<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )(1)
Kleer-Vu Industries, Inc.
----------------------------------------------------
(Name of issuer)
Common Stock
----------------------------------------------------
(Title of class of securities)
498494
----------------------------------------------------
(CUSIP number)
Mr. Barry Reifler, CFO
MicroTel International, Inc.
2040 Fortune Drive, San Jose, California 95131
(408) 435-8520
----------------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
June 20, 1996
-------------------------------------------------------
(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 which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
(Continued on following pages)
(Page 1 of 5 Pages)
- ----------
(1) 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 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).
<PAGE>
CUSIP No. 13D Page __ of __ Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
MicroTel International, Inc.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
EIN #77-0226211
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 641,944
BENEFICIALLY --------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING
PERSON --------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
--------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
641,944
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.7% which includes 2,725,020 shares of Common Stock and 900,000 shares**
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** of preferred stock which votes as one class with the Company stock.
<PAGE>
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $.010 per share
("Common Stock") issued by Kleer-Vu Industries, Inc., a Delaware Corporation
(the "Company"), whose principal executive offices are located at 921 West
Artesia Boulevard, Compton California, 90220.
Item 2. Identity and Background.
This statement is filed by MicroTel International, Inc., a corporation
formed under the laws of Delaware having a business 2040 Fortune Drive, San Jose
California 95131 (the "Reporting Person"). The Directors and Executive Officers
of the Reporting Person are Mr. Henry A. Mourad, President and Director, Mr.
Jack Talon, Director, Daniel Dror, Chief Executive Officer, Chairman of the
Board and Director, William Lewisham, Director, Jacque Moisset, Vice President
and Barry Reifler, Vice President, Secretary and Treasurer (collectively the
"Directors and Executive Officers"). All Directors and Executive Officers
maintain a business address at 2040 Fortune Drive, San Jose California 95131 and
are citizens of the United States.
The Reporting Person, or the Directors and Executive Officers have not,
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) been a 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 in jointing future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violations with respect to such laws.
Item 3. Source and Amount of Funds or other Consideration.
The voting rights (and thus beneficial ownership) relating to 641,944
shares of Common Stock enured to the Reporting Person pursuant to a default of a
security interest on a promissory note assigned for the benefit of the Reporting
Person made by the Issuer in the original amount of $1,444,445. The Reporting
Person will own the 641,944 shares of Common Stock upon foreclosure on the
security interest.
Item 4. Purpose of Transaction.
The purpose of the foreclosure on the Common Stock is for investment. The
Reporting Person may make purchases of Common Stock from time to time and may
acquire or dispose of any or all of shares of Common Stock held by it at any
time. The Reporting Person has no plans or proposals which relate to, or could
result in any of the matters referred to in Paragraphs (b) through (j), of Item
4 of Schedule 13D. The Reporting Person may review or
3
<PAGE>
reconsider his position with respect to the Issuer or to formulate plans or
proposals with respect to any such matters, but has no present intention of
doing so.
Item 5. Interest in Securities of the Issuer.
As of the date hereof, the Reporting Person beneficially owns an aggregate
of 641,944 shares of Common Stock as a result of having the voting rights of
such shares, constituting approximately 23.5% of the Issuer's Common Stock, or
17.7% of the total voting shares outstanding, which shares include 2,725,020
shares of Common Stock and 900,000 shares of preferred stock at May 12, 1996.
The Preferred Stock votes as one class with the Common Stock. The Reporting
Person has sole voting power with respect to all the shares of Common Stock
which this statement relates. The Reporting Person has not effected any
transactions in shares of the Common Stock in the past 60 days except for the
acquisition of the option.
Subject to the Reporting Person's right to foreclose on such shares, no
person other than Hardee and Mr. Hardee, the record owners of the 641,944 shares
of Common Stock, has the right to receive or the power to direct receipt of
dividends or the proceeds of sale of the shares of Common Stock. Upon
foreclosure, such rights will rest with the Reporting person only.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
On September 29, 1993, Hardee Capital Partners, L.P. ("Hardee") executed
and delivered two secured non-interest bearing promissory notes in the principal
amount of $805,555 and $1,444,445 (the "Notes") payable to Elk International
Corporation Limited ("Elk"). The Notes were due and payable in full on December
31, 1995. The Notes were delivered as partial consideration for the purchase of
certain shares of Common Stock of the Issuer from Elk, and are secured pursuant
to security and pledge agreements executed on September 29, 1993 (the "Security
Agreements"), and by the personal guarantee of David W. Hardee, individually.
On November 8, 1994, the $1,444,445 Note and the collateral with respect to
such Note (641,944 shares of the Issuer's Common Stock), were assigned to
MicroTel International Inc. (the "Reporting Person").
In December 1995, the Reporting Person agreed to extend the maturity of the
$1,444,455 Note to December 15, 1996 in consideration for the payment by Hardee
of $358,300. Hardee did not pay $8,300 of such amount as agreed, therefore,
Hardee defaulted on the obligation to the Reporting Person. A notice of default
was given to Hardee and the default was not cured. Under
4
<PAGE>
the terms of the Security Agreement, upon default, the Reporting Person has the
immediate right to vote all shares subject to such agreement, in addition to its
rights of foreclosure with respect to all of such shares. It is the position of
the Reporting Person that the Security Agreement, securing the $1,444,445 Note,
covers 641,944 shares representing 23.6% of the Issuer's outstanding Common
Stock and that the Reporting Person has the sole right to vote such shares. As
of the date hereof, the Reporting Person has not commenced foreclosure
proceedings with respect to such shares of Common Stock.
It is the Reporting Person's position that the above described default by
Hardee could result in a change of control of the Issuer.
There are no other contracts, arrangements, understandings or relationships
with the Reporting Person or any other person with respect to the securities of
the Issuer, including but not limited to transfer or voting of any other
securities, finders' fees, joint ventures, loan or option arrangements, puts or
calls, guaranties of profits, divisions of profits or loss or the giving or
withholding of proxies, except as otherwise disclosed herein.
Item 7. Materials to be filed as Exhibits.
10.1. Letter Agreement dated September 29, 1993 between Hee Poong Park and
Hardee Capital Partners ("Purchasers") and Elk International Corporation Ltd.
("Elk") Whereby Elk agrees to sell an aggregate of 250,000 shares of Common
Stock of Kleer-Vu Industries, Inc. for an aggregate of $3,611,110 consisting of
$2,000,000 cash and $1,611,110 in the form of promissory notes ("Notes").
10.2. Secured non-interest bearing Promissory Note, dated September 29,
1993 in the principal amount of $805,000 made by Hee Poong Park for the benefit
of Elk.
10.3. Secured non-interest bearing Promissory Note, dated September 29,
1993 in the principal amount of $805,000 made by Hardee Capital Partners, Ltd.
for the benefit of Elk.
10.4. Security and Pledge Agreement, dated September 29, 1993 by Elk as
pledgee and Hee Pong Park as pledgor.
10.5. Security and Pledge Agreement, dated September 29, 1993 by Elk as
pledgee and Hardee Capital Partners, Ltd. as pledgor.
10.6. Escrow Agreement dated September 29, 1993 by and between Elk, Hee
Poong Park, Hardee Capital Partners, L.P. and City
5
<PAGE>
National bank as Escrow Agent.
10.7. Release Agreement dated September 29, 1993 between Hardee Capital
Partners, L.P., David W. Hardee, Hee Pong Park, Kleer-Vu Industries, Inc., Elk
and Daniel Dror.
10.8. Guarantee Agreement dated September 29, 1993 by David Hardee as
guarantor in favor of Elk, guaranteeing the an $805,555 promissory note made by
Hardee Capital Partners to Elk.
10.9. Guarantee Agreement dated January 3, 1994 by David Hardee as
guarantor in favor of Elk, guaranteeing the a promissory note dated January 3,
1994, in the principal amount of $1,444,445 made by Hardee Capital Partners to
Elk.
10.10 Secured Non-Recourse Non-Interest Bearing Promissory Note, dated
January 3, 1994 in the principal amount of $1,444,445 made by Hardee Capital
Partners, Ltd. for the benefit of Elk.
10.11 Security and Pledge Agreement, dated January 3, 1994 by Elk as
pledgee and Hardee Capital Partners, Ltd. as pledgor.
10.12 Security and Pledge Agreement, dated January 3, 1994 by Elk as
pledgee and Hee Poong Park as pledgor.
10.13 Amended Restated and Consolidated Secured Promissory Note dated
January 12, 1996 made by Hee Pong Park for the benefit of Elk in the principal
amount of $2,700,000.
10.14 Letter Agreement dated April 19, 1996, amending the letter agreement
dated January 12, 1996, between Hee Poong Park and Elk.
10.15 Notice of Default from Elk to Hee Poong Park and Hardee Capital
Partners, L.P. dated May 30, 1996.
6
<PAGE>
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.
DATE: June 27, 1996
MICROTEL INTERNATIONAL, INC.
/s/ Daniel Dror
--------------------------------
BY: Daniel Dror
7
<PAGE>
September 29, 1993
Elk International Corporation, Ltd.
PO Box N-3247
Nassau, Bahamas
Gentlemen:
This letter sets forth our agreement pursuant to which Hee Poong Park
("Park") and Hardee Capital Partners, L.P., a Texas limited partnership
("Hardee", and together with Park the "Purchasers") hereby agree to purchase at
the times hereinafter described from Elk International Corporation, Ltd. ("Elk")
an aggregate of 450,000 shares of common stock, $.10 par value (the "Common
Shares or Shares") of Kleer-Vu Industries, Inc., a Delaware Corporation, ("KVI"
or the "Company"), which Common Shares are not registered under the Securities
Act of 1933 as amended (the "Act"), and to change the employment status of
Daniel Dror ("Dror") with KVI, on the terms and conditions set forth below:
1. As soon as practicable after the execution of this Agreement (the "First
Closing"), Elk agrees to sell and Purchasers agree to buy 250,000 Common
Shares (which are not subject to any vesting requirements) (112,500 shares
to Park and 137,500 shares to Hardee), for consideration of $3,611,110
payable as follows:
(1) $2,000,000 cash, payable by personal checks, $1,000,000 of which shall
be paid by Park and $1,000,000 of which shall be paid by Hardee.
(2) $1,611,110 to be paid by Park and Hardee in the form of a promissory
note to be executed by each of them at the First Closing in the amount
of $805,555 per note in the forms of Exhibits A and B hereto with the
following terms and conditions:
<PAGE>
Elk International Corporation, Ltd.
Page 2
Interest Rate: Zero
Payment Terms: No principal payment due until December 31,
1995 when Notes will be due and payable in full
Security: Promissory Notes shall be secured by Shares
being purchased hereunder by each of the
Purchasers and any Common Shares acquired
after the First Closing from KVI by Park,
Hardee or their affiliates (other than KVI)
2. On the Second Closing (as hereinafter defined) Elk agrees to sell and
Purchasers agree to buy the 200,000 Common Shares (87,500 shares to Park
and 112,500 shares to Hardee) not purchased at the First Closing, for
consideration of $2,888,890 payable as follows:
(1) $2,888,890 to be paid by Park and Hardee in the form of a promissory
note to be executed by each of them at the Second Closing in the
amount of $1,444,445 per note in the form of Exhibits A and B hereto,
with the terms and conditions as described above.
The parties agree that except for the restriction on the Shares provided
herein and the documents contemplated hereby, Elk shall have all right,
title and interest to the 200,000 Common Shares until such Shares are
acquired at the Second Closing by Purchasers.
3. Effective at the First Closing, the STOCKHOLDER AGREEMENT dated April 30,
1993 between Dror, Elk, Park and KVI (the "Stockholder Agreement") shall be
rescinded and of no further force or effect.
4. Effective at the First Closing, the Employment Agreement dated as of May 4,
1993 by and between KVI, Kleer-Vu Plastics Corporation, a Delaware
corporation, PAS Industries, a California corporation and Dror shall be
terminated and superseded in its entirety by a Consulting Agreement in the
<PAGE>
Elk International Corporation, Ltd.
Page 3
form of the agreement between KVI and Daniel Dror Company, Inc. ("DCC")
attached hereto as Exhibit C-1, which agreement shall provide for an
initial consulting fee of $230,500 and for an annual consulting fee of
$150,000, payable monthly in advance, for three years from the First
Closing Date (as hereinafter defined) and 50,000 Common Shares of KVI (to
be equitably adjusted in the event of any stock dividends or stock splits
prior to the issuance of such Shares) to be issued at no additional cost to
DCC in the following amounts:
a. 15,000 Common Shares to be issued December 31, 1994
b. 20,000 Common Shares to be issued December 30, 1995
c. 15,000 Common Shares to be issued on the third anniversary of the First
Closing Date
and a Consulting Agreement in the form of the agreement between KVI and
Dror attached hereto as Exhibit C-2, which agreement shall provide for an
annual consulting fee of $90,000, payable monthly in advance, for three
years from the First Closing Date.
KVI shall have the right to offset any amounts due under the Consulting
Agreement against the promissory note in the principal amount of $75,000
made by Dror in favor of KVI, the principal and interest on which is
$80,351.31 as of the date hereof.
5. Effective at the First Closing, Dror shall resign as a director and officer
of KVI and all its subsidiaries and Dror shall cause Mr. William Lewisham
to similarly resign with all outstanding options owned by them to remain
intact in accordance with their terms. The indemnification obligations of
KVI and its subsidiaries existing on the date hereof in favor of Dror and
Mr. Lewisham shall also remain intact.
6. The parties hereto agree to execute mutual general releases at the First
Closing in favor of the others and their respective affiliates in the form
of Exhibit D hereto. Except as set forth in paragraph 4 above, the parties
further agree that no party shall have the right of offset for breaches of
any of the agreements contemplated hereby.
<PAGE>
Elk International Corporation, Ltd.
Page 4
7. (a) Each of the Purchasers understands that all reports by the Company
under the Securities Act of 1934, as amended, since January 1, 1988,
plus any and all documents, instruments, records and books pertaining
to the Company and this investment have been made available to them
and their attorney(s), accountant(s) or investment advisor(s). They
have had the opportunity to ask questions of, and receive answers from
the Company concerning the business of the Company, and have had the
opportunity to obtain additional information in order to permit them
to evaluate the merits and risks of acquiring the Shares.
(b) Each of the Purchasers further represents that they are acquiring the
Shares for investment for their own account and not with a view to
resell or otherwise distribute the Shares in a manner that would
violate the Act, subject to the disposition of Shares being within
their control at all times.
(c) Each of the Purchasers also further understands that investment in the
Shares involves a very high degree of risk and that they may lose
their entire investment therein.
(d) Each of the Purchasers also understands that the Shares issued to them
will bear the following legend:
"This certificate and the shares of stock represented hereby have not
been registered with the Securities Act of 1933 and may not be
transferred, reoffered and sold unless registered or unless an
exemption from registration is available."
(e) In the absence of an effective registration statement under the Act
covering the Shares, the Purchasers shall not offer, sell, transfer or
otherwise dispose of any of the Shares without either first obtaining
an opinion of counsel that the disposition may be made without
registration of the Shares in question under the Act, or first
obtaining a letter from the Division of Corporation Finance of the
Securities and Exchange Commission (the "Commission") to the effect
that it will recommend no action to the Commission if any of the
Shares to be disposed of are so disposed of without registration.
<PAGE>
Elk International Corporation, Ltd.
Page 5
8. Elk represents and warrants as follows:
(a) Elk is a corporation duly organized, validly existing and in good
standing under the laws of the Bahamas;
(b) This Agreement is duly authorized and executed and constitutes the
binding obligations of Elk enforceable against Elk in accordance with
its terms; and
(c) Elk has good and marketable title to the Shares and owns the Shares
free and clear of any liens, encumbrances and pledges whatsoever,
except restrictions as to transferability pursuant to the provisions
of Rule 144 promulgated under the Act. There are no outstanding
options, warrants, agreements, understanding or arrangements relating
to the Shares other than certain vesting requirements with respect to
some of the Shares to be delivered at the Second Closing. KVI hereby
waives any and all vesting requirements with respect to the Shares to
be delivered at the Second Closing, effective as of the Second
Closing. Upon the Closings, the Purchasers will acquire good and
marketable title to the Shares to be acquired hereunder, free and
clear of any liens, encumbrances and pledges whatsoever, except
restrictions as to transferability pursuant to the provisions of Rule
144 promulgated under the Act.
9. The First Closing of the transactions contemplated hereby shall occur at
the Los Angeles offices of Skadden, Arps, Slate, Meagher & Flom on
September 28, 1993 or as soon thereafter as practicable (the "First Closing
Date"). At the First Closing the following documents shall be executed and
delivered by the parties thereto:
(a) 250,000 Common Shares, duly endorsed for transfer or with stock powers
executed in blank, 112,500 shares to be delivered to Park and 137,500
shares to be delivered to Hardee.
(b) Personal checks payable to the order of Elk International Corporation,
Ltd. or its designee in the aggregate amount of
<PAGE>
Elk International Corporation, Ltd.
Page 6
$2,000,000, $1,000,000 of which shall be payable by each of the
Purchasers.
(c) A full recourse promissory note in the amount of $805,555 executed by
Park payable to the order of Elk International Corporation, Ltd. in
the form of Exhibit A-1 hereto, together with a Pledge and Security
Agreement in the form of Exhibit A-2 hereto.
(d) A non-recourse promissory note in the amount of $805,555 executed by
Hardee, which note shall be guaranteed by David W. Hardee, payable to
the order of Elk International Corporation, Ltd. in the form of
Exhibit B-1 hereto, together with a Pledge and Security Agreement in
the form of Exhibit B-2 hereto and the guaranty by David W. Hardee in
the form of Exhibit B-3 hereto.
(e) The Consulting Agreement between KVI and Dror dated as of the Closing
Date in the form of Exhibit C hereto.
(f) Mutual Releases in the form of Exhibit D hereto.
(g) The resignations of Dror and William Lewisham as directors of KVI and
all of its subsidiaries and of Dror as an officer of KVI and all of
its subsidiaries, effective as of the Closing Date, in the forms of
Exhibit E-1 and E-2 hereto.
