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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1943
(Amendment No._______)*
HAWKS INDUSTRIES, INC.
--------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
--------------------------------------------------------------------------------
(Title of Class of Securities)
420323 20 6
--------------------------------------------------------------------------------
(CUSIP Number)
David H. Peipers, 888 7th Avenue, #1608, New York, NY 10106, (212) 489-2288
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 15, 2000
--------------------------------------------------------------------------------
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of SS 240 13d-1(e), 240 13d-1(f) or 240 13d-1(g), check the
following box. [_]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See 240 13d-7(b) for other
parties to whom copies are to be sent.
(*) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Persons who respond to the collection of information contained in this form are
not required to respond unless the form displays a currently valid OMB control
number.
(SEC 1748 (03-00)
<PAGE>
CUSIP No. 420323 20 6
________________________________________________________________________________
1. Name of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only)
Thorn Tree Resources, LLC.
________________________________________________________________________________
2. Check the Appropriate Box if a Member of a Group (See instructions)
(a) [_]
(b) [x]
________________________________________________________________________________
3. SEC Use Only
________________________________________________________________________________
4. Source of Funds (See instructions)
WC, AF, BK
________________________________________________________________________________
5. Check if Disclosure of Legal Proceedings Is Required
Pursuant to Items 2(d) or 2(e)
________________________________________________________________________________
6. Citizenship or Place of Organization
Delaware
________________________________________________________________________________
7. Sole Voting Power
Number of 11,110,938
Shares _________________________________________________________________
8. Shared Voting Power
Beneficially
Owned by
_________________________________________________________________
Each 9. Sole Dispositive Power
Reporting 11,110,938
Person _________________________________________________________________
10. Shared Dispositive Power
With
________________________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person
11,110,938
________________________________________________________________________________
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See instructions)
________________________________________________________________________________
13. Percent of Class Represented by Amount in Row (11)
47.6
________________________________________________________________________________
14. Type of Reporting Person*
OO
________________________________________________________________________________
2
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Item 1. Security and Issuer
The title of the class of equity securities to which this statement relates
is common stock. The name and address of the principal executive office of the
issuer of such securities are Hawk Industries, Inc., 115 East 57th Street, Suite
1540, New York, NY 10022.
Item 2.
The person filing this statement is a limited liability company organized
under the laws of the State of Delaware. The members of such limited liability
company are David H. Peipers, The Cornerhouse Limited Partnership, which is a
Delaware limited partnership of which David H. Peipers is the general partner,
and The Winsome Limited Partnership, a Delaware limited partnership of which
David H. Peipers is the general partner.
b) The business address of the reporting person, David H. Peipers, The
Cornerhouse Limited Partnership and The Winsome Limited Partnership is 888
Seventh Avenue, Suite 1608, New York, NY 10106.
c) The principal occupation of the reporting person and the other persons
referred to in subdivision b is to invest in and manage businesses of various
kinds.
d) None of the aforementioned persons has during the last five years been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors)
e) None of the aforementioned persons has during the last five years been
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violation of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
f) David H. Peipers is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration
The consideration for the reporting person's purchase of the securities
consists of assets valued at a total of $16,675,000, of which $7,275,000 was
supplied by Equistar Consolidated Holdings, LLC, ("Equistar"), an affiliate of
the reporting person, including $2,175,000 borrowed by Equistar from a bank.
Item 4. Purpose of Transaction
(a) Not applicable
(b) Not applicable
(c) Not applicable
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<PAGE>
(d) The purpose of the transaction was to bring about a change in the
control of the issuer, and the plans of the reporting person included changing
the management and board of directors of the issuer, including replacing and
changing the number of its directors.
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h) Not applicable
(i) Not applicable
(j) Not applicable
Item 5. Interest in Securities of the Issuer
(a) The reporting person beneficially owns 11,110,938 shares constituting
47.6 percent of the total 23,328,364 outstanding shares of the common stock of
the issuer. The same number of shares is beneficially owned by Universal
Equities Consolidated, LLC, a Nevada limited liability company ("Universal"),
which together with the reporting person may be deemed to constitute a group
within the meaning of Section 13(d) (3) of the Act. The reporting person
disclaims membership in any group.
(b) The reporting person has sole power to vote or direct the vote of the
11,110,938 shares beneficially owned by it. Universal has sole power to vote or
direct the vote of the 11,110,938 shares beneficially owned by it.
(c) On June 29, 2000, each of the reporting person and Universal acquired
25,000 shares of the common stock of the issuer from the issuer for a price of
$175,000, amounting to $7 per share. At that time neither the reporting person
nor Universal owned or became the owner of at least 5 percent of the outstanding
shares of that class, and neither was otherwise required to file a Schedule 13D.
The June 29, 2000 transaction was effected by mail between New York, NY and
Casper, WY. On August 15, 2000, each of the reporting person and Universal
acquired 11,085,938 shares of the common stock of the issuer for a price of
$16,500,000, amounting to approximately $1.49 per share. The August 15, 2000
transaction was effected in person in New York, NY.
(d) Not applicable
(e) Not applicable
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
The acquisition of shares on June 29, 2000 was pursuant to a private
placement agreement of that date among the issuer, the
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<PAGE>
reporting person and Universal. The acquisition of shares on August 15, 2000 was
pursuant to an agreement dated as of June 10, 1999, as amended, among the
issuer, Universal, David H. Peipers, The Cornerhouse Limited Partnership and The
Winsome Limited Partnership, the last three of which persons assigned their
rights under the agreement to the reporting person prior to the closing of the
transaction. Apart from providing for the acquisitions to which they
respectively relate, the above agreements did not establish any contracts,
arrangements, understandings or relationships with respect to securities of the
issuer. The reporting person and Universal have entered into agreements relating
to hypothecation of the securities as part of the collateral for bank loans to
Equistar, which agreements do not give another person voting power or investment
power over such securities except for standard default and similar clauses
customarily included in loan agreements.
Item 7. Material to Be Filed as Exhibits
Exhibit A - A copy of the agreement for the acquisition of shares on June
29, 2000 is incorporated by reference to Exhibit A to the issuer's report on
Form 8-K filed July 6, 2000.
Exhibit B - A copy of the agreement relating to the acquisition of shares
on August 15, 2000, as amended, is incorporated by reference to Exhibits 1 and 3
to the issuer's report on Form 8-K filed October 14, 1999 and to Item 1 of the
issuer's report on Form 8-K filed April 27, 2000 (the second of two reports on
Form 8-K filed by the issuer on that date).
