UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1999 Commission File Number 000-18389
WORLD WIDE STONE CORPORATION
NEVADA 33-0297934
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification number)
5236 S. 40th Street, Phoenix, AZ 85040
(Address of Principal Executive Offices) (Zip Code)
602-438-1001
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or, for such period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No [ ]
As of June 30, 1999, there were 32,703,768 shares of common stock outstanding.
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WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 1999
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1999 and December 31, 1998........................................3
Consolidated Statements of Operations
Three months ended June 30, 1999 and 1998..................................4
Consolidated Statements of Operations
Six months ended June 30, 1999 and 1998....................................5
Consolidated Statements of Cash Flows
Six months ended June 30, 1999 and 1998....................................6
Notes to Consolidated Financial Statements.................................7
Item 2. Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations..........................8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.....................................................13
Item 2. Changes in Securities.................................................13
Item 3. Defaults Upon Senior Securities.......................................13
Item 4. Submission of Matters to a Vote of Security Holders...................13
Item 5. Other Information.....................................................13
Item 6. Exhibits and Reports on Form 8-K......................................13
Signatures....................................................................14
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WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1999 1998
----------- -----------
(Unaudited)
CURRENT ASSETS:
Cash $ 465,591 $ 279,167
Accounts receivable 355,843 265,585
Inventory 1,169,802 885,478
Prepaid expenses and other 404,193 168,715
----------- -----------
Total current assets 2,395,429 1,598,945
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of $1,429,685 and $1,247,199,
respectively 4,098,355 3,559,788
COST IN EXCESS OF NET ASSETS ACQUIRED, net of
accumulated amortization of $109,436 and $100,316,
respectively 164,153 173,273
OTHER ASSETS:
Other receivables 311,930 172,338
Deferred loan fees, net 51,700 --
Prepaid taxes 27,275 13,865
Deferred taxes 99,000 300,000
----------- -----------
Total assets $ 7,147,842 $ 5,818,209
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 126,940 $ 124,294
Accrued liabilities 172,609 189,714
Current portion of long-term debt 262,333 101,561
Other 900,000 900,000
----------- -----------
Total current liabilities 1,461,882 1,315,569
LONG-TERM DEBT, net of current portion 908,513 102,898
----------- -----------
Total liabilities 2,370,395 1,418,467
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, 100,000,000
shares authorized, 34,703,768 shares issued,
32,703,768 outstanding 34,704 34,704
Additional paid-in capital 8,024,536 8,024,536
Accumulated deficit (3,180,320) (3,537,237)
Cumulative remeasurement adjustment 18,527 (2,261)
Treasury stock, at cost, 2,000,000 shares (120,000) (120,000)
----------- -----------
Total stockholders' equity 4,777,447 4,399,742
----------- -----------
Total liabilities and stockholders' equity $ 7,147,842 $ 5,818,209
=========== ===========
The accompanying notes are an integral part of these
consolidated balance sheets.
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WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
June 30,
----------------------------
1999 1998
------------ ------------
REVENUE $ 1,311,754 $ 1,090,232
COST OF GOODS SOLD 746,122 523,312
------------ ------------
Gross profit 565,632 566,920
COST AND EXPENSES:
Selling, general and administrative 347,239 273,760
Depreciation and amortization 11,024 10,568
------------ ------------
Income from operations 207,369 282,592
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 4,439 827
Interest expense (24,078) (5,056)
Gain on currency remeasurement 31,783 2,118
------------ ------------
Total other income (expense) 12,144 (2,111)
------------ ------------
Income before provision for income taxes 219,513 280,481
PROVISION FOR INCOME TAXES 88,000 --
------------ ------------
Net income 131,513 280,481
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Foreign currency remeasurement adjustment 6,713 --
------------ ------------
Comprehensive income $ 138,226 $ 280,481
============ ============
EARNINGS PER SHARE
Basic and diluted:
Net income per share $ -- $ .01
============ ============
Weighted average number of common shares
outstanding 32,703,768 34,703,768
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
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WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended
June 30,
----------------------------
1999 1998
------------ ------------
REVENUE $ 2,706,685 $ 1,961,342
COST OF GOODS SOLD 1,418,423 932,508
------------ ------------
Gross profit 1,288,262 1,028,834
COST AND EXPENSES:
Selling, general and administrative 717,827 521,081
Depreciation and amortization 22,048 21,136
------------ ------------
Income from operations 548,387 486,617
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 7,203 1,701
Interest expense (32,433) (13,333)
Gain on currency remeasurement 34,760 7,752
------------ ------------
Total other income (expense) 9,530 (3,880)
------------ ------------
Income before provision for income taxes 557,917 482,737
PROVISION FOR INCOME TAXES 201,000 --
------------ ------------
Net income 356,917 482,737
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Foreign currency remeasurement adjustment 20,788 --
------------ ------------
Comprehensive income $ 377,705 $ 482,737
============ ============
EARNINGS PER SHARE
Basic and diluted:
Net income per share $ .01 $ .01
============ ============
Weighted average number of common shares
outstanding 32,703,768 34,703,768
============ ============
The accompanying notes are an integral part of these
consolidated financial statements.
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WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
--------------------------
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 356,917 $ 482,737
Adjustments to reconcile net income to net cash
(used in) provided by operating activities-
Depreciation and amortization 194,306 165,766
(Gain) on foreign currency remeasurement (34,760) (7,752)
Changes in certain assets and liabilities:
Increase in accounts receivable (90,258) (101,114)
Increase in inventory (284,324) (129,595)
Increase in prepaid expenses and other (248,888) (23,743)
Increase in other receivables (84,044) (34,739)
Decrease in deferred taxes 201,000 --
Increase in accounts payable 2,646 35,551
Increase (decrease) in accrued liabilities (17,105) 31,030
----------- -----------
Net cash (used in) provided by operating
activities (4,510) 418,141
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant, and equipment, net (721,053) (217,992)
----------- -----------
Net cash used in investing activities (721,053) (217,992)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on notes payable (113,613) (63,280)
Proceeds from equipment loan, net of fees 1,025,600 --
----------- -----------
Net cash provided by (used in) financing
activities 911,987 (63,280)
----------- -----------
NET INCREASE IN CASH 186,424 136,869
CASH, beginning of period 279,167 221,660
----------- -----------
CASH, end of period $ 465,591 $ 358,529
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest $ 29,733 $ 13,333
=========== ===========
Cash paid for income taxes $ -- $ --
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
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WORLD WIDE STONE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
(1) INTERIM FINANCIAL REPORTING:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows for the periods presented have been made. The results of operations
for the three-month and six-month periods ended June 30, 1999 are not
necessarily indicative of the operating results that may be expected for the
entire year ending December 31, 1999. These financial statements should be read
in conjunction with the Company's Form 10-KSB for the year ended December 31,
1998.
(2) INVENTORY:
Inventory is stated at the lower of cost or market. Inventory and cost of goods
sold include all operating costs incurred at the two factories in Mexico as well
as freight charges from Mexico to the United States. Included in these operating
costs was depreciation of property, plant and equipment of $92,678 and $72,315
for the three months ended June 30, 1999 and 1998, respectively, and $169,558
and $144,630 for the six months ended June 30, 1999 and 1998, respectively. As
of June 30, 1999, inventory was located at the plant in Durango, Mexico, at a
showroom-warehouse in Phoenix, Arizona, and at a warehouse in El Paso, Texas.
Inventory at June 30, 1999, consists of finished goods and raw materials of
$1,009,440 and $160,362, respectively.
(3) EARNINGS PER SHARE:
The Company utilizes SFAS No. 128, EARNINGS PER SHARE, to compute basic and
diluted earnings per share. Because the Company has no outstanding convertible
securities or other common stock equivalents, there is no difference between
amounts reported for weighted average common shares and earnings per share for
basic and diluted amounts.
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(4) FOREIGN CURRENCY TRANSLATION:
The Company's wholly-owned Mexican subsidiaries maintain their books and records
in Mexican pesos. Their functional currency, however, is the U.S. dollar.
Therefore, these subsidiaries utilize the remeasurement method of foreign
currency translation when consolidated.
The remeasurement method of foreign currency converts all monetary assets and
liabilities from Mexican pesos to U.S. dollars at the current rate of exchange
at the balance sheet date. All nonmonetary assets and liabilities are converted
at the historical rates that were present when the particular transaction took
place. Revenue and expenses from the statements of operations are converted from
Mexican pesos to U.S. dollars at a weighted average conversion rate.
Depreciation, amortization, and similar historical-cost-based expenses use a
historical-based rate. Remeasurement gains and losses resulting from
transactions that are short-term in nature are reported in the Company's
consolidated statements of operations as foreign currency remeasurement
adjustments. Remeasurement gains or losses resulting from intercompany
transactions that are long-term in nature are reported as a separate component
of stockholders' equity as a cumulative remeasurement adjustment.
(5) RELATED PARTY TRANSACTIONS
In January 1999, an officer of the Company acquired the building that the
Company leases for its corporate offices in Phoenix, Arizona. Because the
Company entered into the lease with a third party prior to the officer's
acquisition of the building, the Company believes that the terms of the lease
are no less favorable to the Company than it could obtain from non-affiliated
parties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this Report on Form 10-QSB that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's "expectations,"
"anticipation," "intentions," "beliefs," or "strategies" regarding the future.
Forward-looking statements include statements regarding revenue, margins,
expenses, and earnings analysis for fiscal 1999 and thereafter; future products
or product development efforts; spending for acquisitions of additional
equipment or expansion of production facilities; and liquidity and anticipated
cash needs and availability. All forward-looking statements included in this
Report are based on information available to the Company as of the filing date
of this Report, and the Company assumes no obligation to update any such
forward-looking statements. It is important to note that the Company's actual
results could differ materially from those in such forward-looking statements as
a result of a variety of factors, including those identified in the Company's
Form 10-KSB for the year ended December 31, 1998, as filed with the Securities
and Exchange Commission.
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INTRODUCTION
The Company quarries, manufactures, and markets a wide variety of dimensional
stone products. The Company extracts marble limestone and travertine blocks from
quarries located in Mexico. The Company then transports the blocks to plants
operated by its wholly-owned Mexican subsidiaries in Durango, Durango, Mexico,
where the blocks are cut, honed, polished or tumbled, then dimensioned and
packaged. The Company markets its dimensional stone products primarily in the
United States and Canada through distributors, dealers, and designers. In
addition, the Company sells nominal quantities of its products in Europe.
The Company is currently constructing its third factory. The 27,000 square foot
factory will be used to produce large slabs of marble limestone as well as
additional billets for the existing factories. The Company estimates that the
total cost to build and equip the new facility will be approximately $2.0
million. As of the filing date of this Report, the project is approximately 85%
complete. The Company has obtained financing for approximately half the project
and has financed the remainder with cash flows from operations. The Company
plans to open the factory in September of 1999 and believes the new factory will
significantly increase the Company's existing production and sales capacity. The
Company's existing two factories are operating at near peak capacity.
RESULTS OF OPERATIONS OF THE COMPANY FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1999
REVENUE. The Company's revenue for the three months ended June 30, 1999 was
$1,311,754, which represents a 20% increase over revenue of $1,090,232 for the
three months ended June 30, 1998. The Company's revenue for the six months ended
June 30, 1999 was $2,706,685, which represents a 38% increase over revenue of
$1,961,342 for the six months ended June 30, 1998. The Company attributes the
increases in revenue to increased market acceptance and demand for its products.
COST OF GOODS SOLD; GROSS PROFIT. Cost of goods sold was $746,122 and $1,418,423
during the three months and six months ended June 30, 1999, respectively, as
compared with $523,312 and $932,508 during the three months and six months ended
June 30, 1998. Gross profit as a percentage of revenue decreased to 43% and 48%
for the three months and six months ended June 30, 1999, respectively, from 52%
for both the three months and six months ended June 30, 1998. The decrease in
gross profit as a percentage of revenue resulted from excess costs incurred to
fill two specialty orders of specific stone color and dimension. The Company
rarely accepts specialty orders and plans to adopt procedures to reduce the
likelihood that it will accept specialty orders in the future that may
ultimately prove to be unprofitable. There can be no assurance, however, that
the Company will not incur unanticipated expenses in connection with specialty
orders that it accepts in the future.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased to $347,239 during the three months ended June
30, 1999 from $273,760 during the three months ended June 30, 1998. Selling,
general, and administrative expense represented approximately 26% and 25% of
revenue during the three months ended June 30, 1999 and 1998, respectively. This
increase is attributable to increases for payroll and increased advertising and
promotion costs. Selling, general and administrative expense increased to
$717,827 during the six months ended June 30, 1999 from $521,081 during the six
months ended June 30, 1998. Selling, general, and administrative expense
represented approximately 27% of revenue during both the six months ended June
30, 1999 and 1998. The increase in expense is attributable to those factors
discussed above as well as increased travel expenses related to promotion of the
Company's products.