(h) A Termination Letter acknowledging termination of all obligations
under the Stockholder's Agreement and the Stock Purchase Option
Agreement in the form of Exhibit F hereto.
10. The Second Closing (the "Second Closing") of the transactions contemplated
hereby shall occur at the Los Angeles offices of Skadden, Arps, Slate,
Meagher & Flom on January 3, 1994 or such earlier date designated by
Purchasers on not less than 5 days written notice to Elk (the First Closing
and Second Closing together referred to herein as the "Closings"). At the
Second
<PAGE>
Elk International Corporation, Ltd.
Page 7
Closing the following documents shall be executed and delivered by the
parties thereto:
(a) 200,000 Common Shares, duly endorsed for transfer with stock powers
executed in blank, 87,500 shares to be delivered to Park and 112,500
shares to be delivered to Hardee.
(b) A full recourse promissory note in the amount of $1,444,445 executed
by Park payable to the order of Elk International Corporation, Ltd. in
the form of Exhibit A-1 hereto, together with a Pledge and Security
Agreement in the form of Exhibit A-2 hereto.
(c) A non-recourse promissory note in the amount of $1,444,445 executed by
Hardee, which note shall be guaranteed by David W. Hardee, payable to
the order of Elk International Corporation, Ltd. in the form of
Exhibit B-1 hereto, together with a Pledge and Security Agreement in
the form of Exhibit B-2 hereto and the guaranty by David W. Hardee in
the form of Exhibit B-3 hereto.
11. If and to the extent that the number of issued shares of KVI common stock
shall be increased or reduced by a change in par value, split-up,
reclassification, distribution of a dividend payable in shares, or the
like, the number of Shares subject to the Second Closing shall be
proportionately adjusted, and the Shares to be purchased hereunder at the
Second Closing shall include all of such Shares as so modified.
12. Prior to the Second Closing, Elk shall not take any action which will
result in any sale, assignment, transfer, disposition, pledge, lien,
security interest, encumbrance, charge or other imposition upon the Shares
to be purchased at the Second Closing nor will Elk take any action which
will prevent the transfer of such Shares on the terms and conditions set
forth herein. Promptly following the execution of this Agreement, Elk shall
place such Shares in escrow pending the Second Closing pursuant to an
escrow agreement reasonably satisfactory to Elk and the Purchasers.
<PAGE>
Elk International Corporation, Ltd.
Page 8
13. The stock certificates representing the Shares to be purchased at the
Second Closing shall bear the following legend in addition to any other
legends contained thereon with respect to restrictions as to
transferability pursuant to the Act:
"The Shares represented by this certificate are the subject of an
Agreement to purchase these Shares between Elk International
Corporation Limited and Hee Poong Park, Hardee Capital Partners, L.P.
and certain other parties. A copy of the Agreement is on file with the
Secretary of Kleer-Vu Industries, Inc. These Shares shall not be
encumbered, pledged, hypothecated, sold or transferred in any; way
except in accordance with and pursuant to the terms of the Agreement.
14. KVI shall reimburse Park and Hardee for each of their reasonable
out-of-pocket expenses incurred in connection with the negotiation of this
Agreement, including attorneys fees. Except as provided above, each party
hereto shall bear his own costs and expenses in negotiating this Agreement.
15. This Agreement may be exercised in several counterparts, each of which
shall be an original, but all of which together shall constitute one and
the same agreement.
16. The parties acknowledge that it would be impossible to fix money damages
for violations of this Agreement and that such violations of this Agreement
and that such violations will cause irreparable injury for which adequate
remedy at law is not available and, therefore, this Agreement must be
enforced by specific performance or injunctive relief. The parties hereto
agree that any party may, in its sole discretion, apply to any court of
competent jurisdiction for specific performance or injunctive or such other
relief as such court may deem just and proper in order to enforce this
Agreement or prevent any violation hereof and, to the extend permitted by
applicable law, each party waives any objection or defense to the
imposition of such relief. Nothing herein shall be construed to prohibit
any party from bringing any action for damages in addition to an action for
specific performance or an injunction for a breach of this Agreement.
<PAGE>
Elk International Corporation, Ltd.
Page 9
17. This Agreement is being delivered in the State of California and shall be
construed and enforced in accordance with, and the rights of the parties
shall be governed by, the law of such State.
18. The parties hereby irrevocably submit to and accept generally and
unconditionally the jurisdiction of any California State or United States
Federal Court sitting in Los Angeles, California over any action or
proceeding arising out of or relating to this Agreement, and each of the
parties hereby irrevocably agrees that all claims in respect to such action
or proceeding may be heard and determined in such California State or
Federal Court. Each party hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. Each party irrevocably consents
to the service of any and all process in any such action or proceeding by
the delivery or mailing of copies of such process by certified or
registered mail to the address specified in this Agreement. Each party
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law. Nothing in this paragraph
shall affect the right of any party to serve legal process in any other
manner permitted by law or affect the right of any party to bring any
action or proceedings against any other party in the Courts of other
jurisdictions.
19. In the event any provisions of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall
not invalidate or render unenforceable any other provisions hereof or
entitle any party to seek rescission of this Agreement. Any provision of
this Agreement held invalid or unenforceable only in part or degree shall
remain in full force and effect to the extent not held invalid or
unenforceable.
<PAGE>
Elk International Corporation, Ltd.
Page 10
If the foregoing correctly reflects our agreement, please so indicate by
signing and returning the enclosed copy of this letter at your earliest
convenience.
Very truly yours,
/s/Hee Poong Park
-----------------
Hee Poong Park
/s/David W. Hardee
------------------
David W. Hardee
HARDEE CAPITAL PARTNERS, L.P.
By: /s/David W. Hardee
--------------------------------
David W. Hardee, General Partner
Agreed to and accepted:
ELK INTERNATIONAL CORPORATION LTD.
By: /s/Elkana Faiwuszewicz
- ---------------------------
Title: President
/s/Daniel Dror
- ---------------------------
Daniel Dror
KLEER-VU INDUSTRIES, INC.
By: /s/[ILLEGIBLE]
- ---------------------------
Title:
<PAGE>
SECURED
NON-INTEREST BEARING
PROMISSORY NOTE
$805,555 Los Angeles, California
September 29, 1993
FOR VALUE RECEIVED, Hee Poong Park ("Maker") promises to pay to the order
of Elk International Corporation, Ltd. ("Holder") at 2415 S. Sierra Drive,
Compton, California 90220, or such other place as Holder may from time to time
designate, the principal sum of Eight Hundred Five Thousand Five Hundred Fifty
Five Dollars ($805,555).
1. The unpaid principal balance hereof shall be due and payable on December
31, 1995.
2. This Note shall not bear interest.
3. This Note may be prepaid in whole or in part at any time without premium
or penalty on or with respect to the amounts prepaid. Maker shall have no right
to reborrow any such prepaid amounts.
4. An event of default hereunder shall occur if an Event of Default (as
defined in the Security and Pledge Agreement between Maker and Holder dated as
of the date hereof (the "Security Agreement")) shall have occurred. If such an
Event of Default occurs and is continuing, the Holder, at its option, may
declare all sums due hereunder immediately due and payable without notice or
demand.
5. No delay on the part of the Holder or the exercise of any power or right
under this Note shall operate as a waiver of such power or right or preclude
other or further exercise thereof or the exercise of any other power or right.
The Maker hereby waives diligence, presentment, demand for payment, notice of
dishonor or acceleration, protest and notice of protest, and any and all other
notices or demands in connection with delivery, acceptance, performance, default
or enforcement of this Note.
6. If any principal payment due hereunder is not paid as and when due or if
any Event of Default occurs hereunder, Maker promises to pay all costs
<PAGE>
of enforcement and collection, including, but not limited to, reasonable
attorneys' fees and disbursements, whether or not such enforcement and
collection includes the filing of a lawsuit.
7. This Note is secured by the Security Agreement.
8. Amounts owing under this Note shall not be subject to set off of any
obligations of Holder owing to Maker.
9. This Note shall be governed by and construed in accordance with the laws
of the State of California without regard to conflicts of laws and principles
thereof.
IN WITNESS WHEREOF, the undersigned has executed this Note on the day and
year first above written.
/s/Hee Poong Park
-----------------
Hee Poong Park
2
<PAGE>
SECURED NON-RECOURSE
NON-INTEREST BEARING
PROMISSORY NOTE
$805,555 Los Angeles, California
September 29, 1993
FOR VALUE RECEIVED, Hardee Capital Partners, Ltd. ("Maker") promises to pay
to Elk International Corporation, Ltd. ("Holder") at 2415 S. Sierra Drive,
Compton, California 90220, or such other place as Holder may from time to time
designate, the principal sum of Eight Hundred Five Thousand Five Hundred Fifty
Five Dollars ($805,555).
1. The unpaid principal balance hereof shall be due and payable on December
31, 1995.
2. This Note shall not bear interest.
3. This Note may be prepaid in whole or in part at any time without premium
or penalty on or with respect to the amounts prepaid. Maker shall have no right
to reborrow any such prepaid amounts.
4. An event of default hereunder shall occur if an Event of Default (as
defined in the Security and Pledge Agreement between Maker and Holder dated as
of the date hereof (the "Security Agreement")) shall have occurred. If such an
Event of Default occurs and is continuing, the Holder, at its option, may
declare all sums due hereunder immediately due and payable without notice or
demand.
5. No delay on the part of the Holder or the exercise of any power or right
under this Note shall operate as a waiver of such power or right or preclude
other or further exercise thereof or the exercise of any other power or right.
The Maker hereby waives diligence, presentment, demand for payment, notice of
dishonor or acceleration, protest and notice of protest, and any and all other
notices or demands in connection with delivery, acceptance, performance, default
or enforcement of this Note.
6. If any principal payment due hereunder is not paid as and when due or if
any Event of Default occurs hereunder, Maker promises to pay all costs
<PAGE>
of enforcement and collection, including, but not limited to, reasonable
attorneys' fees and disbursements, whether or not such enforcement and
collection includes the filing of a lawsuit.
7. This Note is secured by the Security Agreement.
8. Amounts owing under this Note shall not be subject to set off of any
obligations of Holder owing to Maker.
9. Notwithstanding anything herein or in the Security Agreement to the
contrary, it is understood and agreed that this Note is intended to evidence a
non-recourse obligation of Maker, and Holder's sole recourse in the event of a
default hereunder or thereunder is against the Collateral (as defined in the
Security Agreement) and the Guaranty executed by David W. Hardee in favor of
Holder dated as of the date hereof.
10. This Note shall be governed by and construed in accordance with the
laws of the State of California without regard to conflicts of laws and
principles thereof.
IN WITNESS WHEREOF, the undersigned has executed this Note on the day and
year first above written.
HARDEE CAPITAL PARTNERS, L.P.
By:/s/ David W. Hardee
----------------------
David W. Hardee
Its General Partner
2
<PAGE>
SECURITY AND PLEDGE AGREEMENT
This Security and Pledge Agreement (the "Agreement") is made and entered
into as of September 29, 1993 by and between Elk International Corporation, Ltd.
("Pledgee"), and Hee Poong Park ("Pledgor").
WHEREAS, Pledgor has agreed to purchase, and Pledgee has agreed to sell,
the Pledged Securities (as defined below); and
WHEREAS, as part of the consideration for such purchase, Pledgor has
executed that certain promissory note in the principal amount of $805,555 in
favor of Pledgee dated as of the date hereof (the "Note"); and
WHEREAS, Pledgor has agreed to enter into this Agreement as additional
consideration for acceptance by Pledgee of the Note.
NOW, THEREFORE, based upon the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Grant of Security Interest in Collateral. Pledgor hereby grants to
Pledgee, as security for all present and future obligations and liabilities of
all kinds of Pledgor to Pledgee under the Note and this Agreement (collectively
referred to as the "Obligations"), a first priority security interest in the
following described property (collectively referred to as the "Collateral"):
(a) the following shares (the "Pledged Shares") of Kleer-Vu
Industries, Inc., a Delaware corporation (the "Company"), as more fully
described in Schedule 1 hereto, and the certificates representing the Pledged
Shares and all of Pledgor's rights and privileges with respect thereto, together
with stock powers executed in blank:
112,500 shares of common stock, $.10 par value, of the Company (the
"Common Stock").
(b) all shares of Common Stock acquired from the Company by Pledgor or
its affiliates (other than the Company) after the date hereof together with the
87,500 shares of Common Stock to be acquired by Pledgor from Pledgee on or
before January 3, 1994 (the "Additional Securities").
<PAGE>
(c) the products, proceeds and accessions of the Pledged Shares and/or
the Additional Securities, including, without limitation, cash and stock
dividends and additional property at any time and from time to time receivable
or which may be received by Pledgee or Pledgor, or otherwise distributed or paid
to Pledgee or Pledgor, in respect of or in exchange for any or all of such
Pledged Securities and/or Additional Securities (the "Proceeds").
2. Pledgor's Obligations. At any time and from time to time, upon request
of Pledgee, Pledgor shall give, execute and file and/or record any notice,
financing statement, continuation statement, instrument, document or agreement
that Pledgee shall consider necessary or desirable to create, preserve,
continue, perfect or validate any security interest granted hereunder or which
Pledgee may consider necessary or desirable to exercise or enforce its rights
hereunder with respect to such security interest including, without limitation,
assignment of such registration rights as Pledgor may have relating to the
Collateral.
3. Pledgor's Covenants.
(a) Pledgor agrees hereafter not to encumber or grant a security
interest in or a lien or other encumbrance on the Collateral.
(b) Pledgor agrees not to dispose of any of the Collateral except in
accordance with the terms of this Agreement.
(c) Pledgor agrees to: (i) pay promptly the Obligations secured hereby
when due; (ii) indemnify Pledgee against all loss, claims, demands and
liabilities of every kind arising from the Collateral and the transactions and
other agreements and undertakings contemplated hereby; (iii) pay all expenses,
including reasonable attorneys' fees, incurred by Pledgee in the preservation,
realization, enforcement and exercise of its rights, powers and remedies
hereunder; (iv) execute and deliver such documents as Pledgee deems necessary to
create, perfect and continue the security interest contemplated hereby; and (v)
give Pledgee notice of any litigation filed or claim asserted against Pledgor
relating to or potentially affecting the Collateral.
(d) Pledgor agrees: (i) if requested by Pledgee, to receive and
collect the Proceeds, in trust and as the property of Pledgee, and to
immediately endorse as appropriate and deliver such Proceeds to City National
Bank as Escrow Agent when requested by Pledgee in the exact form in which they
are re-
2
<PAGE>
ceived; (ii) not to commingle the Proceeds or collections thereunder with
other property; and (iii) to keep complete and accurate records regarding all of
the Proceeds.
4. Voting Rights. Pledgor shall have all voting rights with respect to the
Collateral until an Event of Default (as defined below) has occurred, at which
time Pledgee may exercise all such voting rights. Pledgor hereby grants to
Pledgee an irrevocable proxy, effective upon the occurrence of an Event of
Default and so long as such Event of Default shall continue, to vote the Pledged
Securities in such manner and for such purposes as Pledgee shall, in its sole
discretion, continue. Such proxy is coupled with an interest and shall continue
in full force and effect until all of the Obligations shall be paid in full.
5. Events of Default; Remedies.
(a) Each of the following shall constitute an event of default ("Event
of Default") hereunder: (i) Pledgor shall fail to make any payment on the
Obligations secured hereby as and when due; (ii) if Pledgor has materially
breached any provisions of this Agreement; (iii) if a receiver or a trustee of
all or any part of Pledgor's property shall be appointed; (iv) if any assignment
for the benefits of Pledgor's creditors shall be made; (v) if a petition in
bankruptcy shall be filed by or against Pledgor and not dismissed within 120
days; (vi) if any of the Collateral shall be attached or levied upon at any time
pursuant to any court order or other legal process; (vii) liquidation or
dissolution of Pledgor; and (vii) if Pledgor shall generally fail to pay debts
as they become due.
(b) Upon the occurrence of any Event of Default, and at any time as
such Event of Default is continuing, Pledgee shall be entitled to exercise all
the rights, powers and remedies for the protection and enforcement of its rights
in respect of the Collateral. Upon the occurrence of any Event of Default,
Pledgee may declare all obligations secured hereby immediately due and payable
and may proceed to enforce payment of the same and exercise any and all of the
rights and remedies provided by the Uniform Commercial Code of California, as
well as all other rights and remedies possessed by Pledgee. Pledgee may, at
Pledgee's option, sell, assign, and deliver all or any part of the Collateral at
public or private sale, and may bid for and purchase all or any part of the
Collateral so sold free from any right or equity of redemption. Pledgor consents
to Pledgee's remedies stated herein. Pledgor waives diligence, presentment,
demand for payment, notice of dishonor or acceleration, protest and notice
3
<PAGE>
of protest. Pledgee will give Pledgor reasonable notice of the time and place
of any public or private sale and the requirements of reasonable notice shall be
met if such notice is mailed, postage prepaid, to the address of Pledgor as
provided for in the notice provisions of this Agreement at least ten (10) days
before the time of the sale or disposition. Pledgee may apply the proceeds of
any sale or disposition of Collateral available for satisfaction of Pledgor's
obligations hereunder and the expenses of sale in any order of preference that
Pledgee, in Pledgee's sole discretion, determines. Pledgor shall remain liable
for any deficiency.
6. Dividends.
(a) So long as all of the Obligations shall be paid when due, Pledgor
may receive and retain all regular cash dividends declared and paid on the
Pledged Securities and/or the Additional Securities. If any of the Obligations
are not paid when due, all regular cash dividends paid on the Pledged Securities
and/or the Additional Securities shall be received and retained by Escrow Agent
as part of the collateral. If Pledgor receives any such dividend while any
Obligation which is due is unpaid, it shall hold such dividend in trust for the
sole purpose of delivering it in kind to Escrow Agent to be added to the
Collateral.
