creditors; (ii)
Lessee's becoming a "debtor" as defined in 11 U.S.C. ss.101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same Is dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession Is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Promises or of Lessee's Interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph (a) Is contrary to any applicable law, such
provision shall be of no force or effect. and not affect the validity of the
remaining provisions.
(f) The discovery by Lessor that any financial statement given to Lessor by
Lessee or any Guarantor of Lessee's obligations hereunder was materially false.
(g) If the performance of Lessee's obligations under this Lease Is
guaranteed: (i) the death of a guarantor, (ii) the termination of a guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a guarantors refusal to honor the guaranty, or (v) a
guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurance or security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the guarantors that existed at the time of execution of this Lease.
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13.2 Remedies. If Lessee fails to perform any affirmative duly or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duly or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
Insurance policies, or governmental licenses, permits or approvals. the costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon Invoice therefore. if any chock given to Lessor by Losses
shall not be honored by the bank upon which It is drawn, Lessor, at Its option,
may require all future payments to be made under this Lease by Lessee to be made
only by cashier's check. In the event of a Breach of this Lease by Lessee, as
defined In Paragraph 13.1, with or without further notice or demand. and without
limiting Lessor In the exercise of any right or remedy which Lessor may have by
reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, In which case this Lease and the term hereof shall terminate and Lessee
shall Immediately surrender possession of the Promises to Lessor. In such ,event
Lessor shall be entitled to recover from Lessee: (i) the worth at the time of
the award of the unpaid rent which had been earned at the time of termination;
(ii the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Promises, expenses of retailing, including necessary renovation and alteration
of the Promises, reasonable attorneys' fees, and that portion of the leasing
commission paid by Lessor applicable to the unexpired term of this Lease. The
worth at the time of award of the amount referred to In provision (iii) of the
prior sentence shall be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%). Efforts by Lessor to mitigate damages caused by Losses's Default
or Breach of this Lease shall not waive Lessor's right to recover damages under
this Paragraph. It termination of this Lease Is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover In such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve therein the right to recover all or any part thereof in a separate suit
for such rent and/or damages. It a notice and grace period required under
subparagraphs 13.1 (b), (c) or (d) was not previously given, a notice to pay
rent or quit, or to perform or quit, as the case may be, given to Lessee under
any statute authorizing the forfeiture of leases for unlawful detainer shall
also constitute the applicable notice for grace period purposes required by
subparagraphs 13.1 (b), (c) or (d). In such case, the applicable grace period
under subparagraphs 13.1 (b), (c) or (d) and under the unlawful detainer statute
shall run concurrently after the one such statutory notice, and the failure of
Lessee to cure the Default within the greater of the two such grace periods
shall constitute both an unlawful detainer and a Breach of this Lease entitling
Lessor to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in affect (in
California under California Civil Code Section 1951.4) after Lessee's breach and
abandonment and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Promises, or the appointment of a receiver to
protect the Lessor's Interest under the Lease, shall not constitute a
termination of the Lessee's tight to possession. located.
(c) Pursue any other remedy now or hereafter available to Lessor under the
laws or judicial decisions of the state wherein the Promises are located
(d) The expiration or termination of this Lease and/or the termination of
Lessee's right to possession shall not relieve Lessee from liability under any
Indemnity provisions of this Lease as to matters occurring or accruing during
the term hereof or by reason of Lessee's occupancy of the Premises.
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13.3 Inducement Recapture In Event Of Breach. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
Inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions;' shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms. covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach of this Lease by Lessee as defined In Paragraph 13.1, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be Immediately due and payable by Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph shall not be deemed a waiver by Lessor of the provisions of this
Paragraph unless specifically so stated In writing by Lessor at the time of such
acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to Incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs Include, but are not limited to, processing
and accounting charges, and late charges which may be Imposed upon Lessor by the
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly. If any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within live (5) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will Incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall In no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge Is payable hereunder, whether or not
collected, for three (3) consecutive Installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary. Base Rent shall, at Lessor's option, become due and payable quarterly
In advance.
13.5 Breach by Lessor. Lessor shall not be deemed In breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days alter receipt by Lessor,
and by the holders of any ground lease, mortgage or deed of trust covering the
Promises whose name and address shall have been furnished Lessee In writing for
such purpose, of written notice specifying wherein such obligation of Lessor has
not been performed; provided, however, that if the nature of Lessor's obligation
Is such that more than thirty (30) days after such notice are reasonably
required for its performance, then Lessor shall not be In breach of this Lease
it performance Is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.
14. Condemnation. If the Promises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the Premises, or more than twenty-five percent (25%) of the
land area not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised In writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or In the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain In full force and effect as to the portion of
the Promises remaining, except that the Base Rent shall be reduced In the same
proportion as the rentable floor area of the Premises taken bears to the total
rentable floor area of the building located on the Premises. No reduction of
Base Rent shall occur If the only portion of the Promises taken Is land on which
there Is no building. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor. whether such award
shall be made as compensation for diminution In value of the leasehold or for
the taking of the fee, or as severance damages; provided, however, that Lessee
shall be entitled to any compensation separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of its not severance damages received, over and above the legal and other
expenses Incurred by Lessor In the condemnation matter, repair any damage to the
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Premises caused by such condemnation, except to the extent that Lessee has been
reimbursed therefore by the condemning authority Lessee shall be responsible for
the payment of any amount In excess of such not severance damages required to
complete such repair.
15. Broker's Fee.
15.1 The Brokers named In Paragraph 1. 10 are the procuring causes of this
Lease.
15.2 Upon execution of this Lease by both Parties, Lessor shall pay to said
Brokers jointly, or In such separate shares as they may mutually designate In
writing, a fee as set forth in a separate written agreement between Lessor and
said Brokers (or In the event there Is no separate written agreement between
Lessor and said Brokers. the sum of ($ as agreed) for brokerage services
tendered by said Brokers to Lessor In this transaction.
15.3 Unless Lessor and Brokers have otherwise agreed In writing, Lessor
further agrees that: (a) if Lessee exercises any Option (as defined In Paragraph
39.1) or any Option subsequently granted which is substantially similar to an
Option granted to Lessee In this Lease, or (b) It Lessee acquires any rights to
the Promises or other promises described In this Lease which are substantially
similar to what Lessee would have acquired had an Option herein granted to
Losses been exercised, or (c) It Lessee remains in possession of the Promises,
with the consent of Lessor after the expiration of the term of this Lease after
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Promises and/or any adjacent property In which Lessor has an Interest, or
(e) If Base Rent Is increased, whether by agreement or operation of an
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Brokers a fee In accordance with the schedule of said Brokers In effect at
the time of the execution of this Lease,
15.4 Any buyer or transferee of Lessor's interest In this Lease, whether
such transfer Is by agreement or by operation of law, shall be deemed to have
assumed Lessor's obligation under this Paragraph 15. Each Broker shall be a
third party beneficiary of the provisions of this Paragraph 15 to the extent of
its interest In any commission arising from this Lease and may enforce that
right directly against Lessor and Its successors.
15.5 Lessee and Lessor each represent and warrant to the other that It has
had no dealings with any person, firm, broker or finder (other than the Brokers,
If any named In Paragraph 1.10) In connection with the negotiation of this Lease
and/or the consummation of the transaction contemplated hereby, and that no
broker or other person. firm or entity other than said named Brokers Is entitled
to any commission or finder's fee In connection with said transaction. Lessee
and Lessor do each hereby agree to Indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expanses, attorneys' fees reasonably Incurred with respect thereto.
15.6 Lessor and Lessee hereby consent to and approve all agency
relationships, Including any dual agencies, Indicated In Paragraph 1.10.
16. Tenancy Statement.
16.1 Each Party (as "Responding Party") shall within ten (10) days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing In form
similar to the then most current "Tenancy Statement" form published by the
American Industrial Real Estate Association, plus such additional Information,
confirmation. and/or statements as may be reasonably requested by the Requesting
Party.
16.2 If Lessor desires to finance, refinance, or sell the Promises, any
part thereof, or the building of which the Promises are a part, Lessee and all
Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors as may be reasonably required by such lender or purchaser,
Including but not limited to Lessee's financial statements for the past three
(3) years. All such financial statements shall be received by Lessor and such
lender or purchaser In confidence and shall be used only for the purposes herein
set forth.
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17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner or
owners at the time in question of the fee title to the Promises, or, it this is
a sublease, of the Lessee's Interest In the prior lease. In the event of a
transfer of Lessor's title or Interest In the Promises or In this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit hold by Lessor at the time of such transfer or assignment.
Except as provided In Paragraph 15, upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The Invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall In no way affect the validity of any
other provision hereof.
19. Interest on Past-Due Obligations. Any monetary payment due Lessor hereunder,
other than late charges, not received by Lessor within thirty (30) days
following the date on which It was due, shall bear Interest from the
thirty-first (31st) day after It was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for In Paragraph 13.4.
20. Time of Essence. Time Is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein. and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that It has made,
and Is relying solely upon, its own Investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Promises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
23. Notices.
23.1 All notices required or permitted by this Lease shall be In writing
and may be delivered in person (by hand or by messenger or courier service) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given If served In a manner specified In this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for the purpose of mailing or delivering notices to
Lessee. A copy of all notices required or permitted to be given to Lessor
hereunder shall be concurrently transmitted to such party or parties at Such
addresses as Lessor may from time to time hereafter designate by written notice
to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date Is shown, the postmark thereon. It sent by regular
mail the notice shall be deemed given forty-eight (48) hours after the same Is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. It any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served or
delivered upon telephone confirmation of receipt of the transmission thereof,
provided a copy Is also delivered via delivery or mall. If notice Is received on
a Sunday or legal holiday, It shall be deemed received on tile next business
day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term. covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. Regardless of Lessor's
knowledge of a Default or Breach at the time of accepting rent, the acceptance
of rent by Lessor shall not be a waiver of any preceding Default or Breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted. Any payment given Lessor by Lessee may be accepted
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by Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to In writing by Lessor at or before the
time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. No Right To Holdover. Lessee has no right to retain possession of the
Promises or any part thereof beyond the expiration or earlier termination of
this Lease.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. Covenants and Conditions. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, dead of trust, of other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof, Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Lessee may have by reason thereof.
If any Lender shall elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Promises by reason of a foreclosure of a Security Device, and
that In the event of such foreclosure, such new owner shall not: (I) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (if) be subject to any offsets or defenses
which Lessee might have against any prior lessor. or (III) be bound by
prepayment of more than one (1) month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered Into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Lender that Lessee's possession and this Lease, including any options to extend
the farm hereof, will not be disturbed so long as Lessee Is not In Breach hereof
and attorns to the record owner of (he Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender In connection with a sale,
financing or refinancing of the Premises. Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination. Attornment and/or non-disturbance agreement
as is provided for herein.
31. Attorney's Fees. It any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) or Broker in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorney's fees. Such fees may be awarded in the
same suit or recovered In a separate suit, whether or not such action or
proceeding Is pursued to decision or judgment. The term, "Prevailing Party"
shall Include, without limitation, a Party or Broker who substantially obtains
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or defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorney's fee award shall not be computed In accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to attorney's
fees, costs and expenses incurred In the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal action
Is subsequently commenced In connection with such Default or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises of any time, In the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, Improvements or additions to the Promises or to the building of which
they are a part, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred twenty (120) days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or Involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exorcise any standard
of reasonableness In determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises, except that Lessee
may, with Lessor's prior written consent. Install (but not on the roof) such
signs as are reasonably required to advertise Lessee's own business. The
Installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to Install, and
all revenues from the Installation of, such advertising signs on the Premises,
including the roof, as do not unreasonably Interfere with the conduct of
Lessee's business.
35. Termination; Merger. Unless specifically stated otherwise In writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, In the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lessor Interest, shall constitute Lessor's election to have such
event constitute the termination of such Interest.
36. Consents.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party Is required to an act by
or for the other Party, such consent shall not be unreasonably withhold or
delayed. Lessor's actual reasonable costs and expenses (including but not
limited to architects', attorneys', engineers' or other consultants' fees)
Incurred in the consideration of, or response to, a request by Lessee for any
Lessor consent pertaining to this Lease or the Premises, Including but not
limited to consents to an assignment. a subletting or the presence or use of a
Hazardous Substance. practice or storage tank, shall be paid by Lessee to Lessor
upon receipt of an Invoice and supporting documentation therefore. Subject to
Paragraph 12.2(e) (applicable to assignment or subletting), Lessor may, as a
condition to considering any such request by Lessee, require that Lessee deposit
with Lessor an amount of money (in addition to the Security Deposit hold under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor will
incur in considering and responding to Lessee's request. Except as otherwise
provided, any unused portion of said deposit ,hall be refunded to Lessee without
Interest. Lessor's consent to any act, assignment of this Lease or subletting of
the Premises by Lessee shall not constitute an acknowledgement that no Default
or Breach by Lessee of this Lease exists, nor shall such consent be deemed a
waiver of any than existing Default or Breach, except as may be otherwise
specifically stated In writing by Lessor at the lime of such consent,
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent Is being
given.
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37. Guarantor.
37.1 It there are to be any Guarantors of this Lease per Paragraph 1.11,
the form of the guaranty to be executed by each such Guarantor shall be in the
form most recently published by the American Industrial Real Estate Association,
and each said Guarantor shall have tile some obligations as Lessee under this
Lease. Including but not limited to the obligation to provide the Tenancy
Statement and information called for by Paragraph 16.
37.2 It shall constitute a Default of the Lessee under this Lease If any
such Guarantor falls or refuses, upon reasonable request by Lessor to give: (a)
evidence of the due execution of the guaranty called for by this Lease,
Including the authority of the Guarantor (and of the party signing on
Guarantor's behalf) to obligate such Guarantor on said guaranty, and Including
In the case of a corporate Guarantor, a certified copy of a resolution of Its
board of directors authorizing the making of such guaranty, together with a
certificate of Incumbency showing the signature of the persons authorized to
sign on its behalf, (b) current financial statements of Guarantor as may from
time to time be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in affect.
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants. conditions and
provisions on Lessees part to be observed and performed under this lease, Lessee
shall have quiet possession of the Premises for the entire term hereof subject
to all of the provisions of this Lease.
39. Options.
39.1 Definition. As used in this Paragraph 39 the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease of to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Promises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Promises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor. or the right of first offer to purchase other
property of Lessor.
39.2 Options Personal To Original Lessee. Each Option granted to Lessee In
this Lease Is personal to the original Lessee named In Paragraph 1. 1 hereof,
and cannot be voluntarily or involuntarily assigned or exercised by any person
or entity other than said original Lessee while the original, Lessee is in full
and actual possession of the Premises and without the Intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease In any manner,
by reservation or otherwise.
39.3 Multiple Options. In the event that Lessee has any Multiple Options to
extend or renew this Lease, a later Option cannot be exercised unless the prior
Options to extend or renew this Lease have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option, notwithstanding any
provision In the grant of Option to the contrary: (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee Is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) In the event that Lessor has given to Lessee three
(3) or more notices of Default under Paragraph 13. 1, whether or not the
Defaults are cured, during the twelve (12) month period Immediately preceding
the exercise of the Option.
(b) The period of time within which an Option may be exercised shall not be
extended or enlarged by reason of Lessee's inability to exercise an Option
because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall terminate
and be of no further force or affect. notwithstanding Lessee's due and timely
exercise of the Option. 11, after such exercise and during the term of this
Lease, (i) Lessee falls to pay to Lessor a monetary obligation of Lessee for a
period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of Default under Paragraph 13.1 during any
twelve (12) month period. whether or not the Defaults occurred, or (iii) If
Lessee commits a Breach of this Lease.
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40. Multiple Buildings. If the Promises are part of a group of buildings
controlled by Lessor, Lessee agrees that It will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety. care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay Its fair share of common expenses incurred In
connection therewith.
41. Security Measures. Lessee hereby acknowledges that the rental, payable to
Lessor hereunder does not Include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same,
Lessee assumes all responsibility (of the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to Itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights. dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money Is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to Institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease,
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. Offer. Preparation of this Lease by Lessor or Lessor's agent and submission
of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is
not intended to be binding until executed by all Parties hereto.
47. Amendments. This Lease may be modified only In writing, signed by the
parties in Interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Promises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity Is named herein as either Lessor or Lessee, the
obligations of such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF ASBESTOS, STORAGE TANKS
OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR
THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES
SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX
CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER
THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD
BE CONSULTED.
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The parties hereto have executed this Lease at the place on the dates specified
above to their respective signatures.
Executed at Executed at
on on
by LESSOR: by LESSEE:
American Fire Retardant Corporation
/S/ Darwin E. Zavadil /S/ Angela M. Raidl 3/20/97
- ------------------------------- ---------------------------------------
Name Printed: Darwin E. Zavadil Name Printed: Angela Raidl
Title: Owner Title: Executive V.P.
By By
Name Printed: Name Printed:
Title: Title:
Address: 10239 Hawkley Rd. Address: 1951 Tavern Rd.
El Cajon, CA 92020 Alpine, CA 91901
Tel. No. (__) 561-6152 Tel.No.(__) 445-2226
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Additional Paragraphs
To Lease between Darwin E. Zavadil as Lessor and Angela Raidl DBA American Fire
Retardant as Lessee for lease dated February 21, 1997.
49. Zoning & Permits: This lease is contingent upon: (a) receiving zoning
approval from the County of San Diego for Lessee's proposed use (b) receiving a
business license from the County of San Diego (c) getting Fire Marshall approval
for Lessee's proposed use.
Lessee shall have until 5 P.M. on February 28, 1997 to investigate, apply for
and receive all of these permits and licenses. After 5 P.M. on February 28,
1997, unless written notice of cancellation is received by Lessor or Lessor's
Broker, Lessee waives the ability to cancel this Lease as 'a result of
contingencies 49 (a), (b), and (c).
Lessee is strongly urged to get Fire Marshall's approval for tile adequacy of
existing fire sprinkler capacity for Lessee's proposed use. Since Fire Marshall
inspections typically take place a couple weeks after Lessee's occupancy, Lessee
accepts full responsibility for investigating Fire Marshall requirements prior
to occupancy and Lessee accepts full responsibility for any expenses associated
with permits, licenses or improvements to the property that the Fire Marshall
may require as a result of' Lessee's proposed use.
50. Broker Indemnification: Lessor and Lessee shall hold Brokers harmless for
any expense or liability associated with the investigation, satisfaction and/or
mitigation of (a) zoning requirements, (b) business license requirements, (c)
underground tank/clarifier requirements (d) Fire Marshall requirements (e)
American with Disabilities Act requirements (f) Hazardous Waste Contamination.
Lessor & Lessee shall hold Brokers harmless for any expense or liability
associated with (a) Lessee's non-performance of any provision in the lease, (b)
ally flooding of the premises, (c) any earthquake damage, (d) any
electromagnetic radiation damage that could be caused by surrounding power
lines, and (e) any other damage that may result from a natural disaster, nuclear
accident, act of war, act of God or act of' Congress.
51. Hazardous Materials Disclosure: Various construction materials may contain
items that have been or may in the future be determined to be hazardous (toxic)
or undesirable and may need to be specifically handled, treated or removed. For
example, some transformers and other electrical components contain PCB's and
asbestos has been used in components such as fire-proofing, heating and cooling
systems, air duct insulation, spray-on and tile acoustical materials, linoleum,
floor tiles, roofing, dry-wall and plaster.
Due to prior or current uses of the property or other properties in the area,
the property may have hazardous or undesirable metals, minerals, chemicals,
hydrocarbons, or biological or radioactive items (including electrical and
magnetic fields) in soils, water, building components, above and below ground
containers and other accessible and non-accessible areas. Such items may leak or
otherwise be released.
Wiese & Associates and its agents have no expertise in the detection or
correction of hazardous or undesirable items. Expert inspections are necessary
and recommended. Current or future laws may require clean up by past, present
and future operators and/or owners. It is the responsibility of the
Seller/Lessor and the Buyer/Lessee to retain qualified experts to detect and
correct such matters and to consult with the legal counsel of their choice to
determine what provisions, if any, they may wish to include in transaction
documents regarding the property.
52. Environmental Notification and Indemnification:
(a) Lessor's Duty to Notify Lessee: If Lessor knows, or has reasonable cause to
believe, that a Hazardous Substance, or a condition involving or resulting from
the same, has been located in, on, under or about the premises, prior to
Lessee's occupancy, Lessor shall immediately give notice of such fact to Lessee.
Lessor at Lessee's written request, shall immediately give Lessee a copy of any
statements, report, notice, registration, application, permit, business plan,
license, claim, action or proceeding, given to or received from, any
governmental authority or
Lessor: Lessee:
/s/ Darwin E. Zavadil /s/ Angela M. Raidl
- -------------------------- ----------------------------------
Darwin E. Zavadil Angela M. Raidl
<PAGE>
Additional Paragraphs Continued:
private party, or person entering or occupying the Premises, concerning the
presence, spill, release, discharge of, or exposure to, any Hazardous Substance
or contamination in, on, or about the Premises, including but not limited to all
such documents as may be involved in any reportable uses involving the premises.
At this time, Lessee makes such written request.
(b) Lessor's Indemnification: Lessor shall indemnify, protect, defend and hold
Brokers and Lessee, its agents and employees, harmless from and against any and
all damages, liabilities, judgements, costs, claims, liens, expenses, penalties,
permits, attorney's and consultant fees arising out of or involving any
Hazardous substance or storage tank on the Premises prior to Lessee's occupancy.
Lessor's obligations under this paragraph shall include, but not be limited to,
the effects of any contamination therein or injury to person, property or the
environment created by Lessor or any other previous occupants and the cost of
investigation (including consultant an attorney fees and testing), removal,
remediation, restoration and/or abatement thereof, shall be at the sole expense
of the Lessor.
Lessee agrees not to install any underground tanks during the term of the lease.
(c) Lessee's Responsibilities: It shall be the Lessee's sole responsibility to
properly dispose of all wastes generated or used in the course of Lessee's
occupancy. Such disposal shall be made in accordance with all applicable laws,
codes and standards provided for such disposal. Lessee shall be solely
responsible for any clean up of such wastes generated by Lessee's use of the
premises. Lessee is specifically prohibited from dumping any such waste into any
drain, toilet facility or outside yard area on the leased premises, and if used
for such disposal, Lessee shall be fully responsible for any subsequent clean
up.
53. Broker Disclosure: Americans with Disabilities Act:
The United States Congress has enacted thee Americans with Disabilities Act of
1990. ("ADA") Among other things, this act is intended to make many business
establishments equally accessible to persons with a variety of disabilities.
State and Local Laws may also mandate changes. As such, modifications to
existing buildings may be required. The real estate brokers in this transaction
are not qualified to advise you as to what, if any, changes may be required now
or in the future. Lessors and lessees should consult their attorney's and
qualified design professionals of their choice for information regarding the
consequences of ADA.
Lessee shall at all times keep the premises in compliance with ADA, and its
supporting regulations, and all similar federal, state and local laws,
regulations and ordinances. If Lessor's consent would be required for
alterations to bring thee Premises into compliance, Lessor agrees to not
unreasonably withhold such consent.
Also, within seven (7) days of receipt, Lessee and Lessor shall advise the other
party in writing, and provide the other party with copies of any notices
alleging violation of ADA; any claims made or threatened in writing regarding
noncompliance with ADA; or any governmental or regulatory actions or
investigations taken in response to noncompliance with ADA.
54. Tenant Improvements: Landlord at Landlord's expense shall:
A. Deliver yard and premises in clean condition;
B. Deliver all mechanical, electrical and plumbing in good working order;
C. Repaint office walls & clean or replace office carpeting
55. Option to Purchase: See attached Exhibit "B."
56. Cost of Living Increase: See attached Exhibit "C".
57. Resume Marketing For Sale: Should tenant fail to exercise option to
purchase, prior to June 1, 2001, then Wiese & Associates is authorized to renew
marketing the property for sale and the tenant shall cooperate in all showings
of the property.
Lessor: Lessee:
/s/ Darwin E. Zavadil /s/ Angela M. Raidl
- -------------------------- ---------------------------------
Darwin E. Zavadil Angela M. Raidl
<PAGE>
GUARANTY OF LEASE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
WHEREAS, Darwin E. Zavadil hereinafter referred to as "Lessor" and Angela
Raidl hereinafter referred to as "Lessee" are about to execute a document
entitled "Lease" dated 2/ 21/97 concerning the premises commonly known as 9337
Bond Ave., El Cajon, CA 92021 wherein Lessor will lease the premises to Lessee
and whereas, Angela Raidl hereinafter referred to as "Guarantors' have a
financial interest in Lessee. and WHEREAS. Lessor would not execute the Lease it
Guarantors did not execute and deliver to Lessor this Guarantee of Lease. NOW
THEREFORE. for and in consideration of the execution of the foregoing Lease by
Lessor and as a material inducement to Lessor to execute said Lease. Guarantors
hereby jointly. severally, unconditionally and irrevocably guarantee the prompt
payment by Lessee of all rentals and all other sums payable by Lessee under said
Lease and the faithful and prompt performance by Lessee of each and every one of
the terms, conditions and covenants of said Lease to be kept and performed by
Lessee.
It is specifically agreed and understood that the terms of the foregoing
Lease may be altered, affected, modified or changed by agreement between Lessor
and Lessee. or by a course of conduct, and said Lease may be assigned by Lessor
or any assignee of Lessor without consent Or notice to Guarantors and that this
Guaranty shall thereupon and thereafter guarantee the performance of said Lease
as so changed modified. altered or assigned
This Guaranty shall not be released. modified or affected by failure or
delay on the part of Lessor to enforce any of the rights or remedies of the
Lessor under said Lease. whether pursuant to the terms thereof or at law or in
equity.