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<PAGE>
INCOME BEFORE PROVISION FOR INCOME TAXES. Income before provision for income
taxes for the three months ended June 30, 1999 decreased 22% to $219,513
compared to the same period in 1998. The decrease is attributable to increases
in production costs and interest expense. However, income before provision for
income taxes for the six months ended June 30, 1999, increased by 16% to
$557,917 over income before provision for income taxes of $482,737 for the six
months ended June 30, 1998, as a result of increased revenue.
PROVISION FOR INCOME TAXES. The Company has determined that it is more likely
than not that it will utilize all of its net operating loss carryforwards in
fiscal 1999 and fiscal 2000. The Company accounted for utilization of its net
operating loss carryforwards during the six-month period ended June 30, 1999 by
reducing its deferred tax asset by $201,000 and recording a related provision
for income taxes of $113,000 in the first quarter of fiscal 1999 and $88,000 in
the second quarter. The reduction of the Company's deferred tax asset was a non-
cash transaction. No provision for income taxes was recorded for the six months
ended June 30, 1998.
NET INCOME. Net income for the three months ended June 30, 1999, was $131,513 as
compared with net income of $280,481 for the three months ended June 30, 1998.
Net income for the six months ended June 30, 1999, was $356,917 as compared with
net income of $482,737 for the six months ended June 30, 1998.
SEASONALITY
The Company historically has experienced lower sales in the fourth calendar
quarter as a result of production declines during the holiday season as well as
seasonal declines in homebuilding and remodeling. The Company took a number of
steps during fiscal 1998 to increase sales during the fourth quarter, including
concentrating selling efforts in parts of the world that experience warm weather
during this time and plans to take similar steps during fiscal 1999. The Company
also may be subject to periodic declines experienced by the building industry in
general.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital position increased $650,171 for the six months
ended June 30, 1999 to $933,547 from $283,376 at December 31, 1998. The increase
was attributable to increases in cash, accounts receivable, and inventory as a
result of greater production and sales.
The Company's net cash used in operating activities was $4,510 for the six
months ended June 30, 1999, compared to net cash provided by operating
activities of $418,141 for the six months ended June 30, 1998. The change was
primarily attibutable to an increase in inventory and prepaid construction costs
in anticipation of the opening of the Company's third factory.
The Company invested $721,053 during the first six months of 1999 to construct
its third factory, to enhance its existing two factories, and to purchase
equipment and machinery, primarily in Mexico. The Company intends to acquire
additional property, plant, and equipment during 1999 and in future years in
order to continue to support its current sales volume and to accommodate
anticipated increases in demand for its products.
On April 13, 1999, the Company obtained a loan in the principal amount of
$1,080,000 to purchase equipment to be installed at the new factory under
construction in Mexico. The loan bears interest at the rate of 9.5258% per annum
and matures on March 13, 2004. The loan is secured by quarry block, quarry
equipment, and the building structure and equipment purchased and installed
specifically from these loan proceeds at the new factory. The Company's
subsidiary, Sociedad Piedra Sierra, S.A. de C.V., also has guaranteed the loan.
Fees incurred in connection with obtaining the loan were deferred and are being
amortized over the life of the loan.
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<PAGE>
The Company's current cash resources, expected cash flow from operations, and
equipment financing are expected to be sufficient to fund the Company's capital
needs during the next 12 months at its current level of operations, apart from
capital needs for the construction of new facilities or acquisitions of
additional equipment or additional business operations beyond the new factory
currently under construction. The Company may be required to obtain additional
capital to fund its planned growth during the next 12 months and beyond,
particularly for expansion of the Company's facilities and operations in Mexico.
Potential sources of any such capital may include the proceeds from bank
financing, strategic alliances, and offerings of the Company's equity or debt
securities. There can be no assurance that such capital will be available from
these or other potential sources, and the lack of such capital could have a
material adverse affect on the Company's business.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two-digit entries to represent years in the date code field.
Computer systems and products that do not accept four-digit year entries will
need to be upgraded or replaced to accept four-digit entries to distinguish
years beginning with 2000 from prior years. The Company has upgraded its
internal computer network at its headquarters in Phoenix, Arizona, in order to
integrate its management information systems, as well as to ensure that its
computer systems and other process control equipment located at its Arizona
facility will be able to deal appropriately and without malfunctions caused by
"Year 2000" issues.
The Company currently has one internal information technology systems employee
and one external computer engineer planning upgrades to the computer network and
computer-operated equipment located at the Company's factories and quarries in
Mexico. The Company currently plans to test its computer systems and
computer-operated equipment in Mexico after the third factory is completed. The
Company currently anticipates that it will conduct these tests during September
1999. The Company intends to complete upgrades to its computer systems and
equipment located in Mexico during 1999 to ensure that they will properly
process dates beginning on and after January 1, 2000, as well as to improve the
content, quality, and flow of information throughout the Company.
The Company has corresponded with approximately 50 of its approximately 100
third-party vendors, suppliers, banks, government agencies, and others with
respect to the Year 2000 issue. All of the third parties that the Company has
contacted have responded and have indicated that they have addressed the Year
2000 issue and are working towards solving problems related to the Year 2000
issue. There can be no assurance, however, that computer systems operated by
third parties, including customers, vendors, credit card transaction processors,
and financial institutions, will continue to properly interface with the
Company's systems and will otherwise be compliant on a timely basis with Year
2000 requirements.
The Company's costs to modify software and hire Year 2000 solution providers are
included as part of the management information system enhancements described
above. The Company currently estimates that its costs to address the Year 2000
issue to date have been approximately $35,000 for internal and external computer
network services. The Company currently anticipates that it will incur
additional costs of approximately $20,000 during 1999 to complete upgrades and
enhancements to its computer systems.
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<PAGE>
The Company's business depends entirely upon its ability to extract and process
stone in Mexico and ship its dimensional stone products to the United States for
sales and distribution. The Company may be at risk with respect to suppliers of
necessary resources, particularly suppliers of power, water, and
telecommunications within Mexico, if those suppliers are not Year 2000
compliant. Extended power brownouts or blackouts or loss of the water supply at
the Company's factories in Mexico would seriously disrupt the Company's source
of dimensional stone products. Telephone communication system failures within
Mexico or between the United States and Mexico, Canada, and Europe as a result
of Year 2000 issues would severely hinder the Company's sales and shipping
functions. In addition, disruption to local and international banking, credit
card processing, and other financial services as a result of Year 2000 issues
would have a material adverse effect on the Company's cash management systems
and financial resources. Potential revenue losses and/or liabilities to third
parties as a result of Year 2000 problems could adversely impact the Company's
ability to continue as a going concern. Because of these factors, the Company is
unable to fully assess the impact of the Year 2000 issue as of the filing date
of this Report. The Company is formulating a contingency plan with respect to
the Year 2000 issues described above and will finalize its contingency plan by
September 1999 with a formalized plan and document.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
Not applicable.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Item 5. OTHER INFORMATION
Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 10.1: Pledge and Deposit Agreement dated April 12, 1999 between
World Wide Stone Corporation, First Capital Group, Inc., Sociedad Piedra
Sierra, S.A. de C.V., and Jaime Muguiro Munoz
Exhibit 10.2: Equipment Loan and Security Agreement dated April 13, 1999
between World Wide Stone Corporation and First Capital Group, Inc.
Exhibit 10.3: Promissory note in the principal amount of $1,080,000 dated
April 13, 1999 issued by World Wide Stone Corporation and guaranteed by
Sociedad Piedra Sierra, S.A. de C.V., payable to First Capital Group, Inc.
Exhibit 27.1: Financial Data Schedule
(b) REPORTS ON FORM 8-K
Not Applicable
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
Date: August 13, 1999 World Wide Stone Corporation
By: /s/ Spencer Cunningham
--------------------------------------------
Spencer Cunningham, Executive Vice President
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CONTRATO DE PRENDA Y DEPOSITO PLEDGE AND DEPOSIT AGREEMENT
CONTRATO DE PRENDA Y DEPOSITO (en lo PLEDGE AND DEPOSIT AGREEMENT
sucesivo denominado como el (hereinafter referred to as the
"CONTRATO") celebrado el 12 de abril "AGREEMENT") entered into on April 12,
de 1999 por una parte por la sociedad 1999 on one part by WORLD WIDE STONE
WORLD WIDE STONE CORPORATION, (en lo CORPORATION (hereinafter referred to
sucesivo denominada como el "DEUDOR as the "PLEDGOR"), represented herein
PRENDARIO"), representada en este acto by Mr. Spencer W. Cunningham, in his
por el senor Spencer W. Cunningham en capacity as Executive Vice-president;
su caracter de Vicepresidente on a second part by FIRST CAPITAL
Ejecutivo; por una segunda parte por GROUP, INC. (hereinafter referred to
FIRST CAPITAL GROUP, INC., as "PLEDGEE"), represented herein by
representada en este acto por el senor Mr. Gary Milhollon, in his capacity as
Gary Milhollon, en su caracter de President; and on a third part by
Presidente (en lo sucesivo referida SOCIEDAD PIEDRA SIERRA, S.A. DE C.V.,
como el "ACREEDOR PRENDARIO"), y por represented herein by Mr. Jaime
una tercera parte por SOCIEDAD PIEDRA Muguiro Munoz, in his capacity as
SIERRA, S.A. DE C.V., representada en Chairman of the Board of Directors and
este acto por el Sr. Jaime Muguiro MR. JAIME MUGUIRO MUNOZ, acting in his
Munoz en su caracter de Presidente del personal capacity, (hereinafter
Consejo de Administracion y por el jointly referred to as
senor JAIME MUGUIRO MUNOZ, actuando en "DEPOSITARIES"), pursuant to the
lo personal (en lo sucesivo following representations and clauses:
denominados conjuntamente como los
"DEPOSITARIOS"); y de conformidad con REPRESENTATIONS
las siguientes declaraciones y
clausulas: I. PLEDGOR represents and warrants
that:
DECLARACIONES
a) It is a corporation duly
I. El DEUDOR PRENDARIO declara y incorporated and existing under the
garantiza que: laws of the State of Nevada, United
States of America.
a) Es una sociedad debidamente
constituida en los terminos de las b) It holds title to the machinery and
leyes del Estado de Nevada, Estados equipment (hereinafter referred to as
Unidos de America. the "PLEDGED GOODS") described in the
documents attached hereto as EXHIBIT
b) Es propietario de la maquinaria y "A", which signed by the parties are
equipo (en adelante referidos como los hereby incorporated by reference. The
"BIENES PIGNORADOS") que se describe Pledged Goods will be located in the
en el documento que se adjunta al premises of the DEPOSITARIES, located
presente como ANEXO "A", los cuales at Calle Anex #2, Cdd. Industrial,
debidamente firmados en copia simple 34220, in Ciudad Durango, State of
por las partes se adjuntan al presente Durango, Mexico (hereinafter the
y se tienen por reproducidas en el "PREMISES"). The title to the
mismo. Los Bienes Pignorados se machinery and equipment is evidenced
ubicaran en las instalaciones de los through the invoices attached hereto
DEPOSITARIOS, ubicadas en Calle Anex as EXHIBIT "B".
#2, Cdd. Industrial, 34220, Ciudad
Durango, Estado de Durango (en lo c) On even date herewith, it entered
sucesivo las "INSTALACIONES"). La as Borrower, with PLEDGEE acting as
propiedad de la maquinaria y el equipo lender; and Sociedad Piedra
se demuestran a traves de las facturas
que se adjuntan al presente como ANEXO
"B".
<PAGE>
c) Con esta misma fecha, celebro como Sierra, S.A. de C.V. acting as
acreditado junto con el ACREEDOR guarantor, a loan agreement by and
PRENDARIO como acreditante, y la between PLEDGEE and PLEDGOR, whereby
sociedad Piedra Sierra, S.A. de C.V. PLEDGEE granted to PLEDGOR a loan for
como garante, un contrato de credito up to the amount of US$1,080,000.00
entre el ACREEDOR PRENDARIO y el (ONE MILLION EIGHTY THOUSAND DOLLARS
DEUDOR PRENDARIO mediante el cual el 00/100) lawful currency of the United
DEUDOR PRENDARIO otorgo a favor del States of America, plus interest
ACREEDOR PRENDARIO un credito hasta thereon (hereinafter referred to as
por la cantidad de US$1,080,000.00 (UN the "LOAN AGREEMENT"). A copy of the
MILLON OCHENTA MIL DOLARES 00/100), Loan Agreement is attached hereto as
moneda del curso legal de los Estados EXHIBIT "C".