(b) In the event that any other dividend (including, without
limitation, a stock dividend) or any distribution shall be declared and paid or
made on or in respect of any of the Pledged Securities and/or the Additional
Securities or in the event that any shares, cash, obligations or other property
shall be distributed upon or with respect to any of the Pledged Securities
and/or the Additional Securities pursuant to a recapitalization or
reclassification of the capital stock of an issuer of any such issuer, or
pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or
reorganization of any such issuer with or into another corporation, or
otherwise, then the shares, cash, obligations or other property so paid or
distributed shall be delivered by Pledgor to Escrow Agent forthwith upon its
receipt thereof, to be held by Escrow Agent as additional Collateral hereunder,
and all of such property (other than cash) shall constitute Pledged Securities
and/or the Additional Securities for all purposes of this Pledge Agreement.
7. Unregistered Securities. If at the time of any sale of the Collateral in
accordance with the terms of this Agreement the same or any part thereof to be
sold shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as amended, or there is no exemption available
4
<PAGE>
under such Act, then Pledgee, in its sole and absolute discretion, is
authorized to sell such Collateral or such part thereof by private sale or sales
in such manner and under such circumstances as Pledgee reasonably may deem
necessary or advisable in order that such sale may legally be effected without
registration. Pledgor agrees that private sales so made may be at prices and on
other terms less favorable to the seller than if such Collateral were sold at
public sale, and that Pledgee has no obligation to delay the sale of any such
Collateral for the period of time necessary to permit the issuer of such
Collateral, even if such issuer would agree, to register such Collateral for
public sale under such Act. Pledgor agrees that private sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.
8. No Waiver. Failure of Pledgee to exercise any right or remedy under this
Agreement or any other agreement between Pledgee and Pledgor, or otherwise, or
delay by Pledgee in exercising same, will not operate as a waiver thereof. No
waiver by Pledgee will be effective unless and until it is in writing and signed
by Pledgee. No waiver of any condition or performance will operate as a waiver
of any subsequent condition or obligation. Pledgee shall have no obligation to
resort to the Collateral or any other security which is or may become available
to it.
9. Miscellaneous.
(a) This Agreement, any amendments or replacement hereof, and the
legality, validity and performance of the terms hereof, shall be governed by and
enforced and construed in accordance with the laws of the State of California
without regard to conflicts of laws and principles thereof.
(b) This Agreement and the rights, powers and duties set forth herein
shall be binding upon Pledgor, its employees, shareholders, agents, officers,
directors, representatives and successors and shall inure to the benefit of the
successors and assigns of Pledgee and, in the event of any transfer or
assignment of rights by Pledgee, the rights and privileges herein conferred upon
Pledgee shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This Agreement may not
be transferred or assigned without written consent.
(c) In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith
5
<PAGE>
and shall be modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under any applicable
law shall not effect the validity or enforceability of any other provisions
hereof.
(d) Notices required or permitted to be given under this Agreement
shall be in writing and may be delivered personally or sent to a party by
airmail or first class mail, postage prepaid and addressed to such party at the
address set forth below its signature, or to such other address furnished by
notice given in accordance with this paragraph. Any such notice shall be deemed
to have been given, (i) if sent by mail, five days after the date mailed, and
(ii) if delivered personally, on the date of delivery.
(e) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which shall together constitute
one and the same document.
(f) This Agreement and the security interest and pledge hereunder
shall terminate upon the full and final performance of all Obligations of
Pledgor and payment of all indebtedness secured hereby. At such time, Pledgee
shall promptly reassign to Pledgor all of the Collateral hereunder which has
not been sold, disposed of, retained or applied by Pledgee in accordance with
the terms hereof.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first written above.
ELK INTERNATIONAL CORPORATION, LTD.
By: /s/ Elkana Faiwuszewicz
---------------------------
Title:
Address: P.O. Box N-3247
Nassau, Bahamas
/s/ Hee Poong Park
---------------------------
HEE-POONG PARK
Address: 2415 S. Sierra Drive
Compton, California
90220
7
<PAGE>
SCHEDULE 1
Description of Pledged Shares
Common Stock
Certificate Number Number of Shares
- ------------------ ----------------
NU 44462 112,500
8
<PAGE>
[Form of front of Stock Certificate]
00044462 [Kleer-Vu logo]
Number Shares
----------------- ---------------
NU-44462 112,500
KLEER-VU INDUSTRIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK
CUSIP 498494 20 2
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT HEE POONG PARK ***112500******* is the owner of
2415 SOUTH SIERRA DRIVE ****112500******
COMPTON, CA 90220 *****112500*****
******112500****
*******112500***
**ONE HUNDRED TWELVE THOUSAND FIVE HUNDRED**
Full Paid and Non-Assessable Shares of the COMMON Stock of the par value of
$.10 each of
KLEER-VU INDUSTRIES, INC.
transferable on the books of the Corporation by the holder hereof, in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented thereby are issued and
shall be held [????????] of the provisions of the Certificate of Incorporation,
and all Amendments thereto. This Certificate is not valid unless countersigned
by the Transfer Agent and Registrar.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed
by the facsimile signatures of its duly authorized officers and a facsimile of
its corporate seal to be hereunto fixed.
Dated: DEC 30, 1993
/s/ Michael R. [ILLEGIBLE] /s/ [ILLEGIBLE]
SECRETARY CHAIRMAN
[SEAL]
006777517
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN
OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT.
THIS CERTIFICATE REPRESENTS SHARES OF
NEW COMMON STOCK
<PAGE>
[Form of back of Stock Certificate]
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT-- Custodian
TEN ENT--as tenants by the entireties (Cust) (Minor)
JT TEN--as joint tenants with right of under Uniform Gifts to
survivorship and not as tenants Minors Act.
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received,________ hereby sell, assign and transfer unto
______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
______________________________________________________________________________
______________________________________________________________________________
_______________________________________________________________________ shares
of the capital stock represented by the within Certificate; and do hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said stock on the books of the within named Corporation with full
power of substitution in the premises.
Dated _______________________ _______________________
Notice: The signature to this assignment must correspond with the name
as written upon the face of the certificate in every particular, without
alteration or enlargement or any change whatever.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN
OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT.
<PAGE>
SECURITY AND PLEDGE AGREEMENT
This Security and Pledge Agreement (the "Agreement") is made and entered
into as of September 29, 1993 by and between Elk International Corporation, Ltd.
("Pledgee") and Hardee Capital Partners, L.P. ("Pledgor").
WHEREAS, Pledgor has agreed to purchase, and Pledgee has agreed to sell,
the Pledged Securities (as defined below); and
WHEREAS, as part of the consideration for such purchase, Pledgor has
executed that certain promissory note in the principal amount of $805,555 in
favor of Pledgee dated as of the date hereof (the "Note"); and
WHEREAS, Pledgor has agreed to enter into this Agreement as additional
consideration for acceptance by Pledgee of the Note.
NOW, THEREFORE, based upon the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Grant of Security Interest in Collateral. Pledgor hereby grants to
Pledgee, as security for all present and future obligations and liabilities of
all kinds of Pledgor to Pledgee under the Note and this Agreement (collectively
referred to as the "Obligations"), a first priority security interest in the
following described property (collectively referred to as the "Collateral"):
(a) the following shares (the "Pledged Shares") of Kleer-Vu
Industries, Inc., a Delaware corporation (the "Company"), as more fully
described in Schedule I hereto, and the certificates representing the Pledged
Shares and all of Pledgor's rights and privileges with respect thereto, together
with stock powers executed in blank:
137,500 shares of common stock, $.10 par value, of the Company (the
"Common Stock").
(b) all shares of Common Stock acquired by Pledgor from the Company or
its affiliates (other than the Company) after the date hereof together with the
112,500 shares of Common Stock to be acquired by Pledgor from Pledgee on or
before January 3, 1994 (the "Additional Securities").
<PAGE>
(c) the products, proceeds and accessions of the Pledged Shares and/or
the Additional Securities, including, without limitation, cash and stock
dividends and additional property at any time and from time to time receivable
or which may be received by Pledgee or Pledgor, or otherwise distributed or paid
to Pledgee or Pledgor, in respect of or in exchange for any or all of such
Pledged Securities and/or Additional Securities (the "Proceeds").
2. Pledgor's Obligations. At any time and from time to time, upon request
of Pledgee, Pledgor shall give, execute and file and/or record any notice,
financing statement, continuation statement, instrument, document or agreement
that Pledgee shall consider necessary or desirable to create, preserve,
continue, perfect or validate any security interest granted hereunder or which
Pledgee may consider necessary or desirable to exercise or enforce its rights
hereunder with respect to such security interest including, without limitation,
assignment of such registration rights as Pledgor may have relating to the
Collateral.
3. Pledgor's Covenants.
(a) Pledgor agrees hereafter not to encumber or grant a security
interest in or a lien or other encumbrance on the Collateral.
(b) Pledgor agrees not to dispose of any of the Collateral except in
accordance with the terms of this Agreement.
(c) Pledgor agrees to: (i) pay promptly the Obligations secured hereby
when due; (ii) indemnify Pledgee against all loss, claims, demands and
liabilities of every kind arising from the Collateral and the transactions and
other agreements and undertakings contemplated hereby; (iii) pay all expenses,
including reasonable attorneys' fees, incurred by Pledgee in the preservation,
realization, enforcement and exercise of its rights, powers and remedies
hereunder; (iv) execute and deliver such documents as Pledgee deems necessary to
create, perfect and continue the security interest contemplated hereby; and (v)
give Pledgee notice of any litigation field or claim asserted against Pledgor
relating to or potentially affecting the Collateral.
(d) Pledgor agrees: (i) if requested by Pledgee, to receive and
collect the Proceeds, in trust and as the property of Pledgee, and to
immediately endorse as appropriate and deliver such Proceeds to City National
Bank as Escrow Agent when requested by Pledgee in the exact form in which they
are re-
2
<PAGE>
ceived; (ii) not to commingle the Proceeds or collections thereunder with other
property; and (iii) to keep complete and accurate records regarding all of the
Proceeds.
4. Voting Rights. Pledgor shall have all voting rights with respect to the
Collateral until an Event of Default (as defined below) has occurred, at which
time Pledgee may exercise all such voting rights. Pledgor hereby grants to
Pledgee an irrevocable proxy, effective upon the occurrence of an Event of
Default and so long as such Event of Default shall continue, to vote the Pledged
Securities in such manner and for such purposes as Pledgee shall, in its sole
discretion, determine. Such proxy is coupled with an interest and shall continue
in full force and effect until all of the Obligations shall be paid in full.
5. Events of Default; Remedies.
(a) Each of the following shall constitute an event of default ("Event
of Default") hereunder: (i) if Pledgor shall fail to make any payment on the
Obligations secured hereby as and when due; (ii) if Pledgor has materially
breached any provisions of this Agreement; (iii) if a receiver or a trustee of
all or any part of Pledgor's property shall be appointed; (iv) if any assignment
for the benefits of Pledgor's creditors shall be made; (v) if a petition in
bankruptcy shall be filed by or against Pledgor and not dismissed within 120
days; (vi) if any of the Collateral shall be attached or levied upon at any time
pursuant to any court order or other legal process; (vii) liquidation or
dissolution of Pledgor; and (vii) if Pledgor shall generally fail to pay debts
as they become due.
(b) Upon the occurrence of any Event of Default, and at any time as
such Event of Default is continuing, Pledgee shall be entitled to exercise all
the rights, powers and remedies for the protection and enforcement of its rights
in respect of the Collateral. Upon the occurrence of any Event of Default,
Pledgee may declare all obligations secured hereby immediately due and payable
and may proceed to enforce payment of the same and exercise any and all of the
rights and remedies provided by the Uniform Commercial Code of California, as
well as all other rights and remedies possessed by Pledgee. Pledgee may, at
Pledgee's option, sell, assign, and deliver all or any part of the Collateral at
public or private sale, and may bid for and purchase all or any part of the
Collateral so sold free from any right or equity of redemption. Pledgor consents
to Pledgee's remedies stated herein. Pledgor waives diligence, presentment,
demand for payment, notice of dishonor or acceleration, protest and notice
3
<PAGE>
of protest. Pledgee will give Pledgor reasonable notice of the time and place of
any public or private sale and the requirements of reasonable notice shall be
met if such notice is mailed, postage prepaid, to the address of Pledgor as
provided for in the notice provisions of this Agreement at least ten (10) days
before the time of the sale or disposition. Pledgee may apply the proceeds of
any sale or disposition of Collateral available for satisfaction of Pledgor's
obligations hereunder and the expenses of sale in any order of preference that
Pledgee, in Pledgee's sole discretion, determines. Pledgor shall remain liable
for any deficiency.
6. Dividends.
(a) So long as all of the Obligations shall be paid when due, Pledgor
may receive and retain all regular cash dividends declared and paid on the
Pledged Securities and/or the Additional Securities. If any of the Obligations
are not paid when due, all regular cash dividends paid on the Pledged Securities
and/or the Additional Securities shall be received and retained by Escrow Agent
as part of the collateral. If Pledgor receives any such dividend while any
Obligation which is due is unpaid, it shall hold such dividend in trust for the
sole purpose of delivering it in kind to Escrow Agent to be added to the
Collateral.
(b) In the event that any other dividend (including, without
limitation, a stock dividend) or any distribution shall be declared and paid or
made on or in respect of any of the Pledged Securities and/or the Additional
Securities or in the event that any shares, cash, obligations or other property
shall be distributed upon or with respect to any of the Pledged Securities
and/or the Additional Securities pursuant to a recapitalization or
reclassification of the capital stock of an issuer of any such issuer, or
pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or
reorganization of any such issuer with or into another corporation, or
otherwise, then the shares, cash, obligations or other property so paid or
distributed shall be delivered by Pledgor to Escrow Agent forthwith upon its
receipt thereof, to be held by Escrow Agent as additional Collateral hereunder,
and all of such property (other than cash) shall constitute Pledged Securities
and/or the Additional Securities for all purposes of this Pledge Agreement.
7. Unregistered Securities. If at the time of any sale of the Collateral in
accordance with the terms of this Agreement the same or any part thereof to be
sold shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as amended, or there is no exemption available
4
<PAGE>
under such Act, then Pledgee, in its sole and absolute discretion, is authorized
to sell such Collateral or such part thereof by private sale or sales in such
manner and under such circumstances as Pledgee reasonably may deem necessary or
advisable in order that such sale may legally be effected without registration.
Pledgor agrees that private sales so made may be at prices and on other terms
less favorable to the seller than if such Collateral were sold at public sale,
and that Pledgee has no obligation to delay the sale of any such Collateral for
the period of time necessary to permit the issuer of such Collateral, even if
such issuer would agree, to register such Collateral for public sale under such
Act. Pledgor agrees that private sales made under the foregoing circumstances
shall be deemed to have been made in a commercially reasonable manner.
8. No Waiver. Failure of Pledgee to exercise any right or remedy under this
Agreement or any other agreement between Pledgee and Pledgor, or otherwise, or
delay by Pledgee in exercising same, will not operate as a waiver thereof. No
waiver by Pledgee will be effective unless and until it is in writing and signed
by Pledgee. No waiver of any condition or performance will operate as a waiver
of any subsequent condition or obligation. Pledgee shall have no obligation to
resort to the Collateral or any other security which is or may become available
to it.
9. Miscellaneous.
(a) This Agreement, any amendments or replacement hereof, and the
legality, validity and performance of the terms hereof, shall be governed by and
enforced and construed in accordance with the laws of the State of California
without regard to conflicts of laws and principles thereof.
(b) This Agreement and the rights, powers and duties set forth herein
shall be binding upon Pledgor, its employees, shareholders, agents, officers,
directors, representatives and successors and shall inure to the benefit of the
successors and assigns of Pledgee and, in the event of any transfer or
assignment of rights by Pledgee, the rights and privileges herein conferred upon
Pledgee shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. This Agreement may not
be transferred or assigned without written consent.
(c) In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith
5
<PAGE>
and shall be modified to conform with such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any applicable law shall
not effect the validity or enforceability of any other provisions hereof.
(d) Notices required or permitted to be given under this Agreement
shall be in writing and may be delivered personally or sent to a party by
airmail or first class mail, postage prepaid and addressed to such party at the
address set forth below its signature, or to such other address furnished by
notice given in accordance with this paragraph. Any such notice shall be deemed
to have been given, (i) if sent by mail, five days after the date mailed, and
(ii) if delivered personally, on the date of delivery.
(e) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which shall together constitute
one and the same document.
(f) This Agreement and the security interest and pledge hereunder
shall terminate upon the full and final performance of all Obligations of
Pledgor and payment of all indebtedness secured hereby. At such time, Pledgee
shall promptly reassign to Pledgor all of the Collateral hereunder which has
not been sold, disposed of, retained or applied by Pledgee in accordance with
the terms hereof.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first written above.
ELK INTERNATIONAL CORPORATION, LTD.
By: /s/Elkana Faiwuszewicz
-----------------------
Title:
Address: P.O. Box N-3247
Nassau, Bahamas
HARDEE CAPITAL PARTNERS,
L.P.
By: /s/David W. Hardee
----------------------
David W. Hardee
Its General Partner
Address: 258 Amalfi Drive
Santa Monica, CA
90402
7
<PAGE>
SCHEDULE 1
Description of Pledged Shares
Common Stock
Certificate Number Number of Shares
------------------ ----------------
NU 44461 137,500
8
<PAGE>
[Form of front of Stock Certificate]
00044461 [Kleer-Vu logo]
Number Shares
----------------- ---------------
NU-44461 **137500**
KLEER-VU INDUSTRIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK
CUSIP 498494 20 2
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT HARDEE CAPITAL PARTNERS LP ***137500******* is the owner of
258 AMALFI DRIVE ****137500******
SANTA MONICA, CA 90402 *****137500*****
******137500****
*******137500***
**ONE HUNDRED THIRTY-SEVEN THOUSAND FIVE HUNDRED**
Full Paid and Non-Assessable Shares of the COMMON Stock of the par value of
$.10 each of
KLEER-VU INDUSTRIES, INC.
transferable on the books of the Corporation by the holder hereof, in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented thereby are issued and
shall be held [????????] of the provisions of the Certificate of Incorporation,
and all Amendments thereto. This Certificate is not valid unless countersigned
by the Transfer Agent and Registrar.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed
by the facsimile signatures of its duly authorized officers and a facsimile of
its corporate seal to be hereunto fixed.