No notice of default need be given to Guarantors. it being specifically
agreed and understood that the guarantee of the undersigned is a continuing
guarantee under which Lessor may proceed forthwith and immediately against
Lessee or against Guarantors following any breach or default by Lessee of for
the enforcement of any rights which Lessor may have as against Lessee pursuant
to or under the terms of the within Lease or at law or in equity
Lessor Shall have the right to proceed against Guarantors hereunder
following any breach or default by Lessee without first proceeding against
Lessee and without previous notice to or demand upon either Lessee of
Guarantors,
Guarantors hereby waive (a) notice of acceptance of this Guaranty, (b)
demand of payment, presentation and protest, (c) all right to assert or plead
any statute of limitations as to or relating to this Guaranty and the Lease, (d)
any right to require the Lessor to proceed against Lessee or any other Guarantor
or any other person or entity liable to Lessor. (e) any right to require Lessor
to apply 10 any default any security deposit or other security it may hold under
the Lease. (1) any right to require Lessor to proceed under any other remedy
Lessor may have before proceeding against Guarantors. (g) any right of
subrogation.
Guarantors do hereby subrogate all existing or future indebtedness of
Lessee to Guarantors to the obligations owed to Lessor under the Lease and this
Guaranty
Any married woman who signs this Guaranty expressly agrees that recourse
may be had against her separate properly for all of her obligations hereunder.
The obligations of Lessee under the Lease to execute and deliver estoppel
statements and financial statements. as therein provided. Shall be deemed to
also require the Guarantors hereunder to do and provide the same relative to
Guarantors.
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The term "Lessor" whenever hereinabove used refers to and means the Lessor
in the foregoing Lease specifically named and also any assignee of said Lessor.
whether by outright assignment or by assignment for security, and also any
successor to the interest of said Lessor or of any assignee in Such Lease or any
part thereof. whether by assignment or otherwise. So long as the Lessor's
interest In or to the leased premises or the rents, issues and profits
therefrom, or in, to or under said Lease. are subject to any mortgage or deed of
trust or assignment for security, no acquisition by Guarantors of the Lessor's
interest in the leased premises of under said Lease shall affect the continuing
obligation of Guarantors under this Guaranty which shall nevertheless continue
in full force and effect for the benefit of the mortgagee. beneficiary. trustee
or assignee under such mortgage. deed of trust or assignment, of any purchase at
sale by judicial foreclosure or under private power of sale. and of the
successors and assigns of any such mortgagee. beneficiary. trustee. assignee or
purchaser.
The term "Lessee" whenever hereinabove used refers to and means the Lessee
in the foregoing Lease specifically named and also any assignee or sublessee of
said Lease and also any successor to the interests of said Lessee. assignee or
sublessee of Such Lease or any part thereof whether by assignment. Sublease or
otherwise.
In the event any action be brought by said Lessor against Guarantors
hereunder to enforce the obligation of Guarantors hereunder. the unsuccessful
party in such action shall pay to the prevailing party therein a reasonable
attorney's fee which shall be fixed by the court.
If this Form has been filled in it has been prepared for submission to your
attorney for his approval. No representation of recommendation is made by the
real estate broker or its agents or employees as to the legal sufficiency, legal
effect, or tax consequences of this Form or the transaction relating thereto.
Executed at: /s/ Angela M. Raidl
-----------------------------
"GUARANTORS"
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Exhibit "B"
Option to Purchase
A. Lessor (does hereby grant to Lessee an option to purchase the Premises and
Lessor's interest under this lease, upon the terms and conditions herein set
forth.
B. Lessee has the option to purchase 9337 Bond Ave., an approximately 7,554
square foot building with APN: 395-380-03 for $528,780 in the first year of the
lease. Beginning June 1, 1998 and each year thereafter, (the same cost of living
increase that affects the rent shall also increase the selling price.
The option to purchase is terminated if not exercised by January 1, 2002.
C. In order to exercise the option to purchase, Lessee must give written notice
of the exercise of such option to Lessor, and at the same time, open up escrow
by depositing a check into Grossmont Escrow Company for One Hundred Dollars
($100.) Such deposit will apply towards the purchase price.
D. The provision of Paragraph 39, including the provision relating to the
default of the Lessee set forth in paragraph 39.4 of this lease are conditions
of the Option.
E. Within 10 days of the date that the option to purchase is exercised, Lessor
and Lessee shall give instructions to consummate the sale to Grossmont Escrow
Company who shall act as escrow holder, on the normal and usual forms then used
by such escrow holder as follows:
i. Escrow fees shall be split equally;
ii. Interest, fees and rents if any shall be prorated to the close of
escrow;
iii. Lessor shall pay for tile costs of a standard CLTA title policy
to be issued by Chicago Title;
iv. All real estate transfer taxes shall be paid by Lessor;
v. Lessee's security deposit tinder the Lease shall be credited
against the sales price;
vi. Payment of Broker's Commission as explained below;
F. Brokers' Sale Commission: If sellers or successors should sell this property
to Angela M. Raidl DBA American Fire Retardant Corporation &/or Nominee at any
time during the lease or any extension, a Six (6%) commission based on the gross
sales price shall be payable to Wiese & Associates (3%) and Jim Renner's Broker
(3%.) Any "unearned commission" that has been paid for the lease of the premises
shall be a credit against the sales commission owed. The "unearned commission"
shall be computed in accordance with the original listing agreement schedule
based on the total value of lease payments owed on the original lease the Lessee
is no longer obligated to pay as a result of close of escrow on the property.
Initials /s/ AMR /s/ DZ
<PAGE>
Exhibit "C"
Cost of Living Adjustments
The monthly rent for the 2nd year of the lease and cumulatively for every year
thereafter and through any option period shall be automatically adjusted based
upon any increase that may occur in the Consumer Price Index (All Items) as
published by the United States Department of Labor, Bureau of Labor Statistics
for the Los Angeles, Long Beach, Anaheim, California Area. "Area."
The ratio of the change in the Area Base Index (1967 = 100,) between the month
immediately proceeding the commencement of the lease (Denominator), and the
month immediately preceding the 2nd and each subsequent anniversary of the lease
commencement (Numerator), shall be multiplied by the base rent to determine the
new rental rate, provided, however, that the monthly rent shall never decrease
from the higher of the initial base rent or any subsequent increase.
If the above Consumer Price Index ceases to be published, then both parties
shall agree to substitute another Index with which they both can agree. If no
such index can be approved by both parties, then the Parties agree to submit the
matter to arbitration. Each party shall appoint one arbitrator and the so
appointed shall appoint a third arbitrator and the decision of the majority of
said arbitrators shall be binding upon Lessor and Lessee. The cost of such
arbitration if any, shall be paid equally by Lessor and Lessee.
The maximum increase in the Cost of Living shall be capped at Five (5 %) per
adjustment. The minimum annual rent increase shall be Three (3%) percent. This
increase shall also apply to Tenant's option to purchase price.
Initials /s/ DZ /s/ Angela M. Raidl
- --------------------------------- ---------------------------------------
Lessor Lessee
Exhibit 10.8(a)
---------------
PROMISSORY NOTE
Borrower: American Fire Retardant Corporation TIN: 72-1261941
110 Brush Road
Broussard, La. 70518
Lender: Whitney National Bank
P.0. Box3708
Lafayette, La. 70502
Principal Amount: $74,400.00
Initial Ratc: 8.5%
Date of Note: December 13, 1996
- -------------------------------------------------------------------------------
PROMISE TO PAY. AMERICAN FIRE RETARDANT CORPORATION and all endorsers signing
this Note as guarantors guaranteeing this indebtedness (collectively "Borrower,)
promise to pay to the order of WHITNEY NATIONAL BANK ("Lender"), in lawful money
of the United States of America the sum of SEVENTY-FOUR THOUSAND FOUR HUNDRED &
NO/100 ($74,400.00) DOLLARS, together with simple, interest assessed on a
variable rate basis at the rate per annum equal to the index provided, below, as
the index under this Note may be adjusted from time to time, one or more times,
with interest being assessed on the unpaid principal balance of this Note as
outstanding from time to time, commencing on December 13, 1996 and continuing
until this Note is paid in full, or until default under this Note with interest
being thereafter subject to the default interest rate provisions set forth
herein.
PAYMENT. Subject to any payment changes resulting from changes in the index,
Borrower will pay this loan in accordance with the following payment schedule:
This Note shall bear interest on the principal amount due as follows: (1) for
the initial five year period the interest rate shall be 8.50 percent per annum;
(2) for the second five year period, commencing on December 13, 200 1, the
interest rate shall be fixed at one quarter (0.25%) of one percent above Whitney
prime; such interest rate to continue for the remainder of the loan, with the
final payment being due and payable on December 30,2006.
Borrower's monthly payment for the initial five year period is $925.00 per
month. The first payment is due January 30, 1997, and all subsequent payments
are due on the same day of each successive calendar month until this Note is
paid in full. Payments include principal and amortized simple interest. Interest
on this Note is computed on a 365/365 simple interest basis; that is, by
applying the ratio of the annual interest rate over a year of 365 days, times
the outstanding principal balance, times the actual number of days the principal
balance is outstanding. Borrower will pay Lender at Lender's address shown above
or at such other place as Lender may designate in writing. Unless otherwise
agreed or required by applicable law, payments will be applied first to any
unpaid collection costs and late charges, then to unpaid interest, and any
remaining amount to principal.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to increase or
decrease at the times specified herein above. The final two five year periods of
this Note shall be based on changes in an index which is the Whitney prime (the
"index"). Whitney prime is the prime rate of interest established from time to
time by the Board of Directors of management of WNB as its prime lending rate
whether or not that rate is published. Lender will tell Borrower the current
index rate upon Borrower's request. Borrower understands that Lender may make
loans based on other rates as well. Under no circumstances will the interest
rate on this Note be more than the maximum rate allowed by applicable law.
Whenever increases occur in the interest rate, Lender, at its option, may do one
or more of the following: (A) increase Borrower's payments to ensure Borrower's
loan will pay off by its original final 'maturity date, (B) increase Borrower's
payments t6 cover accruing interest, (C) increase the number of Borrower's
payments, and (D) continue Borrower's payments at the same amount and increase
Borrower's final payment.
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PRE PAYMENT; MINIMUM INTEREST CHARGE. Borrower may prepay this Note in full at
any time by paying the then unpaid principal balance of this note, plus accrued
simple interest and any unpaid late charges through date of prepayment. If
Borrower prepays this Note in full, or if Lender accelerates payment, Borrower
understan4s that, unless otherwise required by law, any prepaid fees or charges
will not be subject to rebate and will be earned by Lender at the time this Note
is signed. Borrower agrees to pay minimum interest of $15.00 if this amount has
not been earned by Lender at the time of prepayment. Unless otherwise agreed to
in writing, early against prior parties, in the collateral in which Lender
possesses a security interest, and Lender's only duty with respect to such
collateral shall be solely to use reasonable care in the physical preservation
of the collateral which is in the actual possession of Lender.
CONFESSION OF JUDGMENT AND WAIVER. For the purposes of executory process,
Borrower hereby acknowledges the debt created hereby and confesses judgment in
favor of Lender for the full amount of the debt evidenced by this Note. To the
extent permitted by law, Borrower hereby expressly waives (a) the benefit of
appraisement provided in the Louisiana Code of Civil Procedure and (b) the
demand and three (3) days delay accorded by Articles 2639 and 2721, Louisiana
Code of Civil Procedure.
ADDITIONAL DEFAULTS AND ACCELERATION. In addition to the events of default set
forth above, Lender shall have the right, at is sole option, to insist upon
immediate payment (to accelerate the maturity) of this Note should any judgment,
garnishment,. seizure, tax lien or levy occur against any of Borrower's assets.
NO NOVATION IF EARLIER NOTE CANCELED. If an earlier note of any Borrower is
canceled at the time of execution hereof, then this Note constitutes an
extension, but not a novation, of the amount of the continuing indebtedness, and
Borrower agrees that all security rights held by Lender under the earlier note
shall continue in full force and effect.
OTHER COSTS AND FEES. Borrower further agrees to pay any and all charges, fees,
costs and/or taxes levied or assessed against Lender in connection with this
Note and/or any collateral, asset or other property which is pledged, mortgaged,
hypothecated or assigned to Lender or in which Lender possess a security
interest, as security for this Note.
WAIVERS. Borrower of this Note hereby waive demand, presentment for payment,
protest, notice of protest and notice of nonpayment, and all pleas of division
and discussion, and severally agree that their obligations and liabilities to
Lender hereunder shall be on a "solidary" or "joint and several" basis. Borrower
and each guarantor further severally agree that discharge or release of any
party who is or may be liable to Lender for the indebtedness represented hereby,
or the release of any collateral directly or indirectly securing repayment
hereof, shall not have the effect of releasing any other party or parties, who
shall remain liable to Lender, or of releasing any other collateral that is not
expressly released by Lender. Borrower additionally agrees that Lender's
acceptance of payment other than in accordance with the terms of this Note, or
Lender's subsequent agreement to extend or modify such repayment terms, or
Lender's failure or delay in exercising any rights or remedies granted to Lender
shall furthermore not be construed as a waiver of any other rights and remedies;
it being Borrower's intent and agreement that under this Note, any waiver or
forbearance on the part of Lender to pursue the rights and remedies available to
Lender, shall be binding upon Lender only to the extent that Lender specifically
agrees to any such waiver or forbearance in writing. A waiver or forbearance on
the part of Lender as to one default event shall not be construed as a waiver or
forbearance as to any other default. Borrower of this Note further agree that
any late charges provided for under this Note will not be charges for deferral
of time for payment and will not and are not intended to compensate Lender for a
grace or cure period, and no such deferral, grace or cure period has or' will be
granted to Borrower in return for the imposition of any late charge. Borrower
recognizes that Borrower's failure to make timely payment of amounts due under
this Note will result in damages to Lender, including reasonable compensation to
Lender for such damages. Failure to pay in full any installment or payment
timely when due under this Note, whether or not a late charge is assessed, will
remain and shall constitute an Event of Default hereunder.
SUCCESSORS AND ASSIGNS LIABLE. Borrower's obligations and agreements under this
Note shall be binding upon Borrower's respective successors, heirs, legatees,
devisees, administrators, executors and assigns. Tile rights and remedies
granted to Lender under this Note shall inure to the benefit of Lender's
successors and assigns, as well as to any subsequent holder or holders of this
Note.
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CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the payments under this Note
will not relieve Borrower of Borrower's obligation to continue to make regularly
scheduled payments under the above payment schedule. Early payments will instead
reduce the principal balance due, and Borrower may be required to make fewer
payments under this Note.
LATE CHARGE. If Borrower fails to pay any payment under this Note in full within
10 days of when due, Borrower agrees to pay Lender the last payment fee in an
amount equal to 5.00% of the unpaid amount of the payment, or U.S. $15.00,
whichever is greater. Late charges will not be assessed following declaration of
default and acceleration of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute default events
under this Note.
DEFAULT UNDER THIS NOTE. Should Borrower default in the payment of
principal and /or interest under this Note.
DEFAULT UNDER SECURITY AGREEMENTS. Should Borrower or any guarantor
violate, or fail to comply fully with any of the terms and conditions of,
or default under any security right, instrument, document, or agreement
directly or indirectly securing repayment of this Note.
OTHER DEFAULTS IN FAVOR OF LENDER. Should Borrower or any guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may affect any property or other collateral directly or indirectly
securing repayment of this Note.
INSOLVENCY. Should the suspension, failure or insolvency, however
evidenced, of Borrower or any guarantor of this Note occur or exist.
DEATH OR INTERDICTION. Should any Borrower of this Note die or be
interdicted.
READJUSTMENT OF INDEBTEDNESS. Should proceedings for readjustment of
indebtedness, reorganization, bankruptcy, composition or extension under
any insolvency law be brought by or against Borrower or any guarantor.
ASSIGNMENT OF BENEFIT OF CREDITORS. Should Borrower or any guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
RECEIVERSHIP. Should a receiver of all or any part of Borrower's property,
or the property of any guarantor, be applied for or appointed.
DISSOLUTION PROCEEDINGS. Should proceedings for the dissolution or
appointment of a liquidator of Borrower or any guarantor be commenced.
FALSE STATEMENTS. Should an representation, warranty, or material statement
of Borrower or any guarantor made in connection with the obtaining of the
loan evidenced by this note or any security agreement directly or
indirectly securing repayment of this note, prove to be incorrect or
misleading in any respect.
MATERIAL ADVERSE CHANGE. Should any material adverse change occur in the
financial condition of Borrower or any guarantor of this Note or should any
material discrepancy exist between the financial statements submitted by
Borrower and any guarantor and the actual financial condition or Borrower
of such guarantor.
INSECURITY. Should Lender deem itself to be insecure with regard to
repayment of this Note.
LENDER'S RIGHTS UPON DEFAULT. Should any one or more default events occur or
exist under this Note as provided above, Lender shall have the right, at its
sole option, to declare formally this Note to be in default and to accelerate
the maturity and insist upon immediate payment in full of the unpaid principal
balance then outstanding under this Note, plus accrued interest, together with
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reasonable attorney's fees, costs, expenses and other fees and charges as
provided herein. Lender shall have the further right, again at its sole option,
to declare formal default and to accelerate the maturity and to insist upon
immediate payment in full of each and every other loan, extension of credit,
debt, liability and/or obligation of every nature and kind that Borrower may
then owe to Lender, whether direct or indirect or by way of assignment, and
whether absolute or contingent, liquidated or unliquidated, voluntary or
involuntary, determined or undetermined, secured or unsecured, whether Borrower
is obligated alone or with others on a "solidary" or "joint and several" basis,
as a principal obligor or otherwise, all without further notice or demand,
unless Lender shall otherwise elect.
ATTORNEY'S FEES. If Lender refers this Note to an attorney for collection, or
files suit against Borrower to collect this Note, or if Borrower files for
bankruptcy or other relief from creditors, Borrower agrees to pay all Lender's
reasonable attorneys fees in an amount not less than 25% of the unpaid debt then
owing under this Note.
DEPOSIT ACCOUNTS. As collateral security for repayment of this Note and all
renewals and extensions, as well as to secure any and all other loans, notes,
indebtedness and obligations that Borrower (or any of them) may now and in the
future owe to Lender or incur in Lender's favor, whether direct or indirect,
absolute or contingent, due or to become due, of any nature and kind whatsoever
(with the exception of any indebtedness under a consumer credit card account),
Borrower is granting Lender a continuing security interest in any and all funds
that Borrower may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that Lender may at any time apply any funds
that Borrower may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Borrower is an account holder against the
unpaid balance of this Note and any all other present and future indebtedness
and obligations that Borrower (or any of them) may then owe to Lender, in
principal, interest, fees, costs, expenses, and attorney's fees.
COLLATERAL. This Note is secured by: Pledge of A Collateral Mortgage Note.
Collateral securing other loans with Lender may also secure this Note as the
result of cross-collateralization.
FINANCIAL STATEMENTS. Borrower agrees to provide Lender with such financial
statements and other related information at such frequencies and in such detail
as Lender may reasonably request.
GOVERNING LAW. Borrower agrees that this Note and the loan evidenced hereby
shall be governed under the laws of the State of Louisiana. Specifically, this
business or commercial Note is subject to La. R.S. 9:3509 et seq,
ADDITIONAL COLLATERAL. As further collateral security for the repayment of this
Note and all renewals and extensions, as well as to secure any and all other
loans, notes, indebtedness and obligations, in principal, interest, fees, costs,
expenses and attorney's fees, that Borrower (or any of them) may now and in the
future owe to Lender or incur in Lender's favor, whether direct or indirect,
absolute or contingent, due or to become due, of any nature and kind whatsoever
(with the exception of any indebtedness under a consumer credit card account),
Borrower is granting Lender a continuing security interest in, all property of
Borrower of every nature or kind whatsoever (with the exception of IRA, pension,
and other tax-deferred accounts) owned by Borrower or in which borrower has an
interest that is now or hereafter on deposit with, in the possession of, under
the control of or held by Lender in definitive form, book entry form or in
safekeeping or custodian accounts, including instruments, negotiable
instruments, certificates of deposit, commercial paper, stocks, bonds, treasury
bills and other securities, documents, documents of title and chattel paper, and
Borrower hereby grants to Lender a right of set-off and/or compensation with
respect to all such property. The terms "deposit accounts', "instruments",
"documents" and "chattel paper" shall have the meaning provided in La. R.S.
10:9-105. Borrower further hereby releases Lender from any obligation to take
any steps to collect any proceeds of or preserve any of Borrower's rights,
including, without limitation, rights
BORROWER:
AMERICAN FIRE RETARDANT CORPORATION
/s/ Edward E. Friloux
- ------------------------------------
By: Edward E. Friloux, Secretary
Page 4
Exhibit 10.8(b)
---------------
COLLATERAL MORTGAGE
SECURITY AGREEMENT United States of America
AND State of Louisiana
ASSIGNMENT OF LEASES AND RENTS Parish of Lafayette
BY
AMERICAN FIRE RETARDANT CORPORATION
- -------------------------------------------------------------------------------
BE IT KNOWN, that on this 13th day of December, 1996 before me, RANDALL E.
OLSON, a Notary Public, duly commissioned and qualified in and for the aforesaid
State and Parish, and In the presence of the undersigned, competent witnesses,
personally came and appeared:
AMERICAN FIRE RETARDANT CORPORATION (TIN 72-1261941), a Louisiana
corporation domiciled in Lafayette Parish, Louisiana, herein represented by
its duly authorized Secretary, Edward E. Friloux, pursuant to the
Resolution of the Board of Directors, the original of which is attached
hereto and made a part hereof, whose mailing address is 110 Brush Road,
Broussard, Louisiana 70518,
(hereinafter, whether one or more, referred to as "Mortgagor").
Mortgagor declared that in order to borrow funds from any person, firm, or
corporation willing to loan the same and to enable Mortgagor to secure any
obligation of Mortgagor now existing or hereafter arising, Mortgagor declares
and acknowledges a debt in the principal sum of SEVENTY-FOUR THOUSAND FOUR
HUNDRED ($. 74,400.00 ) Dollars, evidenced by one certain promissory note
executed by Mortgagor on the date hereof in the principal amount of SEVENTY-FOUR
THOUSAND FOUR HUNDRED ($ 74,40O.-Dollars, made payable to the order of bearer,
due on demand at Whitney National Bank, 228 St. Charles Avenue, New Orleans,
Louisiana 70130, or at any one of its branches, bearing interest at the rate of
eighteen (18%) percent per annum from date until paid, and providing for ten
(10%) percent attorneys' fees (the "Note").
The Note was paraphed "Ne Varietur" on the date hereof by the undersigned
Notary Public for identification with this mortgage and was delivered to
Mortgagor, who acknowledges its receipt. Mortgagor further declared that a
security interest may be granted in the Note or that the Note may be otherwise
negotiated for the purpose of borrowing funds and securing obligations, whether
now existing or hereafter arising, including without limitation, the repayment
of loans previously or hereafter made to Mortgagor, all of Mortgagor's
obligations, covenants, agreements, representations, and warranties in any
present or future loan, credit, or other agreement, and all of Mortgagor's
obligations as endorser, guarantor, or surety of the obligations of others.
Mortgagor hereby acknowledges to be indebted unto any future holder or holders
of the Note in the full amount of the Note, together with interest, attorneys'
fees, insurance premiums, taxes, collection costs, keeper's fees, and all other
costs, if any should accrue.
If the Note is referred to an attorney-at-law institute legal proceedings
to recover all or any part of the principal or interest on the Note, to protect
interests of the holder or holders of the Note, or for collection, compromise,
or other action, Mortgagor hereby agrees to pay the fee of the attorney who may
be employed for that purpose, which fee is hereby fixed at ten (10%) percent of
the amount due, sued for, claimed, or sought to be protected, preserved or
enforced.
Now, in order to secure the payment of the indebtedness evidenced by the
Note, together with all interest, attorneys' fees, insurance premiums, taxes,
collection costs, keeper's fees, and all other costs and to secure the
observance and performance of all of tile obligations, covenants, agreements,
and stipulations contained in this mortgage, Mortgagor does by these presents
specially mortgage, pledge, affect, and hypothecate unto and in favor of any
future holder or holders of the Note (hereinafter called "Mortgagee"), whether
the Note is held as an original obligation or in pledge, or as security for the
obligations described herein, tile following described property (the
"Premises"):
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That certain lot of ground, together with all buildings and
improvements and the improvements parts thereof, with all rights,
ways, privileges, and servitudes thereunto appertaining, situated in
Lafayette Parish, Louisiana, and being known and designated as LOT 1,
BUTCHER BUSINESS PARK, said lot having such measurements, boundaries,
configurations, and dimensions as are more fully shown on that certain
plat of survey prepared by Michael J. Breaux & Associates, Inc., dated
November 8, 1996, a copy of which is attached hereto and made a part
hereof; which lot bears the municipal address of 110 Brush Road,
Broussard, Louisiana 70518.
Together with all buildings, constructions, and improvements now or hereafter
existing on the Premises, all other component parts of -the Premises, all
component parts of the buildings, constructions, and improvements now or
hereafter on the Premises, all appurtenances, attachments, rights, ways,
privileges, servitudes, advantages, batture and batture rights belonging or in
any wise appertaining to the Premises, affecting the Premises, or now or
hereafter forming part of, attached to, or connected with the Premises or used
in connection with the Premises.
The Premises and all other property described above are hereinafter
referred to as the "Mortgaged Property".
1. COLLATERAL ASSIGNMENT OF LEASES AND RENTS
As additional security for the payment of the indebtedness evidenced by the
Note, together with all interest, attorneys' fees, insurance premiums, taxes,
collection costs, keeper's fees, and all other costs and to secure the full and
punctual payment and performance of all other obligations of Mortgagor to
Mortgagee, now existing or hereafter arising, up to the maximum amount of five
(5) times the principal amount of the Note, Mortgagor does hereby pledge, pawn,
grant a security interest in, transfer, assign, set over, abandon, and deliver
with full subrogation to Mortgagee all right, title, and interest of Mortgagor
in and to (i) all present and future rents, fruits, revenues, income, and
profits accruing from time to time from the use, possession, occupancy, or lease
of all or any part of the Mortgaged Property and from Mortgagor's operation
thereof (collectively, the "Rents") and (ii) all present and future leases on
all or any part of the Mortgaged Property (collectively, the "Leases"). Although
this creates a present assignment and vested security right in favor of
Mortgagee, Mortgagor shall be entitled to collect, use, commingle, and dispose
of the Rents as long as there has been no Default (as hereinafter defined) under
this mortgage or until Mortgagee sends written notice as hereinafter provided.