Unidos de America, mas los intereses
correspondientes (en lo sucesivo d) Pursuant to the terms of the Loan
referido como el "CONTRATO DE Agreement, PLEDGOR executed one
CREDITO"). Una copia del Contrato de promissory note in favor of PLEDGEE
Credito se adjunta al presente como for the entire amount of
ANEXO "C". US$1,080,000.00 (ONE MILLION EIGHTY
THOUSAND DOLLARS 00/100), (hereinafter
d) De conformidad a los terminos del referred to as the "NOTE") evidencing
Contrato de Credito, el DEUDOR the disbursement in such amount under
PRENDARIO firmo un pagare en favor del the Loan Agreement. A form of the Note
ACREEDOR PRENDARIO por la cantidad is attached hereto as EXHIBIT "D".
total de US$1,080,000.00 (UN MILLON
OCHENTA MIL DOLARES 00/100), (en lo e) In order to secure all obligations
sucesivo denominado el "PAGARE") assumed by itself and Sociedad Piedra
documentando la disposicion de dicha Sierra, S.A. de C.V. under the Loan
cantidad de conformidad al Contrato de Agreement, PLEDGOR wishes to pledge
Credito. Un formato del Pagare se the Pledged Goods in favor of the
adjunta al presente como ANEXO "D". PLEDGEE.
e) A fin de garantizar todas las f) The Pledged Goods have been
obligaciones a su cargo y de Sociedad acquired outside of Mexico, and are
Piedra Sierra, S.A. de C.V. en los currently in the process of being
terminos del Contrato de Credito, el legally imported into Mexico, and in
DEUDOR PRENDARIO desea dar en prenda all cases are free from any liens,
los Bienes Pignorados a favor del encumbrances or domain limitations.
ACREEDOR PRENDARIO.
II. PLEDGEE represents and warrants
f) Los Bienes Pignorados han sido that:
importados fuera de Mexico, y se
encuentran actualmente en proceso de a) It is a corporation duly
ser legalmente importados a Mexico, y incorporated and existing under the
en todo caso se encuentran libres de laws of the State of New Mexico,
cualquier gravamen, o limitacion de United States of America.
dominio en su totalidad.
b) That induced and subject to the
II. El ACREEDOR PRENDARIO declara y execution hereof, it has entered into
garantiza que: the Loan Agreement with PLEDGOR.
a) Es una sociedad debidamente
constituida en los terminos de las
leyes del Estado de Nuevo Mexico,
Estados Unidos de America.
b) Como consecuencia y sujeto a la
celebracion
<PAGE>
del presente, ha celebrado el Contrato III. The DEPOSITARIES represent and
de Credito con el DEUDOR PRENDARIO. warrant that:
III. Los DEPOSITARIOS declaran y a) They wish to act as depositaries of
garantizan que: the Pledged Goods pledged through this
Agreement in favor of PLEDGEE.
a) Desean actuar como depositarios de
los Bienes Pignorados otorgados a IV. All parties represent and warrant
traves de este Contrato en favor del that:
ACREEDOR PRENDARIO.
a) They wish to perfect a security
IV. Todas las partes declaran y interest in the Pledged Goods in favor
garantizan que: of PLEDGEE, under Mexican Law.
a) Desean perfeccionar el derecho de b) Their respective representatives
garantia del ACREEDOR PRENDARIO sobre have sufficient authority to execute
los Bienes Pignorados en los terminos this Agreement, which authority has
de la legislacion mexicana. not been revoked, modified or limited
in any way.
b) Sus representantes cuentan con
facultades suficientes para celebrar c) In the execution of this Agreement
el presente Contrato, facultades que there has been no error, bad faith nor
de ninguna manera les han sido duress among them.
revocadas, modificadas o limitadas.
d) All terms not defined herein shall
c) En la celebracion de este Contrato have the meaning ascribed to them in
no ha obrado error, dolo, mala fe, the Loan Agreement.
violencia o lesion alguna entre las
partes. NOW, THEREFORE, the parties agree as
follows:
d) Todos los terminos que no se
encuentren definidos en el presente CLAUSES
Contrato tendran el significado dado a
ellos en el Contrato de Credito. FIRST.- PLEDGE
EN CONSIDERACION DE LO ANTERIOR, las In order to secure and/or guarantee
partes convienen en otorgar las the entirety of the obligations of the
siguientes: PLEDGOR and Sociedad Piedra Sierra,
S.A. de C.V. under the Loan Agreement,
CLAUSULAS the Note and any other ancillary
document covenant or undertaking
PRIMERA.- PRENDA thereon in a maximum principal amount
of US$1,080,000.00 (ONE MILLION EIGHTY
A fin de garantizar y/o asegurar la THOUSAND DOLLARS/100) lawful currency
totalidad de las obligaciones del of the United States of America, plus
DEUDOR PRENDARIO y Sociedad Piedra interest thereon, as set forth in the
Sierra, S.A. de C.V. en los terminos Loan Agreement and the amounts
del Contrato de Credito, el Pagare y resulting from any ancillary
cualquier otro documento accesorio, obligations derived from such Loan
compromisos y obligaciones accesorias
al mismo hasta por la cantidad de
capital de US$1,080,000.00 (UN MILLON
OCHENTA MIL DOLARES 00/100) moneda de
curso legal en los Estados Unidos de
America, mas los intereses sobre
<PAGE>
dicha cantidad en los terminos del Agreement, PLEDGOR hereby pledges the
Contrato de Credito y importe de las Pledged Goods in favor of PLEDGEE
prestaciones accesorias que se deriven under the terms of Article 334 of the
de dicho Contrato de Credito, el Mexican General Law of Negotiable
DEUDOR PRENDARIO en este acto da en Instruments and Credit Transactions.
prenda los Bienes Pignorados en favor PLEDGEE hereby accepts such pledge
del ACREEDOR PRENDARIO en los terminos (hereinafter referred to as the
del Articulo 334 de la Ley General de "PLEDGE") on all the Pledged Goods,
Titulos y Operaciones de Credito. El including without limitation, the
ACREEDOR PRENDARIO en este acto acepta machinery and equipment described in
dicha prenda (en lo sucesivo referida EXHIBIT "A". The Pledge shall include
como la "PRENDA") sobre la totalidad all the machinery and equipment
de los Bienes Pignorados, incluyendo (hereinafter referred to as the
sin limitacion, los bienes descritos "EQUIPMENT") acquired by PLEDGOR and
en el ANEXO "A". La Prenda debera installed at the Premises during the
incluir toda la maquinaria y equipo term of this Agreement. To the extent
(en adelante el "EQUIPO") utilizado en the goods that are a part of such
las Instalaciones y adquirido e Equipment may be considered as
instalado por el DEUDOR PRENDARIO fungible goods, the provisions of
durante la vigencia de este Contrato. Article 335 of the Mexican General Law
En la medida que bienes que formen of Negotiable Instruments and Credit
parte del Equipo o de los BIENES Transactions shall apply.
PIGNORADOS puedan llegar a ser
considerados como bienes fungibles, In connection with the Equipment,
seran aplicables las disposiciones del every time that any new goods are made
Articulo 335 de la Ley General de a part of the Equipment, or in case an
Titulos y Operaciones de Credito. item is changed from such Equipment,
PLEDGOR or the DEPOSITARIES must
En relacion con el Equipo, en cada provide PLEDGEE with an updated
ocasion que bienes adicionales sean version of EXHIBIT "A", in order for
incorporados al Equipo, o en caso de such Equipment to become a part of the
que algun bien de dicho Equipo sea Pledged Goods. In such event, PLEDGOR
cambiado, el DEUDOR PRENDARIO o los and the DEPOSITARIES, must appear
DEPOSITARIOS deberan de entregar al before a public attestor to ratify the
ACREEDOR PRENDARIO una version new list of Pledged Goods, and in
actualizada del ANEXO "A", a fin de general, at PLEDGOR=S expense, to
que dicho Equipo pase a conformar execute all the documents that may be
parte de los Bienes Pignorado. En tal required by the Public Registry of
caso, el ACREEDOR PRENDARIO y los Property for the City of Durango,
DEPOSITARIOS deberan comparecer ante State of Durango, Mexico (the "PUBLIC
un Fedatario Publico para ratificar la REGISTRY"), to record the updated
nueva lista de Bienes Pignorados y en versions of EXHIBIT "A" and to ensure
general, y a costo del DEUDOR that all current or future Equipment
PRENDARIO, para firmar todos los secure the Obligations of PLEDGOR
documentos que puedan ser requeridos under the Loan Agreement, the Note and
por el Registro Publico de la any other of document related to the
Propiedad para la Ciudad de Durango, Loan Agreement for as long as the Loan
en el Estado de Durango, Mexico (el is in effect. It is expressly
"REGISTRO PUBLICO") a fin de registrar understood that the prior written
las versiones actualizadas del ANEXO approval by PLEDGEE shall be a
"A" para asegurar que todos los bienes condition precedent to the validity of
de Equipo actuales o futuros any replacement of Equipment made by
garanticen las obligaciones del DEUDOR PLEDGOR or the DEPOSITARIES.
PRENDARIO en los terminos del Contrato Consequently, PLEDGOR and the
de Credito, el Pagare y cualesquier DEPOSITARIES shall under no
otro documentos relacionado con el circumstance dispose of the Pledged
Contrato de Credito por tanto tiempo Goods unless such prior written
como el Credito se mantenga vigente. authorization to so dispose of such
Queda perfectamente establecido que el goods is obtained from PLEDGEE.
consentimiento previo y por escrito
del ACREEDOR PRENDARIO sera una
condicion
<PAGE>
suspensiva respecto de la validez de SECOND.- APPOINTMENT OF DEPOSITARIES
cualquier reemplazo de Equipo
realizado por el DEUDOR PRENDARIO o PLEDGOR and PLEDGEE hereby appoint the
los DEPOSITARIOS. Consecuentemente, ni DEPOSITARIES as the depositaries of
el DEUDOR PRENDARIO ni los the Pledged Goods pursuant to the
DEPOSITARIOS podran disponer de los provisions of Article 334, paragraph
Bienes Pignorados a menos que hayan IV, of the General Law of Negotiable
obtenido dicha autorizacion previa y Instruments and Credit Transactions of
por escrito del ACREEDOR PRENDARIO. Mexico. The DEPOSITARIES hereby take
legal possession of the Pledged Goods
SEGUNDA.-NOMBRAMIENTO DE DEPOSITARIOS and accept such appointment. The
DEPOSITARIES agree to act as
El DEUDOR PRENDARIO y el ACREEDOR depositaries of the Pledged Goods for
PRENDARIO en este acto nombran a los purposes of the Pledge and to keep the
DEPOSITARIOS como los depositarios de Pledged Goods in the Premises at the
la Prenda de los Bienes Pignorados en full and exclusive disposal of PLEDGEE
los terminos de lo dispuesto por el notwithstanding the provisions of
Articulo 334, IV parrafo de la Ley Clause Fourth hereunder.
General de Titulos y Operaciones de
Credito de Mexico. Los DEPOSITARIOS en The DEPOSITARIES covenant and agree to
este acto toman posesion legal de los perform all the actions required by
Bienes Pignorados y aceptan dicho law as depositaries of the Pledged
nombramiento. Los DEPOSITARIOS esta de Goods and to undertake all actions
acuerdo en actuar como depositarios de necessary, required or advisable for
los Bienes Pignorados para los efectos the preservation and maintenance of
de la Prenda y en mantener los Bienes the Pledged Goods, and shall perform
Pignorados en las Instalaciones a la all those actions necessary or
completa y exclusiva disposicion del required to maintain the highest
ACREEDOR PRENDARIO sin perjuicio de lo market or replacement value of the
dispuesto por la Clausula Cuarta del Pledged Goods. PLEDGOR agrees to cause
presente. the Pledged Goods to be kept in
compliance with any and all laws,
Los DEPOSITARIOS esta de acuerdo y decrees, regulations or other legal
conviene en que debera realizar todos provisions applicable to the use and
los actos y gestiones que sean possession of the Pledged Goods as if
necesarios para la conservacion y it had the capacity of depositaries,
mantenimiento de los Bienes Pignorados and to inform PLEDGEE and/or the
en buenas condiciones y debera DEPOSITARIES of any claim, lawsuit,
realizar aquellas acciones que action, tax or duty assessment, or any
resulten necesarias o requeridas para lien or encumbrance imposed or
mantener el mas alto valor de intended to be imposed on the Pledged
reemplazo o mercado de los Bienes Goods, that could affect or impair the
Pignorados. El DEUDOR PRENDARIO esta rights of PLEDGEE over the Pledged
de acuerdo en que hara que\ los Bienes Goods under this Agreement. PLEDGOR
Pignorados se mantengan en shall comply with all the obligations
cumplimiento con todas y cada una de which may be related to the Pledged
las leyes, decretos, reglamentos y Goods, including, without limitation,
otras disposiciones legales aplicables payment of all taxes, surcharges,
al uso y posesion de los Bienes fees, penalties, assessments, customs
Pignorados tal y como si tuviese el fees, import or export duties, and
caracter de depositarios, y en
informar al ACREEDOR PRENDARIO y/o a
los DEPOSITARIOS respecto de cualquier
reclamacion, demanda, accion, impuesto
o derecho, o cualquier gravamen o
limitacion de dominio impuestos sobre,
o que pretendan ser impuestos sobre
los Bienes
<PAGE>
Pignorados, y que podria afectar o any other obligation related to the
impedir el ejercicio de los derechos Pledged Goods. For such purposes,
del ACREEDOR PRENDARIO sobre los PLEDGOR will be allowed full access to
Bienes Pignorados en los terminos de the Premises by the DEPOSITARIES at
este Contrato. El DEUDOR PRENDARIO all reasonable times to inspect,
debera cumplir con todas las maintain and repair the Pledged Goods.