Exhibit C - A copy of the note evidencing the bank borrowing referred to in
Item 3 (the principal amount of which note includes other sums borrowed in the
ordinary course of business by Equistar) is submitted herewith. The name of the
bank, for which confidential treatment is requested, has been redacted.
Exhibit D - A copy of the stock pledge agreement among the reporting
person, Universal and the bank (the name of which has been redacted) referred to
in Exhibit C is submitted herewith.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 30, 2000
-----------------------------------
Date
/s/ David H. Peipers
-----------------------------------
Signature
DAVID H. PEIPERS, MANAGER
-----------------------------------
Name/Title
5
<PAGE>
EXHIBIT C
TIME GRID NOTE
(LIBOR pricing - Commercial)
New York, New York
$8,335,000.00 Date:_____________________
For Value Received, on September 18, 2001 (the "Maturity Date"), the
undersigned ("Maker") promises to pay to the order of (name and address of bank
redacted), the principal sum of Eight Million Three Hundred Thirty Five Thousand
($8,335,000.00) Dollars, or so much thereof as shall be advanced by Bank to
Maker, in Banks sole discretion, and not repaid, in installments set forth below
together with interest on the unpaid principal amount hereof from time to time
outstanding from the date hereof until the date on which this Note is paid in
full, at the rate set forth below. Within the limits of the principal sum stated
above, Maker may borrow, pay and reborrow, subject to the terms and conditions
stated herein.
Interest on the unpaid principal of each loan made pursuant to this Note
(each, a "Loan") will be due and payable when payment of the principal of this
Note is due (whether at stated maturity or by acceleration) and (indicate
whichever is applicable):
[ ] on the last day of each month.
[x] on the 1st day of each month.
Prior to the date on which the unpaid principal hereof is due and payable,
this Note shall bear interest at a rate (the "Contract Rate") equal to 1 .25%
per annum above LIBOR (as defined below) on the date of each Loan made pursuant
to this Note. As used herein "LIBOR" means thc per annum interest rate equal to
the London Interbank Offered Rate shown on the Bridge Telerate Screen, page 3750
or any successor page thereto, as the 11:00 AM (London time) fixing, rounded
upward to the nearest 1/8 of 1%, two (2) Business Days (as defined below) prior
to the date: (i) on which each Loan is made for the Interest Period specified by
Maker in its Drawing Notice; or (ii) of each Renewal (as defined below) for the
Interest Period specified by Maker in its Renewal Notice, as applicable, for
deposits of United States dollars for a period of time equal to the stated term
of this Note.
Maker will give notice to the Bank of its request that a Loan be made to it
hereunder before 11:00 am. (New York City time) at least two (2) Business Days,
as defined below, prior to the date that the Loan is requested to be made, by
delivering a notice to the Bank in a form substantially similar to Exhibit A
hereto (a "Drawing Notice"), such notice to specify: (1) the amount in U.S.
dollars (which will be a minimum of US$ _______ and in multiples of US$
________), (2) the account to which the funds are to be paid: (3) the Interest
Period applicable to
<PAGE>
such Loan; and (4) that no Event of Default has occurred and is continuing.
Absent a selection of an Interest Period by the Maker, the Interest Period for
such Loan shall be 30 days. Any Drawing Notice received by the Bank shall be
irrevocable. As used herein, "Business Day" shall mean a day on which banks are
regularly open for business in London and Banks principal banking office at 452
Fifth Avenue, New York, New York is open for ordinary business.
Each Loan made hereunder shall be renewed by the Maker on the final day of
the Interest Period relating thereto far an additional Interest Period of an
equivalent term, unless a written notice in a form substantially similar to
Exhibit B hereto (a "Renewal Notice") is received by the Bank before 11:00 a.m.
(New York City time) at least two (2) Business Days prior to such date which
states: (1) the date on which the current Interest Period expires; (2) the
Interest Period applicable to the renewal term ; and (3) that no Event of
Default has occurred and is continuing, whereupon, subject to the terms hereof,
such Loan will be renewed (each, a "Renewal"), provided, however, no Loan or
Renewal thereof may be outstanding after the Maturity Date. Any Renewal Notice
received by the Bank shall be irrevocable.
After the date on which the unpaid principal hereof is due and payable
(whether at stated maturity or by acceleration), interest under this Note shall
be payable on demand and shall accrue at a fluctuating rate per annum equal to
2% per annum above (i) if the Contract Rate is a fixed rate, the Contract Rate,
or (ii) if the Contract Rate is a fluctuating rate, the greater from time to
time of (x) the Contract Rate in effect on the date that the principal became
due and (y) the Contract Rate that would have been in effect from time to time
if the principal had not become due. If Maker is a corporation, interest shall
be calculated on the basis of a 360-day year for actual days elapsed. In no
event shall the interest rate applicable at any time to this Note exceed the
maximum rate permitted by law.
This Note evidences loans made by Bank to Maker in Bank's sole discretion,
from time to time. The unpaid principal balance of this Note at any time shall
be the total amount advanced by Bank to Maker in Banks sole discretion, less the
total amount of principal payments made hereon by Maker. The date and amount of
each such loan and each payment on account of principal thereof may be endorsed
by Bank on the grid attached to and made a part of this Note, and when so
endorsed shall represent evidence thereof binding upon Maker in the absence of
manifest error. Any failure by Bank to so endorse shall in no way mitigate or
discharge the obligation of Maker to repay any loans actually made. Maker may
prepay this Note in whole at any time with all accrued interest to the date of
prepayment. So long as Maker is not in default under this Note, Maker shall be
entitled to prepay the outstanding principal amount of each Loan made pursuant
to this Note in whole or in part without the prior consent of Bank before 11:00
A.M. on any Business Day (the "Prepayment Date"), together with (i) the payment
of all interest accrued on the prepaid principal to the date of prepayment and
(ii) the payment of the Liquidated Cost (as defined below),
2
<PAGE>
provided that Bank has received written notice from Maker, at least seven (7)
Business Days prior to such Prepayment Date, informing the Bank that prepayment
will occur on such Prepayment Date. As used herein, "Liquidated Cost" means,
with respect to any prepayment (unless the rate is based upon the Reference
Rate), an amount necessary to compensate Bank for the cost of reinvesting, for
the period extending to the last day of the then current Interest Period for
such Loan, the prepaid principal amount received by Bank at a rate or rates
which may be less than the Contract Rate. Maker and Bank acknowledge that
determining the actual amount of the Liquidated Cost may be difficult or
impossible in any specific instance and accordingly Maker agrees with Bank that
the Liquidated Cost shall equal the excess, if any, of (i) the product of (A)
the amount of principal prepaid, multiplied by (B) the Contract Rate divided by
360, multiplied by (C) the remaining number of days from the date of the
prepayment to the end of the then current Interest Period for such Loan, over
(ii) that amount of interest which Bank determines that the holder of a Treasury
Obligation (as defined below) selected by Bank in the amount (or as close to
such amount as is feasible) of the prepaid principal and having a maturity date
on the last day of the then current Interest Period for such Loan (or as soon
thereafter as is feasible), would earn if that Treasury Obligation were
purchased in the secondary market on the date of the prepayment and were held to
the last day of the then current Interest Period for such Loan. Maker agrees
that the determination of Liquidated Cost shall be based on amounts which a
holder of a Treasury Obligation could receive under these circumstances, whether
or not Bank actually invests the prepaid principal amount in any Treasury
Obligation. As used herein, "Treasury Obligation" means a note, bill or bond
issued by the United States Treasury Department as a full faith and credit
general obligation of the United States. Maker agrees that the payment of
Liquidated Cost as a premium in connection with any prepayment is reasonable to
compensate Bank for lost income resulting from such prepayment because Maker is
receiving the benefit of having the Contract Rate priced based on LIBOR.