Mortgagor covenants and agrees not to execute in favor of any person, firm,
or corporation any sale, assignment, pledge, or other document that affects or
encumbers the Rents or Leases until all obligations secured by this mortgage
have been paid in full.
Upon the occurrence of a Default or upon Mortgagee sending written notice
to Mortgagor at Mortgagor's address set forth above by hand delivery or by
deposit in the United States mail, certified mail, return receipt requested,
Mortgagee shall have the right to receive and collect the Rents until all
obligations secured by this mortgage have been paid in full. Mortgagor hereby
irrevocably makes, constitutes, and appoints Mortgagee its attorney-in-fact,
either in its own name or in the name of Mortgagee, to demand, sue for, collect,
receive, and receipt for the Rents, to endorse in the name of Mortgagor any
checks or drafts payable to Mortgagor that may be received or collected on
account of or in payment of the Rents, to settle, adjust and compromise, without
incurring any liability in connection therewith, all present and future claims
arising out of the Rents and Leases, and to exercise all the rights and
privileges of Mortgagor under any lease of all or any part of the Mortgaged
Property, including without limitation, the right to fix or modify the amount of
the Rents, to evict any lessee, tenant or occupant (the "Lessee") from the
Mortgaged Property, to relet such property and to do all such things as
Mortgagee may deem necessary. Mortgagor hereby irrevocably consents that all
Lessees of the Mortgaged Property shall be authorized to pay the Rents directly
to Mortgagee without liability for the determination of the actual existence of
any Default, the Lessees being hereby expressly relieved of any and all duty,
liability, and obligation to Mortgagor in connection with all Rents so paid to
Mortgagee. All Rents collected under this mortgage shall be applied, after
payment of all costs and charges, as a credit against tile indebtedness secured
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by this mortgage. Mortgagor specifically declares that this assignment shall not
operate (i) to place any responsibility for the control, care, management, or
repair of the Mortgaged Property upon the Mortgagee or for the carrying out of
any of tile terms or conditions of any present or future lease that may affect
the Mortgaged Property, or (ii) to make Mortgagee responsible or liable for (a)
any waste committed on the Mortgaged Property by any Lessee or by any other
party, (b) the dangerous or defective condition of the Mortgaged Property,
including but not limited to liability as described in Louisiana Civil Code
Articles 2315 through 2324, or (c) any negligence in the management, upkeep,
repair, or control of the Mortgaged Property that may result in loss, injury, or
death to any Lessee or other party.
This assignment of Leases and Rents is made by Mortgagor and accepted by
Mortgagee solely for the benefit and protection of Mortgagee, and all leases and
other contracts affecting the Mortgaged Property which are unrecorded or
inferior in ranking to this mortgage shall at all times be and remain
subordinate to this mortgage. If the Mortgaged Property is transferred by virtue
of any judicial foreclosure proceeding, the Mortgaged Property may, in
Mortgagee's sole discretion, be transferred free and clear of, and unencumbered
by, any and all subordinate subleases, assignments, and contracts,
11.COVENANTS OF THE MORTGAGOR
Mortgagor covenants and agrees to the faithful fulfillment of the following
stipulations in favor of Mortgagee:
1. The Mortgaged Property shall remain specially mortgaged, pledged,
affected and hypothecated to Mortgagee until the full and final payment of the
Note, and all interest, attorneys' fees, insurance premiums, taxes, collection
costs, keeper's fees, and all other costs. Mortgagor agrees not to abandon,
sell, transfer, lease, donate, exchange, pledge, assign, convey, alienate, or
further encumber any of the Mortgaged Property or any interest therein and shall
not permit any other party to do so. In no event shall any such act by
Mortgagor, whether or not authorized by Mortgagee, prejudice the rights of
Mortgagee under this mortgage.
2. Mortgagor shall maintain the Mortgaged Property in good condition and
shall make all repairs, additions, and improvements necessary to maintain the
Mortgaged Property in good condition and to prevent any impairment of the
security of this mortgage. If Mortgagor fails to maintain the Mortgaged Property
in good condition, Mortgagee may, at its option, cause the Mortgaged Property to
be maintained in good condition at Mortgagor's cost. Nothing in this mortgage
shall be construed to require Mortgagee to maintain the Mortgaged Property in
good condition or to repair the Mortgaged Property.
3. (a) Mortgagor shall keep the Mortgaged Property constantly insured
against risk of loss by fire, wind, storm, flood, tornado, theft, and all such
other hazards, casualties, and contingencies as may be deemed necessary by
Mortgagee. The insurance shall be in such amounts and shall be issued by such
companies as are acceptable to Mortgagee. All policies of insurance shall be
delivered to Mortgagee, shall contain a loss payable clause in favor of
Mortgagee, and shall be in a form acceptable to Mortgagee. All renewal policies
shall be delivered to Mortgagee at least fifteen (15) days prior to the
expiration date of the existing policy. If Mortgagor fails to comply with the
provisions of this paragraph in any respect, Mortgagee may, at its option,
obtain the required insurance at Mortgagor's cost, but Mortgagee shall not be
responsible for the solvency of any company issuing any insurance policy,
whether approved or selected by Mortgagee, or for the collection of any amount
due under any insurance policy except to the extent such amount is actually
received by Mortgagee. Nothing in this mortgage shall be construed to require
Mortgagee to obtain such insurance or to make Mortgagee liable in any way for
any loss, claim, damage, or injury resulting from any failure to obtain such
insurance.
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(b) The insurance policies required by this mortgage shall provide that any
loss payable to Mortgagee and Mortgagor, as their respective interests may
appear, shall be payable notwithstanding any act or negligence of Mortgagor or
of any other party, which would otherwise result in a forfeiture of such
insurance, and that in no event shall such policy be cancelled even for
nonpayment of premium or the coverage thereunder reduced in any manner without
at least thirty (30) days prior written notice to Mortgagee.
(c) Mortgagor shall promptly notify Mortgagee of any insured loss. If
Mortgagee receives any sum of money from any insurance policy affecting the
Mortgaged Property, Mortgagee may, at its option and in such manner as it may
determine, (i) retain the money and apply it toward the payment of any debt
secured by this mortgage or by a pledge of tile Note with Mortgagee having the
right to impute the money among the debts in any manner as Mortgagee wants, or
(ii) pay all or part of the money, under such conditions as Mortgagee may
determine, to Mortgagor to enable Mortgagor to repair or restore the Mortgaged
Property or use the money for any other purpose satisfactory to Mortgagee, all
without prejudice to, and without affecting the lien of, this mortgage.
4. Mortgagor shall pay promptly when due all taxes, local and special
assessments, and governmental and utility charges (collectively, the "Taxes") of
every description imposed, assessed, or levied on all or any part of the
Mortgaged Property, and Mortgagor shall furnish Mortgagee evidence of the
payment of the Taxes. If Mortgagor for any reason does not pay promptly when due
any of the Taxes, Mortgagee is hereby authorized to pay such unpaid Taxes with
full subrogation to all rights of all authorities imposing such Taxes by reason
of Mortgagee's payment, and Mortgagor shall promptly reimburse Mortgagee for all
Taxes paid by Mortgagee. Nothing herein shall be construed, however, to require
Mortgagee to pay any Taxes, and Mortgagee shall not be responsible or liable for
any penalty, loss, or damage resulting from the nonpayment of any Taxes.
5. Mortgagor shall pay promptly when due all of Mortgagor's obligations and
all lawful claims and demands that might, if unpaid, result in or permit the
creation of a lien or encumbrance on all or any part of the Mortgaged Property.
Mortgagor shall do everything necessary to preserve the priority of this
mortgage without any expense to Mortgagee. Mortgagor shall notify Mortgagee
immediately if any lien is filed against all or any part of the Mortgaged
Property or if all or any part of the Mortgaged Property is seized, attached, or
levied against in any way. Mortgagor shall obtain the release of the Mortgaged
Property from any seizure, lien, or attachment within seven (7) days from any
such occurrence. If Mortgagor fails to obtain the release of the Mortgaged
Property within seven (7) days, Mortgagee may, at its option obtain the release
of the Mortgaged Property at Mortgagor's expense.
6. Mortgagor shall pay promptly on demand the full amount due on the Note
and under this mortgage without any deduction for taxes, assessments, or
governmental charges on (a) the Note, (b) all or any part of any debt or
interest evidenced by the Note, or (c) this mortgage that Mortgagor may be
required or permitted to deduct, obtain, or pay pursuant to any present or
future law of the United States or of any state, parish, municipality, or taxing
authority of the same, except insofar as prohibited by law. If any law is passed
after the date of this mortgage requiring or permitting Mortgagee to pay any
such taxes, assessments, or governmental charges, Mortgagor shall pay all such
taxes, assessments, and governmental charges assessed against Mortgagee because
of this mortgage.
7. Mortgagor shall comply with all laws, ordinances, regulations,
covenants, conditions, and restrictions affecting the Mortgaged Property, its
use, construction, or maintenance.
8. Mortgagor shall not remove any part of the Mortgaged Property from its
present location without Mortgagee's prior written consent.
9. Mortgagor shall permit Mortgagee and its agents to have access to, and
they shall have the right to inspect, the Mortgaged Property at all reasonable
times.
10. Mortgagor shall, if requested by Mortgagee, pay to Mortgagee an amount
equal to the estimated annual Taxes and the premiums for the insurance required
under Section 11, Paragraph 3 hereof, so that Mortgagee shall have sufficient
funds available to pay such Taxes and insurance premiums, and shall, at the
option of Mortgagee, pay such amounts either (i) thirty (30) days before they
become due or (ii) in equal monthly payments, with such payments commencing one
(1) month after the date of this mortgage.
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11. Mortgagor warrants (a) that it lawfully owns and possesses the
Mortgaged Property, (b) that, to the extent the ownership thereof can be
registered, the Mortgaged Property is registered in Mortgagor's name, (c) that
the Mortgaged Property has not been alienated by Mortgagor, and (d) that there
are no mortgages, liens, or encumbrances against the Mortgaged Property and
there are no judgments of any court of record against Mortgagor unless
specifically listed here:
Mortgagor agrees to cancel forthwith the mortgages, liens, and
encumbrances listed above unless specifically listed here:
Mortgagor agrees to perform timely all terms and conditions of any
mortgage, lien, or encumbrance that is not cancelled.
12. Mortgagor warrants that there are no Taxes due and payable on the
Mortgaged Property and that all such Taxes have been paid up to and including
the year 1995
13. Mortgagor hereby acknowledges that a security interest may be granted
in the Note to secure an obligation maturing beyond the prescriptive period
applicable to the Note, and Mortgagor hereby agrees to acknowledge the Note
prior to the date on which the Note may prescribe. Any payment of principal or
interest on any promissory note or other obligation secured by the grant of a
security interest affecting the Note shall interrupt prescription on the Note
and on every note and other obligation of Mortgagor that is secured by the
pledge of the Note.
14. Mortgagor hereby agrees to promptly pay all charges, costs, and
attorneys' fees incurred in connection with the preparation, execution, and
recordation of this mortgage and any other related document as may be required
by Mortgagee.
III. DEFAULT AND REMEDIES OF THE MORTGAGEE
1. The occurrence of any one or more of the following events shall
constitute a default (a "Default") under this mortgage:
(a) failure to pay promptly on demand any principal or interest due on the
Note;
(b) failure to pay promptly on demand any sums advanced by Mortgagee for
the payment of insurance premiums, taxes, the cost of maintaining the
Mortgaged Property in good repair, or the cost of obtaining the release of
the Mortgaged Property from any seizure, lien, or attachment;
(c) failure by Mortgagor to observe or perform any of Mortgagor's
covenants, agreements, and obligations under this mortgage;
(d) the inaccuracy of any warranty made by Mortgagor to Mortgagee in this
mortgage or otherwise;
(e) any default in the observance or performance of any obligation,
agreement, or covenant in any obligation the Note is pledged to secure,
including without limitation failure to make any payment of principal or
interest when due; or
(f) the seizure of all or any part of the Mortgaged Property under a writ
of executory process, sequestration, attachment, fieri facias, or any other
legal process or the issuance of an order for the sale of all or any part
of the Mortgaged Property in any judicial proceeding.
2. If a Default occurs, Mortgagee may, at Mortgagee's option, without
notice to Mortgagor, declare the Note and all indebtednesses and obligations the
Note is pledged to secure or for which the Note is given as security to be
immediately due and payable, anything in the Note, this mortgage, or any
document evidencing the indebtednesses and obligations the Note is pledged to
secure or for which the Note is given as security to the contrary
notwithstanding. For purposes of executory process, Mortgagor confesses judgment
in favor of Mortgagee for the full amount of the Note in principal, interest,
attorneys' fees, and all other costs and charges, including all sums Mortgagee
advances during tile life of this mortgage for the payment of insurance
premiums, taxes, assessments, or for any other payment made by Mortgagee in
accordance with the terms of this mortgage. Mortgagor hereby agrees that it
shall be lawful for Mortgagee, and Mortgagor does hereby authorize Mortgagee,
without making demand and without notice and putting in default, all of which
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are hereby expressly waived, to cause all or any part of the Mortgaged Property
to be seized and sold under executory or other legal process without
appraisement, which is hereby expressly waived, as an entirety or in parcels, as
Mortgagee may determine, to the highest bidder for cash, or on such terms as are
acceptable to Mortgagee. Mortgagor acknowledges that nothing in this mortgage
shall in any way affect or impair Mortgagee's right to demand payment of the
Note according to its tenor. Any failure by Mortgagee to exercise the options
granted to it if a Default occurs shall not constitute a waiver of Mortgagee's
right to exercise such options at any other time.
3. To the extent permitted by law, Mortgagor hereby expressly waives:
(a) The benefit of appraisement provided for in Articles 2332, 2336, 2723
and 2724, Louisiana Code of Civil Procedure, and all other laws conferring
such benefits;
(b) The demand and three (3) days delay accorded by Articles 2639 and 2721,
Louisiana Code of Civil Procedure;
(c) The notice of seizure required by Articles 2293 and 2721, Louisiana
Code of Civil Procedure;
(d) The three (3) days delay provided by Articles 2331 and 2722, Louisiana
Code of Civil Procedure;
(e) The benefit of the other provisions of Articles 2331, 2722, and 2723,
Louisiana Code of Civil Procedure;
(f) The benefit of the provisions of any other articles of the Louisiana
Code of Civil Procedure not specifically mentioned above; and
(g) All rights of division and discussion with respect to any indebtedness
or obligation secured by this mortgage.
Mortgagor expressly agrees to the immediate seizure of the Mortgaged
Property in the event of a suit for the recognition or foreclosure of this
mortgage.
Mortgagor hereby waives all homestead exemptions relating to the Mortgaged
Property to which Mortgagor is or may be entitled under the constitution and
laws of the State of Louisiana or of the United States of America.
4. If Mortgagor fails to pay or perform any 'of its obligations under this
mortgage, Mortgagee may, but shall not be obligated to, pay or perform any such
obligations, and all sums paid by Mortgagee in connection with the payment and
performance of such obligations shall be secured by this mortgage.
5. Pursuant to Louisiana Revised Statutes 9:5136, et seq., Mortgagor hereby
designates Mortgagee, or any employee, agent, or other person named by Mortgagee
at the time any seizure of the Mortgaged Property is effected by Mortgagee to
serve as a keeper of the Mortgaged Property pending the judicial sale thereof.
The keeper's fees shall be determined by the Court before which the proceedings
are pending, and the payment of such fees shall be secured by this mortgage.
6. If any proceedings are instituted to enforce this mortgage by executory
process or otherwise, all declarations of fact made by authentic act before a
notary public in the presence of two witnesses by a person declaring that such
facts lie within that person's knowledge shall constitute authentic evidence of
such facts for the purpose of executory process.
IV. SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT
AND PLEDGE OF INCORPOREAL RIGHTS AND PROCEEDS
1. This mortgage shall attach to subsequent additions, substitutions, and
replacements to and for the Mortgaged Property, as well as to present and future
component parts of the Mortgaged Property and to natural increases, accessions,
accretions, and issues of the Mortgaged Property, and as additional security for
the payment of the indebtedness evidenced by the Note, together with all
interest, attorneys' fees, insurance premiums, taxes, collection costs, keeper's
fees, and all other costs and to secure the full and punctual payment and
performance of all other obligations of Mortgagor to Mortgagee, now existing or
hereafter arising, up to the maximum amount of five (5) times the principal
amount of the Note, Mortgagor does hereby collaterally assign and pledge and
grant to Mortgagee a continuing security interest in all incorporeal rights that
are or may be incidental or accessory to the Mortgaged Property or its use (the
"Incorporeal Rights"), including without limitation the following:
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(i) the right to receive proceeds and fruits attributable to the sale,
lease, insurance loss, or condemnation of the Mortgaged Property;
(ii) rights under service, maintenance, or warranty contracts with
regard to the Mortgaged Property; and
(iii) rights under trade names, patents, or copyrights that are
subject to use in connection with the Mortgaged Property or
Mortgagor's business or other activities with regard thereto.
2. Upon and after the occurrence of a Default, Mortgagee may, at its
option, exercise any rights of the Mortgagor under the Incorporeal Rights, and
Mortgagee is hereby vested with full power to use all remedies, legal and
equitable, including without limitation the right to exercise all rights of a
pledgee to enforce a pledge under Louisiana law, deemed by it necessary or
proper to enforce this collateral assignment and pledge and security interest
and to exercise Mortgagor's rights under the Incorporeal Rights assigned
hereunder.
3. Mortgagor does hereby name, constitute, and appoint Mortgagee and
Mortgagee's agents as Mortgagor's true and lawful agent and attorney-in-fact
with full power of substitution and with power for Mortgagee in its name and
capacity or in the name and capacity of Mortgagor to carry out and enforce any
or all of the Incorporeal Rights collaterally assigned and pledged or otherwise
encumbered under this mortgage and at Mortgagee's sole discretion to file any
claim or take any other action or proceedings and make any settlement of any
claims, either in its own name or in the name of Mortgagor or otherwise, that
Mortgagee may deem necessary or desirable in order to collect and enforce the
payment and performance of the obligations owed to Mortgagor under the
Incorporeal Rights. Upon receipt of a written notice from Mortgagee that a
Default exists, the parties to the Incorporeal Rights (other than Mortgagor) are
hereby expressly and irrevocably authorized and directed to pay any and all
amounts and perform any duties, liabilities, or obligations due to Mortgagor
pursuant to any of the Incorporeal Rights to and for Mortgagee or such nominee
as Mortgagee may designate in such notice. The power of attorney granted to
Mortgagee and its agents is coupled with an interest and may not be revoked by
Mortgagor as long as this mortgage remains in effect.
4. Nothing in this mortgage shall be construed to impose any obligation,
responsibility, or liability on Mortgagee or its agents to prosecute any of the
Incorporeal Rights hereunder or to perform or carry out any of the obligations,
duties, responsibilities, or liabilities of Mortgagor under or in connection
with the Incorporeal Rights, it being understood and agreed that the collateral
assignment and pledge of, and security interest in, the Incorporeal Rights is a
collateral assignment and pledge of, and grant of a security interest in, rights
only and not of any obligations, duties, responsibilities, or liabilities.
Mortgagee does not assume any responsibility for any covenants of Mortgagor in
connection with any of the Incorporeal Rights. Mortgagor hereby agrees to
indemnify and defend the Mortgagee and its agents, employees, successors, and
assigns (the "Indemnified Parties") and to hold them harmless from any cost,
expense, liability, loss, or damage, including, without limitation, reasonable
attorneys' fees, which may or might be incurred by them by reason of the
collateral assignment and pledge of the Incorporeal Rights in this mortgage. The
obligation set forth herein to indemnify, defend, and hold the Indemnified
Parties harmless shall be secured by this mortgage.
Page 7
<PAGE>
V. OTHER PROVISIONS
1. As additional security for the payment of the indebtedness evidenced by
the Note, together with all interest, attorneys' fees, insurance premiums,
taxes, collection costs, keeper's fees, and all other costs and to secure the
full and punctual payment and performance of all other obligations of Mortgagor
to Mortgagee, now existing or hereafter arising, up to the maximum amount of
five (5) times the principal amount of the Note, Mortgagor hereby grants a
security interest in, pledges and assigns to Mortgagee (a) all awards from any
condemnation, appropriation, or expropriation of all or any part of the
Mortgaged Property by any governmental authority, and (b) all awards or proceeds
received from any insurance policy covering the Mortgaged Property. Such awards
shall be applied by Mortgagee to the reduction of the indebtedness secured by
this mortgage.
2. Mortgagee may at any time and without notice to any party (a) release
any of the Mortgaged Property from the effect of this mortgage, (b) grant an
extension of time to any party for the performance of any obligation under this
mortgage, the Note, or any obligation for which the Note is given as security
(collectively, the "Secured Obligations"), or (c) release any one or more
parties from the Secured Obligations without affecting the lien of this mortgage
or the personal liability of Mortgagor or any other party to the Secured
Obligations.
3. Possession of the Note at any time by Mortgagor shall not in any manner
extinguish the Note or this mortgage, and Mortgagor shall have the right to
issue and reissue the Note one or more times without in any manner extinguishing
or affecting the obligation on the Note or the security of this mortgage.
4. Notwithstanding anything to the contrary, the maximum amount for which
this mortgage shall secure the Note and any indebtedness or obligations
stipulated in this mortgage is hereby fixed at an amount not to exceed five (5)
times the principal amount of the Note.
5. The parties to this mortgage waive the production of mortgage
certificates and all other certificates or researches and relieve and release
the undersigned Notary Public and the surety on the undersigned Notary Public's
bond from any and all responsibility and liability in connection therewith.
6. It is expressly agreed that any and all stipulations, agreements,
warranties, and covenants by Mortgagor in favor of Mortgagee contained in this
mortgage, and all rights, powers, and privileges conferred in this mortgage on
Mortgagee by any of the provisions of this mortgage shall inure to and be
for the benefit of and may be exercised by Mortgagee, its successors, and
assigns. All covenants and agreements contained in this mortgage to be observed
or performed by Mortgagor shall be binding upon Mortgagor and upon Mortgagor's
heirs, administrators, executors, successors, and assigns, as well as upon any
person, firm, or corporation hereafter acquiring title to the Mortgaged
Property, or any part thereof, by, through, or under Mortgagor, and the word
"Mortgagor," unless the context otherwise requires, shall also mean and include
the heirs, administrators, executors, successors, and assigns of Mortgagor, and
any other person, firm, or corporation acquiring title to any of the Mortgaged
Property by, through, or under Mortgagor.
7. Any headings in this mortgage are for convenience only and shall not be
construed as a limitation on the scope of the particular part of the mortgage to
which they refer.
8. If any provision of this mortgage is invalid or unenforceable, such
invalidity or unenforceability shall not affect the other provisions of this
mortgage.
AND NOW UNTO THESE PRESENTS personally came and appeared James L. Zehnder,
II who on behalf of Mortgagee hereby accepts this mortgage.
Page 8
<PAGE>
THUS DONE AND PASSED, in multiple originals at Lafayette Louisiana, on the
day, month, and year first above written, in the presence of Robert M. Francez
and George Parker, the undersigned competent witnesses, who sign their names
with the appearers and the undersigned Notary Public.
WITNESSES: MORTGAGOR:
AMERICAN FIRE RETARDANT CORPORATION
/s/ Edward E. Friloux
---------------------------------------
By: EDWARD E. FRILOUX, Secretary
INTERVENOR:
---------------------------------------
/s/ Randall E. Olsen
--------------------------------------------------
RANDALL E. OLSON, Notary Public
Page 9
<PAGE>
[MAP AND PLAT SURVEY OF PROPERTY]
Exhibit 10.8(c)
---------------
SECURITY AGREEMENT
This Security Agreement is made this 13TH day of December, 1996, by
AMERICAN FIRE RETARDANT CORPORATION ("Debtor") in favor of Whitney National Bank
("Secured Party").
Debtor's lace of business or chief executive office, if there is more than
one place of business, is located at 110 Brush load, Broussard, Louisiana 70518.
Debtor has agreed to secure the payment and performance of all obligations
and Indebtednesses of AMERICAN FIRE RETARDANT CORPORATION (the "Borrower,"
whether one or more) to Secured Party.
NOW THEREFORE, for valuable consideration, the receipt of which Is hereby
acknowledged, Debtor and Secured Party agree as follows:
In order to secure payment of all obligations and liabilities of Debtor and
Borrower, and of any one or more of them, Secured Party, direct or contingent,
due or to become due, now existing or hereafter arising, Including all future
advances, with Interest, attorneys' fees, expenses of collection and costs,
Including, without limitation, obligations to Secured Party on promissory notes,
checks, overdrafts, letter-of-credit agreements, endorsements and continuing
guaranties (collectively the ("Obligations"), and to secure the observance and
performance of all of the obligations, covenants, agreements, stipulations,
representations and warranties contained in this Security Agreement, Debtor
hereby pledges, pawns and delivers to Secured Party, and grants in favor of
Secured Party a continuing security interest in, and a right of set-off and
compensation against, property of Debtor, of every nature and kind whatsoever,
owned by Debtor, or in which Debtor has an interest, that is now hereafter on
deposit with, in the possession of, under the control of or held by Secured
Party in definitive form, book entry form or in safekeeping or custodian
accounts, including (a) all deposit accounts, money, funds on deposit in
checking, savings, custodian and other accounts, instruments, negotiable
instruments, certificates of deposit, commercial paper, stocks, bonds, treasury
bills and other securities, documents, documents of title and chattel paper, (b)
the following described collateral note )the "Collateral Note"):
That certain collateral note in the principal amount of $ 74,400.00 dated
December 13, 1996 made by Debtor payable to the order of bearer at Whitney
National Bank, 228 St. Charles Avenue, New Orleans, Louisiana 70130, or at
any one of its branches, bearing interest at the rate of eighteen ( 18 %)
percent per annum from date until paid, paraphed for identification with
and secured by an act of collateral mortgage, security agreement and
assignment of leases and rents dated December 13, 1996, executed by Debtor
before Randall E. Olson, Notary Public, recorded or to be recorded in the
Parish of Lafayette.
and (c) all Proceeds (as hereinafter defined), increases and profits of all of
the foregoing property, including, without limitation all instruments,
documents, chattel paper, cash, interest, dividends, corporate distributions and
fruits. The terms "deposit accounts," "instruments," "documents," "chattel
paper" and "Proceeds" shall have the meaning provided in La. R.S. 10:9-101, et
seq. Notwithstanding any other provision in this Security Agreement to the
contrary, IRA, pension and other tax-deferred accounts with Secured Party shall
not be Subject to the security interest created hereby.