obligaciones que pueda tener en
relacion con los Bienes Pignorados, The DEPOSITARIES, may not change the
incluyendo, sin limitarse a, el pago location of the Pledged Goods without
de todos los impuestos, derechos, the prior written consent of PLEDGEE,
tributos, cargos, multas, aranceles, except in case of goods removed from
derechos de importacion o exportacion the Premises for its repair, in which
y cualquier otra obligacion case a written notice delivered to
relacionada con los Bienes Pignorados. PLEDGEE by the DEPOSITARIES
Para dichos efectos, el DEUDOR indicating: (i) the goods so removed;
PRENDARIO tendra completo acceso a las (ii) the nature and approximate cost
Instalaciones otorgado por los of the repair; (iii) the place where
DEPOSITARIOS en cualquier momento such repair is to be conducted; (iv)
razonable para inspeccionar, dar the name of the person so conducting
mantenimiento y reparar los Bienes it; and (v) the approximate time of
Pignorados. return of the repaired goods to its
current location, will suffice.
Los DEPOSITARIOS no podra cambiar la
ubicacion de los Bienes Pignorados sin The DEPOSITARIES will be directly
el consentimiento previo y por escrito responsible to PLEDGEE for the due,
del ACREEDOR PRENDARIO, excepto en timely and complete compliance of the
caso de bienes trasladados fuera de obligations of the DEPOSITARIES
las Instalaciones para su reparacion, arising from this agreement, including
en cuyo caso una notificacion por the compliance by the DEPOSITARIES of
escrito entregada al ACREEDOR its obligations towards PLEDGOR.
PRENDARIO por los DEPOSITARIOS en la
que se indique (i) los bienes que se THIRD.- RECORDING OBLIGATIONS OF
trasladaran; (ii) la naturaleza y PLEDGOR
costo aproximado de la reparacion;
(iii) el lugar en donde dicha PLEDGOR agrees to perform any and all
reparacion sera realizada; (iv) el necessary acts or actions, and to
nombre de la persona que la realizara; execute or cause to be executed
y (v) el tiempo aproximada para el whether in Mexico or abroad, as it may
regreso de los bienes reparados a su be required, any and all documents
ubicacion actual, sera suficiente. necessary or required for obtaining
and maintaining the proper
Los DEPOSITARIOS seran directamente registration of this Agreement before
responsables frente al ACREEDOR the Public Registry, as well as any
PRENDARIO por el debido, completo y other registration or authorization
oportuno cumplimiento de las that may be required under Mexican Law
obligaciones que deriven de este for the validity and enforceability of
contrato, incluyendo las obligaciones the Pledge. PLEDGOR further agrees to
de los DEPOSITARIOS frente al DEUDOR cause this Agreement to be ratified
PRENDARIO. before a Mexican Notary Public or
Public Broker. PLEDGOR
TERCERA.-OBLIGACIONES DE
REGISTRO DEL DEUDOR PRENDARIO
El DEUDOR PRENDARIO esta de acuerdo en
realizar todos los actos o acciones
necesarias y en celebrar o hacer que
sean celebrados, ya sea en Mexico o en
el extranjero, segun sea requerido, la
totalidad de los documentos necesarios
o requeridos para obtener y mantener
el debido registro de este Contrato
ante el Registro Publico, asi como
cualquier otro registro u
<PAGE>
autorizacion que pueda ser requerido shall pay any and all applicable
en los terminos de la legislacion notarial costs and fees and any and
mexicana para la validez y el all registration fees, charges, taxes
ejercicio de los derechos derivados de or any other amounts payable in order
la Prenda. El ACREEDOR PRENDARIO to obtain the proper registration of
ademas esta de acuerdo en hacer que this Agreement and any amendments
este Contrato sea ratificado ante un thereto, including but not limited to,
notario o corredor publico mexicano. the updates of the Pledged Goods list
El DEUDOR PRENDARIO pagara la before the Public Registry.
totalidad de los costos y honorarios
notariales y la totalidad de los FOURTH.- MAINTENANCE OBLIGATIONS OF
gastos, costos, impuestos y derechos PLEDGOR.
de registro o cualquier otra cantidad
pagadera a fin de obtener el debido PLEDGOR hereby agrees to guarantee the
registro de este Contrato y cualquier obligations assumed by the
modificacion al mismo, incluyendo pero DEPOSITARIES under the Loan Agreement,
sin limitarse a las actualizaciones de the Note and any other document
la lista de los Bienes Pignorados ante related to the Loan Agreement, and to
el Registro Publico. comply with all its duties regarding
the Pledged Goods which may arise from
CUARTA.- MANTENIMIENTO DE LAS this Agreement, and that it will
OBLIGACIONES DEL DEUDOR PRENDARIO perform all actions or procedures
required for the correct preservation
El DEUDOR PRENDARIO en este acto esta and maintenance of the Pledged Goods
de acuerdo en garantizar las and for the preservation and
obligaciones asumidas por los enforceability of the rights of
DEPOSITARIOS en los terminos del PLEDGEE related with the Pledged Goods
Contrato de Credito, el Pagare y under the Loan Agreement, the Note,
cualquier otro documento relacionado any other document related to the Loan
con el Contrato de Credito, y en Agreement and this Agreement,
cumplir con todas sus obligaciones en including without limitation,
relacion con los Bienes Pignorados que obtaining and maintaining in effect
surjan de este Contrato, y en que all risk insurance equal to the
realizara todas las acciones o replacement value of the Equipment and
procedimientos necesarios para la the payment of any and all taxes,
debida preservacion y mantenimiento de surcharges, fees, penalties,
los Bienes Pignorados y para la registration fees and import or export
preservacion y ejercicio de los duties imposed thereon.
derechos del ACREEDOR PRENDARIO en
relacion con los Bienes Pignorados en FIFTH.- EVENTS OF DEFAULT
los terminos del Contrato de Credito,
el Pagare y cualquier otro documento The following events shall be
relacionado con el contrato de Credito considered events of default of the
y este Contrato, incluyendo, pero sin obligations of PLEDGOR (the "EVENTS OF
limitarse a, la obtencion y Default"):
mantenimiento en vigor de seguros por
un monto igual al valor de reemplazo a) The default by PLEDGOR or the
del Equipo y el pago de la totalidad DEPOSITARIES in the performance of any
de los impuestos, derechos, cargos, of the obligations assumed herein or
multas, derechos de registro, derechos under the Loan
de importacion y exportacion causados,
por los mismos.
QUINTA.- CASOS DE INCUMPLIMIENTO
Las siguientes deberan ser
consideradas como casos de
incumplimiento de las Obligaciones del
DEUDOR PRENDARIO ("CASOS DE
INCUMPLIMIENTO"):
<PAGE>
a). El incumplimiento por parte del Agreement, the Note or any other
DEUDOR PRENDARIO o DEPOSITARIOS con document related to the Loan Agreement
cualquiera de las obligaciones (including but not limited to Events
contraidas en el presente o en los of Default as defined therein);
terminos del Contrato de Credito, el
Pagare y cualquier otro documento b) If PLEDGOR or the DEPOSITARIES fail
relacionado con el Contrato de Credito to deliver to PLEDGEE the updated
(incluyendo pero sin limitarse a Casos versions of EXHIBIT "A", or if PLEDGOR
de Incumplimiento, tal y como ahi se or the DEPOSITARIES fails to deliver
definen); possession of the Pledged Goods to
PLEDGEE under the terms hereof;
b). Si el DEUDOR PRENDARIO o los
DEPOSITARIOS no entregan al ACREEDOR c) If PLEDGOR fails to cause the
PRENDARIO las versiones actualizadas registration of updated versions of
del ANEXO "A", o si el DEUDOR EXHIBIT "A" to be entered in the
PRENDARIO o los DEPOSITARIOS no Public Registry to the satisfaction of
entregan la posesion de dichos Bienes PLEDGEE; or
Pignorados al ACREEDOR PRENDARIO en
los terminos del presente; d) If PLEDGOR causes the DEPOSITARIES
voluntarily or involuntarily to lose
c). Si el DEUDOR PRENDARIO omite hacer possession of the Pledged Goods or if
que se registren las versiones the DEPOSITARIES otherwise lose
actualizadas del ANEXO "A" ante el possession, whether voluntarily or
Registro Publico, a satisfaccion del involuntarily, of the Pledged Goods.
ACREEDOR PRENDARIO; o
SIXTH.- ENFORCEMENT AND FORECLOSURE.
d). Si el DEUDOR PRENDARIO causa que
los DEPOSITARIOS voluntaria o In case of the occurrence of any Event
involuntariamente pierda la posesion of Default, PLEDGEE, or any assignee
de los Bienes Pignorados, o si los of the Loan, shall have the right, at
DEPOSITARIOS de cualquier otra manera, its sole discretion, to enforce its
voluntaria o involuntariamente pierden rights under this Agreement or under
la posesion de los Bienes Pignorados. any other Loan Agreement, the Note and
any other document related to the Loan
SEXTA.-EJECUCION Y VENTA Agreement, including without
limitation, the right to foreclose the
En caso de presentarse cualquier Caso Pledge granted over the Pledged Goods.
de Incumplimiento, el ACREEDOR In such event, PLEDGEE shall have the
PRENDARIO, O cualquiera de sus right to request the judicial sale of
cesionarios, tendran el derecho, a su the Pledged Goods pursuant to the
absoluta discrecion, de ejercitar los provisions of Articles 341, 342 and
derechos en los terminos de este other applicable provisions of the
Contrato, el Pagare o cualquier otro General Law of Negotiable Instruments
documentos relacionado con el Credito, and Credit Transactions or pursuant to
incluyendo, pero sin limitarse a, el the procedure it may deem convenient
derecho de rematar la prenda otorgada in accordance with applicable law.
sobre los Bienes Pignorados. En dicho
evento, el ACREEDOR PRENDARIO tendra
el derecho de solicitar la venta
judicial de los BIENES PIGNORADOS en
los terminos de los Articulos 341, 342
y otras disposiciones aplicables de la
Ley General de Titulos y Operaciones
de Credito o conforme al procedimiento
que estime conveniente conforme a la
<PAGE>
legislacion aplicable. SEVENTH.- TERM
SPTIMA.-VIGENCIA This Agreement and the Pledge of the
Pledged Goods to PLEDGEE, pursuant to
Este Contrato y la Prenda de los this Agreement shall be effective as
Bienes Pignorados al ACREEDOR of the date of execution hereof, and
PRENDARIO, en los terminos de este shall continue in full force and
Contrato deberan entrar en vigor a la effect until the PLEDGOR has fully
fecha de celebracion del presente, y paid and complied with all of its
se mantendran vigentes y en efecto obligations under the Loan Agreement,
hasta en tanto el DEUDOR PRENDARIO the Note and any other document
haya pagado y cumplido por completo related to the Loan Agreement.
con la totalidad de sus Obligaciones
en los terminos del Contrato de EIGHTH.- NOTICES
Credito, el Pagare o cualquier otro
documento relacionado con el Contrato All notices or communications required
de Credito. to be given or sent in connection with
this Agreement, shall be in writing,
OCTAVA.-NOTIFICACIONES and shall be personally delivered in
case of notices or communications in
Todas las notificaciones o Mexico, or sent by certified or
comunicaciones que requieran ser registered mail or by courier service
enviadas o dadas en relacion con este if outside of Mexico, to the domiciles
Contrato, deberan ser por escrito, y of the parties as follows:
deberan ser entregadas personalmente
en caso de notificaciones y Pledgee:
comunicaciones en Mexico, o enviadas
por correo certificado registrado o FIRST CAPITAL GROUP, INC.
por servicio de paqueteria si han de 5601 Office Boulevard NE, Suite 200
realizarse fuera de Mexico, a los Albuquerque, New Mexico, 87109
domicilios de las partes tal y como se United States of America
establece enseguida: Attn: Mr. Gary Milhollon
Acreedor Prendario: With a copy to:
FIRST CAPITAL GROUP BAKER & MCKENZIE
5601 Office Boulevard NE, Suite 200 ABOGADOS, S.C.
Albuquerque, New Mexico, 87109 Paseo Triunfo de la Republica 3304-2
United States of America Ciudad Juarez, Chihuahua, 32330
Atn: Sr. Gary Milhollon Mexico
Attn: Jorge Luis Ruiz, Esq.