Requests for loans to Maker from Bank and directions as to the disposition
of the proceeds thereof may be given orally (including by telephone) or in
writing to Bank by the officers of Maker or other persons authorized to borrow
on Maker's behalf by borrowing resolutions of Maker's Board of Directors
heretofore delivered to Bank, as such resolutions may be amended or superseded
from time to time, provided that any such amending or superseding resolutions
shall have been certified by the Secretary or an Assistant Secretary of Maker,
and a copy thereof so certified, shall have been delivered to an officer of Bank
at its office for payment. Bank may conclusively rely on the authorities
contained in said resolutions. Any such loan so made shall be conclusively
presumed to have been made to or for the benefit of Maker and Maker shall be
liable in respect thereof when made in accordance with any such request or
direction, or when deposited to any account of Maker with Bank, even though
persons other than those authorized to borrow on behalf of Maker may have
authority to draw against such account. Bank may rely on any such request or
direction which it believes to be genuine, and Bank shall be fully protected in
so doing without any duty to make further inquiry as to such genuineness or in
otherwise acting in good faith in the premises. By making a request for a loan,
Maker shall be deemed to be representing to Bank that all of the representations
and warranties of Maker set forth in this Note are true and correct as of the
date of such request as if made on and as of such date and shall also be deemed
to be representing and warranting to Bank that on such date Maker is not in
breach of any of its
3
<PAGE>
covenants to Bank set forth in this Note or in any other document or instruments
of Maker to Bank and no event of default has occurred and is continuing with
respect to any Obligations (as defined below).
Upon the occurrence of any of the following (each, an "Event of Default")
with respect to any Maker, endorser or guarantor of the indebtedness evidenced
by this Note: (i) default in payment of any amount due under this Note or in the
payment or performance of any other Obligation or agreement of any nature or
description to or with Bank; (ii) any of them shall commence any case,
proceeding or other action under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to any of them, or seeking to adjudicate any of them a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to any of
them or any of their debts, or seeking appointment of a receiver, trustee,
custodian or other similar official for any of them or for all or any
substantial part of the assets of any of them, or any of them shall make a
general assignment for the benefit of its creditors, or there shall be commenced
against any of them any case, proceeding or other action of a nature referred to
in this clause (ii), or there shall be commenced against any of them any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
the assets of any of them which results in the entry of an order for any such
relief or any of them shall take any action in furtherance of, or indicating its
consent to, approval or acquiescence in, any of the acts set forth in this
clause (ii), or any of tern shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; (iii) entry
of a judgment against any of them; (iv) failure to pay or remit any tax when
assessed or due; (v) death or dissolution; (vi) making a bulk transfer or
sending notice of intent to do so; (vii) granting any security interest (other
than to Bank); (viii) suspension or liquidation of the usual business; (ix)
failing to furnish Bank with any requested financial information or failing to
permit inspection of books or records by Bank or any of its agents, attorneys or
accountants; (x) making any misrepresentation to Bank in obtaining credit for
any of them ; (xi) impairment of financial responsibility of any of them in
Bank's good faith opinion; (xii) Bank shall in good faith deem itself insecure
at any time; (xiii) the occurrence of a default or event of default under any
guarantee or security agreement guaranteeing or securing any Obligations of
Maker; or (xiv) breach of any covenant or warranty; then, in the case of any
Event of Default other than those referred to in clause (ii) of this sentence,
Bank may declare by notice to Maker any and all Obligations of Maker to be
immediately due and payable, refuse to grant any advances, and in case of any
Event of Default referred to in clause (ii) of this sentence all of the
Obligations of Maker shall automatically become due and payable immediately
without notice or demand.
This Note shall be payable in lawful money of the United States of America
in immediately available funds. Except as otherwise provided herein with respect
to prepayments, all payments on this Note shall be applied to the payment of
accrued interest before being applied to the payment of principal. Any payment
which is required to he made on a day which is not a banking business day in the
City of New York shall be payable on the next succeeding banking business day
and such additional time shall be included in the computation of interest. In
the event
4
<PAGE>
that any other Obligations are due at any time that Bank receives a payment from
Maker on account of this Note or any such other Obligations, Bank may apply such
payment to amounts due under this Note or any such other Obligations in such
manner as Bank, in its discretion, elects, regardless of any instructions from
Maker to the contrary.
To induce Bank, in its sole discretion, to make loans to Maker, Maker
represents, warrants and covenants to Bank that (i) Maker is duly incorporated
and validly existing in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority to make, deliver and perform this
Note; (ii) the execution, delivery and performance by Maker of this Note have
been duly authorized by all necessary corporate action and do not and will not
violate or conflict with its charter or by-laws or any law, rule, regulation or
order binding on Maker or any agreement or instrument to which Maker is a party
or which may be binding on Maker, (iii) this Note has been fully executed by an
authorized officer of Maker and constitutes a legal, valid, binding and
enforceable obligation of Maker; (iv) no authorization, consent, approval,
license, exemption of or filing or registration with, any court or government or
governmental agency is or will be necessary to the valid execution, delivery or
performance by Maker of this Note; (v) the loans evidenced by this Note will be
used solely for ________________________ purposes; (vi) there are no pending or
threatened actions, suits or proceedings against or affecting Maker by or before
any court, commission, bureau or other governmental agency or instrumentality,
which, individually or in the aggregate, if determined adversely to Maker, would
have a material adverse effect on the business, properties, operations, or
condition, financial or otherwise, of Maker; and (vii) the most recent financial
statements of Maker heretofore delivered to Bank are complete and correct and
since the date thereof there has not occurred any material adverse change in the
financial condition or operations of Maker from that shown on said financial
statements.