This Security Agreement shall be on the following terms and conditions:
1. The property hereby encumbered and any property added or substituted for
such property is hereafter referred to as the "Collateral".
2. The Collateral shall remain subject to this Security Agreement until all
of the Obligations have been satisfied and aid in full and all of the Collateral
has been returned by Secured Party to the possession of Debtor.
Page 1
<PAGE>
3. Secured Party may, at its option, renew certificates of deposit or other
renewable items comprising the Collateral, and the security interest created by
this Security Agreement shall extend to the renewed certificates of deposit or
other renewed items.
4. All Proceeds, increases and profits derived from the Collateral,
including corporate distributions, stock splits and stock dividends, shall be
subject to this Security Agreement and shall be delivered immediately upon
receipt to Secured Party with all necessary endorsements. Secured Party may, in
its sole discretion, without notice to or consent of the Debtor, (a) retain the
Proceeds, increases and profits, including money, derived from the Collateral,
as additional security for the Obligations without applying the Proceeds,
increases and profits toward payment of the Obligations, or (b) impute or apply
he Proceeds, increases and profits, in whole or in part, to the Obligations in
such manner as Secured Party sees fit without notice to Debtor or Borrower.
5. Debtor hereby releases Secured Party from any obligation to take any
steps to collect any Proceeds, increases and profits of, or to preserve any of
Debtor's rights, including, without limitation, all rights against prior
parties, in the Collateral, and Secured Party's only duty with respect to the
Collateral shall be solely to use reasonable care in the physical preservation
,of the Collateral that is in the actual possession of Secured Party.
6. Should the Collateral or any part thereof decline in value, Debtor
agrees to grant a security Interest in, and deliver to Secured Party, additional
property satisfactory to Secured Party as security for the Obligations.
7. Debtor authorizes Secured Party, in its discretion, (a) to transfer the
Collateral into its name or Into the name of its nominee, (b) to notify the
obligor on any credits, non-negotiable instruments or contractual rights hereby
encumbered to make payments directly to Secured Party, or (c) to receive or
recover all payments due with respect to the Collateral; provided, however, that
Secured Party shall not be obligated to do any of the foregoing and shall not be
liable to Debtor or Borrower or failing to do so.
8. Not less than sixty (60) days prior to the date on which enforcement of
any portion of the Collateral might be barred by prescription or statute of
limitations, as security for the Obligations, Debt, or shall grant a security
interest in, and deliver to Secured Party, additional property satisfactory in
form and amount to Secured Party.
9. On non-performance of Debtor's obligations under this Security Agreement
or upon the non-payment or non-performance of any of the Obligations, then, at
Secured Party's option, all of the Obligations shall be immediately due and
payable, without demand, and Secured Party may sell, assign, transfer and
effectively deliver all or any part of the Collateral at public or private sale,
without recourse to judicial proceedings and without demand, appraisement or
advertisement, all of which are hereby expressly waived by Debtor to the fullest
extent permitted by law. Secured Party shall notify Debtor of the sale by
depositing notice in the United States mail, postage prepaid, addressed to
Debtor at Debtor's address most recently furnished to Secured Party. Such notice
shall be deemed reasonable notice If it is deposited in the United States mail
at least ten (10) days prior to the sale. At any such sale, Secured Party may
itself purchase all or any part of the Collateral, free of any right of
redemption, which right is hereby expressly waived and released. For purposes of
executory process, Debtor hereby acknowledges the indebtedness owed under the
Obligations and confesses judgment in favor of Secured Party for the full amount
of the Obligations In principal, Interest, attorneys' fees and 'all other costs
and charges, including all sums Secured Party advances during the life of this
Security Agreement for any payment made by Secured Party in accordance with, the
terms of this Security Agreement. Debtor hereby agrees that it shall be lawful
for Secured Party, and Debtor does hereby authorize Secured Party, without
making demand and putting in default, all of which are hereby expressly waived,
to cause all or any part of the Collateral, including the Collateral Note, to be
seized and sold under executory or other legal process without appraisement,
which Is hereby expressly waived, as an entirety or in parcels -is Secured Party
may determine, to the highest bidder for cash, or on such terms as are
acceptable to Secured Party. To the extent permitted by law, Debtor expressly
waives (i) the benefit of appraisement provided in the Louisiana Code of Civil
Procedure and (ii) the demand and three (3) days delay accorded by Articles 2639
and 2721, Louisiana Code of Civil Procedure. Secured Party may, at its option,
enforce the mortgage securing the Collateral Note and any other mortgage note
encumbered hereby and cause tile property therein mortgaged to be seized and
sold by executory or other process in accordance with law and the terms of the
mortgage. The proceeds of any sale or enforcement of the Collateral as herein
Page 2
<PAGE>
authorized shall be applied to the Obligations with preference and priority over
all other creditors and claimants of Debtor or in the manner otherwise required
by law. Secured Party is irrevocably authorized, in its sole discretion, to
impute the proceeds of the sale or enforcement of the Collateral among the
Obligations as it sees fit without notice to Debtor or Borrower. If the proceeds
from the sale or enforcement of the Collateral are insufficient to satisfy all
of the Obligations in full, all parties obligated thereon shall remain fully
obligated for any deficiency.
10. The obligations of Debtor hereunder shall be joint, several and
solidary and shall bind and obligate Debtor's successors, heirs and assigns.
Debtor waives all rights of division and discussion. Secured Party may assign
and transfer the Collateral to the assignee of any of the Obligations, whereupon
such transferee shall become vested with all powers and rights granted to
Secured Party under this Security Agreement, and Secured Party shall have no
further fiduciary obligation with respect to the Collateral. This Security
Agreement shall be governed by the internal laws of the State of Louisiana.
Debtor hereby represents and warrants that Debtor's name, Debtor's place of
business or chief executive office, whichever is applicable, and the description
and identification of the Collateral Note, as stated above, are true and
correct. Debtor hereby represents and warrants that the social security number
or employer identification number shown opposite Debtor's signature below is
correct.
Debtor hereby delivers and transfers possession of and all control over the
Collateral, including the Collateral Note, to Secured Party.
Secured Party appears herein through its undersigned representative,
accepts this Security Agreement, and acknowledges receipt of the Collateral Note
and all other property hereby encumbered.
DEBTOR SOCIAL SECURITY NUMBER
OR
AMERICAN FIRE RETARDANT CORPORATION EMPLOYER IDENTIFICATION NUMBER
/s/ Edward E. Friloux 72-1261941
- ------------------------------------ ----------------------------------
By: EDWARD E. FRILOUX, Secretary
SECURED PARTY
WHITNEY NATIONAL BANK
/s/
- ------------------------------------
Corporate Banking Officer
Page 3
Exhibit 10.9
------------
STANDARD LEASE
APPROVED BY BATON ROUGE APARTMENT ASSOCIATION, INC.
Date: 3/13/98
PARTIES: The Plantations at Lafayette (hereinafter referred to as Lessor) hereby
leases to: American Fire Retardant Corporation. (hereinafter referred to as
Lessee) the following described property.
PREMISES - Apartment No. 421 located at 211 Liberty Avenue In Lafayette, T-A
70508 for use by resident as a private residence only.
TERM - 3/13/98 is the commencing date of this lease term and this lease ends on
4/30/99
AUTOMATIC RENEWAL - It Lessee or Lessor, desires that this lease terminate at
the expiration of its term, he must give to the other written notice at least 30
days prior to that date. Failure of either party to give this required notice
will automatically renew this lease on a month to month basis. If this lease
automatically renews on a month to month basis then it Lessee or Lessor desires
that this lease terminate he must give to the other written notice of the
termination at least 30 days prior to file last calendar day of the month in
which the lease is to terminate. If this lease automatically renews on a month
to month basis then all terms and conditions of this lease remain in effect.
RENT - Nine Hundred Twenty-five. ($ 925.00 )DOLLARS per month shall be the
rental which shall be payable in advance on the first day of each month. The
rent shall be paid at: all Liberty 211 Liberty Avenue Lafayette, LA 70508
Rent not received by the first of the month shall be considered delinquent.
should Lessor agree to accept rent after that date then Lessor may charge a late
fee of: $25.00 on the 4th, plus $5. 00 per day starting on the 5th until paid in
full Acceptance of rent after the due date shall not be considered as a waiver
or relinquishment of any of the other rights and remedies of Lessor. Rent may
not be paid in cash unless Lessor specifically agrees in writing.
If Lessee pays by check and said check is not honored upon presentation for any
reason whatsoever Lessee agrees to pay an additional sum of 25.00 NSF, plus all
late fees as a penalty.
$567.00 for 19 days in March has been paid by Lessee to Lessor which is prorated
rental from the date of the commencement of this Lease to the first day of the
following month.
SECURITY DEPOSIT - Two Hundred Dollars ($200.00) DOLLARS has been deposited by
Lessee with Lessor receipt of which is acknowledged. This deposit which is
non-interest bearing is to be held by Lessor as security for the full and
faithful performance of all the terms and conditions of this lease and any
renewals of this lease. The security deposit is not an advance rental and Lessee
may not deduct any portion of the deposit from the rent due to Lessor. In the
event of forfeiture of the security deposit due to Lessee's failure to fully and
faithfully perform all of the terms and conditions of file lease, Lessor retains
all of his other rights and remedies. Lessee does not have the right to cancel
this lease and avoid his obligations thereunder by forfeiting the said security
deposit.
Lessee shall be entitled to return of said security deposit within 30 days
after the premises have been vacated and inspected by Lessor provided said
leased premises are returned to Lessor In as good condition as they were at the
time Lessee first occupied same, subject only to normal wear and tear and after
all keys are surrendered to Lessor. Lessor agrees to deliver the premises clean
and free of trash at the beginning of this lease and Lessee agrees to return
same in like condition at the termination of the lease,
Unless otherwise specifically provided for herein, Lessee shall not make
any repairs to the leased premises. Lessor shall make all repairs to the leased
premises within a reasonable time alter written notice delivered by Lessee to
Lessor.
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<PAGE>
In the event of any damage to the leased premises or equipment therein,
reasonable wear and tear excepted, caused by Lessee, his family, guest or
agents. Lessee agrees to pay Lessor when billed file full amount necessary to
repair or replace the damaged premises or equipment, as agreed to on the CHECK
IN/CHECK OUT LIST attached hereto and made a part of this lease.
Deductions will be made from the security deposit to reimburse Lessor for
the cost of repairing any damage to the premises or equipment or the cost of
replacing any of the articles or equipment that may be damaged beyond repair,
lost or missing at the termination of file lease. Deductions will also be made
to cover any unpaid amounts owed to Lessor for any such damages or loss
occurring prior to termination of the lease and for which Lessee has been
billed. In the event that such damages or cleaning charges exceed the amount of
the security deposit, Lessee agrees to pay all excess costs to Lessor. In the
event there has been a forfeiture of the security deposit, charges for damages
and cleaning shall be paid in addition to the amount of the said security
deposit.
Notwithstanding any other provisions expressed or implied herein, it Is
specifically understood and agreed that the entire security deposit aforesaid
shall be automatically forfeited as a set off should Lessee vacate or abandon
the premises before the expiration of this lease, except where such abandonment
occurs during the last month of the term of the lease, Lessee has paid all rent
covering the entire term and either party has given the other timely written
notice that this lease will not be renewed under its automatic renewal
provisions.
MAINTAINING UTILITY SERVICE - Lessee must maintain at all times electrical,
water and gas service to the Leased Premises at Lessee's expense. Failure to
maintain such service(s) for two (2) consecutive days shall be deemed to be a
breach hereunder. Further, Lessor Is entitled to, but not obligated to, obtain
such services to the Leased Premises and charge Lessee the expense of obtaining
and maintaining the service(s).
OCCUPANTS - The leased premises shall be occupied as a residence by the
following persons only:
Stephen Owens
Edward E. Friloux
Patty Frederick
PETS - No pets are allowed to live on the premises at any time. However this
provision shall not preclude Lessor from modifying any lease to allow pets by
mutual written agreement between Lessor and Lessee prior to bringing pet in
apartment community. If a pet is allowed, Resident must pay: N/A ($ -________)
DOLLARS as a nonrefundable pet fee which shall be considered as additional
rental for the first month of this lease.
SUB LEASE - Lessee is not permitted to post any "For Rent" signs, rent, sublet
or grant use or possession of the leased premises In any manner.
DEFAULT OR ABANDONMENT - Should Lessee fall to pay the rent or any other charges
arising under his lease promptly as stipulated, or should voluntary or
Involuntary bankruptcy proceedings be commenced by or against Lessee or should
Lessee discontinue the use of the premises for the purposes for which they are
rented or should Lessee or any of Lessee's guest or invitees fail to maintain a
standard of behavior consistent with the consideration necessary to provide
reasonable safety, peace and quiet to the other residents In the apartment
community such as being boisterous or disorderly, creating undue noise,
disturbance or nuisance of any nature or kind, engaging in an unlawful or
immoral activities, or should Lessee breach any of the rules and/or regulations
as referred to further herein. or should Lessee breach any other covenant of
this lease, Lessee shall be ipso facto in default, without the necessity of
demand or putting in default. In the event of default hereunder, Lessor may
elect any remedy allowed under Louisiana law, including but not limited to
declaring the rent for the whole unexpired term of the lease together with the
attorney's fees immediately due and exigible, or to proceed one or more times
for past due installments without prejudicing his right to proceed later for the
rent for the remaining term of the lease and/or cancel the lease and obtain
possession of the premises.
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<PAGE>
WAIVER OF NOTICE - Lessee specifically waives the requirement of the live day
notice to vacate as set forth In the Revised Civil Code of the State of
Louisiana and under the Code of Civil Procedure as they may be amended.
RULES AND REGULATIONS - Lessee acknowledges receipt of a copy of the rules and
regulations which are attached to and form a part of his lease. Lessee agrees to
comply with all such rules and regulations and with all reasonable rules and
regulations hereafter adopted by the Lessor and posted In or about the apartment
community and/or mailed or delivered to Lessee.
CONDITION OF PREMISES - Lessor has delivered the leased premises in good
condition. Lessee accepts them in such condition and agrees to keep them In such
condition during the term of this lease at his expense and to return them to
Lessor in the same condition as the termination of the lease, normal decay, wear
and tear excepted.
OCCUPANCY - Should Lessee be unable to obtain occupancy on the date of the
beginning of the lease due to causes beyond control of Lessor, the lease should
not be affected thereby, but Lessee shall owe rent beginning only with the day
on which he can obtain possession.
Should the property be destroyed or materially damaged so as to render it
wholly unfit for occupancy by fire or other unforeseen event not due to any
fault or neglect of Lessee, the Lessee shall be entitled to a credit for the
unexpired term of the lease. However Lessee shall not be entitled to a reduction
of the monthly rent or cancellation of this lease because of a temporary failure
of utilities, heat, air conditioning or temporary closing of swimming pool or
other amenity.
ADDITIONS AND ALTERATIONS - Neither Lessor nor Lessee shall make any additions
or alterations to the premises without written permission of the other. However,
Lessor or his employees shall have the right to enter the premises for the
purpose of making repairs necessary to the preservation of the property. Any
additions made to the property by the Lessee shall become the property of Lessor
without compensation to Lessee at the termination of this lease unless otherwise
stipulated herein. Nothing herein shall be construed to prevent Lessor from
making improvements or conducting repairs at any other place other than the
premises' as defined hereinabove.
No holes shall be drilled in the walls, woodwork or floors and no antenna
installations are permitted. No painting or papering of walls is permitted.
No foil in window. No hurricane tape to stay in windows after danger
ceases.
LIABILITY - If any employee of Lessor renders any other services (such as
parking, washing or delivery of automobiles, handling of furniture or other
articles, cleaning the rented premises, package delivery, or any other service)
for or at the request of resident, his family, employees or guests then, for the
purpose of such service, such employees shall be deemed the servant of Lessee,
regardless of whether or not payment Is arranged for such service, and Lessee
agrees to relieve Lessor and hold Lessor harmless from any and all liability In
connection with such services.
The Lessor shall not be liable to Lessee, or to Lessee's employees,-
patrons and visitors, or to any other person for any damage to person or
property caused by any act, ommission or neglect of Lessee or any other tenant
of said demised premises, and Lessee agrees to hold Lessor harmless from all
claims for any such damage, whether the injury occurs on or off the leased
premises. Lessee has inspected the premises and assumes responsibility for their
condition. Lessor shall not be liable for injury caused by any defect herein to
the Lessee or anyone on the premises who derives his right to be thereon from
the Lessee, unless the Lessor knew or should have known of the defect or had
received notice thereof and failed to promptly remedy it within a reasonable
time. Should Lessee fail to promptly so notify Lessor, In writing, of any such
defects, Lessee will become responsible for any damage resulting to Lessor or
other parties. Lessor will not be responsible for damage caused by leaks In the
roof, by bursting of pipes by freezing or otherwise, or any vices or defects of
the leased property, or the consequences thereof.
Page 3
<PAGE>
Lessee hereby releases, relieves and holds Lessor blameless for any damage
or Injury to persons making use of said pool through the use, permission or
consent of Lessee. No person under the age of twelve (12) years of age will be
allowed in or about the swimming pool areas unless accompanied by an adult.
SIGNS AND ACCESS - Lessor reserves the right to post on the premises "For Sale"
or "For Rent" signs at all times. Lessee will allow parties authorized by Lessor
to visit the premises at reasonable hours in view of buying the property at any
time during this lease term or in view of renting for 30 days prior to the
expiration of this lease. Lessee will also permit Lessor to have access to the
premises for the purpose of Inspection at reasonable Intervals between the hours
of: 8:30 a.m. to .5:30 p.m.
ATTORNEY'S FEES - Lessee further agrees that if any attorney is employed to
protect any rights of the Lessor hereunder, Lessee will pay the fee of such
attorney. Such fee is hereby fixed at twenty-five (25%) percent of the amount
claimed or a minimum of $500.00 whichever is greater. Lessee further agrees to
pay all court costs and sheriff's charges if any.
OTHER - The failure of Lessor to insist upon the strict performance of the
terms, covenants, agreements and conditions hereby contained, or any of them
shall not constitute or be construed as a waiver or relinquishment of the
Lessor's right thereafter to enforce any such terms, covenant, agreement and
condition, but the same shall continue In full force and effect.
It is understood that the terms "Lessor" and "Lessee" are used in this
agreement, and they shall include the plural and shall apply to persons. both
male and females. All obligations of Lessee are several and in solido.
This lease, whether or not recorded, shall be junior and subordinate to any
mortgage hereafter placed by the Lessor on the entire property of which the
leased premises form a part.
OTHER CONDITIONS -
READ YOUR LEASE BEFORE SIGNING
Executed in Duplicate
/s/ Nancy Micek
at the Plantation Office -----------------------------------
this 13 day of March, Agent for Lessor
1998.
/s/ Patricia Frederick
-----------------------------------
Lessee
/s/ Stephen F. Owens
-----------------------------------
Lessee
Page 4
<PAGE>
WAIVER OF LIABILITY
The undersigned hereby waives any and all claims or causes of action that the
.undersigned may have against J. MEDVE INVESTMENTS AND MANAGEMENT, INC., THE
PLANTATION AT LAFAYETTE, and all respective officers, directors, partners,
employees and agents (collectively the "released parties") as a result of any
personal injury, death, or property damage suffered or sustained by the
undersigned resulting from any condition of the Premises (as defined below) of
resulting from any act of omission of the released parties, except for claims or
causes of action based upon the gross negligence or willful misconduct of the
released parties. The undersigned represents that he or she is in good physical
condition and requires no special or unusual medical supervision or attention.
The foregoing waiver is made by the undersigned in consideration or the receipt
of permission from the released parties to allow the undersigned to participate
in the Activity, as described below:
USE OF RECREATIONAL AMENITIES, SUCH AS:
1) USE OF SAND VOLLEYBALL COURT;
2) USE OF SPORTS COURTS;
3) USE OF SWIMMING POOL;
4) USE OF EXERCISE ROOM AND EQUIPMENT.
PREMISES: THE PLANTATION AT LAFAYETTE APARTMENTS
211 LIBERTY AVENUE
LAFAYETTE, LA 70508
/S/ Patricia Frederick /s/ Lisa Longwell
- ---------------------------- -----------------------------------
Participant Participant
/s/ Stephen F. Owens
- ----------------------------
<PAGE>
SECURITY DEPOSIT AGREEMENT
UNIT NUMBER: 421 DATE: 3/13/98
OWNER ACKNOWLEDGES RECEIPT FROM RESIDENT THE SUM OF $200.00 SAID-SUM IS IN FULL
OR PART. PAYMENT OF THE TOTAL SECURITY DEPOSIT. SUCH DEPOSIT IS NOT ADVANCE
RENT AND CANNOT BE APPLIED TO RENT BY THE RESIDENT. SUCH DEPOSIT SHALL BE
RETURNED TO THE RESIDENT ONLY AFTER EACH AND ALL, OF THE FOLLOWING CONDITIONS
HAVE BEEN MET:
1. Lessee must give 30 day notice in writing with his/her intent to terminate
residency.
2. The apartment, including the kitchen and its appliances, have been
thoroughly cleaned. When the resident moves out, resident is urged to
inspect the apartment with the management during normal business hours.
3. After such inspection, appropriate charges will be deducted for any unpaid
damages or repairs to the apartment or its contents (beyond normal wear and
tear), insufficient light bulbs, stickers, blinds, carpets, floors, and or
furniture, etc. A charge of S20.00 per lock will be charged if all keys are
not returned. A deduction or $25.00 for any returned check and a deduction
for all late payments will also be made.
4. If resident fails to leave apartment in "move-in" condition, reasonable
charges to complete the cleaning of the apartment shall be deducted,
including charges for cleaning carpets, mini-blinds, etc., soiled beyond
reasonable wear.
5. The following fixed charge may be retained in any event for special
cleaning that must be done commercially or by owners' employees, such as
carpet cleaning, mini-blind cleaning, appliance cleaning, floor waxing,
etc.: $100.00
6. Rent may be charged until keys are returned.
AFTER THE ABOVE CONDITIONS HAVE BEEN COMPLIED WITH BY VACATING RESIDENT, THE
BALANCE OF THE SECURITY DEPOSIT SHOULD BE MAILED TO VACATING RESIDENT'S
FORWARDING ADDRESS, IF SUPPLIED. IF FORWARDING ADDRESS HAS NOT BEEN SUPPLIED,
THIS SECURITY DEPOSIT BALANCE SHALL BE MAILED TO VACATING RESIDENTS LAST KNOW
ADDRESS ALONG WITH AN ITEMIZED ACCOUNTING OF ANY CHARGES FOR DAMAGES, CHARGES
FOR CLEANING, OR OTHER SUMS OWED BY VACATING RESIDENT USUALLY WITHIN 30 DAYS
AFTER MOVE-OUT.
RESIDENT AGREES THAT THIS SECURITY DEPOSIT MAY NOT' BE APPLIED TO ANY RENT DUE
AND THAT THE FULL MONTHLY RENT WILL BE PAID ON OR BEFORE THE DUE DATE OF EACH
MONTH, INCLUDING THE LAST MONTH OF OCCUPANCY.
IF RESIDENT FAILS TO PAY THE FIRST MONTH'S RENTAL AT THE DUE DATE OF THAT
PERIOD, RESIDENT'S SECURITY DEPOSIT WILL BE FORFEITED; AND, IN ADDITION, OWNER
MAY TERMINATE RESIDENCY OR OWNER MAY ELECT PURSUE COLLECTION ALTERNATIVES FOR
DAMAGES PLUS ATTORNEY FEES (IN WHICH CASE, OWNER SHALL ATTEMPT TO RELET THE
PREMISE TO RECOUP ANY LOSSES INCURRED DUE TO ABOVE).
SPECIAL PROVISION REGARDING SECURITY DEPOSIT:
IF FOR ANY REASON APPLICANT SHOULD FIND IT NECESSARY TO CANCEL LEASE BEFORE
ACTUAL OCCUPANCY OF ABOVE SAID UNIT, ALL DEPOSITS MADE AND DEPOSITED WITH THE
PLANTATION AT LAFAYETTE APARTMENTS SHALL BE FORFEITED.
/S/ Patricia Frederick /s/ Lisa Longwell
- ----------------------------- ----------------------------------------
RESIDENT AGENT FOR OWNER:
THE PLANTATION LAFAYETTE
/s/ Stephen F. Owens
- -----------------------------
RESIDENT
Exhibit 10.10
---------------
OIL, GAS AND MINERAL LEASE
AMERICAN FIRE RETARDANT CORPORATION, a Louisiana corporation, represented herein
by Stephen Owens, its president, duly authorized by the attached Board of
Directors resolution, whose mailing address is 110 Brush Road, Broussard,
Louisiana 70518 hereinafter called "Lessor" (whether one or more) grants, leases
and lets unto PENWELL ENERGY, INC., a Texas corporation, 6363 Woodway, Ste. 560,
Houston, TX 77067 hereinafter called "Lessee", the exclusive right to enter upon
and use the land hereinafter described for the exploration for, and production
of, oil, gas, sulphur and all other minerals, together with the use of the
surface of the land for all purposes incident to the exploration for and
production, ownership, possession and transportation of said minerals (either
from said land or acreage pooled therewith), and the right of ingress and egress
to and from said lands at all times for such purposes, including the right to
construct, maintain and use roads and/or canals thereon for operations hereunder
or in connection with similar operations on adjoining lands, and including the
right to remove from the land any property placed by Lessee thereon and to draw
and remove casing from wells drilled by Lessee on said land; the land to which
this lease applies and which is affected hereby being situated in Lafayette
Parish, Lousiana, and described as follows, to-wit:
That certain tract of land containing 1.0 acre, more or less, situated in
Sections 54 and/or 98 and/or 97, Township 10 South, Range 5 East, Lafayette
Parish, Louisiana, known and designated as "Lot 1" on that certain plat of
survey entitled "Final Plat of Butcher Business Park, Located In Sections
98 & 54, T10S-R5E, City of Lafayette, Lafayette Parish, Louisiana," by
Domingue, Szabo, & Associates, Inc., Land Surveyors, dated March 11, 1982,
revised October 12, 1982, recorded under File No. 82-34558, Conveyance
Records of Lafayette Parish, Louisiana.