Con copia para:
Pledgor:
BAKER & MCKENZIE
ABOGADOS, S.C.
Paseo Triunfo de la Republica 3304-2
Ciudad Juarez, Chihuahua, 32330
Mexico
Atn: Lic. Jorge Luis Ruiz
<PAGE>
Deudor Prendario: WORLD WIDE STONE
CORPORATION
WORLD WIDE STONE 5236 South 40th Street
CORPORATION Phoenix, Arizona, 85040-9009
5236 South 40th Street United States of America
Phoenix, Arizona, 85040 Attn: Mr. Frank Cunningham
United States of America
Atn: Sr. Frank Cunningham Depositaries:
SOCIEDAD PIEDRA SIERRA,
Depositarios: S.A. DE C.V.
Calle Anex #2, Cdd. Industrial
SOCIEDAD PIEDRA SIERRA, Durango, Durango, 34220
S.A. DE C.V. Mexico
Calle Anex #2, Cdd. Industrial Attn: Mr. Jaime Muguiro Munoz
Durango, Durango, 34220
Mexico NINTH.- LANGUAGE
Attn: Sr. Jaime Muguiro Munoz
This Agreement is executed in English
NOVENA.- IDIOMA and Spanish versions, both of which
shall be enforceable and will
Este contrato se celebra en versiones constitute one and the same
en Ingles y en Espanol, ambas de las instrument, provided, however, that in
cuales habran de ser validas y case of any discrepancy between such
constituyen un solo documento, en el versions, the Spanish version shall
entendido, sin embargo, de que en caso prevail.
de controversia respecto a la debida
interpretacion del contrato, la TENTH.- GOVERNING LAW AND COMPETENT
version en espanol prevalecera. COURTS
DECIMA.- DERECHO APLICABLE Y This Agreement shall, in all respects,
TRIBUNALES COMPETENTES. be governed by and construed in
accordance with the laws of the State
Este Contrato estara, en todo of New Mexico, U.S.A., provided
respecto, sujeto e interpretado de however, that in the case of any
acuerdo con las leyes del Estado de action or proceeding in the United
Nuevo Mexico, E.U.A., estableciendose Mexican States, this Agreement will be
sin embargo, que en caso de cualquier governed, construed and enforced in
accion o procedimiento en los Estados accordance with the laws of the United
Unidos Mexicanos, este Contrato estara Mexican States.
sujeto y sera interpretado de acuerdo
con las leyes de los Estados Unidos For the interpretation, execution,
Mexicanos. compliance with and performance of
this Agreement and for the judicial
Para la interpretacion, ejecucion y requirement of its payment, the
cumplimiento de este Contrato y para parties hereto expressly submit
el requerimiento judicial del pago de themselves to the jurisdiction of (i)
su importe, las partes se someten a la any state or federal court located in
jurisdiccion de: (i) cualquier New Mexico, U.S.A., and (ii) any court
tribunal estatal o federal en Nuevo or courts in the City of Durango,
Mexico, E.U.A., y (ii) cualquier Durango, United Mexican States, as the
tribunal o tribunales competentes en party first bringing the claim may
la Ciudad de Durango, Durango, Estados choose, and by the execution and
Unidos Mexicanos, a la eleccion la delivery of this Agreement, the
parte que inicie el procedimiento. parties hereto hereby irrevocably
Mediante la firma de este submit themselves to the jurisdiction
of any and all such courts expressly
<PAGE>
Contrato las partes se someten waiving any other jurisdiction to
irrevocablemente a la jurisdiccion de which they may now or in the future be
cualquiera de dichos tribunales, entitled by reason of their present or
renunciando expresamente a cualquier future domiciles or for any other
otro fuero al que tengan derecho o reason whatsoever.
lleguen a tenerlo en el futuro, en
virtud de su domicilio o de cualquiera ELEVENTH.- HARMONIZATION OF PROVISIONS
otra razon.
The parties intend that this Agreement
DECIMA PRIMERA.- ARMONIZACIN DE shall perfect the security interest in
DISPOSICIONES the Pledged Goods granted by PLEDGOR
to PLEDGEE to secure the obligations
Es la intencion de las partes de este of PLEDGOR under the Loan Agreement,
Contrato que este Contrato perfeccione the Note and any other documents
los derechos de garantia sobre los related to the Loan Agreement. PLEDGOR
Bienes Pignorados otorgados por el and PLEDGEE intend that the rights of
DEUDOR PRENDARIO al ACREEDOR PRENDARIO PLEDGEE and the obligations of PLEDGOR
a fin de garantizar las obligaciones under this Agreement and those
del DEUDOR PRENDARIO en los terminos obligations derived from the Loan
del Contrato de Credito y cualquier Agreement and its related documents
otro documento relacionado con el shall be cumulative and work together
Contrato de Credito. Es la intencion with each other. However, to the
tanto del DEUDOR PRENDARIO como del extent that any of the provisions of
ACREEDOR PRENDARIO que los derechos this Agreement cannot be harmonized
del ACREEDOR PRENDARIO y las with any of those contained in the
obligaciones del DEUDOR PRENDARIO en Loan Agreement, the Note or any other
los terminos de este Contrato y documents related to the Loan
aquellas obligaciones derivadas del Agreement, the provisions of the Loan
Contrato de Credito y los documentos Agreement, the Note and any other
que se relaciona con este sean documents related to the Loan
acumulativas e interpretadas Agreement shall control.
armonicamente. Sin embargo, en la
medida de que cualquiera de las TWELFTH.- ASSIGNMENT BY PLEDGEE
disposiciones de este Contrato no
pueda ser armonizada con alguna de las PLEDGOR and the DEPOSITARIES agree and
Obligaciones contenidas en el Contrato hereby authorize PLEDGEE to assign any
de Credito, el Pagare o cualquiera and/or all rights which may arise
otro documento que se relacione con el herefrom in its benefit, provided that
contrato de Credito, las disposiciones PLEDGEE notifies PLEDGOR and the
del Contrato de Credito, el Pagare o DEPOSITARIES of such assignment.
cualquier otro documento relacionado
con el Contrato de Credito deberan de
prevalecer.
DECIMA SEGUNDA.- CESIN POR PARTE DEL
ACREEDOR PRENDARIO
El DEUDOR PRENDARIO y los DEPOSITARIOS
estan de acuerdo y en este acto
autorizan al ACREEDOR PRENDARIO, para
ceder cualquiera y/o todos los
derechos que en su favor se derivan
del presente, siempre y cuando el
ACREEDOR PRENDARIO, notifique al
DEUDOR PRENDARIO y a los DEPOSITARIOS
respecto de dicha cesion.
Habiendose leido y acordado lo
anterior por las partes,
<PAGE>
estas ratifican y suscriben este The foregoing having been read,
contrato, en la fecha antes understood and agreed to by the
establecida. parties, the parties hereby ratify and
execute this Agreement on the date
above set forth.
DEUDOR PRENDARIO/PLEDGOR
WORLD WIDE STONE CORPORATION
/s/ Spencer W. Cunningham
-------------------------------------------------
Por/By: Spencer W. Cunningham
Vicepresidente Ejecutivo/Executive Vice-president
ACREEDOR PRENDARIO/PLEDGEE
FIRST CAPITAL GROUP, INC.
/s/ Gary Milhollon
-------------------------------
Por/By: Gary Milhollon
Presidente/President
DEPOSITARIES
SOCIEDAD PIEDRA SIERRA, S.A. DE C.V.
/s/ Jaime Muguiro Munoz
-----------------------------------------
Por/By: Jaime Muguiro Munoz
Presidente del Consejo de Administracion/
Chairman of the Board of Directors
<PAGE>
MR. JAIME MUGUIRO MUNOZ
/s/ Jaime Muguiro Munoz
-------------------------------
Actuando en lo personal/
Acting in his personal capacity
FIRST CAPITAL GROUP
EQUIPMENT LOAN AND SECURITY AGREEMENT
BORROWER: WORLD WIDE STONE CORPORATION
5236 SOUTH 40TH STREET
PHOENIX, ARIZONA 85040
LENDER: FIRST CAPITAL GROUP, INC.
111 LOMAS N.W., SUITE 502
ALBUQUERQUE, NEW MEXICO 87102
- --------------------------------------------------------------------------------
This Equipment Loan and Security Agreement ("Agreement") is between First
Capital Group, Inc. ("Lender") and the party, or parties, designated below as
Borrower ("Borrower"). Lender and Borrower agree as follows:
SECTION 1. AGREEMENT TO LEND.
A. Lender agrees to make the loan (the "Loan") described in the Note/Pagare
(the "Note") attached hereto, in the amount of US$1,080,000.00 ("Note") and
Borrower agrees to repay such loan as set forth in the Note.
B. There may be one or more advances under the Loan. The total of all
advances with respect to the Loan shall not exceed the lesser of (i)
US$1,080,000.00, or (ii) the purchase price of the Collateral. An advance may be
made upon delivery to Lender of a written request for advance in a form
acceptable to Lender executed by Borrower (a "Request for Advance").
C. The Note shall be unconditionally guaranteed by Borrower's wholly owned
subsidiary, Sociedad Piedra Sierra, S.A. de C.V., a Mexican corporation
domiciled in Durango, Durango, Mexico ("Guarantor").
D. The purpose of the Loan is to provide Borrower funds to purchase
equipment which Borrower intends to lease to Guarantor, and intends to place in
a factory of Guarantor in Durango, Durango, Mexico. With respect to any advance
hereunder, until all the Collateral is physically located in Mexico, so as to
perfect the Lender's security interest pursuant to the Deposit and Pledge
Agreement described hereinafter, Lender shall be entitled, at Lender's sole
discretion, to advance only a percentage of the purchase price of the Item.
Additionally, Lender shall be entitled, at Lender's discretion, to require only
one advance under the Loan, and to require that the proceeds of the Loan be
maintained in an interest bearing account, interest to accrue to Borrower, until
the requirements for advance hereunder are met.
SECTION 2. GRANT OF SECURITY INTEREST.
To secure performance of all Borrower's obligations under the Agreement,
Borrower hereby grants Lender a purchase money security interest in the property
and any additional security described in the Note and in the Pledge and Deposit
Agreement attached hereto, together with all increases, substitutions, parts,
<PAGE>
equipment, accessories, supplies, improvements, additions and accessions now or
hereafter affixed thereto or used in connection therewith, and all proceeds and
products thereof (referred to collectively as the "Collateral" and individually
as an "Item"). Unless specifically released by Lender, each Item shall secure
Borrower's obligations under the entire Note and Loan.
SECTION 3. PAYMENTS; DEFAULT RATE.
A. Borrower shall make payments to Lender at the address indicated above in
the amounts and on the dates (each a "Payment Date") specified herein and in the
Note.
B. In the event any amount payable under the Agreement shall not be paid
within fifteen (15) days when due, Borrower shall pay to Lender interest on such
account until paid for the period of delinquency at the rate of thirteen percent
(13%) per annum (the "Default Rate"), however not to exceed the maximum rate
allowed by law.
SECTION 4. PREPAYMENT.
A. Provided no Event of Default shall have occurred and be continuing,
Borrower shall have the right, upon not less than thirty days prior written
notice to Lender, to fully prepay a Loan as of the next succeeding Payment Date
following such notice by paying Lender: (1) the then outstanding balance of
principal plus accrued and unpaid interest; and (2) a prepayment fee in the
amount of five percent (5%) of the outstanding principal balance if paid during
the first year after the date of the loan, four percent (4%) of the outstanding
principal balance if paid during the second year after the date of the loan,
three percent (3%) of the outstanding principal balance if paid during the third
year after the date of the loan, two percent (2%) of the outstanding principal
balance if paid during the fourth year after the date of the loan, or one
percent (1%) of the outstanding principal balance if paid during the fifth year
after the date of the loan.
SECTION 5. CONDITIONS PRECEDENT.
Lender may refuse to make any advance if any Event of Default or any event
which, with the passage of time or the giving of notice or both, that would
constitute an Event of Default shall have occurred and be continuing. The
obligation of the Lender to make any advance is further subject to Borrower
providing the following, at its expense, in form and substance satisfactory to
Lender.