Bank shall have a continuing lien and/or right of setoff on, and is hereby
granted a security interest in, all deposits (general and special) and credits
with Bank or any Bank Affiliate of any Maker and endorser, and may apply all or
pan of the same to any Obligations, at any time or times, without notice. Bank
shall have a continuing lien on, and is hereby wanted a security interest in,
all property of every Maker and endorser and the proceeds thereof held or
received by or for Bank or any Bank Affiliate for any purpose, whether or not
for the express purpose of serving as collateral security for the Obligations.
As used in this Note, the term "Bank Affiliate" includes any individual,
partnership or corporation acting as nominee or agent for Bank, and any
corporation or bank which is directly or indirectly owned or controlled by, or
under common control with, Bank. Any notice of disposition of property shall be
deemed reasonable if mailed at least five days before such disposition to the
last address of Maker or endorser on Bank's records. If the Obligations
evidenced by this Note are secured by a security agreement and/or other security
documents which Maker has separately delivered to Bank (whether or not such
documents make specific reference to this Note), reference to such documents is
made for a description of the collateral provided thereby and of the rights of
Maker and Bank therein. The rights and remedies of Bank provided hereunder are
cumulative with the rights and remedies available to Bank under any other
instruments or agreements or under applicable law. As used in this Note, the
term "Obligations" means all amounts payable under this Note and any and all
other indebtedness, obligations and liabilities of
5
<PAGE>
Maker to Bank, and all claims of Bank against Maker, now existing or hereafter
arising, direct or indirect (including participations or any interest of Bank in
indebtedness of Maker to others), acquired outright, conditionally, or as
collateral security from another, absolute or contingent, joint or several,
secured or unsecured, matured or unmatured, monetary or non-monetary, arising
out of contract or tort, liquidated or unliquidated, arising by operation of law
or otherwise, and all extensions, renewals, refundings, replacements and
modifications of any of the foregoing.
In case any principal of or interest on this Note is not paid when due,
each Maker and indorser shall be jointly and severally liable for all costs of
enforcement and collection of this Note incurred by Bank or any other holder of
this Note, including but not limited to reasonable attorneys' fees,
disbursements and court costs. In addition, in the event of a default hereunder,
Maker shall pay all reasonable attorneys' fees and disbursements incurred by
Bank in obtaining advice as to its rights and remedies in connection with such
default.
Maker and each endorser hereby separately waive presentment, notice of
dishonor, protest and notice of protest, and any or all other notices or demands
(other than demand for payment) in connection with the delivery, acceptance,
performance, default endorsement or guarantee of this Note. The liability of any
Maker or endorser hereunder shall be unconditional and shall not be in any
manner affected by any indulgence whatsoever granted or consented to by the
holder hereof, including, but not limited to any extension of time, renewal,
waiver or other modification. Any failure of the holder to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any time and from time to time thereafter. Bank or any
holder may accept late payments, or partial payments, even though marked
"payment in full" or containing words of similar import or other conditions,
without waiving any of its rights. No amendment modification or waiver of any
provision of this Note nor consent to any departure by Maker therefrom shall be
effective, irrespective of any course of dealing, unless the same shall be in
writing and signed by Bank, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. This
Note cannot be changed or terminated orally or by estoppel or waiver or by any
alleged oral modification regardless of any claimed partial performance
referable thereto.
Any notice from Bank to Maker or any endorser shall be deemed given when
delivered to Maker or such endorser by hand or when deposited in the United
States mail and addressed to Maker or such indorser at the last address of Maker
or such endorser appearing on Banks records.
This Note shall be governed by and construed in accordance with the laws of
the State of New York applicable to instruments made and to be performed wholly
within that state. If any provision of this Note is held to he illegal or
unenforceable for any reason whatsoever, such illegality or unenforceability
shall not affect the validity of any other provision hereof
6
<PAGE>
MAKER AND EACH INDORSER AGREE THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM
OR CONTROVERSY BETWEEN MAKER OR SUCH INDORSER AND BANK, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT BANK'S ELECTION,
WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL
PROCEEDING BY BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY MAKER
OR SUCH INDORSER AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A
SUMMONS AND/OR COMPLAINT MADE BY MAKER OR SUCH INDORSER, BE RESOLVED BY
ARBITRATION IN ACCORDANCE WITH THE PROVISIONS OF THIS PARAGRAPH AND SHALL, AT
THE ELECTION OF BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH
(1) THIS NOTE OR ANY RELATED AGREEMENTS OR INSTRUMENTS, (2) ALL PAST, PRESENT
AND FUTURE AGREEMENTS INVOLVING MAKER OR SUCH INDORSER AND BANK, (3) ANY
TRANSACTION RELATED TO THIS NOTE AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS
INVOLVING MAKER OR SUCH ENDORSER AND BANK, AND (4) ANY ASPECT OF THE PAST,
PRESENT OR FUTURE RELATIONSHIP OF MAKER OR SUCH INDORSER AND BANK. Bank may
elect to require arbitration of any Dispute with Maker or any endorser without
thereby being required to arbitrate all Disputes between Bank and Maker or such
endorser. Any such Dispute shall be resolved by binding arbitration in
accordance with Article 75 of the New York Civil Practice Law and Rules and the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"). In
the event of any inconsistency between such Rules and these arbitration
provisions, these provisions shall supersede such Rules. All statutes of
limitations which would otherwise be applicable shall apply to any arbitration
proceeding under this paragraph. In any arbitration proceeding subject to this
paragraph, the arbitration panel (the "arbitrator") is specifically empowered to
decide (by documents only, or with a hearing, at the arbitrator's sole
discretion) pre-hearing motions which are substantially similar to pre-hearing
motions to dismiss and motions for summary adjudication. In any such arbitration
proceeding, the arbitrator shall not have the power or authority to award
punitive damages to any party. Judgment upon the award rendered may be entered
in any court having jurisdiction. Whenever an arbitration is required, the
panics shall select an arbitrator in the manner provided in this paragraph. No
provision of, nor the exercise of any rights under, this paragraph shall limit
the right of Bank (1) to foreclose against any real or personal property
collateral through judicial foreclosure, by the exercise of the power of sale
under a deed of trust, mortgage or other security agreement or instrument,
pursuant to applicable provisions of the Uniform Commercial Code, or otherwise
herein pursuant to applicable law, (2) to exercise self-help remedies including
but not limited to setoff and repossession, or (3) to request and obtain from a
court having jurisdiction before, during or after the pendency of any
arbitration, provisional or ancillary remedies and relief including but not
limited to injunctive or mandatory relief or the appointment of a receiver. The
institution and maintenance of an action or judicial proceeding for, or pursuit
of, provisional or ancillary remedies or exercise of self-help remedies shall
not constitute a waiver of the right of Bank, even if Bank is the plaintiff, to
submit the Dispute to arbitration if Bank would otherwise have such right.