It is understood and agreed that it is the intention of Lessor herein to
lease all interest Lessor may own in and to all streets, alleys, lanes,
highways, roads, ditches, canals, coulees, public or private, adjacent to,
or traversing the lands described herein whether or not specifically
described. Furthermore, it is the specific intention of Lessor and Lessee
that this lease covers and affects lessor's interest underlying Brush Road
which adjoins the lands described above.
The royalties on oil, gas, and other minerals mentioned below in Paragraph
4 are and shall be one-fourth (1/4th) rather than one-eighth (1/8th) and
said Paragraph 4 is hereby amended so as to substitute the words and
figures "one-fourth (1/4th)" for the words and figures "one-eighth (1/8th)"
wherever same appears in said Paragraph 4.
This lease is granted subject to the provisions of the attached Exhibit
"A."
Containing 1.0 acres, more or less.
All land owned by the Lessor in the above mentioned Section or Sections or
Surveys, all property acquired by prescription and all accretion or alluvion
attaching to and forming a part of said land are included herein, whether
properly or specifically described or not.
This lease, without further evidence thereof, shall immediately attach to
and affect any and all rights, titles, and interests in the described land,
including reversionary mineral rights, hereafter acquired by or inuring to
Lessor and Lessor's successors and assigns. This lease shall be for a term of 3
(three) years from the date hereof (called "primary term") and so long
thereafter as oil, gas or some other mineral is being produced from the land, or
from land pooled therewith, or drilling operations are conducted, as hereinafter
provided for; all subject to the following conditions and agreements:
1. For the consideration hereinafter recited, this lease shall remain in
full force and effect during the primary term, without any additional payment
and without Lessee being required to conduct any operations on the land (either
before or after the discovery of minerals), except to drill such wells as might
be necessary to protect the land from drainage, as hereinafter provided for.
Page 1
<PAGE>
2. If, at the end of the primary term, any mineral is being produced from
the land, or from land pooled therewith, then Lessee's rights shall thereafter
be maintained in force and effect so long as oil, gas or some other mineral
shall be produced in paying quantities, or so long as Lessee is carrying on
operations with reasonable diligence for the production thereof from the leased
premises or land pooled therewith; or, if at the end of said primary term Lessee
is not producing minerals but is conducting or has conducted drilling operations
on the land or on land pooled therewith, the Lessee's rights shall be maintained
thereafter so long as Lessee carries on such drilling operations in the sense
that not more than ninety (90) days shall elapse between the cessation of work
on one well and the commencement of reworking operations or operations for the
drilling of another, and upon the discovery of oil, gas or some other mineral in
paying quantities, Lessee's rights shall be maintained without the drilling of
additional wells within the time specified, but so long as Lessee carries on
operations with diligence for the production of oil, gas or some other mineral.
If, after the primary term and after the discovery of oil, gas or other minerals
in paying quantities, the production thereof should cease from any cause, this
lease shall terminate unless the Lessee resumes or restores such production, or
commences additional drilling, reworking or mining operations within (90) days
thereafter and continues such operations with diligence without more than (90)
days elapsing between the cessation of work on one well and the commencement of
reworking operations or operations for drilling of another until such production
is restored. Lessee shall not be required to produce more than one mineral in
discovered to exist under the lands, the production of any one mineral in paying
quantities and with reasonable diligence being sufficient to maintain all of
Lessee's rights. Lessee is hereby given the right of power without any further
approval from Lessor to pool or combine the acreage, royalty, or mineral
interest covered by this lease, or any portion thereof, with other land, lease,
or leases; royalty and mineral interests in the immediate vicinity thereof,
when, in Lessee's judgement, it is necessary or advisable to do so in order to
properly develop and operate said premises so as to promote the conservation of
oil, gas and other minerals in and under and that may be produced from said
premises or to comply with the spacing or unitization order of any Regulatory
Body of the State of Louisiana or the United States having jurisdiction. The
term "Regulatory Body" shall include any governmental tribunal or group (civil
or military) issuing orders governing the drilling of wells or the production of
minerals, irrespective of whether said orders are designed to promote
conservation or to conserve materials or equipment for National Defense or
similar purposes. Such pooling shall be of tracts which will form one contiguous
body of land for each unit and the unit or units so created shall not exceed
substantially forty (40) acres each, surrounding each oil well and substantially
160 acres each for gas or gas-distillated wells, unless a larger spacing pattern
or larger drilling or producing units (including a field or pool unit) have been
fixed and established by an order of a Regulatory Body of the State of Louisiana
or of the United States, in which event the unit or units may be of the size
fixed by said order. Lessee shall execute and record in the conveyance records
of the Parish in which the land herein leased is situated an instrument
identifying and describing the pooled acreage; and upon such recordation, the
unit or units shall thereby become effective. In lieu of the royalties elsewhere
herein specified and subject to the provisions of paragraph 7 hereof, Lessor
shall receive from production from the unit so pooled only such portion of the
royalties stipulated herein as the amount of his acreage placed in the unit, or
his royalty interest therein, bears to the total acreage so pooled in the
particular unit involved. Drilling or reworking operations on or production of
oil, gas sulphur or other minerals from land included in such pooled unit shall
have the effect of continuing this lease in force and effect after the primary
term as to all of the land covered hereby (including any portion of said land
not included in said unit) whether or not such operations were on or such
production was from land covered hereby. Lessee shall have the right and power
to reduce and diminish the extent of any unit created under the terms of this
paragraph so as to eliminate from said unit any acreage or lease upon which
there is or may be an adverse claim; and Lessee may also re-form any unit to
conform with an order of a Regulatory Body issued after said unit was originally
established. Such revision of the unit shall be evidenced by an instrument in
writing executed by the Lessee, which shall identify and describe the lands
included in the unit as revised and shall be recorded in the conveyance records
of the Parish where the lands herein lease are situated. If Lessee during or
after the primary term should drill a well capable of producing gas or gaseous
substances in paying quantities, (or which although previously produced, Lessee
is unable to continue to produce) and should Lessee be unable to operate said
well because of lack of market or marketing facilities or governmental
restrictions, then Lessee's rights may be maintained beyond or after the primary
term without production of minerals or further drilling operations by paying
Lessor annual rentals at the rate of TWO HUNDRED & NO/100 ($200.00) DOLLARS
each, the first payment to be due (if said well should be completed or be shut
Page 2
<PAGE>
in after the primary term) within (90) days after the completion of such well or
the cessation of production and extend Lessee's rights for one year from the
date of such completion or cessation. If such a well should be completed during
the primary term the first payment, if made by Lessee, shall be due on or before
the expiration date of the primary term herein fixed. Thereafter Lessee's rights
may be continued from year to year by making annual payments in the amount
stated on or before the anniversary date beginning with the date of completion
of said well (if completed after the primary term) or the end of the primary
term (if completed thereto) as the case may be; each of such payments to extend
Lessee's rights for one year. It is provided, however, that in no event shall
Lessee's rights be so extended by annual payments herein fixed and without
drilling operations or the production of oil, gas or some other mineral for more
than five (5) years beyond the end of the primary term hereinabove fixed. The
annual payments herein provided for may be deposited to Lessor's credit in the
St. Martin Bank and Trust Company, P.O. Box 199. Bank of St. Martinville,
Louisiana 70582-0199, which bank shall be and remain Lessor's agent for such
purpose regardless of any change or changes in the ownership of the land or
mineral rights therein. Should any such well be completed on a drilling unit
which includes any part of the land herein leased, the provisions hereof shall
be subject to all other agreements herein contained allowing the pooling of such
lands and the payments herein fixed shall be prorated among the mineral owners
of each tract in the unit so that such owners shall be entitled to receive only
that proportion of said payments that the area of their tract placed in the unit
bears to the total area of said unit; and such proportionate payment shall
maintain the lease in force as to all of the land affected hereby, including any
portion thereof located outside of the unit.
3. If, prior to or after the discovery of oil on the lands held hereunder,
a well producing oil in paying quantities for thirty (30) consecutive days is
brought in on adjacent lands not owned by the Lessor and not forming a pooled
unit containing a portion of the lands described herein and within 330 feet of
any line of the land held hereunder, Lessee, in order to maintain the rights
granted, shall thereafter begin and prosecute with reasonable diligence the
drilling of a well in an effort to discover oil thereby and to protect the land
held hereunder from drainage.
Lessee may, at any time prior to or after the discovery and production of
minerals on the land, execute and deliver to Lessor or place of record a release
or releases of any portion or portions of the lands and be relieved of all
requirements hereof as to the land surrendered. In the event of the forfeiture
of this lease for any cause, Lessee shall have the right to retain around each
well then producing oil, as or other minerals or being drilled or worked on the
number of acres fixed and located by the spacing or unit order of any Regulatory
Body of the State of Louisiana or of the United States under which said well is
being drilled or produced, or if said well has been or is being drilled on a
unit pooled by Lessee as provided herein, then Lessee may retain all of the
acreage comprising said pooled unit; and if no spacing order has been issued nor
any pooled unit established, then Lessee shall have the right to retain twenty
(20) acres surrounding each well then producing or being drilled or worked on,
such twenty acres as to be in as near a square form as is practicable.
4. Subject to the provisions of Paragraphs 2 and 7 hereof, the royalties to
be paid by Lessee are: (a) On oil and other liquid hydrocarbons one-eighth
(1/8th) of that produced and saved from the land and not used for fuel in
conducting operations on the property (or on acreage pooled therewith) or in
treating said oil to make it marketable; (b) one-eighth (1/8th) of the market
value of the gas sold or used by Lessee in operations not connected with the
land leased or any pooled unit containing a portion of said land; (c) one-eighth
(1/8th) of the value at the mouth of the well of casinghead gas used in
manufacturing casinghead gasoline to be computed by methods recognized in the
industry; (d) one dollar ($1.00) for each ton of 2240 pounds of sulphur, payable
when marketed; and (e) one-eighth (1/8th) of the value of all other minerals
mined and marketed. Oil royalties shall be delivered to Lessor free of expense
at Lessor's option in tanks furnished by Lessor at the well or to the Lessor's
credit in any pipe line connected therewith. In the event Lessor does not
furnish tanks for such royalty oil and no pipe line is connected with the well,
Lessee may sell Lessor's royalty oil at the best market price obtainable and pay
Lessor the price received f. o. b. the leased property, less any severence or
production tax imposed thereon.
Page 3
<PAGE>
Lessee shall have the right to inject gas, brine, or other fluids into
sub-surface strata, and no royalties shall be due on any gas produced by Lessee
and injected into sub-surface strata through a well or wells located either on
land or on a unit comprising a portion of the land.
5. The Lessee shall be responsible for all damages to timber and growing
crops of Lessor caused by Lessee's operations.
6. All provisions hereof shall extend to and bind the successors and
assigns (in whole or in part) of Lessor and Lessee; but no change in the
ownership of the land or any interest therein or change in the capacity or
status if Lessor, whether resulting from sale, inheritance or otherwise, shall
impose any additional burden on Lessee nor shall any change in ownership or in
the status or capacity of Lessor impair the effectiveness of payments made to
Lessor herein named unless the then record owner of said lease shall have been
furnished, thirty (30) days before payment is due, with certified copy of
recorded instrument or judgment evidencing such transfer, inheritance or sale or
evidence of such change in status or capacity of Lessor. The furnishing of such
evidence shall not affect the validity of payments theretofore made in advance.
7. Lessor hereby warrants and agrees to defend the title to said land and
agrees that Lessee may, at its option, discharge any tax, mortgage or other lien
upon the land and be subrogated thereto and have the right to apply to the
repayment of the Lessee any royalties accuring hereunder. If Lessor owns less
than the entire undivided interest in all or any portion of the lands or
mineral
rights relating thereto (whether such interest is herein specified or not)
royalties and other payments as to the land shall be deducted herein for the
royalties provided for.
8. In the event Lessor's title or an interest therein is claimed by others
Lessee shall have the right to withhold payment of royalties or to deposit such
royalties in the registry of the Court until final determination of Lessor's
rights.
9. If the land herein described is owned in divided or undivided portions
by more than one party, this instrument may be signed in any number of
counterparts, each of which shall be binding on the party or parties so signing
regardless of whether all of the owners join in the granting of this lease.
10. The requirements hereof shall be subject to any State and/or Federal
law or order regulating operations on the land.
11. In the event that Lessor at any time considers that operations are not
being conducted in compliance with this lease, Lessor shall notify Lessee in
writing of the facts relied upon as constituting a breach hereof, and Lessee, if
legally required to conduct operations, in order to maintain the lease in force,
shall have sixty (60) days after receipt of such notice in which to commence the
necessary operations to comply with the requirements hereof.
Lessor acknowledged to have received from Lessee the sum of TEN DOLLARS AND
OTHER VALUABLE CONSIDERATIONS ($10.00 & OVC) as full and adequate consideration
for all rights, options and privileges herein granted.
IN WITNESS WHEREOF, this instrument is executed as of October 31, 1997.
WITNESSES:
/s/ Trudy Richard AMERICAN FIRE RETARDANT CORPORATION
/s/ Stephen Owens
/s/ Richard Indil -----------------------------
By: Stephen Owens
TAX ID 72-1261941
Page 4
<PAGE>
EXHIBIT "A"
Attached to and made a part of that certain Oil, Gas and Mineral Lease
dated effective October 31, 1997, by and between AMERICAN FIRE RETARDANT
CORPORATION, as Lessor, and Penwell Energy, Inc., as Lessee.
1. Notwithstanding anything to the contrary contained herein, Lessee shall
conduct no surface operations on the lands leased herein without the
express written permission of Lessor; however Lessee may recover
hydrocarbons or other minerals from the property herein leased by
directional drilling, unitization or any other method provided herein which
will maintain this lease in full force and effect.
2. In addition to the rights specifically granted herein, but as a separate
grant of rights, Lessor hereby grants unto Lessee, its successors and
assigns, a subsurface easement for use by Lessee, its successors and
assigns, in its operations on other lands. This easement shall continue in
effect from the effective date hereof and for so long thereafter as Lessee,
its successors and assigns, is utilizing the subsurface of the lands
described herein in its operations under such lands and for 120 days
thereafter. This grant may be continued in effect by Lessee, its successors
or assigns, if, during said 120 days, it recommences subsurface use of the
lands described herein; thereafter the rights granted shall continue as if
such cessation had never occurred and for as many successive 120 day
periods may occur. The rights granted herein are separate from those
granted elsewhere in this lease and may be continued in effect even if the
lease should terminate.
SIGNED FOR IDENTIFICATION
AMERICAN FIRE RETARDANT CORPORATION
/s/ Stephen Owens
------------------------------------
Stephen F. Owens
<PAGE>
Attached to and made a part of that certain Oil, Gas and Mineral Lease
dates effective October 31, 1997, by and between AMERICAN FIRE RETARDANT
CORPORATION as Lessor, and Penwell Energy, Inc., as Lessee.
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF LAFAYETTE
BE IT KNOWN that on this 31st day of October, 1997, before me, the
undersigned authority, duly commissioned, qualified, and sworn within and for
the State and Parish aforesaid, personally came and appeared Stephen Owens,
appearing in his capacity as the President of AMERICAN FIRE RETARDANT
CORPORATION, a Louisiana Corporation, formed under the laws of the State of
Louisiana, to me personally known to be the identical person whose name is
subscribed to the foregoing instrument; who declared and acknowledged to me,
Notary, in the presence of the undersigned competenet witnesses, that he
executed the same on behalf of said corporation with full authority and that the
said instrument is the free act and deed of the said corporation and was
executed for the uses, purposes, and benefits therein expressed.
/s/ Danetta A. Lassign
----------------------
NOTARY PUBLIC
<PAGE>
Attached to and made a part of that certain Oil, Gas and Mineral Lease
dated effective October 31, 1997, by and between AMERICAN FIRE RETARDANT
CORPORATION as Lessor, and Penwell Energy, Inc., as Lessee.
RESOLUTION
BE IT RESOLVED that AMERICAN FIRE RETARDANT CORPORATION, does execute in
favor of PENWELL ENERGY, INC., whose address is 6363 Woodway, Suite 560,
Houston, Texas 77057, an oil, gas and mineral lease, dated effective October 31,
1997, covering the specific property described as follows and located in the
Parish of Lafayette, State of Louisiana;
That certain tract of land containing 1.0 acre, more or less, situated in
Sections 54 and/or 98 and/or 97, Township 10 South, Range 5 East, Lafayette
Parish, Louisiana, known and designated as "Lot 1" on that certain plat of
survey entitled "Final Plat of Butcher Business Park, Located in Sections
98 & 54, T10S-R5E, City of Lafayette, Lafayette Parish, Louisiana," by
Domingue, Szabo & Associates, Inc., Land Surveyors, dated March 11, 1982,
revised October 12, 1982, recorded under File No. 82-34558, Conveyance
Records of Lafayette Parish, Louisiana.
It is understood and agreed that it is the intention of Lessor herein to
lease all interest Lessor may own in and to all streets, alleys, lanes,
highways, roads, ditches, canals, coulees, public or private, adjacent or
traversing the lands described herein whether or not specifically
described. Furthermore, it is the specific intention of Lessor and Lessee
that this lease covers and affects Lessor's interest underlying Brush Road
which adjoins the lands described above.
BE IT FURTHER RESOLVED, that Stephen Owens, President of AMERICAN FIRE
RETARDANT CORPORATION, is hereby authorized, directed, and empowered to execute
said oil, gas and mineral lease dated effective October 31, 1997, to PENWELL
ENERGY, INC., for and on behalf of this corporation, for the consideration, and
upon such terms and conditions as he, the said Stephen Owens, in his sole
discretion shall deem to be in the best interests of this corporation, and to do
all other things whatsoever necessary or requisite to be done to carry out the
purpose and intent of this resolution.
CERTIFICATE
I, Edward Friloux, Sr., Secretary of AMERICAN FIRE RETARDANT CORPORATION, do
hereby certify that the above is a true and correct copy of the minutes of the
meeting of the Board of Directors of AMERICAN FIRE RETARDANT CORPORATION held at
its domicile at Broussard, Louisiana, on this site the 31st day of October,
1997, and that a quorum was present and voting favor of this resolution.
/s/ Edward E. Friloux
------------------------
By: Edward Friloux, Sr.
Exhibit 10.11(a)
----------------
PROMISSORY NOTE
Borrower: AMERICAN FIRE RETARDANT - CORPORATION
Borrower: AMERICAN FIRE RETARDANT CORPORATION Lender: WHITNEY NATIONAL
TIN 72-1261941) BANK TIN: 72-0352101
110 BRUSH ROAD P 0 BOX 3708
BROUSSARD, LA 70518 LAFAYETTE, LA 70502
===============================================================================
Principal Amount: $42,888.46 Interest Rate: 7.750% Date of Note: 09/18/96
PROMISE TO PAY. AMERICAN FIRE RETARDANT CORPORATION ("Borrower") promises to pay
to the order of WHITNEY NATIONAL BANK ("Lender"), In lawful money of the United
States of America the sum of Forty Two Thousand Eight Hundred Eighty Eight &
46/100 Dollars (U.S. $42,808.46), together with simple Interest at the role of
7.750% per annum assessed on the unpaid principal balance of this Note as
outstanding from lime to lime, commencing on September 18, 1996 and continuing
until this Note is paid In full.
PAYMENT. Borrower will pay this loan on demand, or if no demand is made, In 59
payments of $866.63 each payment and an irregular last payment estimated at
$866.57. Borrower's first payment is due October 30, 1996, and all subsequent
payments are due on the same day of each month after that. Borrower's final
payment due on September 30, 2001, may be greater If Borrower does not make
payments as scheduled. interest on this note is computed on a 365/365 simple
interest basis; that is, by applying the ratio of the annual interest rate over
the number of days in a year, multiplied by the outstanding principal balance.
multiplied by the actual number of days the principal balance is outstanding.
Borrower will pay Lender at Lender's address shown above or at such other place
as Lender may designate in writing. Unless otherwise agreed or required by
applicable law. payments will be applied first to any unpaid collection costs
and any late charges. than to any unpaid interest. and any remaining amount to
principal.
PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower may prepay this Note in full at
any time by paying the than unpaid principal balance of this Note, plus accrued
simple Interest and any unpaid late charges through date of prepayment. If
Borrower prepays this Note In full. or if Lender accelerates payment, Borrower
understands that, unless otherwise required by law, any prepaid fees or charges
will not be subject to rebate and will be earned by Lender at the time this Note
is signed. Borrower agrees to pay minimum Interest of $15.00 If this amount has
not been earned by Lender at the time of prepayment. Unless otherwise agreed to
in writing, early payments under this Note will not relieve Borrower of
Borrower's obligation to continue to make regularly scheduled payments under the
above payment schedule. Early payments will instead reduce the principal balance
due, and Borrower may be required to make fewer payments under this Note.
LATE CHARGE. If Borrower falls to pay any payment under this Note in full within
10 days of when due, Borrower agrees to pay Lender a late payment fee in an
amount equal to 5.000% of the unpaid amount of the payment, or U.S. $15.00,
whichever is greater. Late charges will not be assessed following declaration of
default and acceleration of maturity of this Note.
DEFAULT. The following actions and/or inactions shall constitute default events
under this Note:
Default Under This Note. Should Borrower default in the payment of
principal and/or Interest under this Note.
Default Under Security Agreements. Should Borrower or any guarantor
violate, or fail to comply fully with any of the terms and conditions of,
or default under any security right, Instrument, document, or agreement
directly or indirectly securing repayment of this Note.
Other Defaults In Favor of Lender. Should Borrower or any guarantor of this
Note default under any other loan, extension of credit, security right.
Instrument, document. or agreement, or obligation in favor of Lender.
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<PAGE>
Default In Favor of Third Parties. Should Borrower or any guarantor default
under any loan. extension of credit, security agreement, purchase or sales
agreement, or any other agreement, In favor of any other creditor or person
that may affect any property. or other collateral directly or indirectly
securing repayment of this Note.
Insolvency. Should the suspension, failure or Insolvency, however
evidenced, of Borrower or any guarantor of this Note occur or exist.
Death or Interdiction. Should any guarantor of this Note die or be
Interdicted.
Readjustment of Indebtedness. Should proceedings for readjustment of
Indebtedness, reorganization, bankruptcy, composition or extension under
any Insolvency law be brought by or against Borrower or any guarantor.
Assignment for Benefit of Creditors. Should Borrower or any guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
Receivership. Should a receiver of all or any part of Borrower's property,
or the property of any guarantor, be applied for or appointed.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Borrower or any guarantor be commenced.
False Statements. Should any representation, warranty, or material
statement of Borrower or any guarantor made in connection with the
obtaining of the loan evidenced by this Note or any security agreement
directly or indirectly securing repayment of this Note, prove to be
incorrect or misleading in any respect.
Material Adverse Change. Should any material adverse change occur in the
financial condition of Borrower or any guarantor of this Note or should any
material discrepancy exist between the financial statements submitted by
Borrower or any guarantor and the actual financial condition at Borrower or
such guarantor.
Insecurity. Should Lender deem itself to be insecure with regard to
repayment of this Note.
LENDER'S RIGHTS UPON DEFAULT. Should any one or more default events occur or
exist under this Note as provided above, Lender shall have the right, at its
sole option, to declare formally this Note to be in default and to accelerate
the maturity and insist upon Immediate payment In full of the unpaid principal
balance then outstanding under this Note, plus accrued Interest, together with
reasonable attorneys' fees, costs, expenses and other fees and charges as
provided herein. Lender shall have the further right, again at Its sole option,
to declare formal default and to accelerate the maturity and to insist upon
Immediate payment In full of each and every other loan. extension of credit,
debt, liability and/or obligation of every nature and kind that Borrower may
then owe to Lender, whether direct or Indirect or by way of assignment, and
whether absolute or contingent, liquidated or unliquidated, voluntary or
Involuntary, determined or undetermined, secured or unsecured, whether Borrower
is obligated alone or with others on a "solidary" or "Joint and several" basis,
as a principle obligor or otherwise, all without further notice or demand,
unless Lender shall otherwise elect.
ATTORNEYS' FEES. If Lender refers this Note to an attorney for collection, or
files suit against Borrower to collect this Note, or If Borrower files for
bankruptcy or other relief from creditors, Borrower agrees to pay Lender's
reasonable attorneys' fees.
DEPOSIT ACCOUNTS. As collateral security for repayment of this Note and all
renewals and extensions, as well as to secure any and all other loans, notes,
Indebtedness and obligations that Borrower (or any of them) may now and in the
future owe to Lender or Incur in Lender's favor, whether direct or indirect,
absolute or contingent, due or to become due, of any nature and kind whatsoever
(with the exception of any indebtedness under a consumer credit card account),
Borrower is granting Lender a continuing security interest in any and all funds
that Borrower may now and In the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that Lender may of any lime apply any funds
that Borrower may have on deposit with Lender or in certificates of deposit or
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other deposit accounts as to which Borrower is an account holder against the
unpaid balance of this Note and any and all other present and future
Indebtedness and obligations that Borrower (or any of them) may than owe to
Lender, In principal, Interest, fees, costs, expenses, and attorneys' fees.
COLLATERAL. This Note Is secured by: Tilled Collateral. Collateral securing
other loans with Lender may also secure this Note as the result of
cross-collateralization
FINANCIAL STATEMENTS. Borrower agrees to provide Lender with such financial
statements and other related Information at such frequencies and In such detail
as Lender may reasonably request.
GOVERNING LAW. Borrower agrees that this Note and the loan evidenced hereby
shall be governed under the laws of the Slate of Louisiana. Specifically, this
business or commercial Note is subject to La. R.S. 9:3509 et seq.
CONFESSION OF JUDGMENT AND WAIVERS. For the purposes of executory process,
Borrower hereby acknowledges the debt created hereby and confesses judgment in
favor of Lender for the full amount of the debt evidenced by this Note. To the
extent permitted by law, Borrower hereby expressly waives (a) the benefit of
appraisement provided in the Louisiana Code of Civil Procedure and (b) the
demand and three (3) days delay accorded by Articles 2639 and 2721, Louisana
Code of Civil Procedure.