Dated: DEC 30, 1993
/s/ Michael R. [ILLEGIBLE] /S/ [ILLEGIBLE]
SECRETARY CHAIRMAN
[SEAL]
006777517
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN
OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT.
THIS CERTIFICATE REPRESENTS SHARES OF
NEW COMMON STOCK
<PAGE>
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") dated as of September 29, 1993, is
entered into by and among Elk International Corporation, Ltd. ("Elk"), Hardee
Capital Partners, L.P. ("HCP"), Hee Poong Park ("Park") and City National Bank,
as escrow agent ("Escrow Agent").
WHEREAS, the parties to this Agreement are parties to the letter agreement
dated as of September 29, 1993 (the "Letter Agreement").
WHEREAS, pursuant to the Letter Agreement, the parties to this Agreement
have agreed to open an escrow and to deposit certain stock certificate with the
escrow agent.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Escrows. Upon receipt of the following certificates and notes, Escrow
Agent shall hold the certificates and notes as follows:
(a) Park Escrow. 112,500 shares of common stock, $.10 par value
("Common Shares"), of Kleer-Vu Industries, Inc. (the "Company") registered in
the name of Park, and accompanying stock powers in blank.
(b) HCP Escrow. 137,500 Common Shares registered in the name of HCP,
and accompanying stock powers in blank.
(c) Elk/P Escrow. 87,500 Common Shares registered in the name of Elk
and accompanying stock powers executed in blank by Elk and a promissory note in
the principal amount of $1,444,445 executed by Park in favor of Elk dated
January 3, 1994 (the "Park Note") and stock powers executed in blank by Park
relating to 87,500 Common Shares.
(d) Elk/H Escrow. 112,500 Common Shares registered in the name of Elk
and accompanying stock powers executed in blank by Elk and a promissory note in
the principal amount of $1,444,445 executed by HCP in favor of Elk dated January
3, 1994 (the "HCP Note") and stock powers executed in blank by HCP relating to
112,500 Common Shares.
<PAGE>
2. January Deliveries. On January 3, 1994:
(a) Escrow Agent shall deliver the Park Note to Elk and submit the
87,500 Common Shares in the Elk/P Escrow in accordance with the provisions of
paragraph 3.
(b) Escrow Agent shall deliver the HCP Note to Elk and submit the
112,500 Common Shares in the Elk/H Escrow in accordance with the provisions of
paragraph 3.
3. Reissuance of Stock Certificates. On January 3, 1994, or as soon
thereafter as possible, Escrow Agent shall submit (a) the 87,500 Common Shares
held in the Elk/P Escrow to Continental Stock Transfer & Trust Company, 2
Broadway, New York, New York 10004, transfer agent for the Company ("Transfer
Agent"), together with the accompanying stock powers executed by Elk, to be
reissued in the name of Park and returned to Escrow Agent, and (b) the 112,500
Common Shares held in the Elk/H Escrow to Transfer Agent, together with the
accompanying stock powers executed by Elk, to be reissued in the name of HCP and
returned to Escrow Agent. Escrow Agent shall have no obligation pursuant to this
paragraph other than to submit to Transfer Agent the certificates and stock
powers in the form delivered to Escrow Agent.
4. Deliveries. Escrow Agent shall make the following deliveries:
(a) The 112,500 Common Shares held in the Park Escrow, and
accompanying stock powers in blank:
(i) to Park, 20 calendar days after written notice from Park to
Escrow Agent and Elk (a copy of which notice Escrow Agent shall mail to Elk
in accordance with the provisions of paragraph 6(a)) that Park has paid or
otherwise satisfied in full the promissory note in the principal amount of
$805,555 executed by Park in favor of Elk dated the date hereof (the "HPP
Note") and the Park Note; or
(ii) to Elk, 20 calendar days after written notice from Elk to
Escrow Agent and Park (a copy of which notice Escrow Agent shall mail to
Park in accordance with the provisions of paragraph 6(a)) that an Event of
Default (as defined in the Security and Pledge Agreement between Park and
Elk dated as of
2
<PAGE>
the date hereof and/or dated as of January 3, 1994) has occurred and is
continuing.
(b) The 137,500 Common Shares held in the HCP Escrow, and accompanying
stock powers in blank:
(i) to HCP, 20 calendar days after written notice from HCP to
Escrow Agent and Elk (a copy of which notice Escrow Agent shall mail to Elk
in accordance with the provisions of paragraph 6(a)) that HCP has paid or
otherwise satisfied in full the promissory note in the principal amount of
$805,555 executed by HCP in favor of Elk dated the date hereof (the "Hardee
Note") and the HCP Note; or
(ii) to Elk, 20 calendar days after written notice from Elk to
Escrow Agent and HCP (a copy of which notice Escrow Agent shall mail to HCP
in accordance with the provisions of paragraph 6(a)) that an Event of
Default (as defined in the Security and Pledge Agreement between HCP and
Elk dated as of the date hereof and/or dated as of January 3, 1994) has
occurred and is continuing.
(c) The 87,500 Common Shares held in the Elk/P Escrow, and
accompanying stock powers in blank:
(i) to Park, 20 calendar days after written notice from Park to
Escrow Agent and Elk (a copy of which notice Escrow Agent shall mail to Elk
in accordance with the provisions of paragraph 6(a)) that Park has paid or
otherwise satisfied in full the Park Note and the HPP Note; or
(ii) to Elk, 20 calendar days after written notice from Elk to
Escrow Agent and Park (a copy of which notice Escrow Agent shall mail to
Park in accordance with the provisions of paragraph 6(a)) that an Event of
Default (as defined in the Security and Pledge Agreement between Park and
Elk dated as of January 3, 1994 and/or dated as of the date hereof) has
occurred and is continuing.
3
<PAGE>
(d) The 112,500 Common Shares held in the Elk/H Escrow, and
accompanying stock powers in blank:
(i) to HCP, 20 calendar days after written notice from HCP to
Escrow Agent and Elk (a copy of which notice Escrow Agent shall mail to Elk
in accordance with the provisions of paragraph 6(a)) that HCP has paid or
otherwise satisfied in full the HCP Note and the Hardee Note; or
(ii) to Elk, 20 calendar days after written notice from Elk to
Escrow Agent and HCP (a copy of which notice Escrow Agent shall mail to HCP
in accordance with the provisions of paragraph 6(a)) that an Event of
Default (as defined in the Security and Pledge Agreement between Park and
Elk dated as of January 3, 1994 and/or dated as of the date hereof) has
occurred and is continuing.
5. Voting.
(a) Until such time as the Common Shares held in the Park Escrow and
the HCP Escrow are delivered in accordance with the provisions of this
Agreement, Park and HCP, respectively, shall retain the right to vote such
shares on any matter on which such shares are entitled to be voted, and shall be
entitled to receive directly all dividends and other distributions declared and
paid with respect thereto. Escrow Agent shall cooperate with Park and HCP to the
extent necessary to allow Park and HCP, respectively, to exercise these rights.
(b) Until January 3, 1994, Elk shall retain the right to vote the
Common Shares held in the Elk/P Escrow and the Elk/H Escrow on any matter on
which such shares are entitled to be voted, and shall be entitled to receive
directly all cash dividends. Escrow Agent shall cooperate with Elk to the extent
necessary to allow Elk to exercise these rights. If and to the extent that the
number of Common Shares held in the Elk/P Escrow or the Elk/H Escrow shall be
increased or reduced by a change in par value, split-up, reclassification,
distribution of a dividend payable in shares, or the like, the number of Common
Shares subject to the Elk/P Escrow and the Elk/H Escrow shall be proportionately
adjusted. If Elk receives any dividend (other than a cash dividend) on the
Common Shares held in the Elk/P Escrow or the Elk/H Escrow, Elk shall deliver it
to the Escrow Agent with instructions to add it to the appropriate escrow.
4
<PAGE>
(c) After January 3, 1994 and until such time as the Common Shares
held in the Elk/P Escrow and the Elk/H Escrow are delivered in accordance with
the provisions of this Agreement, Park and HCP, respectively, shall retain the
right to vote such shares on any matter on which such shares are entitled to be
voted, and shall be entitled to receive directly all dividends and other
distributions declared and paid with respect thereto. Escrow Agent shall
cooperate with Park and HCP to the extent necessary to allow Park and HCP,
respectively, to exercise these rights. Notwithstanding the foregoing, any votes
taken or dividends paid during the period such Common Shares are submitted to
Transfer Agent in accordance with paragraph 3 shall not be the concern of Escrow
Agent.
6. Notices.
(a) All notices, demands or other communications hereunder, other than
to the Escrow Agent shall be in writing and shall be deemed to have been duly
given (i) if sent by United States mail, certified or registered, with return
receipt requested, or (ii) if delivered in person:
If to Elk, at
Elk International Corporation, Ltd.
P.O. Box N-3247
Nassau, Bahamas
Attn:
with a copy to:
Patrick Strong, Esq.
3 River Way, Suite 1460
Houston, Texas 77056
If to HCP, at
Hardee Capital Partners, L.P.
258 Amalfi Drive
Santa Monica, California 90402
Attn: David W. Hardee
5
<PAGE>
If to Park, at:
Hee Poong Park
2415 S. Sierra Drive
Compton, California 90220
or at such other address as may have been furnished by such person in writing to
the other parties. Any such notice, demand or other communication shall be
deemed to have been given, (i) if sent by mail, five days after the date mailed,
and (ii) if delivered in person, on the date of delivery.
(b) All notices and instructions to Escrow Agent must be in writing,
refer to the number assigned to the Escrow, and be delivered personally or
mailed, certified or registered mail, return receipt requested, addressed to
City National Bank, Escrow Department, 400 North Roxbury Drive, 8th Floor,
Beverly Hills, California 90210. All notices and instructions will be deemed
given when received by Escrow Agent, as shown on a receipt therefor.
7. Escrow Agent.
(a) City National Bank Escrow Instructions (the "General Provisions")
attached hereto as Exhibit 1 are incorporated herein by reference. To the extent
that there is a conflict between the provisions of this Agreement and the
general Provisions, the General Provisions shall control. Without limiting the
generality of the Letter Agreement, the Park Note, the HCP Note or any security
and pledge agreement, nor shall Escrow Agent have any obligation to verify
whether or not any default shall have occurred under the terms thereof.
(b) Park and HCP shall each pay $1,250 to Escrow Agent by October 1,
1993 as Escrow Agent's fee. Unless other payment arrangements are agreed to by
Escrow Agent in writing, Escrow Agent may withhold from any deliveries any
unpaid fees.
8. This Agreement may only be amended in writing executed by the parties
hereto effected by such amendment.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
ELK INTERNATIONAL CORPORATION, LTD
By: /s/Elkana Faiwuszewicz
--------------------------
Its: President
HARDEE CAPITAL PARTNERS, L.P.
By: /s/David W. Hardee
----------------------
General Partner
/s/Hee Poong Park
-----------------
HEE POONG PARK
CITY NATIONAL BANK, as Escrow Agent
/s/[ILLEGIBLE]
Vice President
Escrow No.: 32891-SGB
<PAGE>
Exhibit 1
YOU ARE FURTHER INSTRUCTED AND IT IS AGREED AS FOLLOWS:
1. Investment and Disbursement of Funds.
(a) Unless otherwise provided elsewhere in these instructions, or unless
otherwise instructed by a party authorized to give such instructions, all monies
deposited into the Escrow will be placed in an interest bearing City National
Bank Money Market Investment Account. Interest will accrue beginning the next
business day following the deposit, but will not be paid until Escrow Holder
receives a signed, completed IRS Form W-9. In the event Escrow Holder does not
receive a signed, completed Form W-9 by the earlier of (i) the close of the
Escrow, or (ii) the last business day of the current calendar year, all accrued
interest will be forfeited.
(b) Under no circumstances will Escrow Holder be required to disburse any
monies deposited into the Escrow until any check, draft or other instrument so
deposited has been collected in good funds.
2. Exculpation. Escrow Holder will not be liable for:
(a) The genuineness, sufficiency, correctness as to form, manner of
execution or validity of any instrument deposited in the Escrow, nor the
identity, authority or rights of any person executing the same;
(b) Any failure by any party other than Escrow Holder to keep or comply
with any of the provisions of these Escrow Instructions or any agreement,
contract or other instrument referred to herein;
(c) The failure of any party to transmit, or any delay in transmitting, any
funds or other materials to be deposited into the Escrow to Escrow Holder; or
(d) The occurrence or non-occurrence of any event outside of the Escrow, or
Escrow Holder's failure to take any action with respect thereto unless Escrow
Holder is notified in writing of such event by the party specified in these
Escrow Instructions to give such notice.
Escrow Holder's duties hereunder shall be limited to the safekeeping of monies,
instruments or other documents received by Escrow Holder into the Escrow, and
for the disposition of same in accordance with these Escrow Instructions and any
further instructions pursuant to these Escrow Instructions.
3. Interpleader. In the event conflicting demands are made or notices served
upon Escrow Holder with respect to the Escrow, Escrow Holder shall have the
absolute right at its election to do either or both of the following:
(a) Withhold and stop all further proceedings in, and performance of, this
Escrow; or
(b) File a suit in interpleader and obtain an order from the court
requiring the parties to litigate their several claims and rights among
themselves. In the event such interpleader suit is brought, Escrow Holder shall
be fully released from any obligation to perform any further duties imposed upon
it hereunder, and the parties shall pay Escrow Holder all costs, expenses and
reasonable attorneys' fees expended or incurred by Escrow Holder, the amount
thereof to be fixed and a judgment thereof to be rendered by the court in such
suit.
4. Indemnity. The parties further agree to pay on demand, and to indemnify and
hold Escrow Holder harmless from and against, all costs, damages, judgments,
attorney's fees, expenses, obligations and liabilities of any kind or nature
which, in good faith, Escrow Holder may incur or sustain in connection with or
arising out of the Escrow, and Escrow Holder is hereby given a lien upon all the
rights, titles and interest of the parties in monies and other property
deposited in the Escrow, to protect Escrow Holder's rights and to indemnify and
reimburse Escrow Holder under these Escrow Instructions.
<PAGE>
5. Resignation of Escrow Holder. Escrow Holder may resign herefrom upon fourteen
(14) days' written notice to the parties and shall thereupon be fully released
from any obligation to perform any further duties imposed upon it hereunder.
Escrow Holder will transfer all files and records relating to the Escrow to any
successor escrow holder upon receipt of a copy of executed escrow instructions
designating such successor.
6. Other.
(a) Time is of the essence of these and all additional or changed
instructions.
(b) These Escrow Instructions may be executed in counterparts, each of
which so executed shall, irrespective of the date of its execution and delivery,
be deemed an original, and said counterparts together shall constitute one and
the same instrument.
(c) These Escrow Instructions shall be governed by, and shall be construed
according to, the laws of the State of California. Any litigation instituted by
any party with respect to the Escrow or any act or omission of Escrow Holder
shall, if Escrow Holder is made a party thereto, be instituted only in a court
of appropriate jurisdiction in the County of Los Angeles, and each of the
parties hereby consents to the jurisdiction of such court.
(d) All liabilities and obligations of the parties hereto shall be joint
and several, unless otherwise specified herein.
7. Instructions and Amendments. All notices and instructions to Escrow Holder
must be in writing, refer to the number assigned to the Escrow shown on the
reverse hereof and be delivered personally or mailed, certified or registered
mail, return receipt requested, addressed to City National Bank, Escrow
Department, 400 North Roxbury Drive, 8th Floor, Beverly Hills, California 90210.
All such notices and instructions will be deemed given when received by Escrow
Holder, as shown on a receipt therefor.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
ELK INTERNATIONAL CORPORATION, LTD
By: /s/Elkana Faiwuszewicz
--------------------------
Its: President
HARDEE CAPITAL PARTNERS, L.P.
By: /s/David W. Hardee
----------------------
General Partner
/s/Hee Poong Park
-----------------
HEE POONG PARK
CITY NATIONAL BANK, as Escrow Agent
----------------------
Vice President
Escrow No.: 32891-SGB
<PAGE>
[letterhead of Skadden, Arps, Slate, Neagher & Flom]
December 28, 1993
Ms. Sue Behning
City National Bank
Escrow Department
400 North Roxbury Drive, 8th Floor
Beverly Hills, California 90210
Re: Escrow No. 32891-SGB
Dear Ms. Behning:
Enclosed is the Amendment to Escrow Agreement (the "Amendment") executed by
all of the parties (other than City National Bank) to the Escrow Agreement dated
as of September 29, 1993 relating to Escrow No. 32891-SGB. Please execute and
return one copy of the enclosed signature page to the Amendment. Also enclosed
is a stock power executed by Elk International Corporation, Inc. contemplated by
the Amendment.
Please take the actions specified by the Amendment as soon as possible.
Please call me at (213) 687-5266 if you have any questions.
Very truly yours,
/s/Ray Sandona
Ray Sandona
cc: H.P. Park
David Hardee
Daniel Dror
Barry Reifler
Patrick Strong
Joseph Giunta
<PAGE>
AMENDMENT TO ESCROW AGREEMENT
THIS AMENDMENT TO ESCROW AGREEMENT (this "Agreement") dated as of December
6, 1993, is entered into by and among Elk International Corporation, Ltd.
("Elk"), Hardee Capital Partners, L.P. ("HCP"), Hee Poong Park ("Park") and City
National Bank as escrow agent ("Escrow Agent").
WHEREAS, the parties to this Agreement are parties to the Escrow Agreement
dated as of September 29, 1993 (the "Escrow Agreement").
WHEREAS, Kleer-Vu Industries, Inc. (the "Company") has declared a 20% stock
dividend (the "Stock Dividend") on its common stock, $.04 par value per share
(the "Common Shares"), payable October 15, 1993 to holders of record on August
16, 1993.