Whenever an arbitration is required under this paragraph, the arbitrator shall
be selected, except as otherwise herein provided, in accordance with the
Commercial Arbitration Rules of the AAA. A single arbitrator shall decide any
claim of $100,000 or less and he or she shall be an attorney with at
7
<PAGE>
least five years' experience. Where the claim of any party exceeds $100,000, the
Dispute shall be decided by a majority of three arbitrators, at least two of
whom shall be attorneys (at least one of whom shall have not less than five
years' experience representing commercial banks). The arbitrator shall have the
power to award recovery of all costs and fees (including attorneys' fees,
administrative fees, arbitrators fees, and court costs) to the prevailing party.
In the event of any Dispute governed by this paragraph, each of the parties
shall, subject to the award of the arbitrator, pay an equal share of the
arbitrator's fees.
MAKER AND EACH INDORSER AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN
RESPECT OF OR ARISING OUT OF THIS NOTE MAY BE INITIATED AND PROSECUTED IN THE
STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW
YORK AND ANY ARBITRATION PROCEEDING PURSUANT HERETO SHALL BE CONDUCTED IN NEW
YORK, NEW YORK. MAKER AND EACH INDORSER CONSENT TO AND SUBMIT TO THE EXERCISE OF
JURISDICTION OVER ITS PERSON BY ANY SUCH COURT HAVING JURISDICTION OVFR THE
SUBJECT MATTER, WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO
MAKER OR SUCH INDORSER AT ITS ADDRESS SET FORTH BELOW OR TO ANY OTHER ADDRESS AS
MAY APPEAR IN BANK'S RECORDS AS THE ADDRESS OF MAKER OR SUCH INDORSER.
IN ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS
NOTE, BANK, MAKER AND EACH INDORSER WAIVE TRIAL BY JURY, AND MAKER AND EACH
INDORSER ALSO WAIVE (1) THE RIGHT TO INTERPOSE ANY SETOFF OR COUNTERCLAIM OF ANY
NATURE OR DESCRIPTION, (II) ANY OBJECTION BASED ON FORUM NON CONVENIENS OR
VENUE, AND (III) ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
8
<PAGE>
Bank is authorized to fill in any blank spaces and to otherwise complete
this Note and correct any patent errors herein.
Equistar Consolidated Holdings, LLC
/s/ David H. Peipers /s/ Milton E. Stanson /s/ Vincent P. Iannazzo
---------------------- -------------------------- -----------------------
David H. Peipers By: Milton E. Stanson, Vincent P. Iannazzo
Manager Manager Manager
Address for Notices:
115 E. 57th Street, Suite 1540
New York, NY 10022
If the Maker is not a natural
person, indicate the type of entity below:
[ ] partnership
organized under the
laws of_____________.
[ ] limited partnership
organized under the
laws of_____________.
[X] corporation organized
under the laws of Nevada.
[ ] other (specify):.
[Corporate Acknowledgment]
STATE OF NEW YORK
COUNTY OF ____________________
On this _____ day of _____________________ , before me personally came
______________________ to me known who, being duly sworn, deposes and says that
he is the _______________________ of __________________________________ , the
corporation described in and which executed the above instrument; that he knows
the seal of the corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation and he signed his name by like order.
___________________________________
Notary Public
9
<PAGE>
10
<PAGE>
LOANS AND PAYMENTS ON PRINCIPAL
Amount of Unpaid
Loan Amount of Principal Principal Notation
Date No. Loan Paid Balance Made By
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<PAGE>
EXHIBIT A
DRAWING NOTICE
Date:_____________
(Name and address of bank redacted)
New York, New York 10018
Attention:___________________
I hereby refer you to the Promissory Note dated as of _____________________
between [Maker] and (Name and address of bank redacted) (the "Note").
I wish to make a Loan on the following amount and terms pursuant to such
Note and, in connection therewith, I hereby confirm that I accept all the terms
and conditions of such Note and that there is no Event of Default which has
occurred and is continuing as of the date hereof.
Amount of Loan: U.S.$ ____________________________
Credit to Account: _____________________________
Term of LIBOR Interest Period: ___________________
Very truly yours,
[Maker]
By:_______________________
Print Name:
Title:
12
<PAGE>
EXHIBIT B
RENEWAL NOTICE
Date:________________
(Name and address of bank redacted)
New York, New York 10018
Attention:
I hereby refer you to the Promissory Note dated as of ___________________
between [Maker] and (Name and address of bank redacted) (the "Note").
I wish to renew a Loan that is currently outstanding under the Note and, in
connection therewith, I hereby confirm that I accept all the terms and
conditions of such Note and that there is no Event of default that has occurred
and is continuing as of the date hereof.
Amount of Outstanding Loan: U.S. $__________________________
Last Day of Current
LIBOR Interest Period: __________________________
LIBOR Interest Period
for Renewal Term: __________________________
Very truly yours,
[Maker]
By:_______________________
Print Name:
Title:
13
<PAGE>
EXHIBIT D
EXECUTION COPY
STOCK PLEDGE AGREEMENT
Dated as of September 29, 2000
From
UNIVERSAL EQUITIES CONSOLIDATED, LLC
And
THORN TREE RESOURCES, LLC.
as Grantors
to
(Name of bank redacted)
as Secured Party
<PAGE>
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT dated as of September 29, 2000 made by Universal
Equities Consolidated, LLC, a Nevada limited liability company ("Universal"),
and Thorn Tree Resources, LLC., a Delaware limited liability company
("Thorntree") (each of Universal and Thorntree, a "Grantor" and together the
"Grantors"), to (name of bank redacted) (subject to Section 17 below, (name of
bank redacted), together with any successor or assignee, the "Secured Party").