A. Articles of incorporation and by-laws of Borrower, and resolutions of
the board of directors, each certified by the secretary or an assistant
secretary, duly authorizing the Loan and grant of security interest hereunder
and the execution, delivery and performance of this Loan and the Note;
B. Evidence of compliance with the insurance provisions hereof;
C. If requested by Lender, a favorable written opinion of counsel for
borrower as to each matter set forth in Section 6 and as to other matters as
Lender may reasonably request;
D. A completed and signed Note and Request for Advance;
E. Evidence that Borrower has title to the Collateral relating to such
advance free of all security interests or encumbrances or, if such security
interests or encumbrances exist, waivers, releases or subordinations thereof;
2
<PAGE>
F. Executed Pledge and Deposit Agreement, financing statements and other
documents necessary to perfect Lender's security interest in the Collateral
relating to such advance including copies of such documents reflecting the
filing of such documents with the appropriate public officers;
G. With respect to advances for the purchase of equipment, Borrower shall
have provided to Lender a purchase order, delivery ticket, invoice or other
written evidence satisfactory to Lender containing a detailed description of
such equipment, the exact cost thereof and the scheduled delivery date;
H. Borrower shall have delivered and/or executed, as requested by Lender,
such other documents or items as Lender or its counsel may reasonably require as
may be necessary or convenient to ensure preservation of the rights of Lender
under the Loan documents;
I. As of the date of each advance, Lender shall not have determined, in its
sole discretion, that neither Lender nor Guarantor has suffered a material
adverse change in its financial condition; and
J. Such other documents as Lender may reasonably request.
SECTION 6. BORROWER'S REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants that:
A. The proceeds of each Loan will be used solely in the conduct of
Borrower's business.
B. Upon each advance by Lender under any Loan, Borrower will have title to
the Collateral relating to such advance, and other than Lender's security
interests, there will be no liens, security interests or encumbrances against
such Collateral, and such Collateral will be personal property. Such Collateral
will not become real property or inventory or, without the prior written consent
of Lender, become fixtures.
C. Borrower and Guarantor are each fully organized and in good standing in
the state of its incorporation and is duly qualified to do business where such
qualification is necessary to carry on its present business operations.
D. This Agreement has been duly authorized by Borrower, and the execution,
delivery and performance thereof do not require any stockholder approval, do not
require the approval of or the giving of notice to any governmental authority,
do not contravene any law or Borrower's certificate or articles of incorporation
or by-laws and do not contravene or constitute a default under by indenture or
others agreement to which Borrower is a party or by which it is bound.
E. This Agreement is a legal, valid and binding obligation of Borrower,
enforceable in accordance with its terms.
F. There are no pending or threatened proceedings before any court or other
body or any judgments which may materially adversely affect Borrower or
Guarantor.
G. The balance sheet and related earnings statement of Borrower for its
most recent fiscal year have been furnished to Lender and are in accordance with
generally accepted accounting principles consistently applied, and there has
been no material adverse change in Borrower's condition or operations.
3
<PAGE>
H. Borrower shall not dissolve or consolidate with or merge into any other
entity or transfer or lease substantially all of its assets to any third party
without prior written consent of Lender. Borrower will immediately give written
notice to Lender of any change in its principal place of business.
SECTION 7. SALE OF COLLATERAL, MORTGAGES, LIENS, ETC.
So long as any obligations of Borrow under the Agreement remain
unsatisfied, Borrower will not sell, transfer, lease, assign or otherwise
dispose of or relinquish possession of the Collateral (except to Guarantor) and
will not create, incur, assume or allow to exist, any security interest, lien,
encumbrance or claim on or with respect to the Collateral title thereto or any
interest therein except: (a) the rights of Lender and Borrower herein provided;
(b) encumbrances which result from claims against Lender; and (c) liens for
taxes either not yet due or being appropriately contested in good faith.
Borrower will promptly take such action as may be necessary to discharge any
encumbrance not permitted hereunder.
SECTION 8. TAXES.
Borrower shall pay when due and indemnify Lender against all sales, use,
personal property or other taxes, charges, or withholding of any nature
(together with any penalties, fines or interest) imposed against the Lender,
Borrower or the Collateral by any government or taxing authority (including but
not limited to Mexican government and taxing authority) with respect to the
Collateral of the purchase, ownership, delivery, possession, use or disposition
thereof, or the rentals, receipts or earnings arising therefrom, or with respect
to any Loan (excluding taxes on or measured solely by Lenders' net income)
unless, and to the extent only, that any such tax, charge or withholding is
being appropriately contested by Borrower in good faith.
SECTION 9. USE AND MAINTENANCE OF COLLATERAL.
A. Borrower shall comply with all governmental laws and requirements with
respect to the use and maintenance of each Item. Borrower shall retain
possession of each Item. Unless Lender shall first otherwise consent in writing,
Borrower shall keep each Item at the factory of Borrower's subsidiary, Sociedad
Piedra Sierra, S.A. de C.V., in Durango, Durango, Mexico. If any Item is of a
type normally used in more than on location, Borrower will give prompt written
notice to Lender of any use of such Item in any location other than the one at
which Borrower shall have previously advised Lender such Item will be used.
B. Borrower will use Collateral in accordance with the manufacturers'
instructions, for the purposes which the manufactures intend and for business or
commercial purposes only and not for personal, family or household use.
C. Borrower, at its own expense, will repair and maintain the Collateral to
keep in as good condition as on the execution of the Note, ordinary wear and
tear excepted. Borrower may add parts or accessories to any Item if such
addition does not impair the value or warranties of such Item and is really
removable without causing material damage.
SECTION 10. INSPECTION OF COLLATERAL.
Upon request, Borrower shall advise Lender of the location of each Item and
shall, at any reasonable time, make each Item and Borrower's records pertaining
to it available for inspection.
4
<PAGE>
SECTION 11. LOSS OR DESTRUCTION.
If any Item, shall be lost, stolen damaged beyond repair or permanently
rendered unfit for use for any reason (an "Event of Loss"), Borrower shall,
within ten (10) days, give written notice to Lender of the Event of Loss and the
facts pertaining thereto. Borrower shall, at Lender's option, either (a) replace
such Item with collateral acceptable to Lender within thirty (30) days after the
Event of Loss and such replacement shall automatically become the Collateral; or
(b) on the first Payment Date at least twenty (20) days after the Event of Loss,
pay Lender an amount equal to the outstanding principal balance with respect to
the applicable Loan multiplied by the original purchase price of such Item
divided by the total original purchase price of all Items (the "Casualty
Value"). The Casualty Value received by Lender will be applied to Borrower's
obligation, whether or not matured, in any order, at Lender's option.
SECTION 12. INSURANCE
At its own expense, Borrower shall maintain property insurance acceptable
to Lender with respect to all Items in an amount not less than the amount
specified in the applicable Note and Schedule. Each insurance policy shall name
Lender as loss payee. Each policy shall provide that it may be altered or
canceled by the insurer only after thirty (30) days prior written notice to
Lender. Borrower shall cause evidence satisfactory to Lender showing the
existence of such insurance to be delivered to Lender upon demand and thirty
(30) days prior to expiration or cancellation showing renewal or replacement of
such policy. In the event Borrower shall fail to maintain required insurance,
Lender shall have the right, but not the duty, to obtain such insurance as
Lender deems necessary, and Borrower shall reimburse Lender for the payment of
all premiums therefor together with interest from the date of Lender's payment
at the rate of eighteen percent (18%) per annum or the maximum allowed by law,
whichever is lower. Lender shall have full power to collect all insurance
proceeds and to apply them at its option to any obligation secured hereby,
whether or not matured, or to the replacement or repair of the Collateral.
Borrower shall indemnify and hold harmless Lender and any assignee or
transferee of Lender and their agents and employees from and against all claims,
liability (including strict products liability and strict liability in tort),
costs, fees or expenses (including attorney's fees) relating to the Collateral
or any part thereof, including, without limitation, the construction, purchase,
delivery, installation or ownership of the Collateral or as a result of the use,
maintenance, repair, replacement, operation or condition thereof (whether
defects are latent or discoverable by Lender or by Borrower) or by reason or as
a result of any act or omission of Borrower, its agents or employees. This
Section shall be effective from the date the first Item is ordered and shall
remain in effect notwithstanding the full payment of any Loan or the release of
Lenders' security interest in any Collateral. Borrower shall give Lender prompt
notice of any claim or liability indemnified against.
SECTION 13. ASSIGNMENT.
Lender may at any time, without notice to Borrower, transfer, assign or
grant a security interest in this Agreement, any Loan, its interest in any Item,
or any sums due or to become due hereunder, and Lender's transferee and assignee
shall have all of Lender's rights and remedies hereunder. Borrower shall not,
without the prior written consent of Lender, assign any of its rights or
delegate any of its duties hereunder.
SECTION 14. EVENTS OF DEFAULT; REMEDIES.
A. EVENTS OF DEFAULT. The following shall constitute Events of Default
under this Agreement:
5
<PAGE>
(i) Failure to Pay. Borrower shall fail to make any required payment
when due;
(ii) Other Breaches. Borrower shall fail to perform or observe any
other obligation, covenant or condition under this Agreement or in any
other related documents or in any other agreement between Lender and
Borrower. If such a failure is curable and if Borrower has not been given a
prior notice of a breach of the same provision in this Agreement, it may be
cured (and no Event of Default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such failure (a)
cures the failure within ten (10) days; or (b) if the cure requires more
than ten (10) days, immediately initiates steps sufficient to cure the
failure and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical;
(iii) Insurance. Borrower shall fail to maintain required insurance;
(iv) Statements. Any representation or warranty made by Borrower
herein, in any Note and Schedule or any other document in connection
herewith shall be incorrect at any time in any material respect;
(v) Creditor Proceedings. Borrower's insolvency, bankruptcy or
assignment for the benefit of creditors, or the appointment of or
Borrower's consent to the appointment of a trustee or receiver for the
Borrower or a substantial part of its property; or
(vi) Change in Financial Condition. An adverse change in Borrower's
financial condition as a result of which Lender, in good faith, deems
itself or any Item to be insecure;
(vii) Default by Guarantor. The occurrence of any of the foregoing
Events of Default with regard to any guarantor of any of Borrower's
obligations under the Loan or Note; or
B. Lender's Remedies: At any time after the occurrence of an Event of
Default, Lender shall have the remedies of a secured party under the Uniform
Commercial Code and other applicable law and may also exercise one or more of
the following remedies:
(i) Declare all unpaid amounts hereunder and under any or all Loans to
be immediately due and payable , whereupon interest on the outstanding
balance under each Loan (the "Accelerated Balance") shall be calculated
from the date of such Event of Default, both before and after Judgment, at
the Default Rate or the maximum rate allowed by law, whichever is lower;
(ii) Recover from Borrower as liquidated damages for loss of the
bargain and for internal cost, and not as a penalty, five percent (5%) of
the Accelerated Balance;
(iii) Proceed by court action to enforce performance by Borrower of
this Agreement and/or to recover damages for the breach thereof; or
(iv) Require Borrower, at Lender's request and at Borrower's own cost,
to promptly deliver possession of the Collateral to Lender in such manner
and to such place as Lender shall direct, or Lender may at any hour,
without notice to Borrower and without liability except for malicious acts
by its agents, enter upon Borrower's premises or any other premises and
take possession of or render unusable any Item and attachments thereon,
whether or not part of the Collateral, and hold, lease, or sell at public
6
<PAGE>
or private sale any such Item and attachments. If Lender leases or sells
the Collateral, Lender shall have the right to recover from Borrower any
deficiency remaining after the application of the proceeds to the amounts
due under this Agreement.
C. In addition, to any amounts recoverable under Section 14B above, Lender
shall be entitled to recover all expenses and collection costs which Lender
shall have incurred by reason of any Event of Default, including, but not
limited to, salary paid to and expenses incurred by employees and reasonable
attorneys' fees including attorneys' fees on appeal.
D. Lender's remedies shall be cumulative and shall be in addition to all
other remedies at law or in equity. Borrower waives any requirements of law
which might limit any of the remedies herein to the extend permitted by law. No
express or implied waiver of any Event of Default shall be a waiver of any
subsequent Event of Default. Lender's failure or delay in exercising any rights
shall not be a waiver of any such right upon the continuation or recurrence of
any Event of Default. Any single or partial exercise of any right by Lender
shall not exhaust the name or be waiver of any other right.
SECTION 15. RIGHTS TO PERFORM FOR BORROWER.
If Borrower fails to perform any of its agreements contained herein, Lender
may perform them, and all expenses of Lender in connection therewith shall be
payable by Borrower upon demand together with interest at the rate of eighteen
percent (18%) per annum or the maximum allowed by law, whichever is lower.
SECTION 16. FURTHER ASSURANCES, FINANCIAL INFORMATION.