WHEREAS, the Escrow Agent has received the following certificates for
Common Shares issued in the name of Elk in connection with the Stock Dividend
(the "Dividend Shares"):
Certificate No. Number of Shares
--------------- ----------------
NU 44348 2,977
NU 44349 10,269
NU 44350 20,773
NU 44351 56,227
WHEREAS, the parties desire to instruct the Escrow Agent on the treatment
of the Dividend Shares in accordance with the provisions of the Escrow Agreement
and the letter agreement among Elk, HCP, Park and others dated September 29,
1993.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree
as follows:
1. The Escrow Agent is hereby instructed to submit the Dividend Shares to
the Transfer agent (as defined in the Escrow Agreement) with a stock power
executed by Elk with instructions to reissue such shares in the following names
and amounts (after such reissuance, the "Reissued Shares") and to return the
Reissued Shares to the Escrow Agent:
<PAGE>
Name Number of Shares
---- ----------------
Park 22,500
HCP 27,500
Elk 17,500
Elk 22,500
Elk 246
2. Upon receipt by the Escrow Agent of the Reissued Shares, they shall be
held as follows:
a. the 22,500 Reissued Shares in the name of Park shall be held in
accordance with the provisions of Section 1(a) of the Escrow
Agreement, and all references in the Escrow Agreement to the 112,500
Common Shares described in Section 1(a) of the Escrow Agreement shall
be deemed also to refer to such 22,500 Reissued Shares;
b. the 27,500 Reissued Shares in the name of HCP shall be held in
accordance with the provisions of Section 1(b) of the Escrow
Agreement, and all references in the Escrow Agreement to the 137,500
Common Shares described in Section 1(b) of the Escrow Agreement shall
be deemed also to refer to such 27,500 Reissued Shares;
c. the 17,500 Reissued Shares in the name of Elk shall be held in
accordance with the provisions of Section 1(c) of the Escrow
Agreement, and all references in the Escrow Agreement to the 87,500
Common Shares described in Section 1(c) of the Escrow Agreement shall
be deemed also to refer to such 17,500 Reissued Shares;
d. the 22,500 Reissued Shares in the name of Elk shall be held in
accordance with the provisions of Section 1(d) of the Escrow
Agreement, and all references in the Escrow Agreement to the 112,500
Common Shares described in Section 1(d) of the Escrow Agreement shall
be deemed also to refer to such 22,500 Reissued Shares; and
e. the 246 Reissued Shares in the name of Elk shall be held in accordance
with the provisions of Section 1(c) of the Es-
2
<PAGE>
crow Agreement as part of the 87,500 Common Shares described therein.
3. This Agreement may be signed in one or more counterparts, each of which
shall be deemed to be an original but all of which shall together constitute one
and the same agreement.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
ELK INTERNATIONAL CORPORA-
TION, LTD.
By:/s/ Elkana Faiwuszewicz
--------------------------
President
HARDEE CAPITAL PARTNERS, L.P.
By: /s/David W. Hardee
----------------------
General Partner
/s/Hee Poong Park
-----------------
HEE POONG PARK
CITY NATIONAL BANK,
as Escrow Agent
By:
---------------------------
Sue Behning, Escrow Officer
4
<PAGE>
STOCK POWER
FOR VALUE RECEIVED, ELK INTERNATIONAL CORPORATION LTD., a Bahamas
corporation, hereby sells, assigns and transfers unto
Hee Poong Park 22,500 shares
Hardee Capital Partners, L.P. 27,500 shares
- ------------------------------------------------
Elk International Corporation Ltd. 17,500 shares
Elk International Corporation Ltd. 22,500 shares
- ------------------------------------------------
Elk International Corporation Ltd. 246 shares
(_______) Shares of the Common Stock of Kleer-Vu Industries, Inc. standing in
the name of Elk International Corporation Ltd. on the books of said Kleer-Vu
Industries, Inc., represented by Certificate(s) No(s.) NN44348, NN44349, NN44350
and NN44351 herewith, and do hereby irrevocably constitute and appoint
___________________ attorney to transfer the said stock on the books of said
Corporation with full power of substitution in the premises.
Elk International Corporation, Ltd. Dated:
By: /s/ Elkana Faiwuszewicz December 6, 1993
----------------------------
President
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
PAINEWEBBER INC.
[ILLEGIBLE]
- --------------------
AUTHORIZED SIGNATURE
X0002212
NYSE, INC. MEDALLION
SIGNATURE PROGRAM
05501
<PAGE>
[City National Bank letterhead]
FAX TRANSMITTAL COVER SHEET
DATE: 9/29/94
ESCROW #: 46830005
To: Rebekah
FAX #: (713) 334-5090 PHONE #: ________________
FROM: TERRI GIZZO - (310) 550-5419
REGARDING: Elk/Hardee/Park
================================================================================
SPECIAL INSTRUCTIONS/COMMENTS:
Copies of all Kleer-Vu Industries Stock Certificates in file:
Elk Int'l 689 #NU44556
Hardee Capital Part 137,500 44461
Hee Pong Park 112,500 44462
Hardee Capital 22,500 44555
Hardee Capital 27,500 44554
Hardee Capital 112,500 44553
Hee Pong Park 17,500 44552
Hee Pong Park 22,500 44551
Hee Pong Park 87,500 44550
================================================================================
_____ PLEASE REVIEW AND ADVISE
_____ IF APPROVED, PLEASE PHOTOCOPY, SIGN AND RETURN VIA FAX,
WITH HARD COPY TO TRUST DEPARTMENT VIA MAIL
[ X ] RETAIN FOR YOUR RECORDS
We are transmitting a total of 10 pages, including this sheet. Direct your
inquiry regarding an unsuccessful transmission or illegible copy to Terri at
(310) 550-5419.
Rebekah--call me tomorrow if you need to--I'm leaving ill
<PAGE>
RELEASE AGREEMENT
This Release Agreement (this "Agreement") is entered into by and between
Hardee Capital Partners, L.P., David W. Hardee, Hee Poong Park and Kleer-Vu
Industries, Inc. (collectively, the "H/P/K Parties") and Elk International
Corporation, Ltd. and Daniel Dror (collectively, the "E/D Parties") as of
September 29, 1993.
WHEREAS, the H/P/K Parties and E/D Parties are among the parties to that
letter agreement dated September 29, 1993 (the "Letter Agreement").
WHEREAS, as part of the transactions contemplated by the Letter Agreement,
and as additional consideration therefore, the H/P/K Parties and E/D Parties
have agreed to enter into this Agreement.
NOW, THEREFORE, based upon the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. General Release. As of the date of this Agreement, in consideration of
the mutual general releases contained herein, the parties promise, agree and
generally release as follows:
(a) As of the date of this Agreement, except as to such rights or
claims as may be created by this Agreement and the Letter Agreement and the
transactions contemplated thereby, the H/P/K Parties hereby release, remise and
forever discharge the E/D Parties and their respective parent entities,
affiliates, subsidiaries, predecessors, assignors, successors, assignees,
directors, officers, agents, partners, partnerships, stockholders and employees
from any and all claims, demands, and cause or causes of action existing as of
the date of this Agreement and arising out of, connected with, or relating or
incidental to the dealings between the H/P/K Parties and E/D Parties prior to
and including the date of this Agreement, including, without limitation, all
matters relating to pending claims of the Resolution Trust Corporation and the
Federal Insurance Deposit Corporation.
(b) As of the date of this Agreement, except as to (i) such rights
or claims as may be created by this Agreement and the Letter Agreement and the
transactions contemplated thereby, the E/D Parties hereby release, remise
<PAGE>
and forever discharge the H/P/K Parties and their respective parent entities,
affiliates, subsidiaries, predecessors, assignors, successors, assignees,
directors, officers, agents, partners, partnerships, stockholders and employees
from any and all claims, demands, and cause or causes of action existing as of
the date of this Agreement and arising out of, connected with, or relating or
incidental to the dealings between the H/P/K Parties and E/D parties prior to
and including the date of this Agreement.
2. Section 1542. Each party to this Agreement specifically waives the
benefit of the provisions of Section 1542 of the Civil Code of the State of
California, as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
3. Indemnification.
(a) In addition to any other indemnification existing on the date
hereof between the E/d Parties and Kleer-Vu Industries, Inc. (the "Company"),
the Company shall indemnify and hold harmless the E/D Parties and their
respective agents, representatives, employees, officers, directors, stockholders
and affiliates (collectively, the "Indemnified Persons"), to the extent lawful,
from and against all claims, liabilities, losses, damages and expenses related
to or arising out of the transactions contemplated by the Letter Agreement,
other than any claims, liabilities, losses, damages and expenses arising under
or based upon willful misconduct or gross negligence.
(b) If any action, suit or proceeding (a "Proceeding") shall be
brought or asserted against any Indemnified Party for which indemnification
shall be sought from the Company, such Indemnified Party shall promptly notify
the Company thereof in writing. The Company shall have the right, exercisable by
giving written notice to an Indemnified Person within 30 days after receipt of
such written notice from the Indemnified Person, to assume, at its expense, the
defense of any such Proceeding; provided, however, that an Indemnified Person
shall have the right to employ separate counsel in any such Proceeding, and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person. If the Company assumes the
defense of any Proceeding, the Company may compromise or settle such Pro-
2
<PAGE>
ceeding without the Indemnified Persons' consent if there is no finding or
admission of liability and the sole relief is monetary damages that are paid in
full by the Company. The Company shall not be bound by or liable for any
compromise or settlement of any Proceeding effected without its consent, which
shall not be unreasonably withheld.
4. Representations and Warranties. Each of the parties to this Agreement
represents and warrants to, and agrees with, each other party hereto, as
follows:
(a) Each party has received independent legal advice from its
attorneys with respect to the advisability of executing this Agreement and with
respect to the meaning of California Civil Code Section 1542.
(b) No party (nor any officer, agent, employee, representative, or
attorney of or for any party) has made any statement or representation to any
other party regarding any fact relied upon in entering into this Agreement, and
each party does not rely upon any statement, representation or promise of any
other party (or of any officer, agent, employee, representative, or attorney for
any other party), in executing this Agreement, except as expressly stated in
this Agreement.
(c) Each party to this Agreement has made such investigation of the
facts pertaining to this Agreement, and of all the matters pertaining thereto,
as it deems necessary.
(d) Each party or responsible officer thereof has read this
Agreement and understands the contents hereof. Each of the officers executing
this Agreement on behalf of their respective corporations is empowered to do so
and thereby binds such respective corporation.
(e) In entering into this Agreement each party assumes the risk of
any misrepresentation, concealment or mistake. If any party should subsequently
discover that any fact relied upon by it in entering into this Agreement was
untrue, or that any fact was concealed from it, or that its understanding of the
facts or of the law was incorrect, such party shall not be entitled to any
relief in connection therewith, including, without limiting the generality of
the foregoing, any alleged right or claim to set aside or rescind this
Agreement. This Agreement is intended to be and is final and binding between the
parties hereto, regardless of any claims of misrepresentation, promise made
without the intention
3
<PAGE>
to perform, concealment of fact, mistake of fact or law, or of any other
circumstance whatsoever.
(f) Each party has not heretofore assigned, transferred, or granted,
or purported to assign, transfer, or grant, any of the claims, demands, and
cause or causes of action disposed of by this Agreement.
(g) Each term of this Agreement is contractual and not merely a
recital.
(h) Each party is aware that it may hereafter discover claims or
facts in addition to or different from those it now knows or believes to be true
with respect to the matters related herein. Nevertheless, it is the intention of
the parties to fully, finally and forever settle and release all such matters,
and all claims relative thereto, that do now exist, may exist, or heretofore
have existed between them. In furtherance of such intention, the releases given
herein shall be and remain in effect as full and complete mutual releases of
all such matters, notwithstanding the discovery or existence of any additional
or different claims or facts relative thereto.
(i) No party has entered into this Agreement under duress.
(j) No party has been coerced to enter into this Agreement.
5. Notices. All notices, demands or other communications hereunder shall
be in writing and shall be deemed to have been duly given (i) if sent by United
States mail, certified or registered, with return receipt requested, or (ii) if
delivered in person:
If to Elk International Corporation, at
Elk International Corporation, Ltd.
P.O. Box N-3247
Nassau, Bahamas
Attn:
If to Daniel Dror, at
4000 Towerside Terrace #605
Miami, Florida 33138-2236
4
<PAGE>
with a copy to:
Patrick Strong, Esq.
3 River Way, Suite 1460
Houston, Texas 77056
If to the Company, at
Kleer-Vu Industries, Inc.
2415 S. Sierra Drive
Compton, California 90220
Attn: President
If to Hardee Capital Partners, at
Hardee Capital Partners, L.P.
258 Amalfi Drive
Santa Monica, California 90402
Attn: David W. Hardee
If to David Hardee, at
258 Amalfi Drive
Santa Monica, California 90402
If to Hee Poong Park, at:
Hee Pong Park
2415 S. Sierra Drive
Compton, California 90220
or at such other address as may have been furnished by such person in writing to
the other parties. Any such notice, demand or other communication shall be
deemed to have been given, (i) if sent by United States mail, certified or
registered, five days after the date mailed, and (ii) if delivered in person, on
the date of delivery.
5
<PAGE>
6. Miscellaneous.
(a) This Agreement shall be deemed to have been executed and
delivered within the State of California, and the rights and obligations of the
parties hereto shall be construed and enforced in accordance with, and governed
by, the laws of the State of California.
(b) This Agreement is the entire Agreement between the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions. This Agreement may
be amended only by an agreement in writing, signed by the parties hereto.
(c) This Agreement is binding upon and shall inure to the benefit of
the parties hereto, their respective agents, employees, representatives,
officers, directors, divisions, subsidiaries, affiliates, assigns, heirs,
successors in interest and shareholders.
(d) Each party has cooperated in the drafting and preparation of
this Agreement. Hence, in any construction to be made of this Agreement, the
same shall not be construed against any party.
(e) In the event of litigation relating to this Agreement, the
prevailing party shall be entitled to attorneys' fees.
(f) This Agreement may be executed in counterparts, and when each
party has signed and delivered at least one such counterpart, each counterpart
shall be deemed an original, and, when taken together with other signed
counterparts, shall constitute one agreement, which shall be binding upon and
effective as to all parties.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first written above.
ELK INTERNATIONAL CORPORATION, LTD.
By: /s/ Elkana Faiwuszewicz
-------------------------
Title: President
/s/ Daniel Dror
-------------------------
DANIEL DROR
HARDEE CAPITAL PARTNERS, L.P.
By: /s/ Daniel W. Hardee
-------------------------
Daniel W. Hardee
Its General Partner
/s/ David W. Hardee
-------------------------
DAVID W. HARDEE
/s/ Hee Poong Park
-------------------------
HEE POONG PARK
KLEER-VU INDUSTRIES, INC.
By: /s/ [ILLEGIBLE]
----------------------
Title:
7
<PAGE>
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (the "Agreement") is made and entered into as of
September 29, 1993 by David W. Hardee ("Guarantor"), in favor of Elk
International Corporation, Ltd. ("Elk").
WHEREAS, Hardee Capital Partners, L.P. ("HCP"), Elk and others are parties
to that certain letter agreement dated September 29, 1993 (the "Letter
Agreement");
WHEREAS, HCP is the maker on that certain promissory note in the principal
amount of $805,555 in favor of Elk dated the date hereof (the "Note");
WHEREAS, pursuant to the Letter Agreement, Guarantor has agreed to execute
this Agreement is favor of Elk.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, Guarantor hereby agrees for the benefit of Elk as
follows:
1. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to
Elk the timely payment and performance by HCP of all of its obligations at any
time owing or outstanding pursuant to the Note (the "Guarantied Obligations").
2. Nature of the Guaranty. The obligations of the Guarantor under this
Guaranty shall be of a continuing nature, shall cover all of the Guarantied
Obligations, and shall be irrevocable and unconditional, except as expressly
provided herein. This Guaranty shall remain in effect until full payment and/or
performance of all of the Guarantied Obligations.
3. Authorization to Deal with HCP. Elk shall have complete discretion,
without giving notice to, making demand of, or obtaining the consent of, the
Guarantor, to deal with HCP in such manner as Elk in its sole discretion shall
decide. Accordingly, Guarantor hereby grants to Elk full authority in its sole
discretion, whether before or after termination of this Guaranty, and without
giving notice to, making demand of, or obtaining the consent of Guarantor, to do
any or all of the following, without limiting the generality of the foregoing:
(i) renew, extend, accelerate or otherwise modify or amend any term or condition
of
<PAGE>
the Guarantied Obligations; (ii) settle, release, compromise or otherwise
liquidate any portion of the Guarantied Obligations; (iii) accept partial
payment of the Guarantied Obligations; or (iv) assign or transfer this Guaranty
or any interest therein. No exercise or non-exercise by Elk of its rights, no
dealing by Elk with HCP and no change, impairment or suspension of any right or
remedy of Elk shall in any way affect any of Guarantor's duties or obligations
hereunder or give Guarantor any recourse against Elk.
4. Demands for Payment. Demands by Elk for payment under this Guaranty may
be made on any number of occasions. Each demand shall be in writing. No delay in
or failure to make such demand shall deminish or in any way affect Guarantor's
obligations under this Guaranty.
5. Agreements to Pay. All obligations payable by Guarantor hereunder shall
be paid by Guarantor to Elk immediately upon demand, in lawful money of the
United States, when such unsatisfied obligations are or become due. If a claim
is made upon Elk at any time for repayment or recovery of any amount or amounts
or other value received by Elk, from any source whatsoever, in payment of or on
account of any of the Guarantied Obligations and Elk repays or otherwise becomes
liable for all or any part of such claim by reason of the bankruptcy, insolvency
or reorganization of HCP, Guarantor shall remain liable to Elk for the amount so
repaid, or for which Elk otherwise is liable, to the same extent as if such
amount or amounts never had been received by Elk notwithstanding any termination
hereof.