PRELIMINARY STATEMENTS.
(1) The Secured Party may, from time to time on or after the date hereof,
make advances (the "Advances") to Equistar Consolidated Holdings, LLC
("Equistar").
(2) Each Grantor is the owner of the issued shares of stock (the "Initial
Pledged Shares") in Hawks Industries, Inc., a Wyoming corporation ("Hawks"), as
described in Schedule I hereto.
(3) Each Grantor will derive substantial direct and indirect benefit from
the maintenance of the existing Advances and the making of further Advances to
Equistar.
(4) Unless otherwise defined in this Agreement, terms defined in Article 8
or 9 of the Uniform Commercial Code in effect in the State of New York ("N.Y.
Uniform Commercial Code") are used in this Agreement as such terms are defined
in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Secured Party to make Advances and for other good and valuable consideration
(the receipt of which is hereby acknowledged), each Grantor hereby agrees with
the Secured Party as follows:
Section 1. Grant of Security. Each Grantor hereby assigns and pledges to
the Secured Party for the benefit of the Secured Party, and hereby grants to the
Secured Party for the benefit of the Secured Party, a security interest in, such
Grantor's right, title and interest in and to the following, in each case, as to
each type of property described below, whether now owned or hereafter acquired
by such Grantor, wherever located, and whether now or hereafter existing or
arising (collectively, the "Collateral"):
(a) the Initial Pledged Shares and the certificates, if any,
representing the Initial Pledged Shares, and all dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Initial Pledged Shares;
(b) all additional shares of stock of Hawks (excluding any shares of
stock of Hawks pledged by such Grantor in favor of The Chase Manhattan Bank
pursuant to a Collateral Agreement dated the date hereof) from time to time
acquired by such Grantor (such shares, together with the Initial Pledged
Shares, being the "Pledged Shares"), and the certificates, if any,
representing such additional shares, and all dividends, cash, instruments
and other property, from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares; and
(c) all proceeds of any and all of the Collateral (including, without
limitation, proceeds that constitute property of the types described in
clauses (a) and (b) of this Section 1 and this clause (c)).
<PAGE>
Section 2. Security for Obligations. This Agreement secures the payment of
all obligations of Equistar, now or hereafter existing, under each document,
agreement or instrument evidencing the Advances (such documents, agreements and
instruments, the "Loan Documents"), whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
fees, premiums, penalties, indemnifications, contract causes of action, costs,
expenses or otherwise, including, without limitation, any indebtedness owed by
Equistar to Mrs. Dorothy D. Eweson that is acquired by the Secured Party after
the date hereof (all such obligations being the "Secured Obligations"). Without
limiting the generality of the foregoing, this Agreement secures the payment of
all amounts that constitute part of the Secured Obligations and would be owed by
Equistar to the Secured Party under the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving Equistar or such Grantor.
Section 3. Delivery and Control of Collateral. (a) All certificates or
instruments representing or evidencing Collateral shall be delivered to and held
by or on behalf of the Secured Party pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Secured Party.
(b) With respect to any Collateral in which any Grantor has any right,
title or interest and that constitutes an uncertificated security, such Grantor
will cause the issuer thereof either (i) to register the Secured Party as the
registered owner of such security or (ii) to agree in writing with the Grantor
and the Secured Party that such issuer will comply with instructions with
respect to such security originated by the Secured Party without further consent
of such Grantor, such agreement to be in form and substance satisfactory to the
Secured Party.
Section 4. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) Such Grantor is a limited liability company duly formed, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation.
(b) The execution, delivery and performance by such Grantor of this
Agreement, is within such Grantor's limited liability company powers, has
been duly authorized by all necessary limited liability company action, and
does not (i) contravene such Grantor's certificate of formation, limited
liability company agreement or other constitutive documents, (ii) violate
any law, rule, regulation (including, without limitation, Regulation X of
the Board of Governors of the Federal Reserve System), order, writ,
judgment, injunction, decree, determination or award, (iii) conflict with
or result in the breach of, or constitute a default or require any payment
to be made under, any contract, loan agreement, indenture, mortgage, deed
of trust, lease or other instrument binding on or affecting such Grantor or
(iv) except for the pledge, assignment and security interest created under
this Agreement, result in or require the creation or imposition of any Lien
(as defined below) upon or with respect to any of the Pledged Shares of
such Grantor.
(c) This Agreement has been duly executed and delivered by such
Grantor. This Agreement is the legal, valid and binding obligation of such
Grantor, enforceable against such Grantor in accordance with its terms.
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<PAGE>
(d) Such Grantor is, individually and together with its subsidiaries,
solvent.
(e) All Collateral of such Grantor consisting of certificated
securities and instruments has been delivered to the Secured Party.
(f) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien (as defined below), claim,
option or right of others, except for the pledge, assignment and security
interest created under this Agreement. No effective financing statement or
other instrument similar in effect covering all or any part of such
Collateral or listing such Grantor or any trade name of such Grantor as
debtor is on file in any recording office, except such as may have been
filed in favor of the Secured Party relating to the Loan Documents.
(g) The Pledged Shares pledged by such Grantor hereunder have been
duly authorized and validly issued and are fully paid and non-assessable.
(h) The Initial Pledged Shares (together with any shares of stock of
Hawks pledged by such Grantor in favor of The Chase Manhattan Bank pursuant
to a Collateral Agreement dated the date hereof) constitute all of the
issued and outstanding shares of stock of Hawks owned by such Grantor as at
the date hereof.
Section 5. Further Assurances. (a) Each Grantor agrees that from time to
time, at the expense of such Grantor, such Grantor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be reasonably necessary, or that the Secured Party may reasonably request,
in order to perfect and protect any pledge, assignment or security interest
granted or purported to be granted by such Grantor hereunder or to enable the
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral of such Grantor.
(b) Each Grantor hereby authorizes the Secured Party to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral of such Grantor without the signature of such Grantor
where permitted by law. A photocopy or other reproduction of this Agreement or
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
Section 6. Voting Rights; Dividends; Etc. (a) Prior to any of the Advances
becoming due and payable pursuant to the terms of the Loan Documents:
(i) Each Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral of such Grantor or any
part thereof for any purpose.