Borrower, at its expense, will promptly execute and deliver to Lender such
documents of further assurance and take such action as Lender may deem advisable
and request in order to carry out the intent of this Agreement and protect
Lender's rights, including without limitation: (a) financing statements and
other documents necessary to protect Lender's security interest in the
Collateral; and (b) reports containing a balance sheet, income statement and
statement of sources and uses of funds prepared by accountants acceptable to
Lender within One Hundred Twenty (120) days after the close of each fiscal year
of Borrower and within forty-five (45) days after the close of each fiscal
quarter.
SECTION 17. NOTICES.
All required notices shall be in writing , and shall be effective when
deposition in the United States mail, first class postage prepaid, addressed to
the address shown above or to such other address as a party shall designate in
writing to the other party.
SECTION 18. GENERAL.
A. Entire Agreement. This Agreement and the security documents executed in
conjunction with this Agreement constitute the entire agreement of the parties
as to its subject matter. None of the parties make any representations or
warranties in connection with this Loan which are not stated in this Loan.
B. Amendments. This Loan may be amended only in writing signed by all
parties to this Loan.
7
<PAGE>
C. Notice. Notice required under this Loan shall be in writing and will be
deemed given on the earlier of when actually received or three (3) days after
the notice is deposited in the United States mail, certified or registered,
addressed to the appropriate party at the address first set forth above, or any
other address, of which the party to receive notice has notified the other in
writing.
D. Change of Address. Borrower will notify Lender in writing at least
thirty (30) days before changing its principal place of business or chief
executive office.
E. Binding Effects. This Loan benefits and binds Lender and Borrower and
their successors, assigns, heirs and personal representatives.
F. Agreement to Provide Financial Statements. Borrower agrees to provide
financial statements annually, or quarterly, as may reasonably be requested by
Lender throughout the term of the Loan.
G. Limited Power of Attorney. Borrower hereby appoints Lender as its
attorney-in-fact, to execute and file on behalf of Borrower and authorized
Lender to file without Borrower's signature any Uniform Commercial Code
financing statement and amendments Lender deems advisable to secure the
interests of Lender.
H. Joint and Several Liability. If there is more than one Borrower named in
this Loan, the liability of each shall be joint and several.
I. Severability. If a court of competent jurisdiction holds any provision
of this Loan to be unenforceable, all other provisions of this Loan will remain
valid, to the extent consistent with the court's holding.
J. Section Heading. Section headings are for convenience only and have no
independent substantive meaning.
K. Language; Applicable Law. This Agreement is executed in the Spanish and
English languages, both of which shall be binding and constitute one and the
same document, provided, however, that in case of any kind of dispute or
controversy (whether a suit or a preliminary procedure to a suit such as
pre-trial motions and/or injunction proceedings) the Spanish version shall
prevail in the applicable courts in Mexico and the English version shall prevail
in the applicable courts of the State of New Mexico and the United States of
America. This Loan shall be governed by and construed in accordance with the
internal laws of the State of New Mexico, without regard to the conflict of laws
principals thereof.
L. Forum. Borrower hereby irrevocably submits generally and unconditionally
for itself and in respect of its property to the jurisdiction of any state
court, or any United States of America federal court, sitting in Albuquerque,
Bernalillo County, State of New Mexico, United States of America and to the
jurisdiction of any appropriate court sitting in the state and country in which
any of the collateral securing the Loans is located, over any suit, action or
proceeding arising out of or relating to this Agreement or the Indebtedness.
Borrower hereby irrevocably waives, to the fullest extent permitted by law, any
objection that Borrower may now or hereafter have to the laying of venue in any
such court and any claim that any such court is an inconvenient forum.
Notwithstanding the foregoing, Lender and Borrower both expressly agree that in
the event either one of them elects to initiate any legal action or procedure of
any type in Mexico (whether a lawsuit or preliminary to a lawsuit such as
pre-trial motions and/or injunction proceedings) with respect to any controversy
arising from the construction, interpretation and/or enforcement of the terms
8
<PAGE>
and provisions of any or all of the Loan Documents, the parties expressly and
irrevocably waive any alternative forum that Mexican law grants to them by
virtue of their current or future domicile, to the fullest extent permitted by
article 1093 of the Commerce Code of the Mexican Republic, and, in such a case,
expressly submit themselves to the courts with jurisdiction on commercial or
mercantile disputes in the City of Durango, State of Durango, Republic of
Mexico. Lender and Borrower hereby irrevocably waive, to the fullest extent
permitted by law, any objection that either one of them may now or hereafter
have to the laying of venue in any such court and any claim that any such court
is an inconvenient forum.
M. Judgment Currency. If for the purposes of obtaining a judgment in any
court with respect to any obligation of Borrower under this Agreement or the
other Loan Documents, it becomes necessary to convert any amount due hereunder
or in the Loan Documents into a currency other than U.S. dollar, then such
conversion shall be made at the prevailing spot rate of exchange at the close of
business on the day before the day on which the judgment is given at the place
where such court is located. If there is a change in such rate of exchange
prevailing between the day on which the judgment is given and the date of
payment thereof, Borrower agrees to pay such additional amounts (if any) as may
be necessary to insure that the amount paid on such date is the amount in U.S.
dollar, which when converted at such rate of exchange in effect on the day of
payment, is the amount due under this Agreement or any other Loan Document in
U.S. dollar, as the case may be. Any amount due from Borrower under this
paragraph will be due as separate debt and shall not be affected by or merged
into any judgment being obtained for any other sums due under or in respect of
this Agreement or any Loan Document, as the case may be.
N. Construction. This Loan and the Note shall be construed no more strictly
against one party than the other, regardless of which party drafted the Loan and
corresponding Note.
O. Future Obligations of LENDER. Notwithstanding any provision of this Loan
or any related document to the contrary, LENDER HAS NO OBLIGATION TO MAKE ANY
LOAN TO BORROWER OR TO EXTEND ANY CREDIT TO BORROWER EXCEPT AS PROVIDED IN THE
ATTACHED NOTE OR AS LENDER AND BORROWER MAY AGREE IN WRITING AFTER THE DATE OF
THIS AGREEMENT. IF LENDER MAKES ANY LOAN TO BORROWER OTHER THAN THAT DESCRIBED
IN THE ORIGINAL NOTE ATTACHED TO THIS AGREEMENT, THE TERMS OF THIS AGREEMENT
WILL NOT APPLY UNLESS LENDER AND BORROWER SO AGREE IN WRITING.
P. Waiver. The makers, sureties, guarantors and endorsers of the Note
jointly and severally waive presentment for payment, protest, notice of protest
and notice of non-payment, and consent that the Note or any payment thereunder
may be extended or renewed without demand or notice and further consent ot the
release of any Collateral or party thereof, with or without substitution.
Q. Conflicts. If there are any conflicts between this Agreement and any
Note, or exhibits, attachments, supplements or Addenda thereto or to any
guaranties of any obligations under any Note, or any other document which
incorporates this Agreement, the Agreement shall control.
R. Usury Laws. Borrower, Lender and all other parties to the Loan Documents
intend to conform to and contract in strict compliance with applicable usury law
from time to time in effect. All agreements between Borrower and Lender (or any
other party liable with respect to any indebtedness under the Loan Documents)
are hereby limited by the provisions of this Section which shall override and
control all such agreements, whether now existing or hereafter arising. In no
way, nor in any event or contingency (including but not limited to prepayment,
default, demand for payment, or acceleration of the maturity of any obligation),
9
<PAGE>
shall the interest taken, reserved, contracted for, charged, chargeable, or
received under this Agreement, the Notes, any of the other Loan Documents, or
otherwise, exceed the maximum amount permitted under applicable law ("Maximum
Amount"). If, from any possible construction of any document, interest would
otherwise be payable in excess of the Maximum Amount, any such construction
shall be subject to the provisions of this Section and such document shall ipso
facto be automatically reformed and the interest payable shall be automatically
reduced to the Maximum Amount, without the necessity of execution of any
amendment or new document. If Lender shall ever receive anything of value which
is characterized as interest under applicable law and which would apart from
this provision be in excess of the Maximum Amount, an amount equal to the amount
which would have been excessive interest shall, without penalty, be applied to
the reduction of the principal amount owing on the indebtedness due and owing
under the Loan Documents in the inverse order of its maturity and not to the
payment of interest, or be refunded to Borrower or the other payor thereof, at
the election of Lender in its sole discretion or as required by applicable law.
The right to accelerate maturity of the Notes or any other indebtedness does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Lender does not intend to charge or receive
any unearned interest in the event of acceleration. All interest paid or agreed
to be paid to Lender shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full stated term
(including any renewal or extension) of such indebtedness due and owing under
the Loan Documents so that the amount of interest on account of such
indebtedness does not exceed the Maximum Amount. As used in this Section, the
term "applicable law" shall mean the laws of the State of New Mexico or the
federal laws of the United States applicable to this transaction, whichever laws
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future.
S. Further Assurances. Borrower will, on request of Lender (a) promptly
correct any defect, error or omission in any Loan Document; (b) execute,
acknowledge, deliver, procure, record or file such further instruments and do
such further acts deemed necessary, desirable or proper by Lender to carry out
the purposes of the Loan Documents and to identify and subject to the liens and
security interests of the Loan Documents any property intended to be covered
thereby, including any renewals, additions, substitutions, replacements, or
appurtenances to the collateral securing the Notes; (c) execute, acknowledge,
deliver, procure, file or record any document or instrument deemed necessary,
desirable, or proper by Lender to protect the liens or the security interests
under the Loan Documents against the rights or interests of third persons; and
(d) provide such certificates, documents, reports, information, affidavits and
other instruments and do such further acts deemed necessary, desirable or proper
by Lender to comply with the requirements of any agency having jurisdiction over
Lender.
The undersigned, being duly authorized signatories, agree to all the terms
and conditions set forth above and on the foregoing pages hereof, and in witness
whereof, they hereby execute this Agreement on the date written below.
DATE: 04/13/99 DATE: April 13, 1999
------------------------------- -------------------------------
BORROWER: LENDER:
WORLD WIDE STONE CORPORATION FIRST CAPITAL GROUP, INC.
BY: /s/ Spencer W. Cunningham BY: /s/ Gary Milhollon
--------------------------------- ---------------------------------
ITS: Executive Vice President ITS: President
-------------------------------- --------------------------------
10
PAGARE / PROMISSORY NOTE
(SUMA PRINCIPAL/PRINCIPAL AMOUNT): US$1,080,000.00 DOLARES/DOLLARS)
(VENCIMIENTO FINAL/FINAL MATURITY): 12 DE ABRIL DE 2004/APRIL 12, 2004
1. Por este Pagare y por valor 1. By this Promissory Note, the
recibido, el suscriptor, WORLD WIDE undersigned WORLD WIDE STONE
STONE CORPORATION (el "SUSCRIPTOR"), CORPORATION (the "UNDERSIGNED"), for
promete incondicionalmente pagar a la value received, hereby unconditionally
vista, a la orden de FIRST CAPITAL promises to pay on demand, to the
GROUP, INC. (el "ACREDITANTE") en 5601 order of FIRST CAPITAL GROUP, INC.,
Office Boulevard NE, Suite 200, ("LENDER") at, 5601 Office Boulevard
Albuquerque, New Mexico, 87109, United NE, Suite 200, Albuquerque, New
States of America, Estados Unidos de Mexico, 87109, United States of
America La cantidad de US$1,080,000.00 America, in the amount of
(UN MILLON OCHENTA MIL DOLARES 00/100) US$1,080,000.00 (ONE MILLION EIGHTY
moneda de curso legal en los Estados THOUSAND DOLLARS 00/100) lawful
Unidos de America, mediante el pago de currency of the United States of
60 (sesenta) amortizaciones mensuales, America, through the payment of 60
iguales y sucesivas de capital e (sixty) consecutive, monthly and equal
intereses por la cantidad cada una de installments of principal and
$22,516.87 (VEINTIDOS MIL QUINIENTOS interest, each one in the amount of
DIECISEIS DOLARES 87/100) moneda de $22,516.87 (TWENTY-TWO THOUSAND FIVE
curso legal en los Estados Unidos de HUNDRED AND SIXTEEN DOLLARS 87/100)
America, mismas que se empezaran a lawful currency of the United States
pagar a partir de esta fecha con la of America, the first of such
primera de ellas; en el entendido de installments being due to be paid as
que el Acreditado por cada amorizacion of this date hereof; provided that
mensual, tendra un plazo de gracia de with respect to each monthly payment
quince (15) dias calendario y no sera the Undersigned shall have a fifteen
considerado que el Acreditado ocurra (15) calendar day grace period and the
en incumplimiento si la amortizacion Note shall not be considered in
mensual es cubierta durante dicho default if the monthly payment is paid
plazo. within that grace period.
2. El importe principal de este Pagare 2. The principal amount outstanding
devengara intereses a una tasa fija under this Promissory Note shall
anual (la "TASA DE INTERES") igual al accrue interest at a fixed annual rate
9.5258%. equal to 9.5258% the "INTEREST RATE").