6. Unenforceability of the Guarantied Obligations Against HCP. If for any
reason whatsoever HCP has no legal existence or is under no legal obligation to
discharge the Guaranteed Obligations (other than by reason of HCP's payment or
satisfaction of all amounts due thereunder), or if the monies due under the
Guaranteed Obligations cannot be recovered in full from HCP due to operation of
law or for any other reason, this Guaranty shall nevertheless be binding on
Guarantor to the same extent as if Guarantor at all times prior to demand by Elk
for payment hereunder had been, and at the time of such demand was, the
principal debtor on the Guaranteed Obligations. Notwithstanding anything to the
contrary contained herein, Guarantor shall have the right to claim the benefit
of any defense, set-off or counterclaim which may be asserted by or available to
HCP against Elk other than the automatic stay provisions of Section 362 of the
Bankruptcy Code or any provisions relating to HCP's discharge in bankruptcy.
2
<PAGE>
7. Waivers.
(a) Statute of Limitations. Guarantor waives and agrees not to
exercise or take advantage of the defense of the statute of limitations in any
action hereunder or for the collection or payment of any Guaranteed Obligation.
If the maturity of any Guaranteed Obligation is accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for purposes of this
Guaranty, and without demand or notice to Guarantor.
(b) Alternative Remedies, Contributions and Counterclaims. Guarantor
hereby waives any right to require Elk to proceed against HCP, or to pursue any
other remedy in Elk's power against HCP and further waives the right to have the
property of HCP first applied to the discharge of the Guaranteed Obligations, it
being agreed by Guarantor that this Guaranty is an absolute guarantee of payment
and performance and not of collection, that failure of Elk to exercise any
rights or remedies it may have against HCP shall in no way impair the obligation
of this Guaranty, and that the liability of Guarantor hereunder is and shall be
direct and unconditional. Elk may, in its sole discretion, exercise any right or
remedy it may have against HCP without affecting or impairing in any manner the
liability of Guarantor hereunder, except to the extent that the Guarantied
Obligations are satisfied as a result thereof. Guarantor hereby waives any
defense arising out of the absence, impairment or loss of any right of
reimbursement, contribution or subrogation or any other right or remedy of
Guarantor against HCP whether resulting from such election by Elk or otherwise.
(c) Other Waivers. Guarantor hereby expressly waives the protection
of, and any right to assert, in any action brought on this Guaranty or
otherwise, Sections 2809, 2810, 2819, 2845, 2849, and 2850 of the California
Civil Code; and any defense arising as a result of any election made by Elk
under Section 9501(4) of the California Commercial Code. Guarantor waives any
defenses arising as a result of any election made by Elk in any proceeding
instituted under Title 11 of the United States Code (the "Bankruptcy Code"),
under Section 1111(b)(2) of the Bankruptcy Code, and any defense based on any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code. None of the waivers granted in this Section 9(c) shall limit the
generality of any other waiver granted in this Section 9(c), or limit any other
waiver or right provided in this Agreement. All waivers by the Guarantor of
rights, and all rights and remedies afforded Elk herein, and all other
provisions of this Guaranty are expressly made subject to any applicable
mandatory and unwaivable provi-
3
<PAGE>
sions of law limiting, or imposing conditions upon, such waivers or the
effectiveness thereof or any such rights and remedies.
(d) No Subrogation. Until all of the obligations of the Guarantor
with respect to the Guarantied Obligations have been performed, satisfied and
discharged in full, Guarantor shall have no right of subrogation to the rights
of Elk.
(e) Notices. Guarantor hereby waives all presentments, demands for
performance, notices of default and nonperformance by HCP, protests, notices of
protest, notices of dishonor and notices of acceptance of this Guaranty and of
the existence, creation or incurrence of new or additional indebtedness, notices
of assignment or transfer of this Guaranty by Elk, and notices of every other
kind and nature whatsoever, including those of any action or non-action on the
part of HCP or Elk.
8. Miscellaneous.
(a) Notices. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given (i) if sent by
United States mail, certified or registered, with return receipt requested, or
(ii) if delivered in person:
If to Elk, at
Elk International Corporation, Ltd.
P.O. Box N-3247
Nassau, Bahamas
Attn:
If to Guarantor, at
David W. Hardee
258 Amalfi Drive
Santa Monica, California 90402
or at such other address as may have been furnished by such person in writing to
the other parties. Any such notice, demand or other communication shall be
deemed to have been given, (i) if sent by mail, five days after the date mailed,
and (ii) if delivered in person, on the date of delivery.
4
<PAGE>
(b) Amendments and Waivers. Neither this Agreement nor any term
hereto may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and either
retroactively or prospectively) with (but only with) the written consent of Elk,
provided, however, that no such amendment or waiver shall extend to or affect
any obligation not expressly waived or impair any right consequent therein. No
delay or omission to exercise any right, power or remedy accruing to any party
hereto shall impair any such right, power or remedy of such party nor shall be
construed to be a waiver of any such right, power or remedy nor constitute any
course of dealing or performance hereunder.
(c) Remedies. Elk' rights and remedies under this Guaranty shall be
cumulative and nonexclusive of any other rights and remedies which Elk may have
under any other agreement, by operation of law or otherwise.
(d) Severability. Should any Section or any part of a Section within
this Agreement be rendered void, invalid or unenforceable by any court of law
for any reason, such invalidity or unenforceability shall not void or render
invalid or unenforceable any other Section or part of a Section in this
Agreement.
(e) Successors and Assigns. This Guaranty shall not be assignable by
the Guarantor. This Guaranty shall be assignable by Elk and shall inure to the
benefit of Elk and its successors and assigns.
(f) Necessary Acts. Guarantor shall perform any further acts and
execute and deliver any additional agreements, assignments, documents or
instruments that may be reasonably necessary to carry out the provisions or to
effectuate the purposes of this Guaranty.
(g) Costs and Attorneys' Fees. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Agreement, the
prevailing party shall recover all of such party's costs, and reasonable
attorneys' fees incurred in each and every such action, suit, or other
proceeding, including any and all appeals or petitions therefrom.
(h) Governing Law. The terms of this Agreement shall be governed by
and construed in accordance with the laws of the state of California
5
<PAGE>
applicable to contracts made and performed in such state, without regard to the
principles thereof regarding conflicts of laws.
6
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
and delivered to Elk as of the date first written above.
/s/ David W. Hardee
-------------------
DAVID W. HARDEE
AGREED AND ACCEPTED:
ELK INTERNATIONAL
CORPORATION, LTD.
By: /s/Elkana Faiwuszewicz
-----------------------
Its:
7
<PAGE>
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (the "Agreement") is made and entered into as of
January 3, 1994 by David W. Hardee ("Guarantor"), in favor of Elk International
Corporation, Ltd. ("Elk").
WHEREAS, Hardee Capital Partners, L.P. ("HCP"), Elk and others are parties
to that certain letter agreement dated September 29, 1993 (the "Letter
Agreement");
WHEREAS, pursuant to the Letter Agreement, HCP has agreed to deliver to
Elk a promissory note in the principal amount of $1,444,445 in favor of Elk
dated the date hereof (the "Note");
WHEREAS, pursuant to the Letter Agreement, Guarantor has agreed to execute
this Agreement in favor of Elk.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, Guarantor hereby agrees for the benefit of Elk as
follows:
1. Guaranty. Guarantor hereby unconditionally and irrevocable guarantees
to Elk the timely payment and performance by HCP of all of its obligations at
any time owing or outstanding pursuant to the Note upon delivery thereof to Elk
(the "Guarantied Obligations").
2. Nature of the Guaranty. The obligations of the Guarantor under this
Guaranty shall be of a continuing nature, shall cover all of the Guarantied
Obligations, and shall be irrevocable and unconditional, except as expressly
provided herein. This Guaranty shall remain in effect until full payment and/or
performance of all of the Guarantied Obligations.
3. Authorization to Deal with HCP. Elk shall have complete discretion,
without giving notice to, making demand of, or obtaining the consent of, the
Guarantor, to deal with HCP in such manner as Elk in its sole discretion shall
decide. Accordingly, Guarantor hereby grants to Elk full authority in its sole
discretion, whether before or after termination of this Guaranty, and without
giving notice to, making demand of, or obtaining the consent of Guarantor, to do
any or all of the following, without limiting the generality of the foregoing:
(i) renew, extend, accelerate or otherwise modify or amend any term or condition
of
<PAGE>
the Guarantied Obligations; (ii) settle, release, compromise or otherwise
liquidate any portion of the Guarantied Obligations; (ii) accept partial payment
of the Guarantied Obligations; or (iv) assign or transfer this Guaranty or any
interest therein. No exercise or non-exercise by Elk of its rights, no dealing
by Elk with HCP and no change, impairment or suspension of any right or remedy
of Elk shall in any way affect any of Guarantor's duties or obligations
hereunder or give Guarantor any recourse against Elk.
4. Demands for Payment. Demands by Elk for payment under this Guaranty may
be made on any number of occasions. Each demand shall be in writing. No delay in
or failure to make such demand shall diminish or in any way affect Guarantor's
obligations under this Guaranty.
5. Agreements to Pay. All obligations payable by Guarantor hereunder shall
be paid by Guarantor to Elk immediately upon demand, in lawful money of the
United States, when such unsatisfied obligations are or become due. If a claim
is made upon Elk at any time for repayment or recovery of any amount or amounts
or other value received by Elk, from any source whatsoever, in payment of or on
account of any of the Guarantied Obligations and Elk repays or otherwise becomes
liable for all or any part of such claim by reason of the bankruptcy, insolvency
or reorganization of HCP, Guarantor shall remain liable to Elk for the amount so
repaid, or for which Elk otherwise is liable, to the same extent as if such
amount or amounts never had been received by Elk notwithstanding any termination
hereof.
6. Unenforceability of the Guarantied Obligations Against HCP. If for any
reason whatsoever HCP has no legal existence or is under no legal obligation to
discharge the Guaranteed Obligations (other than by reason of HCP's payment or
satisfaction of all amounts due thereunder), or if the monies due under the
Guaranteed Obligations cannot be recovered in full from HCP due to operation of
law or for any other reason, this Guaranty shall nevertheless be binding on
Guarantor to the same extent as if Guarantor at all times prior to demand by Elk
for payment hereunder had been, and at the time of such demand was, the
principal debtor on the Guaranteed Obligations. Notwithstanding anything to the
contrary contained herein, Guarantor shall have the right to claim the benefit
of any defense, set-off or counterclaim which may be asserted by or available to
HCP against Elk other than the automatic stay provisions of Section 362 of the
Bankruptcy Code or any provisions relating to HCP's discharge in bankruptcy.
2
<PAGE>
7. Waivers
(a) Stature of Limitations. Guarantor waives and agrees not to
exercise or take advantage of the defense of the statue of limitations in any
action hereunder or for the collection or payment of any Guaranteed Obligation.
If the maturity of any Guaranteed Obligation is accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for purposes of this
Guaranty, and without demand or notice to Guarantor.
(b) Alternative Remedies, Contributions and Counterclaims. Guarantor
hereby waives any rights to require Elk to proceed against HCP, or to pursue any
other remedy in Elk's power against HCP and further waives the right to have the
property of HCP first applied to the discharge of the Guaranteed Obligations, it
being agreed by Guarantor that this Guaranty is an absolute guarantee of payment
and performance and not of collection, that failure of Elk to exercise any
rights or remedies it may have against HCP shall in no way impair the obligation
of this Guaranty, and that the liability of Guarantor hereunder is and shall be
direct and unconditional. Elk may, in its sole discretion, exercise any right or
remedy it may have against HCP without affecting or impair in any manner the
liability of Guarantor hereunder, except to the extent that the Guarantied
Obligations are satisfied as a result thereof. Guarantor hereby waives any
defense arising out of the absence, impairment or loss of any right of
reimbursement, contribution or subrogation or any other right or remedy of
Guarantor against HCP whether resulting from such election by Elk or otherwise.
(c) Other Waivers. Guarantor hereby expressly waives the protection
of, and any right to assert, in any action brought on this Guaranty or
otherwise, Sections 2809, 2810, 2819, 2845, 2849, and 2850 of the California
Civil Code; and any defense arising as a result of any election made by Elk
under Section 9501(4) of the California Commercial Code. Guarantor waives any
defenses arising as a result of any election made by Elk in any proceeding
instituted under Title 11 of the United States Code (the "Bankruptcy Code"),
under Section 1111(b)(2) of the Bankruptcy Code, and any defense based on any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code. None of the waivers granted in this Section 9(c) shall limit the
generality of any other waiver granted in this Section 9(c), or limit any other
waiver or right provided in this Agreement. All waivers by the Guarantor of
rights, and all rights and remedies afforded Elk herein, and all other
provisions of this Guaranty are expressly made subject to any applicable
mandatory and unwaivable provi-
3
<PAGE>
sions of law limiting, or imposing conditions upon, such waivers or the
effectiveness thereof or any such rights and remedies.
(d) No Subrogation. Until all of the obligations of the Guarantor
with respect to the Guarantied Obligations have been performed, satisfied and
discharged in full, Guarantor shall have no right of subrogation to the rights
of Elk.
(e) Notices. Guarantor hereby waives all presentments, demands for
performance, notices of default and nonperformance by HCP, protests, notices of
protest, notices of dishonor and notices of acceptance of this Guaranty and of
the existence, creation or in currency of new or additional indebtedness,
notices of assignment or transfer of this Guaranty by Elk, and notices of every
other kind and nature whatsoever, including those of any action or non-action on
the part of HCP or Elk.
8. Miscellaneous.
(a) Notices. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given (i) if sent by
United States mail, certified or registered, with return receipt requested, or
(ii) if delivered in person:
If to Elk, at
Elk International Corporation, Ltd.
P.O. Box N-3247
Nassau, Bahamas
Attn:
If to Guarantor, at
David W. Hardee
258 Amalfi Drive
Santa Monica, California 90402
or at such other address as may have been furnished by such person in writing to
the other parties. Any such notice, demand or other communication shall be
deemed to have been given, (i) if sent by mail, five days after the date mailed,
and (ii) if delivered in person, on the date of delivery.
4
<PAGE>
(b) Amendments and Waivers. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any term of this Agreement may be amended and the observance of any
such term may be waived (either generally or in a particular instance and either
retroactively or prospectively) with (but only with) the written consent of Elk,
provided, however, that no such amendment or waiver shall extend to or affect
any obligation not expressly waived or impair any right consequent therein. No
delay or omission to exercise any right, power or remedy accruing to any party
hereto shall impair any such right, power or remedy of such party not shall be
construed to be a waiver of any such right, power or remedy nor constitute any
course of dealing or performance hereunder.
(c) Remedies. Elk' rights and remedies under this Guaranty shall be
cumulative and nonexclusive of any other rights and remedies which Elk may have
under any other agreement, by operation of law or otherwise.
(d) Severability. Should any Section or any part of a Section within
this Agreement be rendered void, invalid or unenforceable by any court of law
for any reason, such invalidity or unenforceability shall not void or render
invalid or unenforceable any other Section or part of a Section in this
Agreement.
(e) Successors and Assigns. This Guaranty shall not be assignable by
the Guarantor. This Guaranty shall be assignable by Elk and shall inure to the
benefit of Elk and its successors and assigns.
(f) Necessary Acts. Guarantor shall perform any further acts and
execute and deliver any additional agreements, assignments, documents or
instruments that may be reasonably necessary to carry out the provisions or to
effectuate the purposes of this Guaranty.
(g) Costs and Attorneys' Fees. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Agreement, the
prevailing party shall recover all of such party's costs, and reasonable
attorneys' fees incurred in each and every such action, suit, or other
proceeding, including any and all appeals or petitions therefrom.
(h) Governing Law. The terms of this Agreement shall be governed by
and construed in accordance with the laws of the state of California
5
<PAGE>
applicable to contracts made and performed in such state, without regard to the
principles thereof regarding conflicts of laws.
6
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
and delivered to Elk as of the date first written above.
/s/ David W. Hardee
-------------------
DAVID W. HARDEE
AGREED AND ACCEPTED:
ELK INTERNATIONAL
CORPORATION, LTD.
By: /s/ Elkana Faiwuszewicz
-----------------------
Its:
7
<PAGE>
EXHIBIT A
SECURED NON-RECOURSE
NON-INTEREST BEARING
PROMISSORY NOTE
$1,444,445 Los Angeles, California
January 3, 1994
FOR VALUE RECEIVED, Hardee Capital Partners, Ltd. ("Maker") promises to
pay to Elk International Corporation, Ltd. ("Holder") at 2415 S. Sierra Drive,
Compton, California 90220, or such other place as Holder may from time to time
designate, the principal sum of One Million Four Hundred Forty Four Thousand
Four Hundred Forty Five Dollars ($1,444,445).
1. The unpaid principal balance hereof shall be due and payable on
December 31, 1995.
2. This Note shall not bear interest.
3. This Note may be prepaid in whole or in part at any time without
premium or penalty on or with respect to the amounts prepaid. Maker shall have
no right to reborrow any such prepaid amounts.
4. An event of default hereunder shall occur if an Event of Default
(as defined in the Security and Pledge Agreement between Maker and Holder dated
as of the date hereof (the "Security Agreement")) shall have occurred. If such
an Event of Default occurs and is continuing, the Holder, at its option, may
declare all sums due hereunder immediately due and payable without notice or
demand.
5. No delay on the part of the Holder or the exercise of any power
or right under this Note shall operate as a waiver of such power or right or
preclude other or further exercise thereof or the exercise of any other power or
right. The Maker hereby waives diligence, presentment, demand for payment,
notice of dishonor or acceleration, protest and notice of protest, and any and
all other notices or demands in connection with delivery, acceptance,
performance, default or enforcement of this Note.
6. If any principal payment due hereunder is not paid as and when
due or if any Event of Default occurs hereunder, Maker promises to pay all costs
<PAGE>
of enforcement and collection, including, but not limited to, reasonable
attorneys' fees and disbursements, whether or not such enforcement and
collection includes the filing of a lawsuit.
7. This Note is secured by the Security Agreement.
8. Amounts owing under this Note shall not be subject to set off of
any obligations of Holder owing to Maker.