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends and other distributions paid in respect of the Collateral of such
Grantor; provided, however, that any and all:
(A) dividends and other distributions paid or payable other than
in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for,
any Collateral;
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<PAGE>
(B) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus; and
(C) cash paid, payable or otherwise distributed in exchange for,
any Collateral,
shall be, and shall be forthwith delivered to the Secured Party to hold as,
Collateral and shall, if received by such Grantor, be received in trust for
the benefit of the Secured Party, be segregated from the other property or
funds of such Grantor and be forthwith delivered to the Secured Party as
Collateral in the same form as so received (with any necessary
endorsement).
(b) Upon and following any of the Advances becoming due and payable
pursuant to the terms of the Loan Documents:
(i) All rights of each Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 6(a)(i) shall, upon notice to
such Grantor by the Secured Party, cease and (y) to receive the dividends
and other distributions that it would otherwise be authorized to receive
and retain pursuant to Section 6(a)(ii) shall automatically cease, and all
such rights shall thereupon become vested in the Secured Party for its
benefit, and the Secured Party shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual rights
and to receive and hold as Collateral such dividends and other
distributions.
(ii) All dividends and other distributions that are received by any
Grantor contrary to the provisions of paragraph (i) of this Section 6(b)
shall be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of such Grantor and shall be forthwith paid
over to the Secured Party for its benefit as Collateral in the same form as
so received (with any necessary endorsement).
Section 7. Covenants. Subject to Section 8, each Grantor agrees that it
will not (i) sell, assign or otherwise dispose of, or grant any option with
respect to, any of the Collateral, or (ii) create or suffer to exist any lien,
or other security interest or other charge or encumbrance of any kind, or any
other type of preferential arrangement (each such lien, security interest,
charge, encumbrance or preferential arrangement, a "Lien"), upon or with respect
to any of the Collateral of such Grantor except for the pledge, assignment and
security interest created under this Agreement.
Section 8. Permitted Sales of Collateral/Refinancing. (a) Prior to any of
the Advances becoming due and payable pursuant to the terms of the Loan
Documents, a Grantor may, with the consent of the Secured Party (such consent
not to be unreasonably withheld) sell or create a Lien in all or part of the
Collateral; provided, however, that:
(i) such Lien shall be created to secure debt which is subordinated in
right of payment to the Secured Obligations;
(ii) the sale proceeds (net of any brokerage commissions, underwriting
fees and discounts, legal fees, finder's fees and other similar fees and
commissions) or the principal amount of such debt (as
4
<PAGE>
applicable) shall be applied to prepay the Secured Obligations in
accordance with Subsection (b) below; and
(iii) the consent of the Secured Party shall not be needed for any
sale of all or part of the Collateral if the number of Pledged Shares owned
by such Grantor that are to be sold and thereby released from the
assignment, pledge and security interest created hereunder does not exceed
a portion of the Pledged Shares owned by such Grantor that bears the same
proportion to the total amount of the Pledged Shares then owned by such
Grantor as the amount of the sale proceeds bears to the total amount of the
Secured Obligations attributable to such Grantor (as determined pursuant to
the second sentence of Section 8(d) below).
(b) Forthwith upon receipt by such Grantor of the sale proceeds or
principal amount of any debt securing any such Lien, such Grantor shall apply
such proceeds or principal amount in the following manner:
(i) a maximum amount of not more than $3,600,000 in aggregate shall be
paid into an account in the name of Equistar held with the Secured Party
(such account or accounts to have Mr David H. Peipers as a co-signer to the
withdrawal of funds therefrom), the funds in such account to be used
exclusively to fund interest and other amounts payable under and in respect
of the Secured Obligations and other out-of-pocket costs and expenses of
Equistar (excluding costs and expenses of a capital expenditure nature)
incurred in the ordinary course of business then due and payable; and
therafter
(ii) until the principal amount of the Secured Obligations is reduced
to the lesser of (x) $18,000,000 and (y) an amount equal to one half of the
principal amount of the Secured Obligations outstanding on the date hereof,
such Grantor shall apply 100% of such proceeds or principal amount to
reduce the Secured Obligations; and thereafter
(iii) (A) if such Grantor is Universal, Universal shall apply 80% of
such proceeds or principal amount to reduce the Secured Obligations until
the Secured Obligations are reduced to zero and, until the Secured
Obligations are reduced to zero, 20% of such proceeds or principal amount
shall be retained by Universal for its own account and (B) if such Grantor
is Thorntree, Thorntree shall apply 100% of such proceeds or principal
amount to reduce the Secured Obligations until the Secured Obligations are
reduced to zero; and thereafter
(iv) 100% of any balance of such proceeds of principal amount after
application in accordance with the foregoing and after the Secured
Obligations have been reduced to zero shall be retained by such Grantor for
its own account.
(c) The Secured Party shall do all things (including delivering any
certificates or instruments representing such Collateral and any accompanying
executed instruments of transfer or assignment in blank to such Grantor) and
execute all documents and instruments reasonably necessary to release such
Collateral from the pledge, assignment and security interest created hereby
pursuant to Subsection (b) above.
(d) Each Grantor shall have the right, at any time prior to any of the
Advances becoming due and payable pursuant to the terms of the Loan Documents,
to make a payment of cash on account of the principal amount of the portion of
the Secured Obligations attributable to such Grantor whereupon such Grantor
shall be permitted to withdraw and reacquire possession of a portion of the
Pledged Shares owned by such
5
<PAGE>
Grantor that bears the same proportion to the total amount of Pledged Shares
then owned by such Grantor as the principal amount of the repayment bears to the
total amount of the Secured Obligations attributable to such Grantor. For
purposes of this paragraph and Section 8(a)(i), the amount of Secured
Obligations attributable to a Grantor shall mean (i) fifty percent of the
Secured Obligations existing on the date hereof, plus or minus any additions
thereto resulting from the making of additional Advances, the accrual of
interest or the incurrence of any other amount under the terms of the Loan
Documents or subtractions therefrom resulting from the repayment or prepayment
of the Advances by Equistar (otherwise than pursuant to the application of this
Section 8), less (ii) such Grantor's pro rata share of any credits to which such
Grantor is entitled by reason of prior transactions pursuant to this Section 8.
Section 9. Remedies. Upon and following any of the Advances becoming due
and payable pursuant to the terms of the Loan Documents:
(a) The Secured Party may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the N.Y. Uniform Commercial Code (whether or not the N.Y.