ADDITIONAL DEFAULTS AND ACCELERATION. In addition to the events of default set
forth above, Lender shall have the right, at its sole option, to insist upon
immediate payment (to accelerate the maturity) of this Note should any judgment,
garnishment. seizure, tax lien or levy occur against any of Borrower's assets.
NO NOVATION IF EARLIER NOTE CANCELLED. If an earlier note of any Borrower is
cancelled at the time of execution hereof, then this Note constitutes an
extension, but not a novation of the amount of the continuing indebtedness, and
Borrower agrees that all security rights held by Lender under the earlier note
shall continue in full force and effect.
OTHER COSTS AND FEES. Borrower further agrees to pay any and all charges, fees,
costs and/or taxes levied or assessed against Lender in connection with this
Note and/or any collateral, asset or other property which is pledged, mortgaged,
hypothecated or assigned to Lender or in which Lender possesses a security
interest, as security for this Note.
WAIVERS. Borrower and each guarantor of this Note hereby waive demand,
presentment for payment. protest, notice of protest and notice of nonpayment,
find all pleas of division and discussion, and severally agree that their
obligations and liabilities to Lender hereunder shall be on a "solidary" or
"joint and several" basis. Borrower and each guarantor further severally agree
that discharge or release of any party who is or may be liable to Lender for the
Indebtedness represented hereby, or the release of any collateral directly or
Indirectly securing repayment hereof, shall not have the effect of releasing any
other party or parties. who shall remain liable to Lender, or of releasing any
other collateral that is not expressly released by Lender. Borrower and each
guarantor additionally agree that Lender's acceptance of payment other than in
accordance with the terms of this Note, or Lender's subsequent agreement to
extend or modify such repayment terms. or Lender's failure or delay in
exercising any rights or remedies granted to Lender. shall likewise not have the
effect of releasing Borrower or any other party or parties from their respective
obligations to Lender, or of releasing any collateral that directly or
indirectly secures repayment hereof. In addition, any failure or delay on the
part of Lender to exercise any of the rights and remedies granted to Lendor
shall not have the effect of waiving any of Lender's rights and remedies. Any
partial exercise of any rights and/or remedies granted to Lender shall
furthermore not be construed as a waiver of any other rights and remedies; it
being Borrower's intent and agreement that Lender's rights and remedies shall be
cumulative in nature. Borrower and each guarantor further agree that, should any
default event occur or exist under this Note any waiver or forbearance on the
part of. Lender to pursue the rights and remedies available to Lender, shall be
binding upon Lender only to the extent that Lender specifically agrees to any
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such waiver or forbearance in writing. A waiver or forbearance on the part of
Lender as to one default event shall not be construed as a waiver or forbearance
as to any other default. Borrower and each guarantor of this Note further agree
that any late charges provided for under this Note will not be charges for
deferral of time for payment and will not and are not Intended to compensate
Lender for a grace or cure period, and no such deferral, grace or cure period
has or will be granted to Borrower in return for the imposition of any late
charge. Borrower recognizes that Borrower's failure to make timely payment of
amounts due under this Note will result in damages to Lender, including but not
limited to Lender's loss of the use of amounts due, and Borrower agrees that any
late charges Imposed by Lender hereunder will represent reasonable compensation
to Lender for such damages. Failure to pay in full any installment or payment
timely when due under this Note, whether or not a late charge is assessed, will
remain and shall constitute an Event of Default hereunder.
SUCCESSORS AND ASSIGNS LIABLE. Borrower's and each guarantor's obligations and
agreements under this Note shall be binding upon Borrower's and each guarantor's
respective successors, heirs, legatees, devisees, administrators, executors and
assigns. The rights and remedies granted to Lender under this Note shall inure
to the benefit of Lender's successors and assigns, as well as to any subsequent
holder or holders of this Note.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST
THE OTHER.
BORROWER:
AMERICAN FIRE RETARDANT CORPORATION
/s/ Edward E. Friloux
- -------------------------------------
By: EDWARD E. FRILOUX, SR., SECRETARY
Exhibit 10.11(b)
----------------
COMMERCIAL SECURITY AGREEMENT
Borrower: AMERICAN FIRE RETARDANT CORPORATION Lender: WHITNEY NATIONAL BANK
(TIN: 72-1261941) TIN: 72-0352101
110 BRUSH ROAD P.O. Box 3708
BROUSSARD, LA 70518 LAFAYETTE, LA 70502
THIS COMMERCIAL SECURITY AGREEMENT is entered into between AMERICAN FIRE
RETARDANT CORPORATION (referred to below as "Grantor"); and WHITNEY NATIONAL
BANK (referred to below as "Lender"). For valuable consideration, Grantor hereby
pledges to Lender and grants to Lender a continuing security interest in the
Collateral to secure Grantor's present and future indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law or
otherwise.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms In the Louisiana Commercial Laws (La. R.S. 10:
9-101, et seq.). All references to dollar amounts shall mean amounts in lawful
money of the United States America.
Agreement. The word "Agreement" moans this Commercial Security Agreement,
as this Commercial Security Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached or to be
attached to this Commercial Security Agreement from time to time.
Collateral. The word "Collateral" means Individually, collectively and
Interchangeably any and all of Grantor's present and future rights, title
and interest in and to the following described property, together with any
and all present and future additions thereto, substitutions therefor, and
replacements thereof:
1996 FORD F150 TRUCK, VIN # 17TEX15N1TKA35523
1996 FORD F150 TRUCK, VIN # 17TEX15N5TKA43477
The word "Collateral" also includes any and all present or future parts,
accessories, attachments, additions, accessions, substitutions and
replacements to and for the collateral. The word "Collateral" further
includes any and all of Grantor's present and future rights to any proceeds
derived or to be derived from the sale, lease, damage, destruction,
insurance loss, expropriation and other disposition of the collateral,
including without limitation, any and all of Grantor's rights to enforce
collection and payment of such proceeds.
Encumbrances. The word "Encumbrances" means individually, collectively and
Interchangeably any and all presently existing and/or future mortgages,
liens, privileges and other contractual and/or statutory security Interests
and rights of every nature and kind that, now and/or in the future, may
affect the Collateral or any part or parts thereof. Event of Default. The
words "Event of Default' mean Individually, collectively, and
Interchangeably any of the Events of Default set forth below In the section
titled "Events of Default."
Grantor. The word "Grantor" means Individually, collectively and
Interchangeably AMERICAN FIRE RETARDANT CORPORATION, its successors and
assigns.
Guarantor. The word "Guarantor" means and includes individually,
collectively, interchangeably and without limitation each and all of the
guarantors, sureties, and accommodation parties In connection with the
Indebtedness.
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Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note, in principal, interest, costs, expenses and attorneys' fees and
all other fees and charges, together with all other Indebtedness and costs
and expenses for which Grantor is responsible under this Agreement or under
any of the Related Documents. In addition, the word "Indebtedness" also
Includes any and all other loans, extensions of credit, obligations, debts
and liabilities, plus Interest thereon, of Grantor, or any one or more of
them, that may now and In the future be owed to or incurred in favor of
Lender, as well as all claims by Lender against Grantor, or any one or more
of them, whether existing now or later; whether they are voluntary or
Involuntary, whether related or unrelated, whether committed or purely
discretionary, due or to become due, direct or indirect or by way of
assignment, determined or undetermined, absolute or contingent, liquidated
or unliquidated; whether Grantor may be liable individually or jointly with
others. of every nature and kind whatsoever, In principal, Interest, costs,
expenses and attorneys' fees and all other fees and charges-, whether
Grantor may be obligated as guarantor, surety, accommodation party or
otherwise; whether recovery upon such Indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such indebtedness
may be or hereafter may become void or otherwise unenforceable.
Lender. The word "Lender' means WHITNEY NATIONAL BANK TIN: 72-0352101, Its
successors and assigns, and any subsequent holder or holders of the Note,
or any interest therein.
Note. The word "Note" means the note or credit agreement dated September
18, 1996, in the principal amount of $42,888.46 from AMERICAN FIRE
RETARDANT CORPORATION to Lender, together with all substitute or
replacement notes therefor, as well as all renewals, extensions,
modifications, refinancings, consolidations and substitutions of and for
the note or credit agreement.
Related Documents. The words "Related Documents" mean and include
individually, collectively, interchangeably and without limitation all
promissory notes, credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, mortgages, collateral
mortgages, deeds of trust, and all other instruments, agreements and
documents. whether now or hereafter existing, executed in connection with
the Indebtedness.
CONTINUING SECURITY INTEREST TO SECURE PRESENT AND FUTURE INDEBTEDNESS. Grantor
affirms that Grantor has granted a continuing security interest in the
Collateral in favor of Lender to secure any and all present and future
indebtedness of Grantor in favor of Lender. as may be outstanding from time to
time set forth above, in principal, interest, costs, expenses, attorneys' fees
and other fees and charges, with the continuing preferences and priorities
provided under applicable Louisiana law. Grantor agrees that all such additional
loans and indebtedness will be secured under this Agreement without the
necessity that Grantor (or any of them) agree or consent to such a result at the
time such additional loans are made and indebtedness incurred, without the
further necessity that the note or notes evidencing such additional loans or
indebtedness refer to the fact that such notes are secured by this Agreement.
Grantor further agrees Grantor may not subsequently have a change of mind and
Insist that any such additional loans or indebtedness not be secured by this
Agreement unless Lender specifically agrees to such a request in writing.
DURATION OF THIS AGREEMENT. This Agreement shall remain In full force and effect
until such time as this Agreement and the security interests created hereby are
terminated and cancelled by Lender under a written cancellation Instrument In
favor of Grantor.
OBLIGATIONS OF GRANTOR. Grantor represents, warrants and covenants to Lender as
follows:
Organization. Grantor is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Louisiana.
Authorization. Grantor's execution, delivery and performance of this
Agreement have been duly authorized, and do not conflict with, and will not
result in a violation of, or constitute or give rise to an event of default
under Grantor's Articles of Incorporation or Bylaws, or any agreement or
other Instrument which may be binding upon Grantor, or under any law or
governmental regulation or court decree or order applicable to Grantor
and/or its properties.
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Perfection of Security Interest. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security Interest In the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lender's Interest upon any and all chattel paper If not delivered to Lender
for possession by Lender. Grantor hereby appoints Lender as its Irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement.
Lender may at any time, and without further authorization from Grantor,
file a carbon, photographic, facsimile, or other reproduction of any
financing statement. Grantor will reimburse Lender for all expenses for the
perfection, termination, and the continuation of the perfection of Lender's
security Interest in the Collateral. Grantor promptly will notify Lender
before any change In Grantor's name Including any change to the assumed
business names of Grantor. Grantor also promptly will notify Lender of any
change In Grantor's Employer Identification Number. Grantor further agrees
to notify Lender In writing prior to any change in address or location of
Grantor's principal governance office. Grantor represents and warrants to
Lender that Grantor has provided Lender with Grantor's correct Employer
Identification Number and that Grantor has no other Employer Identification
Numbers. Grantor Promptly shall notify Lender should Grantor apply for or
obtain a new Employer Identification Number or should Grantor merge or
consolidate with any other entity.
No Violation. The execution and delivery of this agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
Enforceability or Collateral. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is
enforceable in accordance with its terms, is genuine, and fully compiles
with applicable state and federal laws and regulations concerning form,
content and manner of preparation and execution, and all persons appearing
to be obligated on the Collateral have authority and capacity to contract
and are in fact obligated as they appear to be on the Collateral, free of
any offset, compensation, deduction or counterclaim.
Removal of Collateral. Grantor shall keep the Collateral (or to the extent
the Collateral consists of intangible property such as accounts, the
records concerning the Collateral) at Grantor's address shown above, or at
such other locations as are acceptable to Lender. Except in the ordinary
course of its business, including the sales of inventory, Grantor shall not
remove the Collateral from its existing locations without the prior written
consent of Lender. To the extent that the Collateral consists of vehicles,
or other titled property, Grantor shall not take or permit any action which
would require application for certificates of title for the vehicles
outside the State of Louisiana without the prior written consent of Lender.
Transactions Involving Collateral. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
Grantor shall not pledge, mortgage, encumber or otherwise permit the
Collateral to be subject to any Encumbrance or charge, other than the
security interest provided for in this Agreement, without the prior written
consent of Lender. This includes security interests even if junior in right
to the security interests granted under this Agreement. Unless waived by
Lender, all proceeds from any disposition of the Collateral (for whatever
reason) shall be hold in trust for Lender and shall not be commingled with
any other funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt, Grantor
shall immediately deliver any such proceeds to Lender.
Title, Authority, Binding Effect. Grantor represents and warrants to Lender
that it holds good and marketable title to the Collateral, free and clear
of all Encumbrances except for Lender's security interest. No financing
statement covering any of the Collateral is on file in any public office
other than those which reflect the security interest created by this
Agreement or to which Lender has specifically consented. Grantor further
represents and warrants that it has requisite authority to enter into this
Agreement in favor of Lender and to grant to Lender the security interest
in the Collateral as provided herein. Grantor additionally represents and
warrants that this Agreement is binding upon Grantor as well as Grantor's
heirs, successors, transferees and assigns, and is legally enforceable in
accordance with its terms. The foregoing representations and warranties and
all other representations and warranties of Grantor under this Agreement
shall be continuing and shall survive the termination of this Agreement.
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Repairs and Maintenance. Grantor shall keep and maintain and shall cause
others to keep and maintain the Collateral in good order, repair and
merchantable condition. Grantor shall further make and/or cause all
necessary repairs to be made to the Collateral, including the repair and
restoration of any portion of the Collateral that may be damaged, lost or
destroyed. In addition, Grantor shall not, without the prior written
consent of Lender, make or permit to be made any alterations to any of the
Collateral that may reduce or impair the Collateral's use, value or
marketability. Furthermore, Grantor shall not, nor shall Grantor permit
others to abandon, commit waste, or destroy the Collateral or any part of
parts thereof.
Taxes. Grantor shall promptly pay or cause to be paid when due, all taxes,
local and special assessments, and governmental and other charges of every
type and description, that may from time to time be imposed, assessed and
levied against the Collateral or against Grantor. Grantor further agrees to
furnish Lender with evidence that such taxes, assessments, and governmental
and other charges have been paid in full and in a timely manner. Grantor
may withhold any such payment or elect to contest any lien if Grantor is in
good faith conducting an appropriate proceeding to contest the obligation
to pay and so long as Lender's interest in the Collateral is not
jeopardized.
Compliance With Governmental Requirements. Grantor shall comply promptly
with, and shall cause others to comply with, all laws, ordinances, rules
and regulations of all governmental authorities, now or hereafter in effect
applicable to the ownership, production, disposition, or use of the
Collateral. Grantor may contest in good faith any such law, ordnance or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender's interest in the Collateral. In
Lender's opinion, is not jeopardized. Grantor shall not use the Collateral,
and shall not permit others to use the Collateral, for any purpose other
than those previously agreed to by Lender in writing; but in no event shall
any of the Collateral be used in any manner that would damage, depreciate
or diminish its value or that may result in cancellation or termination of
insurance coverage. Grantor additionally agrees not to do or suffer to be
done anything that may increase the risk of fire or other hazards to the
Collateral.
Hazardous Substances. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien
on the Collateral, used for the generation, manufacture, storage,
transportation, treatment disposal, release or threatened release of any
hazardous waste or substance, as those term are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, at seq. ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 Pub. L. No. 99-499 ("SARA"), the
Hazardous Materials Transportation Act 49 U.S.C. Section 1801, at seq, the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
other applicable state or Federal laws, rules, or regulations adopted
pursuant to any of the foregoing. The terms "hazardous waste" and
"hazardous substance" shall also include, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos. The
representations and warranties contained herein are based on Grantor's due
diligence in investigating the Collateral for hazardous wastes and
substances. Grantor hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Grantor becomes
liable for cleanup or other costs under any such laws, and (b) agrees to
indemnity and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement. This
obligation to indemnity shall survive the payment of the indebtedness and
the satisfaction of this Agreement.
Required Insurance. So long as this Agreement remains in effect Grantor
shall, at its sole cost keep and/or cause others, at their expense, to keep
the Collateral constantly insured against loss by fire, by hazards included
within the term "extended coverage," and by such other hazards (including
flood insurance where applicable) as may be required by Lender. Such
insurance shall be in an amount not less than the full replacement value of
the Collateral, or such other amount or amounts as Lender may require or
approve in writing. Grantor shall further provide and maintain, at its sole
cost and expense, comprehensive public liability insurance, naming both
Grantor and Lender as parties insured, protecting against claims for bodily
injury, death and/or property damage arising out of the use, ownership,
possession, operation and condition of the Collateral, and further
containing a broad form contractual liability endorsement covering
Grantor's obligations to indemnity Lender as provided hereunder.
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Grantor may purchase such insurance from any insurance company or broker
that is acceptable to Lender, provided that such approval may not be
unreasonably withheld. All such insurance policies, including renewals and
replacements, must also be in form and substance acceptable to Lender, and
must additionally contain a loss payable or other endorsement in favor of
Lender providing in part that (a) all proceeds and returned premiums under
such policies of insurance will be paid directly to Lender, and (b) no act
or omission on the part of Grantor, or any of its officers, agents,
employees or representatives, nor breach of any warranty contained in such
policies, shall affect the obligations of the insurer to pay the full
amount of any loss to Lender. Such policies of insurance may also contain a
provision prohibiting cancellation or the alteration of such insurance
without at least thirty (30) days' prior written notice to Lender of such
intended cancellation or alteration.
Grantor agrees to provide Lender with originals or certified copies of such
policies of insurance. Grantor further agrees to promptly furnish Lender
with copies of all renewal notices and, if requested by Lender, with copies
of receipts for paid premiums. Grantor shall provide Lender with originals
or certified copies of all renewal or replacement policies of insurance no
later than fifteen (15) days before any such existing policy or policies
should expire. It Grantor's insurance polices and renewals we hold by
another person, Grantor agrees to supply original or certified copies of
the same to Lender within the time periods required above.
Grantor agrees to notify immediately Lender in writing of any material
casualty to or accident involving the Collateral, whether or not such
casualty or loss is covered by insurance. Grantor further agrees to
promptly notify Grantor's insurance company and to submit an appropriate
claim and proof of claim to the insurance company in the event that any
Collateral is lost, damaged, or destroyed as a result of an insured hazard.
Lender may submit such a claim and proof of claim to this insurance company
on Grantor's behalf, should Grantor fail to do so promptly for any reason.
Grantor hereby irrevocably appoints Lender as its agent and
attorney-in-fact such agency being coupled with an interest to make, settle
and adjust claims under such policy or policies of insurance and to endorse
the name of Grantor on any check or other item of payment for the proceeds
thereof, it being understood, however, that unless one or more Events of
Default exist under this Agreement, Lender will not settle or adjust any
such claim without the prior approval of Grantor (which approval shall not
be unreasonably withheld).
Insurance Proceeds. Lender shall have the right to directly receive the
proceeds of all insurance protecting the Collateral. In the event that
Grantor should receive any such insurance proceeds, Grantor agrees to
immediately turn over and to pay such proceeds directly to Lender. All
insurance proceeds may be applied, at Lender's sole option and discretion,
and in such a manner as Lender may determine (after payment of all
reasonable costs, expenses and attorneys' fees necessarily paid or fees
necessarily paid or incurred by Lender in this connection), for the purpose
of: (a) repairing or restoring the lost, damaged or destroyed Collateral;
or (b) reducing the then outstanding balance of Grantor's Indebtedness.
Lender's receipt of such insurance proceeds and the application of such
proceeds as provided herein shall not, however, affect the lien of this
Agreement. Nothing under this section shall be deemed to excuse Grantor
from its obligations promptly to repair, replace or restore any lost or
damaged Collateral, whether or not the same may be covered by insurance,
and whether or not such proceeds of insurance are available, and whether
such proceeds are sufficient in amount to complete such repair, replacement
or restoration to the satisfaction of Lender. Furthermore, unless otherwise
confirmed by Lender in writing, the application or release of any insurance
proceeds by Lender shall not be doomed to cure or waive any Event of
Default under this Agreement. Any proceeds which have not been disbursed
within six (6) months after their receipt and which Grantor has not
committed to the repair or restoration of the Collateral shall be used to
prepay the indebtedness.
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Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as
Lender may reasonably request Including the following: (a) the name of the
Insurer; (b) the risks Insured; (c) the amount of the policy; (d) the
property Insured; (e) the then current value on the basis of which
insurance has been obtained and the manner of determining that value; and
(f) the expiration date of the policy. In addition, Grantor shall upon
request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.
Prior Encumbrances. To the extent applicable, Grantor shall fully and
timely perform any and all of its obligations under any prior Encumbrances
affecting the Collateral. Without limiting the foregoing, Grantor shall not
commit or permit to exist any breach of or default under any such prior
Encumbrances. Grantor shall further promptly notify Lender in writing upon
the occurrence of any event or circumstances that would, or that might,
result In a breach of or default under any such prior Encumbrance. Grantor
shall further not modify or extend any of the terms of any prior
Encumbrance or any indebtedness secured thereby, or request or obtain any
additional loans or other extensions of credit from any third party
creditor or creditors whenever such additional loan advances or other
extensions of credit may be directly or Indirectly secured, whether by
cross-collateralization or otherwise, by the Collateral, or any part or
parts thereof, with possible preference and priority over Lender's security
Interest. Grantor additionally agrees to obtain, upon request by Lender,
and in form and substance as may then be satisfactory to Lender,
appropriate waivers and/or subordinations of any lessors liens or
privileges, vendor's liens or privileges, purchase money security
interests, and any other encumbrances that may affect the Collateral at any
time.
Future Encumbrances. Grantor shall not, without the prior written consent
of Lender, grant any Encumbrance that may affect the collateral, or any
part or parts thereof, nor shall Grantor permit or consent to any
Encumbrance attaching to or being filed against any of the Collateral in
favor of anyone other then Lender. Grantor shall further promptly pay when
due all statements and charges of mechanics, materialmen, laborers and
others incurred in connection with the alteration, improvement, repair and
maintenance of the Collateral, or otherwise furnish appropriate security or
bond, so that no future Encumbrance may ever attach to or be filed against
any Collateral. Grantor additionally agrees to obtain. upon request by
Lender, and in form and substance as may then be satisfactory to Lender.
appropriate waivers and/or subordinations of any lessor's liens or
privileges, vendor's liens or privileges, purchase money security
Interests, and any other Encumbrances that may affect the Collateral at any
time. Notice of Encumbrances. Grantor shall Immediately notify Lender in
writing upon the Filing of any attachment, lien, judicial process, claim,
or other Encumbrance. Grantor additionally agrees to notify Lender
Immediately in writing upon the occurrence of any default, or event that
with the passage of time, failure to cure, or giving of notice, might
result in a default under any of Grantor's obligations that may be secured
by any presently existing or future Encumbrance, or that might result In an
Encumbrance affecting the Collateral, or should any of the Collateral be
seized or attached or levied upon. or threatened by seizure or Attachment
or levy, by any person other than Lender.
Books and Records. Grantor will keep proper books and records with regard
to Grantor's business activities and the Collateral in which a security
Interest is granted hereunder, In accordance with generally accepted
accounting principles, applied on a consistent basis throughout, which
books and records shall at all reasonable times be open to inspection and
copying by Lender or its designated agents. Lender shall also have the
right to Inspect Grantor's books and records, and to discuss Grantor's
affairs and finances with Grantor's officers and representatives, at such
reasonable times as Lender may designate.
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GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession and
beneficial use of all the Collateral and may use it in any lawful manner not
inconsistent with this Agreement or the Related Documents, provided that
Grantor's right to possession and beneficial use shall not apply to any
Collateral where possession of the Collateral by Lender is required by law to
perfect Lender's security interest in such Collateral. If Lender at any time has
possession of any Collateral, whether before or after an event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender takes such action for that purpose as
Grantor shall request or as Lender, in Lender's sole discretion, shall deem
appropriate under the circumstances, but failure to honor any request by Grantor
shall not of itself be deemed to be a failure to exercise reasonable care.
Lender shall not be required to take any steps necessary to preserve any rights
in the Collateral against prior parties, nor to protect, preserve or maintain
any security interest given to secure the indebtedness.
EXPENDITURES BY LENDER. Grantor recognizes and agrees that Lender may incur
certain expenses in connection with Lender's exercise of rights under this
Agreement. If not discharged or paid when due, Lender may (but shall not be
obligated to) discharge or pay any amounts required to be discharged or paid by
Grantor under this Agreement, including without limitation all taxes,
Encumbrances and other claims. at any time levied or placed on the Collateral.
Lender also may (but shall not be obligated to) pay all costs for insuring,
maintaining and preserving the Collateral, including without limitation. the
purchase of insurance protecting only Lender's Interest in the Collateral.
Lender may further take such other action or actions and incur such additional
expenditures as Lender may deem to be necessary and proper to cure or rectify
any actions or inactions on Grantor's part as may be required under this
Agreement. Nothing under this Agreement or otherwise shall obligate Lender to
take any such actions or to incur any such additional expenditures on Grantor's
behalf, or as making Lender in any way responsible or liable for any loss,
damage, or Injury to the Collateral, to Grantor, or to any other person or
persons, resulting from Lender's election not to take such actions or to Incur
such additional expenses. In addition, Lender's election to take any Such
actions or to incur such additional expenditures shall not constitute a waiver
or forbearance by Lender of any Event of Default under this Agreement. All such
expenditures Incurred or paid by Lender for such purposes will then bear
Interest at the rate charged under the Note from the data incurred or paid by
Lender to the date of repayment. All such expenses shall become a part of the
Indebtedness and, at Lender's option, will (a) be payable on demand, (b) be
added to the balance of the Note and be apportioned among and be payable with
any payments to become due during either (i) the term of any applicable
Insurance policy or (ii) the remaining term of the Note, or (c) be treated as a
balloon payment which will be due and payable at the Note's maturity. This
Agreement also will secure payment of these amounts. such right shall be in
addition to all other rights and remedies to which Lender may be entitled upon
the occurrence of an Event of Default.