9. Notwithstanding anything herein or in the Security Agreement to
the contrary, it is understood and agreed that this Note is intended to evidence
a non-recourse obligation of Maker, and Holder's sole recourse in the event of a
default hereunder or thereunder is against the Collateral (as defined in the
Security Agreement) and the Guaranty executed by David W. Hardee in favor of
Holder dated as of the date hereof.
10. This Note shall be governed by and construed in accordance with
the laws of the State of California without regard to conflicts of laws and
principles thereof.
IN WITNESS WHEREOF, the undersigned has executed this Note on the
day and year first above written.
HARDEE CAPITAL PARTNERS, L.P.
By: /s/ David W. Hardee
-----------------------
David W. Hardee
Its General Partner
2
<PAGE>
EXHIBIT A
SECURITY AND PLEDGE AGREEMENT
This Security and Pledge Agreement (the "Agreement") is made and entered
into as of January 3, 1994 by and between Elk International Corporation, Ltd.
("Pledgee"), and Hardee Capital Partners, L.P. ("Pledgor").
WHEREAS, Pledgor has agreed to purchase, and Pledgee has agreed to sell,
the Pledged Securities (as defined below); and
WHEREAS, as part of the consideration for such purchase, Pledgor has
agreed to deliver to Pledgee a promissory note in the principal amount of
$1,444,445 in favor of Pledgee dated as of the date hereof (the "Note"); and
WHEREAS, Pledgor has agreed to enter into this Agreement as additional
consideration for acceptance by Pledgee of the Note.
NOW, THEREFORE, based upon the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Grant of Security Interest in Collateral. Pledgor hereby grants to
Pledgee, upon delivery of the Note to Pledgee, as security for all present and
future obligations and liabilities of all kinds of Pledgor to Pledgee under the
Note and this Agreement (collectively referred to as the "Obligations"), a first
priority security interest in the following described property (collectively
referred to as the "Collateral"):
(a) the following shares (the "Pledged Shares") of Kleer-Vu
Industries, Inc., a Delaware corporation (the "Company"), as more fully
described in Schedule 1 hereto, and the certificates representing the Pledged
Shares and all of Pledgor's rights and privileges with respect thereto, together
with stock powers executed is blank:
112,500 shares of common stock, $.10 par value, of the Company (the
"Common Stock").
(b) all shares of Common Stock acquired from the Company by Pledgor
or its affiliates (other than the Company) after the date hereof
<PAGE>
together with the 137,500 shares of Common Stock previously acquired by Pledgor
from Pledgee (the "Additional Securities").
(c) the products, proceeds and accessions of the Pledged Shares
and/or the Additional Securities, including, without limitation, cash and stock
dividends and additional property at any time and from time to time receivable
or which may be received by Pledgee or Pledgor, or otherwise distributed or paid
in Pledgee or Pledgor, in respect of or in exchange for any or all of such
Pledged Securities and/or Additional Securities (the "Proceeds").
2. Pledgor's Obligations. At any time and from time to time, upon request
of Pledgee, Pledgor shall give, execute and file and/or record any notice,
financing statement, continuation statement, instrument, document or agreement
that Pledgee shall consider necessary or desirable to create, preserve,
continue, perfect or validate any security interest granted hereunder or which
Pledgee may consider necessary or desirable to exercise or enforce its rights
hereunder with respect to such security interest including, without limitation,
assignment of such registration rights as Pledgor may have relating to the
Collateral.
3. Pledgor's Covenants.
(a) Pledgor agrees hereafter not to encumber or grant a security
interest in or a lien or other encumbrance on the Collateral.
(b) Pledgor agrees not to dispense of any of the Collateral except
in accordance with the terms of this Agreement.
(c) Pledgor agrees to: (i) pay promptly the Obligations secured
hereby when due; (ii) indemnify Pledgee against all loss, claims, demands and
liabilities of every kind arising from the Collateral and the transactions and
other agreements and undertakings contemplated hereby; (iii) pay all expenses,
including reasonable attorneys' fees, incurred by Pledgee in the preservation,
realization, enforcement and exercise of its rights, powers and remedies
hereunder; (iv) execute and deliver such documents as Pledgee deems necessary to
create, perfect and continue the security interest contemplated hereby; and (v)
give Pledgee notice of any litigation filed or claim asserted against Pledgor
relating to or potentially affecting the Collateral.
2
<PAGE>
(d) Pledgor agrees: (i) if requested by Pledgee, to receive and
collect the Proceeds, in trust and as the property of Pledgee, and to
immediately endorse as appropriate and deliver stock Proceeds to City National
Bank as Escrow Agent when requested by Pledgee in the exact form in which they
are received; (ii) not to commingle the Proceeds or collections thereunder with
other property; and (iii) to keep complete and accurate records regarding all of
the Proceeds.
4. Voting Rights. Pledgor shall have all voting rights with respect to the
Collateral until an Event of Default (as defined below) has occurred, at which
time Pledgee may exercise all such voting rights. Pledge hereby grants to
Pledgee an irrevocable proxy, effective upon the occurrence of an Event of
Default and so long as such Event of Default shall continue, to vote the Pledged
Securities in such manner and for such purposes as Pledgee shall, in its sole
discretion, determine. Such proxy is coupled with an interest and shall continue
in full force and effect until all of the Obligations shall be paid in full.
5. Events of Default; Remedies.
(a) Each of the following shall constitute an event of default
("Event of Default") hereunder: (i) if Pledgor shall fail to make any payment on
the Obligations secured hereby as and when due; (ii) if Pledgor has materially
breached any provisions of this Agreement; (iii) if a receiver or a trustee of
all or any part of Pledgor's property shall be appointed; (iv) if any assignment
for the benefits of Pledgor's creditors shall be made; (v) if a petition in
bankruptcy shall be filed by or against Pledgor and not dismissed within 120
days; (vi) if any of the Collateral shall be attached or levied upon at any time
pursuant to any court order or other legal process; (vii) liquidation or
dissolution of Pledgor; and (vii) if Pledgor shall generally fail to pay debts
as they become due.
(b) Upon the occurrence of any Event of Default, and at any time as
such Event of Default is continuing, Pledgee shall be entitled to exercise all
the rights, powers and remedies for the protection and enforcement of its rights
in respect of the Collateral. Upon the occurrence of any Event of Default,
Pledgee may declare all obligations secured hereby immediately due and payable
and may proceed to enforce payment of the same and exercise any and all of the
rights and remedies provided by the Uniform Commercial Code of California, as
well as all other rights and remedies possessed by Pledgee. Pledgee may, as
Pledgee's option, sell, assign, and deliver all or any part of the
3
<PAGE>
Collateral at public or private sale, and may bid for and purchase all or any
part of the Collateral so sold free from any right or equity of redemption.
Pledgor consents to Pledgee's remedies stated herein. Pledgor waives diligence,
presentment, demand for payment, notice of dishonor or acceleration, protest and
notice of protest. Pledgee will give Pledgor reasonable notice of the time and
place of any public or private sale and the requirements of reasonable notice
shall be met if such notice is mailed, postage prepaid, to the address of
Pledgor as provided for in the notice provisions of this Agreement at least ten
(10) days before the time of the sale or disposition. Pledgee may apply the
proceeds of any sale or disposition of Collateral available for satisfaction of
Pledgor's obligations hereunder and the expenses of sale in any order of
preference that Pledgee, in Pledgee's sole discretion, determines. Pledgor shall
remain liable for any deficiency.
6. Dividends.
(a) So long as all of the Obligations shall be paid when due,
Pledgor may receive and retain all regular cash dividends declared and paid on
the Pledged Securities and/or the Additional Securities. If any of the
Obligations are not paid when due, all regular cash dividends paid on the
Pledged Securities and/or the Additional Securities shall be received and
retained by Escrow Agent as part of the collateral. If Pledgor receives any such
dividend while any Obligation which is due is unpaid, it shall hold such
dividend in trust for the sole purpose of delivering it in kind to Escrow Agent
to be added to the Collateral.
(b) In the event that any other dividend (including, without
limitation, a stock dividend) or any distribution shall be declared and paid or
made on or in respect of any of the Pledged Securities and/or the Additional
Securities or in the event that any shares, cash, obligations or other property
shall be distributed upon or with respect to any of the Pledged Securities
and/or the Additional Securities pursuant to a recapitalization or
reclassification of the capital stock of an issuer of any such issuer, or
pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or
reorganization of any such issuer with or into another corporation, or
otherwise, then the shares, cash, obligations or other property so paid or
distributed shall be delivered by Pledgor to Escrow Agent forthwith upon its
receipt thereof, to be held by Escrow Agent as additional Collateral hereunder,
and all of such property (other than cash) shall constitute Pledged Securities
and/or the Additional Securities for all purposes of this Pledge Agreement.
4
<PAGE>
7. Unregistered Securities. If at the time of any sale of the Collateral
in accordance with the terms of this Agreement the same or any part thereof to
be sold shall not, for any reason whatsoever, be effectively registered under
the Securities Act of 1933, as amended, or there is no exemption available under
such Act, then Pledgee, in its sole and absolute discretion, is authorized to
sell such Collateral or such part thereof by private sale or sales in such
manner and under such circumstances as Pledgee reasonably may deem necessary or
advisable in order that such sale may legally be effected without registration.
Pledgor agrees that private sales so made may be at prices and on other terms
less favorable to the seller than if such Collateral were sold at public sale,
and that Pledgee has no obligation to delay the sale of any such Collateral for
the period of time necessary to permit the issuer of such Collateral, even if
such issuer would agree, to register such Collateral for public sale under such
Act. Pledgor agrees that private sales made under the foregoing circumstances
shall be deemed to have been made in a commercially reasonable manner.
8. No Waiver. Failure of Pledgee to exercise any right or remedy under
this Agreement or any other agreement between Pledgee and Pledgor, or otherwise,
or delay by Pledgee in exercising same, will not operate as a waiver thereof. No
waiver by Pledgee will be effective unless and until it is in writing and signed
by Pledgee. No waiver of any condition or performance will operate as a waiver
of any subsequent condition or obligation. Pledgee shall have no obligation to
resort to the Collateral or any other security which is or may become available
to it.
9. Miscellaneous.
(a) This Agreement, any amendments or replacement hereof, and the
legality, validity and performance of the terms hereof, shall be governed by and
enforced and construed in accordance with the laws of the State of California
without regard to conflicts of laws and principles thereof.
(b) This Agreement and the rights, powers and duties set forth
herein shall be binding upon Pledgor, its employees, shareholders, agents,
officers, directors, representatives and successors and shall inure to the
benefit of the successors and assigns of Pledgee and, in the event of any
transfer or assignment of rights by Pledgee, the rights and privileges herein
conferred upon Pledgee shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This
Agreement may not be transferred or assigned without written consent.
5
<PAGE>
(c) In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be modified to conform with such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any applicable law shall
not effect the validity or enforceability of any other provisions hereof.
(d) Notices required or permitted to be given under this Agreement
shall be in writing and may be delivered personally or sent to a party by
airmail or first class mail, postage prepaid and addressed to such party at the
address set forth below its signature, or to such other address furnished by
notice given in accordance with this paragraph. Any such notice shall be deemed
to have been given, (i) if sent by mail, five days after the date mailed, and
(ii) if delivered personally, on the date of delivery.
(e) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which shall together constitute
one and the same document.
(f) This Agreement and the security interest and pledge hereunder
shall terminate upon the full and final performance of all Obligations of
Pledgor and payment of all indebtedness accrued hereby. At such time, Pledgee
shall promptly reassign to Pledgor all of the Collateral hereunder which has not
been sold, disposed of, retained or supplied by Pledgee in accordance with the
terms hereof.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first written above.
ELK INTERNATIONAL, LTD.
CORPORATION
By: /s/ Elkana Faiwuszewicz
--------------------------
Title:
Address: P.O. Box N-3247
Nassau Bahamas
HARDEE CAPITAL PARTNERS, L.P.
By:/s/ David W. Hardee
--------------------------
David W. Hardee
Its General Partner:
Address: 258 Amalifi Drive
Santa Monica, CA 90402
7
<PAGE>
SCHEDULE I
Description of Pledged Shares
Common Stock
Certificate Number Number of Shares
- ------------------ ----------------
8
<PAGE>
SECURITY AND PLEDGE AGREEMENT
This Security and Pledge Agreement (the "Agreement") is made and entered
into as of January 3, 1994 by and between Elk International Corporation, Ltd.
("Pledgee"), and Hee Poong Park ("Pledgor").
WHEREAS, Pledgor has agreed to purchase, and Pledgee has agreed to sell,
the Pledged Securities (as defined below); and
WHEREAS, as part of the consideration for such purchase, Pledgor has
agreed to deliver to Pledgee a promissory note in the principal amount of
$1,444,445 in favor of Pledgee dated as of the date hereof (the "Note"); and
WHEREAS, Pledgor has agreed to enter into this Agreement as additional
consideration for acceptance by Pledgee of the Note.
NOW, THEREFORE, based upon the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Grant of Security Interest in Collateral. Pledgor hereby grants to
Pledgee, upon delivery of the Note to Pledgee, as security for all present and
future obligations and liabilities of all kinds of Pledgor to Pledgee under the
Note and this Agreement (collectively referred to as the "Obligations"), a first
priority security interest in the following described property (collectively
referred to as the "Collateral"):
(a) the following shares (the "Pledged Shares") of Kleer-Vu
Industries, Inc., a Delaware corporation (the "Company"), as more fully
described in Schedule I hereto, and the certificates representing the Pledged
Shares and all of Pledgor's rights and privileges with respect thereto, together
with stock powers executed in blank:
87,500 shares of common stock, $.10 par value, of the Company (the
"Common Stock").
(b) all shares of Common Stock acquired by Pledgor from the Company
or its affiliates (other than the Company) after the date hereof
<PAGE>
together with the 112,500 shares of Common Stock previously acquired by Pledgor
from the Pledgee (the "Additional Securities").
(c) the products, proceeds and accessions of the Pledged Shares
and/or the Additional Securities, including, without limitation, cash and stock
dividends and additional property at any time and from time to time receivable
or which may be received by Pledgee or Pledgor, or otherwise distributed or paid
to Pledgee or Pledgor, in respect of or in exchange for any or all of such
Pledged Securities and/or Additional Securities (the "Proceeds").
2. Pledgor's Obligations. At any time and from time to time, upon request
of Pledgee, Pledgor shall give, execute and file and/or record any notice,
financing statement, continuation statement, instrument, document or agreement
that Pledgee shall consider necessary or desirable to create, preserve,
continue, perfect or validate any security interest and granted hereunder or
which Pledgee may consider necessary or desirable to exercise or enforce its
rights hereunder with respect to such security interest including, without
limitation, assignment of such registration rights as Pledgor may have relating
to the Collateral.
3. Pledgor's Covenants.
(a) Pledgor agrees hereafter not to encumber or grant a security
interest in or a lieu or other encumbrance on the Collateral.
(b) Pledgor agrees not to dispose of any of the Collateral except in
accordance with the terms of this Agreement.
(c) Pledgor agrees to: (i) pay promptly the Obligations secured
hereby when due; (ii) indemnify Pledgee against all loss, claims, demands and
liabilities of every kind arising from the Collateral and the transactions and
other agreements and undertakings contemplated hereby; (iii) pay all expenses,
including reasonable attorneys' fees, incurred by Pledgee in the preservation,
realization, enforcement and exercise of its rights, powers and remedies
hereunder; (iv) execute and deliver such documents as Pledgee deems necessary to
create, perfect and continue the security interest contemplated hereby; and (v)
give Pledgee notice of any litigation filed or claim asserted against Pledgor
relating to or potentially affecting the Collateral.
2
<PAGE>
(d) Pledgor agrees: (i) if requested by Pledgee, to receive and
collect the Proceeds, in trust and as the property of Pledgee, and to
immediately endorse as appropriate and deliver such Proceeds to City National
Bank as Escrow Agent when requested by Pledgee in the exact form in which they
are received: (ii) not to commingle the Proceeds or collections thereunder with
other property; and (iii) to keep complete and accurate records regarding all of
the Proceeds.
4. Voting Rights. Pledgor shall have all voting rights with respect to the
Collateral until an Event of Default (as defined below) has occurred, at which
time Pledgee may exercise all such voting rights. Pledgor hereby grants to
Pledgee an irrevocable proxy, effective upon the occurrence of an Event of
Default and so long as such Event of Default shall continue, to vote the Pledged
Securities in such manner and for such purposes as Pledgee shall, in its sole
discretion, determine. Such proxy is coupled with an interest and shall continue
in full force and effect until all of the Obligations shall be paid in full.
5. Events of Default; Remedies.
(a) Each of the following shall constitute an event of default
("Event of Default") hereunder: (i) if Pledgor shall fail to make any payment on
the Obligations secured hereby as and when due; (ii) if Pledgor has materially
breached any provisions of this Agreement; (iii) if a receiver or a trustee of
all or any part of Pledgor's property shall be appointed; (iv) if any assignment
for the benefits of Pledgor's creditors shall be made; (v) if a petition in
bankruptcy shall be filed by or against Pledgor and not dismissed within 120
days; (vi) if any of the Collateral shall be attached or levied upon at any time
pursuant to any court order or other legal process; (vii) liquidation or
dissolution of Pledgor; and (vii) if Pledgor shall generally fail to pay debts
as they become due.
(b) Upon the occurrence of any Event of Default, and at any time as
such Event of Default is continuing, Pledgee shall be entitled to exercise all
the rights, powers and remedies for the protection and enforcement of its rights
in respect of the Collateral. Upon the occurrence of any Event of Default,
Pledgee may declare all obligations secured hereby immediately due and payable
and may proceed to enforce payment of the same and exercise any and all of the
rights and remedies provided by the Uniform Commercial Code of California, as
well as all other rights and remedies possessed by Pledgee. Pledgee may, at
Pledgee's option, sell, assign, and deliver all or any part of the
3
<PAGE>
Collateral at public or private sale, and may bid for and purchase all or any
part of the Collateral so sold free from any right or equity of redemption.