Uniform Commercial Code applies to the affected Collateral) and also may:
(i) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, for cash, on
credit or for future delivery, and upon such other terms as the Secured
Party may deem commercially reasonable and (ii) exercise any and all rights
and remedies of either Grantor under or in connection with or otherwise in
respect of the Collateral. Each Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to such Grantor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) All payments received by any Grantor under or in connection with
the Collateral shall be received in trust for the benefit of the Secured
Party, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Secured Party in the same form as so received
(with any necessary endorsement).
Section 10. Indemnity and Expenses. (a) Each Grantor agrees to indemnify,
defend and save and hold harmless the Secured Party and each of its affiliates
and their respective officers, directors, employees, agents and advisors (each,
an "Indemnified Party") from and against, and shall pay on demand, any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's gross negligence or willful misconduct.
(b) Each Grantor will upon demand pay to the Secured Party the amount of
any and all reasonable expenses, including, without limitation, the reasonable
fees and expenses of its counsel and of any experts and agents, that such
Secured Party may incur in connection with (i) the administration of this
Agreement,
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<PAGE>
(ii) the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral of such Grantor, (iii) the
exercise or enforcement of any of the rights of such Secured Party hereunder or
(iv) the failure by such Grantor to perform or observe any of the provisions
hereof.
Section 11. Amendments; Waivers; Etc. (a) No amendment or waiver of any
provision of this Agreement, no consent to any departure by any Grantor
herefrom, and no release of any of the Collateral (except pursuant to the terms
of Section 8), shall in any event be effective unless the same shall be in
writing and signed by the Secured Party, and then such waiver, consent or
release shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of either Secured Party to
exercise, and no delay in exercising any right hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.
Section 12. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until payment in full in cash of the Secured Obligations and
payment and satisfaction in full in cash of all rights of Mrs. Dorothy D. Eweson
in respect of the Secured Obligations and the Collateral acquired by subrogation
that may arise from collateral arrangements which Mrs. Dorothy D. Eweson has
with the Secured Party, (b) be binding upon each Grantor, its successors and
assigns and (c) inure to the benefit of the Secured Party and its respective
successors, transferees and assigns, and to Mrs. Dorothy D. Eweson to the extent
of any rights of Mrs. Dorothy D. Eweson in respect of the Secured Obligations
and the Collateral acquired by subrogation that may arise from collateral
arrangements which Mrs. Dorothy D. Eweson has with the Secured Party.
Section 13. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against each Grantor to enforce
this Agreement, irrespective of whether any action is brought against such
Grantor or Equistar or whether such Grantor or Equistar is joined in any such
action or actions. All rights of the Secured Party and the pledge, assignment
and security interest hereunder, and all obligations of each Grantor hereunder,
shall be irrevocable, absolute and unconditional irrespective of, and each
Grantor hereby irrevocably waives (to the maximum extent permitted by applicable
law) any defenses it may now have or may hereafter acquire in any way relating
to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other amendment
or waiver of or any consent to any departure from any Loan Document,
including, without limitation, any increase in the Secured Obligations
resulting from the extension of additional credit to Equistar or any of its
subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral
or any other collateral, or any taking, release or amendment or waiver of
or consent to departure from any guaranty, for all or any of the Secured
Obligations;
(d) any manner of application of any Collateral or any other
collateral, or proceeds thereof, to all or any of the Secured Obligations,
or any manner of sale or other disposition of any Collateral or any other
collateral for all or any of the Secured Obligations;
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<PAGE>
(e) any change, restructuring or termination of the corporate
structure or existence of Equistar or any of its subsidiaries;
(f) any failure of the Secured Party to disclose any Grantor any
information relating to the business, condition (financial or otherwise),
operations, performance, assets, nature of assets, liabilities or prospects
of Equistar or any of its subsidiaries now or hereafter known to such
Secured Party (each Grantor waiving any duty on the part of the Secured
Party to disclose such information);
(g) the failure of any other person to execute this Agreement or any
other guaranty or agreement or the release or reduction of liability of any
Grantor or other grantor or surety with respect to the Secured Obligations;
or
(h) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by
the Secured Party that might otherwise constitute a defense available to,
or a discharge of, such Grantor or any other Grantor or a third party
grantor of a security interest.
This Agreement shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Secured Obligations is
rescinded or must otherwise be returned by the Secured Party or by any other
person upon the insolvency, bankruptcy or reorganization of Equistar or
otherwise, all as though such payment had not been made.
Section 14. Third Party Beneficiary. The parties hereto hereby agree that
Mrs. Dorothy D. Eweson shall be an express third party beneficiary of Section 12
of this Agreement.
Section 15. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.
Section 16. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
Section 17. Subrogee. It is hereby agreed that to the extent Mrs. Dorothy
D. Eweson has or acquires by subrogation rights in the Secured Obligations, the
Collateral or the Loan Documents, Mrs. Dorothy D. Eweson shall thereafter and to
such extent be a "Secured Party" for the purposes of this Agreement.
Section 18. Interpretation. Any reference herein to Mrs. Dorothy D. Eweson
shall be construed to include a reference to her heirs, executors, assigns and
successors.
Section 19. Assignments. The Secured Party may only assign or otherwise
transfer any of its rights or obligations under this Agreement with the prior
written consent of Equistar.
8
<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
UNIVERSAL EQUITIES CONSOLIDATED, LLC
By /S/ Milton E Stanson
-------------------------------------
Name: Milton E Stanson
Title: Manager
9
<PAGE>
THORN TREE RESOURCES, LLC
By /s/ David H. Peipers
-------------------------------------
Name: David H. Peipers
Title: Manager
<PAGE>
ACCEPTED by:
(Name of bank redacted)
(Name of signatory redacted)
------------------------------
Name:
Title: Vice President
10
<PAGE>
Schedule I to the
Stock Pledge Agreement
INITIAL PLEDGED SHARES
<TABLE>
<CAPTION>
============================================================================================
Stock
Stock Certificate Number
Grantor Issuer Class of Stock Par Value No(s) of Shares
============================================================================================
<S> <C> <C> <C> <C> <C>
Universal Hawks Common $0.01 21602 6,000,000
Equities Industries, through
Consolidated, Inc. 21613
LLC
--------------------------------------------------------------------------------------------
Thorn Tree Hawks Common $0.01 21500 25,000
Resources, LLC Industries, through
Inc. 21509
--------------------------------------------------------------------------------------------
============================================================================================
</TABLE>
11