EVENTS OF DEFAULT. The following actions or inactions or both shall constitute
events of Default under this Agreement:
Default under the Indebtedness. Should Grantor default in the payment of
principal or interest under any of the indebtedness.
Default under this Agreement. Should Grantor violate, or fall to comply
fully with any of the terms and conditions of, or default under this
Agreement.
Default Under Other Agreements. Should any event of default occur or exist
under any related document which directly or indirectly secures repayment
of any of the indebtedness.
Other Defaults In Favor of Lender. Should Grantor or any Guarantor default
under any other loan, extension of credit, security agreement, or
obligation in favor of Lender.
Default In Favor of Third Parties. Should Grantor or any Guarantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement. In favor of Any other creditor or person
that may materially affect any of Grantor's property, or Grantor's or any
Guarantor's ability to perform their respective obligations under this
Agreement, or any Related Document, or pertaining to the Indebtedness.
Insolvency. Should the suspension, failure or Insolvency, however
evidenced. of Grantor or any Guarantor occur or exist.
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Readjustment of Indebtedness. Should proceedings for readjustment of
Indebtedness, reorganization, composition or extension under any Insolvency
law be brought by or against Grantor or any Guarantor.
Assignment for Benefit of Creditors. Should Grantor or any Guarantor file
proceedings for a respite or make a general assignment for the benefit of
creditors.
Receivership. Should a receiver of all or any part of Grantor's property,
or the property of any Guarantor, be applied for or appointed.
Dissolution Proceedings. Should proceedings for the dissolution or
appointment of a liquidator of Grantor or any Guarantor be commenced. False
Statements. Should any representation or warranty of Grantor or any
Guarantor made in connection with the indebtedness prove to be incorrect or
misleading in any respect.
Defective Collateralization. Should this Agreement or any of the Related
Documents cease to be in full force and effect (including failure of any
Collateral documents to create a valid and perfected security Interest or
lien) at any time and for any reason.
Insecurity. Should Lender deem itself to be insecure with regard to
repayment of the indebtedness.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under applicable law, and more specifically under the Louisiana Commercial
Laws (La. R.S. 10: 9-101 et seq.). In addition and without limitation, Lender
may exercise any one or more of the following rights and remedies:
Accelerate Indebtedness. Lender may declare the entire indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice or further demand for payment.
Seizure and Sale of Collateral in Louisiana. In the event that Lender
elects to commence appropriate Louisiana foreclosure proceedings under this
Agreement, Lender may cause the Collateral, or any part thereof, to be
immediately seized wherever found, and sold, whether in terms of Court or
in vacation, under ordinary or executory process, in accordance with
applicable Louisiana law, to the highest bidder for cash with or without
appraisement, and without the necessity of making additional demand upon or
notifying Grantor or placing Grantor in default, all of which are expressly
waived.
Confession of Judgment. For purposes of foreclosure under Louisiana
executory process procedures, Grantor confesses judgment and acknowledges
to be indebted unto and in favor of Lender, up to the full amount of the
indebtedness, in principal, interest costs, expenses, attorneys' fees and
other fees and charges. Grantor further confesses judgment and acknowledges
to be indebted unto and in favor of Lender in the amount of all additional
advances that Lender may make on Grantor's behalf pursuant to this
Agreement, together with interest thereon, up to a maximum of two (2) times
the face amount of the aforesaid Note. To the extent permitted under
applicable Louisiana law, Grantor additionally waives: (a) the benefit of
appraisal as provided In Articles 2332, 2336, 2723 and 2724 of the
Louisiana Code of Civil Procedure, and all other laws with regard to
appraisal upon judicial sale; (b) the demand and three (3) days' delay as
provided under Articles 2639 and 2721 of the Louisiana Code of Civil
Procedure; (c) the notice of seizure as provided under Articles 2293 and
2721 of the Louisiana Code of Civil Procedure. (d) the three (3) days'
delay provided under Articles 2331 and 2722 of the Louisiana Code of Civil
Procedure; and (e) all other benefits provided under Articles 2331, 2722
and 2723 of the Louisiana Code of Civil Procedure and all other Articles
not specifically mentioned above.
Keeper. Should any or all of the Collateral be seized as an incident to an
action for the recognition or enforcement of this Agreement, by executory
process, sequestration, attachment, writ of fieri facias or otherwise,
Grantor hereby agrees that the court issuing any such order shall, if
requested by Lender, appoint Lender, or any agent designated by Lender, or
any person or entity named by Lender at the time such seizure is requested,
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or any time thereafter, as Keeper of the Collateral as provided under La.
R.S. 9:5136, et seq. Such a Keeper shall be entitled to reasonable
compensation. Grantor agrees to pay the reasonable fees of such Keeper,
which are hereby fixed at $50.00 per hour, which compensation to the Keeper
shall also be secured by this Agreement in the form of an additional
advance as provided herein.
Declaration of Fact. Should It become necessary for Lender to foreclose
under this Agreement, all declarations of fact, which are made under an
authentic act before a Notary Public in the presence of two witnesses, by a
person declaring such facts to lie within his or her knowledge, shall
constitute authentic evidence for purposes of executory process and also
for purposes of La. R.S. 9:3509.1, La. R.S. 9:3504(D)(6) and La. R.S.
10:9-508, as applicable.
Deliver Collateral. This provision applies, to the extent applicable, if
and when the Collateral for any reason is located outside the State of
Louisiana following the occurrence of any Event of Default, or should there
be a subsequent change in Louisiana law permitting such remedies. Lender
may require Grantor to deliver to Lender all or any portion of the
Collateral and any and all certificates of title and other documents
relating to the Collateral. Lender may require Grantor to assemble the
Collateral and make it available to Lender at a place to be designated by
Lender. Lender also shall have full power to enter upon the property of
Grantor to take possession of and remove the Collateral. If the Collateral
contains other goods not covered by this Agreement at the time of
repossession, Grantor agrees Lender may take such other goods, provided
that Lender maim reasonable efforts to return them to Grantor after
repossession.
Public or Private Safe of Collateral. To the extent that any of the
Collateral is then In Lender's possession, Lender shall have full power to
sell, lease, transfer, or otherwise deal with the Collateral or proceeds
thereof in its own name or that of Grantor. Lender may sell the Collateral
at public auction or private sale. Unless the Collateral threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Lender will give Grantor reasonable notice of the time after which
any private sale or any other intended disposition of the Collateral is to
be made. The requirements of reasonable notice shall be met if such is
given at least ten (10) days before the time of the sale or disposition.
All expenses relating to the disposition of the Collateral, including
without limitation the expenses of retaking, holding, insuring, preparing
for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Note rate from date of expenditure until repaid. Grantor
agrees that any such sale shall be conclusively doomed to be conducted in a
commercially reasonable manner if it is made consistent with the standard
of similar sales of collateral by commercial banks in LAFAYETTE, Louisiana.
Appoint Receiver. This provision applies if and when the Collateral for any
reason is located outside the State of Louisiana following the occurrence
of any Event of Default, or should Louisiana law change or be interpreted
to permit such a remedy. Lender shall have the following rights and
remedies regarding the appointment of a receiver: (a) Lender may have a
receiver appointed as a matter of right, (b) the receiver may be an
employee of Lender and may serve without bond, and (c) all fees of the
receiver and his or her attorney shall become part of the indebtedness
secured by this Agreement and shall be payable on demand, with interest at
the Note rate from date of expenditure until repaid.
Collect Revenues, Apply Accounts. Lender shall have the right, at its sole
option and election, at any time, whether or not one or more Events of
Default then exist under this Agreement, to directly collect and receive
all proceeds and/or payments arising under or in any way accruing from the
Collateral, as such amounts become due and payable. In order to permit the
foregoing, Grantor unconditionally agrees to deliver to Lender, immediately
following demand, any and all of Grantor's records, ledger sheets, and
other documentation, in the form requested by Lender, with regard to the
Collateral and any and all proceeds and/or payments applicable thereto.
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Lender shall have the further right, whether or not an Event of Default
then exists under this Agreement, where appropriate and within Lender's
sole discretion, to file suit, either In Lender's own name or in the name
of Grantor, to collect any and all proceeds and payments that may then
and/or in the future be due and owing under this Agreement, and if as a
result of such it is necessary for Lender to attempt to collect any such
proceeds and/or payments from the obligors therefor, Lender may compromise,
settle, extend, or renew for any period (whether or not longer than the
original period) any obligation or indebtedness thereunder or evidenced
thereby, or surrender, release, or exchange all or any part of said
obligation or indebtedness, without affecting the liability of Grantor
under this Agreement or under the indebtedness. To that end, Grantor hereby
irrevocably constitutes and appoints Lender as its attorney-in-fact,
coupled with an interest and with full power of substitution, to take any
and all such actions and any and all other actions permitted hereby, either
in the name of Grantor or Lender.
Additional Expenses. In the event that it should become necessary for
Lender to conduct a search for any of the Collateral in connection with any
foreclosure action, or should it be necessary to remove the Collateral, or
any part or parts thereof, from the premises in which or on which the
Collateral is then located, and/or to store and/or refurbish such
Collateral. Grantor agrees to reimburse Lender for the cost of conducting
such a search and/or removing and/or storing and/or refurbishing such
Collateral, which additional expense shall also be secured by the lien of
this Agreement.
Specific Performance. Lender may, in addition to the foregoing remedies, or
in lien thereof, in Lender's sole discretion, commence an appropriate
action against Grantor seeking specific performance of any covenant
contained herein, or in aid of the execution or enforcement of any power
herein granted.
Obtain Deficiency. Lender may obtain a judgment against Grantor for any
deficiency remaining on the indebtedness due to Lender after application of
all amounts received from the exercise of the rights provided in this
Agreement and any Related Document.
Other Rights and Remedies. In addition, Lender shall have and may exercise
any or all other rights and remedies it may have available at law, in
equity, or otherwise.
Cumulative Remedies. All of Lender's rights and remedies, whether evidenced
by this Agreement or the Related Documents or by any other writing, shall
be cumulative and may be exercised singularly at concurrently. Election by
Lender to pursue any remedy shall not exclude pursuit of any other remedy,
and an election to make expenditures or to take action to perform an
obligation of Grantor under this Agreement, after Grantor's failure to
perform, shall not affect Lender's right to declare a default and to
exercise its remedies.
ASSIGNMENT OF INDEBTEDNESS. Grantor hereby recognizes and agrees that Lender may
assign all or any portion of the indebtedness to one or more third party
creditors. Such transfers may include, but are not limited to, sales of
participation interests in the Indebtedness. Grantor specifically agrees and
consents to all such transfers and assignments and further waives any subsequent
notice of such transfers or assignments as may be provided under applicable law.
Grantor additionally agrees that any and all of the Indebtedness in favor of
such a third party assignee, for the limited purposes set forth above, will be
secured by the Collateral.
PROTECTION OF LENDER'S SECURITY RIGHTS. Grantor will be fully responsible for
any losses that Lender may suffer as a result of anyone other than Lender
asserting any rights or interest in or to the Collateral. Grantor agrees to
appear in and to defend all actions or proceedings purporting to affect Lender's
security interests in any of the Collateral subject to this Agreement and any of
the rights and powers granted Lender hereunder. In the event that Grantor fails
to do what is required of it under this Agreement, or if any action or
proceeding is commenced naming Lender as a party or affecting Lender's security
interests or the rights and powers granted under this Agreement, then Lender
may, without releasing Grantor from any of its obligations under this Agreement,
do whatever Lender believes to be necessary and proper within its sole
discretion to protect the security of this Agreement, including without
limitation making additional advances on Grantor's behalf as provided herein.
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INDEMNIFICATION OF LENDER. Grantor agrees to indemnity, to defend and to save
and hold Lender harmless from any and all claims, suits, obligations, damages,
losses, costs, expenses (including without limitation Lender's attorneys' fees),
demands, liabilities. penalties, fines and forfeitures of any nature whatsoever
that may be asserted against or incurred by Lender arising out of or in any
manner occasioned by this Agreement and the exercise of the rights and remedies
granted Lender hereunder. The foregoing indemnity provisions shall survive the
cancellation of this Agreement as to all matters arising or accruing prior to
such cancellation, and the foregoing indemnity shall survive in the event that
Lender elects to exercise any of the remedies as provided under this Agreement
following default hereunder.
EXECUTION OF ADDITIONAL DOCUMENTS. Grantor agrees to execute all additional
documents, instruments and agreements that Lender may deem to be necessary and
proper, within its sole discretion, in form and substance satisfactory to
Lender, to keep this Agreement in effect, to better reflect the true intent of
this Agreement, and to consummate fully all of the transactions contemplated
hereby and by any other agreement, instrument or document heretofore, now or at
any time or times hereafter executed by Grantor and delivered to Lender.
INSPECTION; AUDITS. Lender and its agents may periodically enter upon Grantor's
promises at reasonable hours and Inspect the Collateral. Lender and its agents
may also periodically conduct audits of the Collateral and may further inspect
and audit Grantor's books and records that In any way pertain to the Collateral
and any part or parts thereof.
APPLICATION OF PAYMENTS. Grantor agrees that all payments and other sums and
amounts received by Lender under the Indebtedness or under this Agreement, shall
be applied: first, to reimburse Lender for its costs of collecting the same
(including but not limited to, reimbursement of Lender's reasonable attorneys'
fees); second, to the repayment of interest on all additional advances that
Lender may have made on Grantor's behalf pursuant to this Agreement; third, to
the payment of principal of all such additional advances; and finally, to the
payment of principal and Interest on the Indebtedness then outstanding, which
may be applied in such order and priority as Lender may determine within its
sole discretion.
TAXATION. In the event that there should be any change in law with regard to
taxation of security agreements or the debts they secure, Grantor agrees to pay
any taxes, assessments or charges that may be imposed upon Lender as a result of
this Agreement.
EFFECT OF WAIVERS. Grantor has waived, and/or does by these presents waive,
presentment for payment, protest, notice of protest and notice of nonpayment
under all of the indebtedness secured by this Agreement. Grantor has further
waived, and/or does by these presents waive, all pleas of division and
discussion, and all similar rights with regard to the Indebtedness, and agrees
that Grantor shall remain liable, together with any and all Guarantors, on a
"solidary" or "Joint and several" basis. Grantor further agrees that discharge
or release of any party who is,' may, or will be liable to Lender under any of
the Indebtedness, or the release of the Collateral or any other collateral
directly or Indirectly securing repayment of the same, shall not have the affect
of releasing or otherwise diminishing or reducing the actual or potential
liability of Grantor and/or any other party or parties guaranteeing payment of
the indebtedness, who shall remain liable to Lender, and/or of releasing any
Collateral or other collateral that is not expressly released by Lender.
Grantor additionally agrees that Lender's acceptance of payments other than in
accordance with the terms of any agreement or agreements governing repayment of
the indebtedness, or Lender's subsequent agreement to extend or modify such
repayment terms, shall likewise not have the effect of releasing any party or
parties from their respective obligations to Lender. and/or of releasing any of
the Collateral or other collateral directly or indirectly securing repayment of
the Indebtedness. In addition, no course of dealing between Grantor and Lender,
nor any failure or delay on the part of Lender to exercise any of the rights and
remedies granted to Lender under this Agreement, or under any other agreement or
agreements by and between Grantor and Lender, shall have the affect of waiving
any of Lender's rights and remedies. Any partial exercise of any rights and
remedies granted to Lender shall furthermore not constitute a waiver of any of
Lender's other rights and remedies, It being Grantor's Intent and agreement that
Lender's rights and remedies shall be cumulative in nature. Grantor further
agrees that, upon the occurrence of any Event of Default under this Agreement,
any waiver or forbearance on the part of Lender to pursue the rights and
remedies available to Lender, shall be binding upon Lender only to the extent
that Lender specifically agrees to any such waiver or forbearance In writing. A
waiver or forbearance as to one Event of Default shall not constitute a waiver
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or forbearance as to any other Event of Default. None of the warranties,
conditions, provisions and terms contained In this Agreement or any other
agreement. document, or instrument now or hereafter executed by Grantor and
delivered to Lender, shall be deemed to have been waived by any act or knowledge
of Lender, Its agents, officers or employees; but only by an Instrument In
writing specifying such waiver, signed by a duly authorized officer of Lender
and delivered to Grantor.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender In the State of Louisiana. Lender and Grantor hereby waive the right
to any jury trial In any action, proceeding, or counterclaim brought by
either Lender or Grantor against the other. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Louisiana.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's legal
expenses, Incurred in connection with the enforcement of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor
shall pay the costs and expenses of such enforcement. Costs and expenses
Include Lender's attorneys' fees and legal expenses whether or not there Is
a lawsuit, Including attorneys' fees and legal expenses for bankruptcy
proceedings (and Including efforts to modify or vacate any automatic stay
or Injunction), appeals, and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such additional fees
as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to Interpret or define the provisions
of this Agreement.
Notices. To give Grantor any notice required under this Agreement, Lender
may hand deliver or mail such notice to Grantor. Lender will deliver or
mail any notice to Grantor (or any of them if more than one) at any address
which Grantor may have given Lender by written notice as provided In this
paragraph. In the event that there is more than one Grantor under this
Agreement, notice to a single Grantor shall be considered as notice to all
Grantors. To give Lender any notice under this Agreement, Grantor (or any
Grantor) shall mail the notice to Lender by registered or certified mail at
the address specified in this Agreement, or at any other address that
Lender may have given to Grantor (or any Grantor) by written notice as
provided In this paragraph. All notices required or permitted under this
Agreement must be In writing and will be considered as given on the day it
is delivered by hand or deposited In the U.S. Mail, by registered or
codified mail to the address specified In this Agreement.
Power of Attorney. Grantor hereby appoints lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive. receipt for, sue and recover
all sums of money or other property which may now or hereafter become due,
owing or payable from the Collateral; (b) to execute. sign and endorse any
and all claims, instruments, receipts. checks, drafts or warrants issued in
payment for the Collateral; (c) to settle or compromise any and all claims
arising under the Collateral, and, in the place and stead of Grantor, to
execute and deliver its release and settlement for the claim; and (d) to
file any claim or claims or to take any action or Institute or take part in
any proceedings, either in its own name or in the name of Grantor. or
otherwise, which in the discretion of Lender may seem to be necessary or
advisable. This power is given as security for the indebtedness, and the
authority hereby conferred is and shall be irrevocable and shall remain in
full force and effect until renounced by Lender.
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Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement In all other respects shall remain valid and enforceable.
Sole Discretion of Lender. Whenever Lender's consent or approval is
required under this Agreement, the decision as to whether or not to consent
or approve shall be in the sole and exclusive discretion of Lender and
Lender's decision shall be final and conclusive.
Successors and Assigns Bound; Solidary Liability. Grantor's obligations and
agreements under this Agreement shall be binding upon Grantor's successors,
heirs, legalees, devisees, administrators, executors find assigns. in the
event that there is more than one Grantor under this Agreement, all of the
agreements and obligations made and/or Incurred by Grantors under this
Agreement shall be on a "solidary" or "Joint and several" basis.
AUTHORIZATION FOR FACSIMILE FILINGS. Grantor agrees that Lender may at any time,
and without further authorization from Grantor, file a carbon, photographic,
facsimile, or other reproduction of Grantees security agreement or financing
statement as a financing statement.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER
18, 1996.
GRANTOR:
AMERICAN FIRE RETARDANT CORPORATION
/s/ Edward E. Friloux
- --------------------------------------
By: EDWARD E. FRILOUX, SR., SECRETARY
LENDER:
WHITNEY NATIONAL BANK
/S/ Jennifer Fox
- --------------------------------------
By: Jennifer Fox
Authorized Officer
Page 13
Exhibit 10.12
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Presidio Capital & Management Corp.
CONSULTING AGREEMENT
AGREEMENT made this 11th day of June, 1998, between Presidio Capital &
Management Corporation (hereinafter referred to as "PCMC"), having a principal
place of business located at 680 South Military Trail, Deerfield Beach, Florida
33442, and American Fire Retardant Corporation is a corporation organized and
existing under the laws of the state of Wyoming and American Fire Retardant
Corporation, a corporation organized under the laws of the state of Nevada, both
having a principal place of business located at 9337 Bond Ave., El Cajon,
California 92021 (hereinafter referred to as "Client" or "AFRC").
WHEREAS, PCMC is engaged in the Merchant Banking Business, providing
intermediary services which include developing Business Plans, Merger
Opportunities, Acquisitions, as well as the identification of sources of
investment capital, equity and other funding and financing for individuals and
business clients; and
WHEREAS, Client desires to retain PCMC for the above purpose as well as
other consulting services; and
WHEREAS, the parties to wish to reduce their agreement to writing.
NOW THEREFORE, in consideration of their mutual promises made herein, and
for other good and valuable consideration, receipt of which is hereby
acknowledged by each party, the parties, intending to be legally bound, hereby
agree follows:
I. Recitals The parties agree that the foregoing recitals are true and
correct and are incorporated herein by this reference.
II. Engagement The client hereby agrees engages PCMC and PCMC hereby
accepts such engagement upon the terms and conditions set forth in this
Agreement.
A. Reasons for Engagement of PCMC: Due to the special skills,
knowledge, abilities, experiences, information, contacts, and other
expertise of PCMC, the Client had engaged the services of PCMC upon
the terms and conditions set forth in this Agreement.
Page 1
<PAGE>
B. Duties: PCMC is engaged by Client to perform work and render
services in connection with the completing of a re-organization and
merger with AFRC the Nevada Corporation, the arrangement of a
shareholder meeting and proxy statements needed to re-issue new stock
to shareholders, re-capitalize the company and the filing of the
appropriate documents with the federal and state agencies as required
under the statutes to arrange the best efforts 504D Offering, in
addition, PCMC will use its best efforts to secure a Commitment Latter
from a licensed Broker Dealer referencing the equity placement
referred to in the Offerings. As contemplated, the Offerings will be
held in the form of a two step capital financing, as follows:
Step 1. 504D Private Placement (Regulation "D") in the amount of
$800,000.00
Step 2. SB-2 Initial Public Offering in the amount of $5,000,000.00
("IPO")
Included in the duties will be the structuring, writing, including all
legal work associated with the offering and filing the documents with
the necessary governmental agencies, state and federal necessary to
accomplish the funding as well as the identification for Client of a
potential source or sources of investment capital. This is more fully
explained in Exhibit A, "The Services Performed", which is attached
hereto and incorporated herein by this reference (hereinafter referred
to as the "Services").
Upon the conclusion of the IPO, the Client will make application for
listing on the NASDAQ Small Cap Stock Market.
The performance of PCMC, under the terms of this contract does not
include the securing or placement of Bridge Capital. Under certain
conditions and under an executed separate Letter Agreement, PCMC would
use its best efforts to provide such bridge capital.
C. Terms: Subject to the terms of this Agreement relating to
termination, this Agreement shall continue in full force and effect
for a term of 180 days from the date hereof, and may be renewed for
successive periods of sixty (60) days thereafter by the mutual written
agreement of the parties hereto made at least ten (10) days prior to
the expiration of such term.
Page 2
<PAGE>
D. Fee Structure:
----------------
1. Time is of the Essence: Time is of the essence with respect to
the parties' respective obligations under this Agreement.
2. Amount of Fee: Client hereby agrees to pay PCMC the fee
described in Exhibit B, "Fee Structure". Which is attached hereto
and incorporated herein by this reference (hereinafter referred
to as the "Fee") with the exception of fees to be paid "at
closing", Client shall pay all fees according to the time table
set forth on Exhibit B.
3. Timing of Payment of Fee: Any and all fees due to PCMC under
this Agreement shall be paid as specified in the Fee Agreement
and shall be paid at the time specified in the Agreement. In the
event of Client's inability to pay all fees as specified, PCMC
retains the right to cancel this Agreement and retain all fees
previously paid as liquidated damages. Payment shall be made in
U.S. Dollars except where payment is made in such other form as
may be previously agreed to in writing by PCMC.
4. For the purposes of this Agreement, the term "closing" shall
refer to the date upon which the Client receives, or becomes
legally entitled to receive, the Financing.
F. Independent Contractors in all matters relating to this Agreement
and otherwise, the parties hereto shall be and act as independent
contractors, neither shall be the employer or agent of the other, and
each shall assume any and all liabilities for its own acts. As a
result of its independent contractor status, PCMC shall be responsible
for any and all income taxes of federal and/or state authorities, FICA
contributions, and any and all other employment related taxes or
assessments which may be required of PCMC, under any federal or state
statute, regulation or administrative ruling. Neither party shall have
any authority to create any obligations, express or implies on behalf
of the other party and neither party shall have any authority to
represent the other party as an employee or in any capacity other than
as herein provided.
III. Non-Circumvention Requirement: Client agrees that it will not,
directly or indirectly, interfere with, circumvent or attempt to circumvent,
avoid, bypass, violate or obviate PCMC's interest in the Financing, or the
interest or relationship between PCMC and potential sources of the Financing
identified to the Client by PCMC, or producers, sellers, buyers, brokers,
dealers, consultants, financial institutions, technology owners, or
Page 3
<PAGE>
manufacturers, to change increase or avoid, directly or indirectly, in whole or
in part, payment of established or to be established business relationships with
manufacturers or technology owners, with intermediaries, entrepreneurs, legal
counsel, or initiate buying and selling relationships, or transactional
relationships that bypass PCMC with any corporation, producer, technology owner,
partnership, consultants, individuals or other parties revealed or introduced by
PCMC to Client in connection with the Financing or any other ongoing or future
transaction or project of like nature. In other words, not only does Client
agree not to circumvent PCMC with the respect to the Financing which is the
subject of this Agreement, but Client also agrees that it will not in the future
seek any additional or other financing or funding from any source identified for
Client by PCMC without engaging PCMC as consultant to provide intermediary
services with respect to the identification of said source or sources of said
future financing or funding and paying PCMC its regular and customary fee for
doing so.