Pledgor consents to Pledgee's remedies stated herein. Pledgor waives diligence,
presentment, demand for payment, notice of dishonor or acceleration, protest and
notice of protest. Pledgee will give Pledgor reasonable notice of the time and
place of any public or private sale and the requirements of reasonable notice
shall be met if such notice is mailed, postage prepaid, to the address of
Pledgor as provided for in the notice provisions of this Agreement at least ten
(10) days before the time of the sale or disposition. Pledgee may apply the
proceeds of any sale or disposition of Collateral available for satisfaction of
Pledgor's obligations hereunder and the expenses of sale in any order of
preference that Pledgee, in Pledgee's sole discretion, determines. Pledgor shall
remain liable for any deficiency.
6. Dividends.
(a) So long as all of the Obligations shall be paid when due,
Pledgor may receive and retain all regular cash dividends declared and paid on
the Pledged Securities and/or the Additional Securities. If any of the
Obligations are not paid when due, all regular cash dividends paid on the
Pledged Securities and/or the Additional Securities shall be received and
retained by Escrow Agent as part of the collateral. If Pledgor receives any such
dividend while any Obligation which is due is unpaid, it shall hold such
dividend in trust for the sole purpose of delivering it in kind to Escrow Agent
to be added to the Collateral.
(b) In the event that any other dividend (including, without
limitation, a stock dividend) or any distribution shall be declared and paid or
made on or in respect of any of the Pledged Securities and/or the Additional
Securities or in the event that any shares, cash, obligations or other property
shall be distributed upon or with respect to any of the Pledged Securities
and/or the Additional Securities pursuant to a recapitalization or
reclassification of the capital stock of an issuer of any such issuer, or
pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or
reorganization of any such issuer with or into another corporation, or
otherwise, then the shares, cash, obligations or other property so paid or
distributed shall be delivered by Pledgor to Escrow Agent forthwith upon its
receipt thereof, to be held by Escrow Agent as additional Collateral hereunder,
and all of such property (other than cash) shall constitute Pledged Securities
and/or the Additional Securities for all purposes of this Pledge Agreement.
4
<PAGE>
7. Unregistered Securities. If at the time of any sale of the Collateral
in accordance with the terms of this Agreement the same or any part thereof to
be sold shall not, for any reason whatsoever, be effectively registered under
the Securities Act of 1933, as amended, or there is no exemption available under
such Act, then Pledgee, in its sole and absolute discretion, is authorized to
sell such Collateral or such part thereof by private sale or sales in such
manner and under such circumstances as Pledgee reasonably may deem necessary or
advisable in order that such sale may legally be effected without registration.
Pledgor agrees that private sales so made may be at prices and on other terms
less favorable to the seller than if such Collateral were sold at public sale,
and that Pledgee has no obligation to delay the sale of any such Collateral for
the period of time necessary to permit the issuer of such Collateral, even if
sch issuer would agree, to register such Collateral for public sale under such
Act. Pledgor agrees that private sales made under the foregoing circumstances
shall be deemed to have been made in a commercially reasonable manner.
8. No Waiver. Failure of Pledgee to exercise any right or remedy under
this Agreement or any other agreement between Pledgee and Pledgor, or otherwise,
or delay by Pledgee in exercising same, will not operate as a waiver thereof. No
waiver by Pledgee will be effective unless and until it is in writing and signed
by Pledgee. No waiver of any condition or performance will operate as a waiver
of any subsequent condition or obligation. Pledgee shall have no obligation to
resort to the Collateral or any other security which is or may become available
to it.
9. Miscellaneous.
(a) This Agreement, any amendments or replacement hereof, and the
legality, validity and performance of the terms hereof, shall be governed by and
enforced and construed in accordance with the laws of the State of California
without regard to conflicts of laws and principles thereof.
(b) This Agreement and the rights, powers and duties set forth
herein shall be binding upon Pledgor, its employees, shareholders, agents,
officers, directors, representatives and successors and shall inure to the
benefit of the successors and assigns of Pledgee and, in the event of any
transfer or assignment of rights by Pledgee, the rights and privileges herein
conferred upon Pledgee shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This
Agreement may not be transferred or assigned without written consent.
5
<PAGE>
(c) In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative as to the extent that it may conflict therewith and
shall be modified to conform with such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any applicable law shall
not effect the validity or enforceability of any other provision hereof.
(d) Notices required or permitted to be given under this Agreement
shall be in writing and may be delivered personally or sent to a party by
airmail or first class mail, postage prepaid and addressed to such party at the
address set forth below its signature, or to such other address furnished by
notice given in accordance with this paragraph. Any such notice shall be deemed
to have been given, (i) if sent by mail, five days after the date mailed, and
(ii) if delivered personally, on the date of delivery.
(e) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall together constitute one
and the same document.
(f) This Agreement and the security interest and pledge hereunder shall
terminate upon the full and final performance of all Obligations of Pledgor and
payment of all indebtedness secured hereby. At such time, Pledgee shall promptly
reassign to Pledgor all of the Collateral hereunder which has not been sold,
disposed of, retained or applied by Pledgee in accordance with the terms hereof.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date above.
ELK INTERNATIONAL CORPORATION, LTD.
By: /s/ Elkana Faiwuszewicz
---------------------------
Title:
Address: P.O. Box N-3247
Nassau, Bahamas
/s/ Hee Poong Park
-------------------------
HEE POONG PARK
Address: 2415 S. Sierra Drive
Compton, California
90220
7
<PAGE>
SCHEDULE 1
Description of Pledged Shares
Common Stock
Certificate Number Number of Shares
------------------ ----------------
NU44463 73,849
NU44462 112,500
8
<PAGE>
[Form of front of Stock Certificate]
00044463 [Kleer-Vu logo]
Number Shares
----------------- ---------------
NU-44463 **73,849**
KLEER-VU INDUSTRIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK
CUSIP 498494 20 2
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT ELK INTERNATIONAL ***73849******** is the owner of
CORPORATION LIMITED ****73849*******
P.O. BOX N-3247 *****73849******
NASSAU ******73849*****
BAHAMAS *******73849****
**SEVENTY-THREE THOUSAND EIGHT HUNDRED FORTY-NINE**
Full Paid and Non-Assessable Shares of the COMMON Stock of the par value of
$.10 each of
KLEER-VU INDUSTRIES, INC.
transferable on the books of the Corporation by the holder hereof, in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented thereby are issued and
shall be held [????????] of the provisions of the Certificate of Incorporation,
and all Amendments thereto. This Certificate is not valid unless countersigned
by the Transfer Agent and Registrar.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed
by the facsimile signatures of its duly authorized officers and a facsimile of
its corporate seal to be hereunto fixed.
Dated: DEC 30, 1993
/s/ Michael R. [ILLEGIBLE] /S/ [ILLEGIBLE]
SECRETARY CHAIRMAN
[SEAL]
006777517
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN
OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT.
THIS CERTIFICATE REPRESENTS SHARES OF
NEW COMMON STOCK
<PAGE>
[Form of front of Stock Certificate]
00044462 [Kleer-Vu logo]
Number Shares
----------------- ---------------
NU-44462 **112500**
KLEER-VU INDUSTRIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK
CUSIP 498494 20 2
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT HEE POONG PARK ***112500******* is the owner of
2415 SOUTH SIERRA DRIVE ****112500******
COMPTON, CA 90220 *****112500*****
******112500****
*******112500***
**ONE HUNDRED TWELVE THOUSAND FIVE HUNDRED**
Full Paid and Non-Assessable Shares of the COMMON Stock of the par value of
$.10 each of
KLEER-VU INDUSTRIES, INC.
transferable on the books of the Corporation by the holder hereof, in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented thereby are issued and
shall be held [????????] of the provisions of the Certificate of Incorporation,
and all Amendments thereto. This Certificate is not valid unless countersigned
by the Transfer Agent and Registrar.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed
by the facsimile signatures of its duly authorized officers and a facsimile of
its corporate seal to be hereunto fixed.
Dated: DEC 30, 1993
/s/ Michael R. [ILLEGIBLE] /S/ [ILLEGIBLE]
SECRETARY CHAIRMAN
[SEAL]
006777517
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN
OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT.
THIS CERTIFICATE REPRESENTS SHARES OF
NEW COMMON STOCK
<PAGE>
EXHIBIT A
AMENDED, RESTATED AND CONSOLIDATED
SECURED PROMISSORY NOTE
$2,700,000 Los Angeles, California
January 12, 1996
WHEREAS, Hee Poong Park (the "Maker") and the Elk International
Corporation Limited, a Bahamian corporation (the "Holder"), have agreed to
amend, restate and consolidate the Maker's $805,555 Secured Non-Interest Bearing
Promissory Note to the Holder dated September 29, 1993 (the "1993 Note"), a copy
of which is annexed hereto as Exhibit "A" and the Maker's $1,444,445 Secured
Non-interest Bearing Promissory Note to the Holder dated January 3, 1994 (the
"January 1994 Note"), a copy of which is annexed hereto as Exhibit "B".
WHEREAS, the Maker executed and delivered the 1993 Note and 1994 Note to
Elk in connection with the purchase by the Maker of an aggregate of 200,000
Common Shares, $.10 per value per share, of Kleer-Vu Industries, Inc., a
Delaware corporation.
WHEREAS, the 1993 Note and the 1994 Note shall be amended, restated,
consolidated and superseded in all respects by this Amended, Restated and
Consolidated Secured Promissory Note (the "Note"). This Note memorializes and
supersedes the same obligations previously set forth in the 1993 Note and 1994
Note.
The 1993 Note and 1994 Note are hereby amended and restated in their
entirety and consolidated as follows:
FOR VALUE RECEIVED, Maker promises to pay to the order of the Holder at
2415 S. Sierra Drive, Compton, California 90220, or such other place as Holder
may from time to time designate, the principal sum of Two Million Seven Hundred
Thousand Dollars ($2,700,000).
1. The Note is payable as follows:
(a) $100,000 on or before January 29, 1996 (by check
delivered by Park to Elk on the date hereof, which will
be deposited by Elk on January 27, 1996 to clear on or
before January 29, 1996);
(b) $100,000 on March 30, 1996;
(c) $100,000 on June 30, 1996;
(d) $150,000 on September 30, 1996; and
<PAGE>
(e) $2,250,000 on December 15, 1996.
2. This Note shall not bear interest.
3. This Note may be prepaid in whole without premium or penalty.
4. Maker shall have no right to reborrow any prepaid amounts.
5. An event of default hereunder shall occur if an Event of Default (as
defined in (a) the Security and Pledge Agreement between the Maker and the
Holder dated as of September 29, 1993, as amended on the date hereof, and (b)
the Security and Pledge Agreement between the Maker and the Holder dated January
3, 1994, as amended on the date hereof, (collectively, the "Security Agreement")
shall have occurred.
6. If such an Event of Default occurs and is continuing, the Holder, at
its option, may declare all sums due hereunder immediately due and payable
without notice or demand.
7. No delay on the part of the Holder or the exercise of any power or
right under this Note shall operate as a waiver of such power or right or
preclude other or further exercise thereof or the exercise of any other power or
right. The Maker hereby waives diligence, presentment, demand for payment,
notice of dishonor or acceleration, protest and notice of protest, and any and
all other notices or demands in connection with delivery, acceptance,
performance, default or enforcement of this Note.
8. If any principal, interest or additional payment due hereunder is not
paid as and when due or if any Event of Default occurs hereunder, Maker promises
to pay all costs of enforcement and collection, including, but not limited to,
reasonable attorneys' fees and disbursements, whether or not such enforcement
and collection includes the filing of a lawsuit.
9. This Note is secured by the Security Agreement, and 250,000
Preferred Shares of Kleer-Vu Industries, Inc.
10. Amounts owing under this Note shall not be subject to set off of any
obligations of Holder owing to Maker.
11. This Note shall take effect as of the date hereof, which effectiveness
is subject to the Holder delivering to the Maker for cancellation the 1993 Note
and the 1994 Note.
2
<PAGE>
12. This Note shall be governed by and construed in accordance with the
laws of the State of California without regard to conflicts of law and
principles thereof.
IN WITNESS WHEREOF, the undersigned has executed this Note on the day and
year first above written.
/s/ HEE POONG PARK
----------------------------
HEE POONG PARK
CONSENTED TO:
ELK INTERNATIONAL CORPORATION LIMITED
By:/s/Elkana Faiwuszewicz
----------------------------------
Elkana Faiwuszewicz, President
3
<PAGE>
April 19, 1996
Elk International Corporation Limited
P.O. Box N-3247
Nassau Bahamas
Gentlemen:
This amends the Letter Agreement dated January 12, 1996 between Hee
Poong Park ("Park") and Elk International Corporation Limited ("Elk") (the
"January Letter Agreement"), and the Promissory Note and Agreements referenced
therein.
1. The $100,000 payable by Park to Elk pursuant to Park's $2,700,000
Amended, Restated and Consolidated Security Promissory Note dated January 12,
1996 (the "Note") to Elk on March 30, 1996, pursuant to paragraph 1(b) of the
Note which payment is referred to in paragraph 1(b) of the January Letter
Agreement, was not paid on March 30, 1996, and the January Letter Agreement and
the Note are hereby amended as follows:
(a) Park has paid $30,000 to Elk prior to the date hereof, receipt
of which Elk acknowledges.
(b) Park shall pay to Elk the remaining $70,000 in the following
installments on the following dates: (i) $15,000 on April 30, 1996; (ii) $20,000
on May 15, 1996; (iii) $35,000 on May 30, 1996.
The foregoing payments shall be made in lieu of the $100,000 payment
which was due on March 30, 1996 and Park's default in failing to pay such
$100,000 on March 30, 1996 is hereby waived by Elk.
2. Park will take the following actions on June 30, 1996:
(a) In the event the closing price of the Common Shares of Kleer-Vu
Industries, Inc. ("Kleer-Vu") on the American Stock Exchange ("AMEX") on Friday,
June 28, 1996 (June 30, 1996 is a Sunday) is $3.00 or less, (i) Park shall make
a payment reduction on the Note (which has a balance of $2,570,000 as of the
date hereof) of One Million Dollars ($1,000,000), alternatively, (ii) Park shall
deliver, by no later than July 3, 1996, stock certificates representing 450,000
Kleer-Vu Preferred Shares (the "Preferred Shares") in his name, with stock
powers executed in blank into escrow with Messrs. Arter and Hadden, as escrow
agent (the "Escrow Agent"), which Preferred Shares shall be held in escrow in
accordance with the terms of that certain escrow agreement amount Elk, Park,
Hardee Capital Partners, MicroTel
<PAGE>
International, Inc., Kleer-Vu and the Escrow Agent dated March 25, 1996 as
additional security for Park's timely payment and performance under the January
Letter Agreement, the Park Note and related agreements, all as amended hereby
(collectively, the "Amended Agreement").
(b) If the closing price of Kleer-Vu's common shares on the AMEX on
June 28, 1996 is greater than $3.00 per share, (i) Park shall make a payment
reduction on June 30, 1996 of $500,000, or in the alternative (ii) Park shall
deliver the 450,000 Preferred Shares into escrow with the Escrow Agent as
described in paragraph 2.
3. In the event Park defaults under the terms of the Amended Agreement,
Park shall grant Elk an irrevocable proxy to Elk to vote all his common shares
and Preferred Shares which constitute security for Park's obligations to Elk
under the Amended Agreement, which irrevocable proxy Park acknowledges is
coupled with an interest. Such proxy shall continue in effect until (i) Park
has satisfied all his obligations to Elk under the Amended Agreement or (ii) the
Park common shares and/or Preferred Shares have been disposed of by Elk or Park.
Notwithstanding the foregoing, Elk shall be able to pursue all of its rights and
remedies available to it under the Amended Agreement in the event of such
default by Park.
4. Other than provided herein, the terms of the January Letter Agreement,
the Note and related agreements shall remain in full force and effect.
5. This Letter Agreement shall become effective only when executed and
delivered by all parties. Facsimile signatures hereon shall be deemed to be
original signatures.
Very truly yours,
/s/Hee Poong Park
--------------------
HEE POONG PARK
ACCEPTED AND AGREED:
ELK INTERNATIONAL CORPORATION LIMITED
By:/s/ Elkana Faiwuszewicz
- --------------------------
Elkana Faiwuszewicz
<PAGE>
EXH.10.15
[LOGO] Elk International Corporation Limited
P.O. BOX N-3247
NASSAU, BAHAMAS
AREA CODE 809
TEL. (32)2-8571
May 30, 1996
VIA FAX (714) 252-0961
RANDOLF W. KATZ
ARTER & HADDEN
JAMBOREE CENTER
5 PARK PLAZA, STE. 1000
IRVINE, CA 92714
RE: ESCROW AGREEMENT DATED MARCH 25, 1996 BY AND AMONG ELK INTERNATIONAL
CORPORATION LIMITED ("ELK"), MICROTEL INTERNATIONAL, INC. ("MICROTEL"), HEE
POONG PARK ("PARK"), HARDEE CAPITAL PARTNERS, L.P. ("HCP"), AND ARTER & HADDEN,
AS ESCROW AGENT
Dear Randy:
Please be advised that PARK and HCP are in default of payments to ELK of certain
promissory notes secured by Kleer-Vu Industries, Inc. shares of stock. Said
defaults have continued for a period in excess of 21 days and have not been
cured.
Accordingly, as per above described escrow agreement, and without waiving any
and all rights or interest of ELK in any and all relevant promissory notes or
security and pledge agreements as amended from time to time in favor of ELK, you
are hereby instructed to give a 7 day notice to PARK, HCP, and David W. Hardee,
guarantor that in 12 days (no later than June 11, 1996) you will deliver the
escrowed shares to ELK as per terms of the escrow agreement, c/o Rebekah Laird,
601 Hanson Rd., Kemah, TX 77565.
Very truly yours,
/s/ Elkana Faiwuszewicz
- -----------------------
Elkana Faiwuszewicz
President
cc: Bill King, Attorney at Law