IV. Nondisclosure/Confidentiality Requirement: Client agrees that it will
not at any time, whether during the term of this Agreement or thereafter, use or
disclose or otherwise reveal, directly or indirectly, to any third party, any
confidential information provided by PCMC to Client, particularly including, but
not limited to, any contract terms, product information, or manufacturing method
or process, design process, trade secret, prices, fees, financing arrangements,
schedules and other information concerning the identity of a potential source or
sources of the Financing, or any confidential record, data or information of
PCMC; or any customer lists, contracts or other information; or identity of any
supplier, sources or customers of any other contacts; or any business
opportunities for now or developing business or procuring the Financing, whether
or not the Financing is received from said source; and any contact or
information identified for Client by PCMC in connection with seeking the
Financing; sellers, producers, buyers, leaders, borrowers, brokers, lenders,
distributors, manufacturers, technology owners, or their representatives,
employees and agents; and specific individual names, addresses, principals, or
telex/fax/telephone numbers and other contact information; references, product
or technology information, and all other information that becomes known to
Client through its dealings with PCMC, without the advance specific written
consent of PCMC; except that nothing herein shall be construed to prohibit (i)
using or disclosing such information as shall become public knowledge other than
by or as a result of disclosure by a person not having a right to make such
disclosure, and (ii) complying with legal process.
V. Termination: This Agreement may be terminated by the written notice of
either party hereto forwarded to the other party hereto. This Agreement shall be
binding on the parties hereto for the Term provided herein, unless terminated as
provided herein.
Page 4
<PAGE>
VI. Arbitration: Any controversy or claim arising out of or relating to
this Agreement; or the breach thereof, or its interpretation or effectiveness,
and which is not settled between the parties themselves, shall be settled by
binding arbitration in Broward County, Florida in accordance with the rules of
the American Arbitration Association and judgment upon the award may be entered
in any court having jurisdiction thereof. Nothing, however, contained herein
shall limit PCMC's rights to injunctive relief as set out in Paragraph VII of
this Agreement. The prevailing party in any litigation, arbitration or mediation
relating to collection of fees, or any other matter under this Agreement, shall
be entitled to recover all its costs, if any, including, but not limited to,
appeals.
VII. Injunctive Relief: Client agrees that its violation or threatened
violation of any of the provisions of this Agreement shall cause immediate and
irreparable harm to PCMC, and, in such event, an injunction restraining Client
from such violation maybe entered against Client in addition to any other relief
available to PCMC.
VIII. Representations and Warranties: Client represents, warrants,
covenants and agrees that Client has a right to enter into this Agreement; that
Client is not a party to any agreement or understanding whether or not written
which would prohibit Client's performance of its obligations hereunder any
proprietary information of any other party which Client is legally prohibited
from using. A breach of this Paragraph IX shall be ground for immediate
termination of this Agreement.
IX. Indemnification and Hold Harmless Clause: Each party to this Agreement
agrees to indemnify and hold harmless the other party against any losses,
claims, liabilities, damages and the like, joint or several, to which the other
directly or indirectly may become subject to in connection with and arising out
of the services which are the subject of this Agreement, except as may be the
direct cause of the gross negligence or willful misconduct of the party seeking
indemnification.
X. Notice: Any notice given or required to be given under this Agreement
shall be in writing and service thereof shall be sufficient if sent by hand or
telex or telegram, facsimile transmission or other similar means of
communication if confirmed by mail, or by certified mail, return-receipt
requested, with postage prepaid, directly to the parties' respective addresses
herein above set forth. Each party may, from time to time, by like written
notice, designate a different address to which notice should be thereafter sent.
Any notice shall be deemed to have given when placed in the United States mail.
XI. Survival: The covenants contained in this Agreement shall survive the
termination of this Consulting Agreement, for whatever reason, and shall be
binding on the parties.
XII. Binding Effect: The terms of the Agreement shall be binding upon the
respective parties hereto, their heirs, their owners, co-owners, partners,
associates, employers, affiliates, subsidiaries, parent companies, nominees,
representatives, employees, agents, clients, consultants and successors and
assigns.
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<PAGE>
XIII. Assignment: This Agreement and the rights and obligations hereunder
may not be assigned or delegated by either party without the prior consent of
the other party.
XIV. Choice of Law: This Agreement is made in the State of Florida, and all
questions related to the execution, construction, validity, interpretation and
performance of this Agreement and to all other issues or claims arising
hereunder, shall be governed and controlled by the laws of the State of Florida.
XV. Venue: Broward, County, Florida, shall be proper venue for any and all
litigation and other proceeds involving this Agreement.
XVI. Counterparts: This Agreement may be signed in more than one
counterpart, in which case each counterpart shall constitute and original of
this Agreement.
XVII. Severability: In the event that any term, covenant, or condition of
this Agreement or the application thereof to any party or circumstances shall,
to any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of such term, covenant or condition to parties or circumstances
other than those as to which it is held invalid or non enforceable, shall not be
affected thereby; and each term, covenant, or condition of this Agreement shall
be valid and shall be enforced to the fullest extent permitted by law.
XVIII. Modification: No amendment, modification, or waiver of this
Agreement or any provision hereof shall be valid unless in writing duly signed
by the parties hereto, which writing specifically refers to this Agreement and
states that it is an amendment, modification, or waiver.
XIX. Entire Agreement: This Agreement represents the entire agreement
between the parties to this Agreement concerning its subject matter, and any and
all prior representations and agreements with respect to subject matter, if any,
are merged herein and are suspected by this Agreement.
XX. Construction: Paragraph headings are for convenience only and are not
intended to expand or restrict the scope or substance of the provisions of this
Agreement. Whenever used herein, the singular shall include the plural, the
plural shall include the singular, and pronouns shall be read as masculine,
feminine, or neuter as the context requires.
Page 6
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.
Presidio Capital & Management Corp.
-----------------------------------
Date: 5/12/98 /s/ Paul Kravitz
---------------------------------------
By: Paul Kravitz
Chairman/CEO
American Fire Retardant Corporation
-----------------------------------
Date: 5/12/98 /s/ Stpehen F. Owens
-----------------------------------
By: Stephen F. Owens
CEO/President
Page 7
<PAGE>
Exhibit A
---------
The Services Performed
----------------------
PCMC will provide services that will include:
Consulting services which will include the preparation of all documents
necessary to merge AFRC, Wyoming into AFRC, Nevada.
1. Provide accounting services necessary to produce a Use Of Proceeds,
Evaluations, 5 year projections and other accounting consulting
services.
2. Legal Work in connection with the contemplated Offering.*
3. All necessary SEC & Blue Sky Filings.
4. Provide introductions and consulting services with regard to the
raising of Capital.
5. Secure advertised space on IPO. COM
6. Introduce Client to proposed Underwriting Group.
* The Services of PCMC as outlined above, do not include efforts by PCMC to
arrange, secure, or structure short term "bridge" financing which Client
may determine is necessary to finance its operations prior to closing the
contemplated Offering and the receipt of proceeds therefrom, unless a
separate written agreement is entered into for such services between PCMC
and the Client.
* All additional Accounting and Legal Services requested by the Client
other than the normal and usual services required for the completion and
filing of the Offering documents will be by separate hourly billing,
mutually agreed upon. Normal hourly services for clients are $225.00 per
hour plus expenses. Auditing expenses will be at the client's expense.
Page 8
<PAGE>
Exhibit B
---------
Fee Structure
-------------
1. Providing Business & Marketing Plans and Program accounting documents.
$10,000 Completion of 504D Offering Memorandum, statutory Blue Sky
filings, and filing Regulation "D" and "SR" forms as required.
2. For providing such legal services as may be necessary to complete,
review, file (SEC) and "Blue Sky" (includes 10 states but exclusive of
state filing fees). $10,000 Provide consulting and legal services
necessary to accomplish the re-capitalization of the company.
3. For providing legal services, writing and filing the 504D $10,000
4. Client will agree to escrow $150,000 from the initial Offering (504D)
to register and complete the SB-2 (IPO) in the amount of $5,000,000.
All fees include legal work with respect to the Offering and work
leading up to the Offering. All other legal work required by client
will be billed at an hourly rate of $225.00 per hour and paid upon
presentation. Extra legal work will be by engagement letter only, and
signed by Gregory Bartko, Esq.
5. All expenses and state and federal filing fees will be paid by client.
Travel, meetings, etc. will be approved in writing prior to being
expensed. Invoices for such expenses will be tendered monthly and paid
within 10 days of presentation.
Schedule of Fee Payments
------------------------
1. On signing this Agreement.................................... $10,000.00
2. At the time the 504D Offering begins on IPO.COM ..............$10,000.00
3. After all Blue Sky filings ...................................$10,000.00
TOTAL $30,000.00
Page 9
<PAGE>
Additional Requirements:
For a term not to exceed five years, the investment group which will include
PCMC, at its sole option and discretion, will occupy 2 seats of 5 seats on the
Board of Directors. If the Board is expanded to seven (7) members, the
investment group will occupy three (3) seats.
Prior to closing, PCMC and the Client shall enter into a 2 year Consulting and
Financial Advisory Contract, the form and substance to be approved by both
parties. Included in this contract shall be the right if first refusal to enter
into any Agreements on further Offerings, private or public.
Page 10
Exhibit 10.13
-------------
AMERICAN FIRE
RETARDANT CORPORATION
110 Brush Road
Broussard, LA 70518
318/837-1198
FAX 837-1699
October 3, 1997
Interco Tire Corporation
Attention: Mr. Warren Guidry
2412 Abbeville Highway
Rayne,LA 70578
Dear Warren,
On behalf of American Fire Retardant Corporation we would like to extend our
sincere thanks for allowing us the opportunity to proceed with our 504 Public
Offering Of stock. The following outlines all of the terms and conditions with
regards to your investment of $100,000.00:
1. Initial investment of $100,000.00
2. The investment will bear an interest rate of 10.50% from date of
investment until paid in full.
3. The investment will be repaid no later than 120 days from receipt of the
initial payment,
4. Once the investment of $100,000,00 has been repaid, investor will
receive 200,000 shares of stock in the company American Fire Retardant
Corporation, Said stock will be restricted for 3810 for 1 full year from
date American Fire Retardant becomes a publicly traded company. Sale of
said stock prior to the end of the restricted year could be made upon
approval of the Board of Directors or between other inside shareholders.
5. Your liability is limited to the amount of your initial investment of
$100,000.00.
6. All other terms and conditions remain the same.
I will be leaving for California next week. If you should have any questions or
comments, please do not hesitate to contact Steve or myself at 318-837-1198. 1
am excited about the opportunities that are ahead of us.
I remain,
Sincerely,
American Fire Retardant Corporation
/s/ John E. Domingue
- ------------------------------------
By: John E. Dominque
Its: Chief Financial Officer
Exhibit 10.14(a)
----------------
AGREEMENT
- --------------------------------------------------------------------------------
This Agreement (the "Agreement") is made this 31st day of March, 1999, by
and between American Fire Retardant Corporation, a Wyoming Corporation,
(hereinafter referred to as the "Corporation" or "AFCR Wyoming"), and Richard
Rosenberg (hereinafter referred to as "Rosenberg")
RECITALS
--------
A. Whereas, between December 1997 and December 1998, Rosenberg has made
various loans and financial accomodations to the Corporation.
B. Whereas, as of December 31, 1998 there remained unpaid and owing to
Rosenberg, principal and accrued interest of $75,700.
C. Whereas, interest has continued to accure on the unpaid principal and
interest from December 31, 1998 to present at the rate of 10% per annum simple
interest and as of the date of this Agreement there is total and principal and
interest owing of $77,545.84.
D. Whereas, the Corporation and Rosenberg desire to:
(i) Converted $34,411.45 of debt into 98,318 shares of restricted
Common Stock of the Corporation at the rate of $0.35 per share, with
no fractional shares being issued;
(ii) Provide for the payment of the balance of $43,134.34 at the rate
of 6.0% interest at $2,500 per month for 18 months commencing on May
1, 1999.
E. Whereas, Rosenberg has agree to said conversion, consolidation and
payment schedule in consideration of 15,968 shares of restricted common stock of
the Corporation.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENTS
1. Rosenberg and the Corporation hereby agree and acknowledge that as of
March 31, 1999, the Corporation is indebted to and owes Rosenberg a total of
$77,545.84.
2. By execution of this Agreement, Rosenberg hereby agrees to the
conversion $34,411.45.00 of said debt into 98,318 shares of restricted Common
Stock of the Corporation at the rate of $0.35 per share. That the Corporation is
authorized to convert said debt on the books and records of the Corporation and
issue a certificate for 98,318 shares of restricted common stock to:
Richard Rosenberg
901 Foxpointe Circle
Delray Beach, FL 33445
Page 1 of 3
<PAGE>
3. In consideration for and conditioned upon the issuance by the
Corporation of 15,968 shares of restricted Common Stock of the Corporation to
Rosenberg, Rosenberg hereby agrees to the conversion, consolidation and payment
of the balance of $43,134.34 owing to him, at the rate of 6.0% interest at
$2,500 per month for 18 months commencing on April 1, 1999, as evidenced by that
certain Promissory Note a copy of which is attached hereto as Exhibit 1.
4. In consideration for Rosenberg's conversion, consolidation and agreement
to the payment schedule for the balance of $43,134.34 owing to him, the
Corporation hereby agrees to the issuance of 15,968 shares of restricted Common
Stock of the Corporation to Rosenberg.
5. Rosenberg hereby acknowledges and agrees that no other amounts, other
than those set forth herein, are due and owing by the Corporation to Rosenberg,
and that there Rosenberg has no options, warrants, or other rights to acquire
any equity securities of the Corporation.
6. Rosenberg acknowledges that the shares to be issued hereunder have not
been registered under the Securities Act of 1933 as amended (the "Act"), or
qualified under the laws of any state, or any other applicable blue sky laws in
reliance, in part, on the representations and warranties herein. Rosenberg
understands that the shares are being offered pursuant to the exemption from
registration provided by Sec. 4(2) of the Securities Act of 1933, as amended.
Such shares are being acquired by Rosenberg for investment purposes for
Rosenberg's own account only and not for sale or with a view to distribution of
all or any part of such shares. No other person will have any direct or indirect
beneficial interest in the shares.
7. Rosenberg understands that the shares are, and will be, "restricted
securities" under the federal securities laws in that such shares will be
acquired from the Corporation in a transaction not involving a public offering,
and that under such laws and applicable regulations such shares may be resold
without registration under the Act only in certain limited circumstances and
that otherwise such shares must be held indefinitely. In this connection,
Rosenberg represents that Rosenberg understands the resale limitations imposed
by the Act and is familiar with Rule 144 of the Securities Act of 1933, as
presently in effect, and the condition which must be meet in order for that rule
to be available for resale of "restricted securities," including the requirement
that the shares must be held for at least one year after purchase thereof from
the Corporation prior to resale (two years in the absence of publicly available
information about the Corporation) and the condition that there be available to
the public current information about the Corporation under certain
circumstances.
8. Assignment. Neither party hereto shall have the right to assign any
interest in this Agreement to another party without the written permission of
the other party, and no delegation of any obligation owed, or the performance of
any obligation, by either party hereto may be made without the written
permission of the other party. Any attempted assignment or delegation shall be
wholly void and totally ineffective for all purposes unless made in conformity
with this paragraph.
9. Partial Invalidity. In the event that any one or more provision of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect by any Court of competent jurisdiction, such provisions shall be
construed as if it were written in such a way as to the greatest extent possible
to be valid, legal and enforceable so as to effectuate to the greatest possible
extent the parties intent to release claims as set forth herein.
Page 2 of 3
<PAGE>
10. Interpretation. In the event any provision of this Agreement requires
interpretation, it is agreed between the parties hereto that the person
interpreting or construing this Agreement shall not apply a presumption that the
terms of this Agreement shall be more strictly construed against one party by
reason of the rule of construction that a document is to be construed more
strictly against the party who, by itself or through an agent, prepared the
document. It is agreed that the parties hereto have participated in the
preparation of this Agreement.
11. Cooperation. Each party shall cooperate and use its best efforts to
consummate the Agreement contemplated herein. Without limiting the foregoing,
each of the parties hereto shall use its or his or her good faith best efforts
and take such action as may reasonably be requested by each other party to
consummate the Agreement contemplated herein. In addition, after the execution
of this Agreement by the parties hereto each party shall cooperate and take such
action and execute such other and further documents as may be reasonably
requested by any other party to carry out the terms, provisions, and intent of
this Agreement.
12. Facsimile Signatures. It is expressly agreed that the parties may
execute this Agreement via facsimile signature and such facsimile signature
pages shall be treated as originals for all purposes.
IN WITNESS HEREOF, the parties hereto as evidenced of their Agreement have
affixed their signatures on the date written above.
American Fire Retardant Corporation
A Wyoming Corporation
Dated: April 6, 1999 /S/ Stephen F. Owens
-------------------------------
By: Stephen F. Owens
Its: President
Dated: April 6, 1999 /S/ Angela M. Raidl
-------------------------------
By: Angela M. Raidl
Its: Secretary
Dated: March 30, 1999 /S/ Richard Rosenberg
-------------------------------
Richard Rosenberg
Page 3 of 3
Exhibit 10.14(b)
----------------
AMENDMENT TO AGREEMENT
This Amendment to Agreement (the "Agreement") is made this 12th day of
April 1999, by and between American Fire Retardant Corp., a Nevada Corporation,
(hereinafter referred to as the "Corporation"), and Richard Rosenberg
(hereinafter referred to as "Rosenberg")
RECITALS
--------
A. Whereas, on March 31, 1999, AFRC Wyoming, the predeceasor of The
Corporation and Rosenberg entered into the Agreement, a copy of which is
attached hereto as Exhibit 1 and incorporated herein by reference.
B. Whereas, the Corporation and Rosenberg now desire to amend and modify
the Agreement to reflect the correction and change of certain terms of the
Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Corporation and
Rosenberg hereby agree as follows:
AGREEMENTS
----------
1. Amendment to Agreement Recitals. Recitals D (i) and (ii), of the
Agreement is hereby amended and modified to read as follows:
D. Whereas, the Corporation and Rosenberg desire to:
(i) Converted $34,411.45 of debt into 49,159 shares of post
reverse split restricted Common Stock of the Corporation at the
rate of $0.70 per share, with no fractional shares being issued;
(ii) Provide for the payment of the balance of $43,134.34 at the
rate of 6.0% interest at $2,500 per month for 18 months
commencing on May 1, 1999.
2. Amendment to Agreement. Paragraphs 2, 3 and 4, of the Agreement is
hereby amended and modified to read as follows:
2. By execution of this Agreement, Rosenberg hereby agrees to the
conversion $34,411.45 of said debt into 49,159 shares of
restricted Common Stock of the Corporation at the rate of $0.70
per share. That the Corporation is authorized to convert said
debt on the books and records of the Corporation and issue a
certificate for 49,159 shares of restricted common stock to:
Page 1 of 3
<PAGE>
Richard Rosenberg
901 Foxpointe Circle
Delray Beach, FL 33445
3. In consideration for and conditioned upon the issuance by the
Corporation of 15,968 shares of restricted Common Stock of the
Corporation to Rosenberg, Rosenberg hereby agrees to the
conversion, consolidation and payment of the balance of
$43,134.34 owing to him, at the rate of 6.0% interest at $2,500
per month for 18 months commencing on May 1, 1999, as evidenced
by that certain Promissory Note a copy of which is attached
hereto as Exhibit 1.
4. In consideration for Rosenberg's conversion, consolidation and agreement
to the payment schedule for the balance of $43,134.34 owing to him, the
Corporation hereby agrees to the issuance of 15,968 shares of restricted Common
Stock of the Corporation to Rosenberg.
3. All other terms and conditions of the Agreement shall remain in full
force and effect.
4. Entire Agreement; Exhibits. This document and its Exhibits contain the
entire agreement between the parties relating to the subject matter contained in
this Agreement. All prior or contemporaneous agreements, representations or
warranties, written or oral, between the parties are superseded by this
Agreement. This Agreement may not be modified except by written document signed
by an authorized representative of each party. In the event that any part of
this Agreement is found to be unenforceable, the remainder shall continue in
effect, to the extent consistent with the intent of the parties as of the
effective date of this Agreement.
5. No Oral Change. This Agreement and any provision hereof may not be
waived, changed, modified or discharged orally, but only by an agreement in
writing signed by the party against whom enforcement of any such waiver, change,
modification or discharge is sought.
6. Non-Waiver. The failure of any party to insist in any one or more cases
upon the performance of any of the provisions, covenants or conditions of this
Agreement or to exercise any option herein contained shall not be construed as a
waiver or relinquishment for the future of any such provisions, covenants or
conditions. No waiver by any party of one breach by another party shall be
construed as a waiver with respect to any subsequent breach.
7. Choice of Law. This Agreement and its application shall be governed by
the laws of the State of California.
8. Counterparts and/or Facsimile Signature. This Agreement may be executed
in any number of counterparts, including counterparts transmitted by telecopier
or FAX, any one of which shall constitute an original of this Agreement. When
counterparts of facsimile copies have been executed by all parties, they shall
have the same effect as if the signatures to each counterpart or copy were upon
the same document and copies of such documents shall be deemed valid as
originals. The parties agree that all such signatures may be transferred to a
single document upon the request of any party.
Page 2 of 3
<PAGE>
9. Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
AGREED AND ACCEPTED as of the date first above written.
American Fire Retardant Corporation
A Wyoming Corporation
Dated: April 12, 1999 /S/ Stepehen F. Owens
-------------------------------
By: Stephen F. Owens
Its: President
Dated: April 12, 1999 /S/ Angela M. Raidl
-------------------------------
By: Angela M. Raidl
Its: Secretary
Dated: April 13, 1999 /S/ Richard Rosenberg
-------------------------------
Richard Rosenberg
Page 3 of 3
Exhibit 10.14(c)
----------------
UNSECURED PROMISSORY NOTE
================================================================================
PRINCIPAL AMOUNT: $43,134.39
- -----------------
INTEREST RATE: 6.0%
- --------------
BORROWER: AMERICAN FIRE RETARDANT CORPORATION
- --------- A WYOMING CORPORATION
LENDER: RICHARD ROSENBERG
- -------
DUE DATE: SEPTEMBER 1, 2000
- ---------
PAYMENTS: 18 EQUAL MONTHLY PAYMENTS OF $2,500.
- ---------
================================================================================
1. For value received, American Fire Retardant Corporation, a Wyoming
corporation, hereinafter collectively referred to as "Borrower" promises to pay
to Richard Rosenberg, hereinafter referred to as "Lender", or to order, the
principal amount of $43,134,39 with interest thereon at the rate of six percent
(6.0%) per annum simple interest, commencing upon date of execution, payable in
18 equal monthly installments of $2,500 per month, with the first payment due on
May 1, 1999 with each payment due the first day of each successive month
thereafter.
2. Late Charge / Termination. If any monthly installment is ten (10) days
or more late, Borrower will be charged a late charge of 5.0% of the regularly
scheduled payment or $100.00, whichever is greater. If Borrower has failed to
cure any default under this Note within fifteen (15) days after written notice
of such default, Lender, at Lender's option may deem the entire principal amount
and interest due thereon immediately due and payable. Consent to one or more
such defaults shall not be deemed to be a waiver of the right of Lender.
3. Default. Borrower will be in default if any of the following occur:
(a) Borrower fails to make any payment when due;
(b) Borrower becomes Insolvent, a receiver is appointed for any part
of Borrower's property, Borrower makes an assignment for the benefit
of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any Bankruptcy or insolvency laws;
(c) Any of the events described in this default section occurs with
respect to any guarantor of this Note.
4. Notices. Any notice, payment or other communication required or
permitted hereunder shall be expressed in writing and sent by certified or
registered mail, return receipt requested, to their respective parties at the
following addresses, or at such other addresses as the parties shall designate
by written notice to be the other:
Page 1 of 3
<PAGE>
If to the Borrower to:
--------------------------
American Fire Retardant Corporation
Attn: Stephen F. Owens and Angela Raidl
9337 Bond Avenue
San Diego, CA 92021
With a copy to Counsel for Borrower at:
--------------------------------------
George G. Chachas, Esq.
Wenthur & Chachas
4180 La Jolla Village Drive
Suite 500
La Jolla, CA 92037
If to the Lender to:
---------------------
Richard Rosenberg
901 Foxpointe Circle
Delray Beach, FL 33445
5. Attorneys Fees. Borrower agrees that if any legal action is necessary to
enforce or collect this Note, the prevailing party shall be entitled to
reasonable attorneys' fees in addition to any other relief to which that party
may be entitled. This provision shall be applicable to the entire Note.
6. Governing Law. This Note shall be governed and construed in accordance
with the laws of the State of California.
7. Method of Payment. Principal and interest shall be payable in lawful
money of the United States. Notwithstanding anything contained herein to the
contrary, the amount of interest payable under the terms of this Note shall in
no event exceed the maximum amount of interest permitted to be charged by law at
the date of execution hereof.
IN WITNESS WHEREOF, this Unsecured Promissory Note was executed on the date
and year written below.
American Fire Retardant Corporation
A Wyoming Corporation
Dated: March 30, 1999 /S/ Stephen F. Owens
-------------------------------
By: Stephen F. Owens
Its: President
Dated: March 30, 1999 /S/ Angela M. Raidl
-------------------------------
By: Angela M. Raidl
Its: Secretary
Page 2 of 2
Exhibit 21
-------------
The Company has no subsidiaries.
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<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAR-31-1999 DEC-31-1998
<CASH> 5,391 0
<SECURITIES> 0 0
<RECEIVABLES> 455,005 472,302
<ALLOWANCES> 0 0
<INVENTORY> 124,249 140,495
<CURRENT-ASSETS> 584,645 612,797
<PP&E> 195,305 196,603
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 882,513 969,791
<CURRENT-LIABILITIES> 1,162,380 1,207,626
<BONDS> 0 0
0 0
0 0
<COMMON> 919,958 874,369
<OTHER-SE> (1,286,783) (1,206,872)
<TOTAL-LIABILITY-AND-EQUITY> 882,513 969,791
<SALES> 552,243 2,059,896
<TOTAL-REVENUES> 552,243 2,059,896
<CGS> 171,627 546,087
<TOTAL-COSTS> 380,616 1,769,440
<OTHER-EXPENSES> (72,494) (255,473)
<LOSS-PROVISION> (7,417) (255,631)
<INTEREST-EXPENSE> (72,494) (255,473)
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (79,911) (511,104)
<EPS-BASIC> (0.04) (0.25)
<EPS-DILUTED> (0.04) (0.25)
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