3. El monto total de capital mas los 3. The total amount of the principal,
intereses que genere el mismo, en los plus any interest accrued thereon
terminos de este Pagare deberan de pursuant to this Promissory Note,
quedar totalmente cubiertos el 12 shall be paid in its entirety on April
(doce) de abril del ano 2004. 12 (twelve) of the year 2004.
4. Si ocurriere un incumplimiento en 4. In the event of default in the
el pago de cualquier amortizacion, el payment of any installment, the
Suscriptor por medio del presente Undersigned hereby unconditionally
promete incondicionalmente pagar promises to pay interest on such due
intereses sobre la cantidad no pagada amount from the date of such default
desde la fecha de incumplimiento y and until such due amount is paid in
hasta que dicha cantidad sea its entirety, at an annual rate
totalmente pagada, a una tasa anual equivalent to 13% (thirteen percentage
por cada dia durante tal periodo points) per annum for each day elapsed
equivalente a la tasa de interes de during such period.
13% (trece puntos
<PAGE>
Pagina/Page 2 de/of 5
porcentuales). 5. The Undersigned further covenants
and agrees that the payments of
5. Igualmente queda establecido por el principal and interest set forth
Suscriptor que los pagos de capital e herein reflect the rate of interest
intereses aqui establecidos reflejan that Lender has agreed to as
la tasa de interes que como consideration for the financing
contraprestacion al otorgamiento del contemplated hereby, it being the
financiamiento en el presente ha intention of the Undersigned to be
aceptado el Acreditante, siendo la bound by such amounts.
intencion del Suscriptor el obligarse
por dichas cantidades. 6. The principal amount of this
Promissory Note plus interest and any
6. La suma principal de este Pagare delinquent interest thereon, shall be
conjuntamente con sus intereses y los payable in Dollars, legal currency of
intereses moratorios correspondientes the United States of America, in
al mismo se pagaran en Dolares, moneda freely transferable same day funds, to
de curso legal de los Estados Unidos be paid before 11:00 a.m.
de America, en fondos disponibles para (Albuquerque, New Mexico, U.S.A. time)
ser libremente transferidos el mismo on the date the payments are made.
dia, antes de las 11:00 a.m. (hora de Payments made after such time shall be
Albuquerque, New Mexico, E.U.A.), en considered as made the following
la fecha que se hagan los pagos. Los business day.
pagos que se hagan despues de tal hora
se consideraran hechos el dia 7. In the event that any payment due
siguiente. under this Promissory Note is due and
payable on a date which is not a
7. En el caso de que cualquier pago business day in Albuquerque, New
bajo este Pagare venza y deba pagarse Mexico, United States of America, such
en una fecha que no sea Dia Habil en payment shall be made on the first
Albuquerque, Nuevo Mexico, Estados business day following such original
Unidos de America, dicho pago debera payment day.
realizarse en el primer dia habil
siguiente a dicho dia de pago 8. Notwithstanding the exchange and/or
original. executive action which may be
exercised by the holder of this
8. Sin perjuicio de la accion Promissory Note due to a default in
cambiaria y/o ejecutiva que pueda the timely and complete payment of
ejercitarse por el beneficiario de principal or interest, whether
este Pagare por la falta de pago ordinary or delinquent, when due, all
oportuno y suficiente del capital o amounts under this Promissory Note,
intereses ordinarios o moratorios a su whether principal or delinquent
vencimiento, todas las cantidades interest, shall immediately become due
amparadas por este Pagare ya sea de and payable on demand upon occurrence
capital, intereses ordinarios, o of any event of default or any other
intereses moratorios, se consideraran breach prior to the maturity date, as
vencidas y pagaderas a la vista, en set forth in the loan agreement
caso de que en cualquier momento antes entered into by and between First
de la fecha de vencimiento ocurra Capital Group, Inc., the Undersigned
cualesquier caso de incumplimiento o and the guarantor of this Promissory
incumplimiento tal y como se Note on April 13, 1999.
establecen en el contrato de credito
celebrado entre First Capital Group,
Inc., el Suscriptor y el aval de este
Pagare con fecha 13 de abril de 1999.
<PAGE>
Pagina/Page 3 de/of 5
9. El importe principal de este Pagare 9. The principal amount of this
y los intereses ordinarios y Promissory Note and all ordinary and
moratorios sobre el mismo, asi como default interest, and all other
cualquier otra cantidad adeudada al amounts owed to Lender, if applicable,
Acreditante, seran pagados por el shall be paid by the Undersigned, free
Suscriptor, libres y sin ninguna and clear of and without deduction by
deduccion por concepto de cualquiera o reason of any and all present or
todos los impuestos presentes o future taxes, levies, imposts,
futuros, tributos, contribuciones, deductions, charges, withholdings, any
deducciones, cargos, retenciones, interest, surcharges, fines,
cualesquiera intereses, recargos, penalties, or other assessments of any
multas, sanciones y otros cargos kind whatsoever, all of which shall be
fiscales de cualquier clase respecto a borne and paid in full by the
los mismos, todos los cuales seran por Undersigned.
cuenta y pagados totalmente por el
Suscriptor. 10. Notwithstanding anything to the
contrary contained herein, and in
10. Sin menoscabo de cualquier addition to and not in lieu of the
disposicion en sentido contrario absolute negotiability incorporated to
contenida en este titulo, y this Promissory Note, the holder of
adicionalmente y no en sustitucion del this Promissory Note shall at all
derecho absoluto de negociabilidad times have the unrestricted right to
incorporado a este Pagare, el tenedor assign the rights arising from this
de este Pagare tendra en todo momento Promissory Note to any manner to any
el derecho irrestricto para ceder person at any time and in any extent.
cualquiera de los derechos u Consequently, the assignment of the
obligaciones derivadas de este Pagare Promissory Note which may be made by
a cualquier persona en cualquier the holder of this Promissory Note to
momento y grado. Consecuentemente, la any other person, may at any time be
cesion del Pagare que pudiera llegar a limited or subject to any repurchase
realizar el tenedor de este Pagare a option of the rights from the
cualquier otra persona, podra en Promissory Note by the holder, or may
cualquier tiempo encontrarse limitada be limited to the right to benefit
o sujeta a cualquier opcion de from the proceeds of the collection of
readquisicion de los derechos such rights. The foregoing mechanisms
derivados de este Pagare por parte del being listed in an enunciative but not
tenedor de este Pagare, o podra limitative fashion, with respect to
limitarse a la cesion de los derechos the absolute right of the holder of
de beneficiarse del producto del cobro this Promissory Note to assign its
de dichos derechos. Siendo los rights under this Promissory Note
anteriores mecanismos listados de una pursuant to the terms and conditions
manera enunciativa mas no limitativa, the holder of this Promissory Note
respecto del derecho absoluto del deems convenient, with which
tenedor de este Pagare para ceder sus unrestricted assignment the
derechos derivados de este Pagare en Undersigned and the guarantor hereby
los terminos y condiciones que el agree and covenant in accordance with
tenedor de este Pagare estime the terms of Article 299 of the
convenientes, con cuya cesion General Law of Negotiable Instruments
irrestricta en este acto el Suscriptor and Credit Transactions of Mexico.
y su avalista manifiestan su completo
acuerdo en los terminos de lo 11. This Promissory Note shall, in all
dispuesto por el articulo 299 de la respects, be governed by and construed
Ley General de Titulos y Operaciones in accordance
de Credito de Mexico.
11. Este Pagare estara, en todo
respecto, sujeto e interpretado de
acuerdo con las leyes del
<PAGE>
Pagina/Page 4 de/of 5
Estado de Nuevo Mexico, E.U.A., with the laws of the State of New
estableciendose sin embargo, que en Mexico, U.S.A., provided however, that
caso de cualquier accion o in the case of any action or
procedimiento en los Estados Unidos proceeding in the United Mexican
Mexicanos, este Pagare estara sujeto y States, this Promissory Note will be
sera interpretado de acuerdo con las governed, construed and enforced in
leyes de los Estados Unidos Mexicanos. accordance with the laws of the United
Mexican States.
12. Para la interpretacion, ejecucion
y cumplimiento de este Pagare y para 12. For the interpretation, execution,
el requerimiento judicial del pago de compliance with and performance of
su importe, el Suscriptor y su this Promissory Note and for the
avalista se someten a la jurisdiccion judicial requirement of its payment,
de (i) cualquier tribunal estatal o the Undersigned and its guarantor
federal en Nuevo Mexico, E.U.A., y expressly submit themselves to the
(ii) cualquier tribunal o tribunales jurisdiction of (i) any state or
en Durango, Durango, Estados Unidos federal court located in New Mexico,
Mexicanos, a la eleccion del tenedor, U.S.A., and (ii) any court or courts
y mediante la suscripcion y entrega de Durango, Durango, United Mexican
este Pagare el Suscriptor se somete States, as the holder may elect, and
irrevocablemente a la jurisdiccion de by the execution and delivery of this
cualquiera y todos los tribunales, Promissory Note, the Undersigned
renunciando expresamente a cualquier hereby irrevocably submits itself to
otro fuero al que el Suscriptor tenga the jurisdiction of any and all such
derecho o llegue a tenerlo en el courts expressly waiving any other
futuro, en virtud de cualquier razon. jurisdiction to which the Undersigned
may now or in the future be entitled
13. El Suscriptor y su aval for any reason whatsoever.
expresamente y en los terminos de lo
dispuesto por el articulo 128 de la 13. The Undersigned and its guarantor
Ley General de Titulo y Operaciones de expressly and in accordance with
Credito, aceptan que este Pagare se Article 128 of the General Law of
pueda presentar a su cobro, inclusive Negotiable Instruments and Credit
mas alla de seis meses despues de la Transactions of the United Mexican
fecha de vencimiento de la ultima States, agree that this Promissory
amortizacion aqui contemplada. Note may be presented for payment even
if six months after the due date of
14. Este Pagare se suscribe en the last amortization payable
versiones al ingles y al espanol, las hereunder.
cuales ambas obligaran al Suscriptor,
pero las cuales ambas constituiran un 14. This Promissory Note is executed
unico y mismo instrumento, quedando in English and Spanish versions both
establecido, sin embargo, que en caso of which will bind the Undersigned,
de duda acerca de la correcta but both of which will constitute one
interpretacion de este Pagare, and the same instrument; provided
prevalecera el texto en ingles, however, that in the case of doubt as
excepto en el caso en que cualesquier to the proper interpretation or
accion o procedimiento sean iniciados construction of this Promissory Note,
en los Estados Unidos Mexicanos, o the English text will prevail, except
cualquier subdivision politica de los in the event any actions or
mismos, para hacer efectivo este proceedings are initiated in the
Pagare, caso en cual prevalecera el United Mexican States or any political
texto en espanol. subdivision thereof to enforce this
Promissory
<PAGE>
Pagina/Page 5 de/of 5
15. Por el presente Pagare, el Note, the Spanish text will prevail.
Suscriptor renuncia a cualquier
diligencia, presentacion, 15. With respect to this Promissory
requerimiento o protesto y toda Note, the Undersigned hereby waives
notificacion. La omision del tenedor diligence, presentment, demand,
del presente en el ejercicio de protest, and all notices whatsoever.
cualquiera de sus derechos bajo este The failure of the holder to exercise
Pagare en ningun caso constituira its rights hereunder in any instance
renuncia de dichos derechos. will not constitute the waiver of such
rights.
16. El Suscriptor y su aval por medio
del presente, prometen pagar los 16. The Undersigned and its guarantor
gastos que implique el cobro de este hereby promise to pay all costs of
Pagare y los honorarios de los collections and reasonable attorney's
abogados que intervengan en dicho fees in connection with a payment
cobro, en caso de que haya default under this Promissory Note.
incumplimiento en el pago de este
Pagare. This Promissory Note consisting of
five pages is made and delivered in El
Este Pagare que consta de cinco hojas Paso, Texas, United States of America,
se suscribe y entrega en El Paso, on April 13, 1999.
Texas, Estados Unidos de America, el
13 de abril de 1999.
SUSCRIPTOR (UNDERSIGNED)
WORLD WIDE STONE CORPORATION
/s/ Spencer W. Cunningham
--------------------------------
Por/By: Spencer W. Cunningham
Vicepresidente Ejecutivo/Executive Vice-president
POR AVAL (GUARANTOR)
SOCIEDAD PIEDRA SIERRA, S.A. DE C.V.
/s/ Jaime Muguiro Munoz
--------------------------------
Por/By: Jaime Muguiro Munoz
Presidente del Consejo de Administracion
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF WORLD WIDE STONE CORPORATION FOR THE SIX
MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS. THIS EXHIBIT SHALL NOT BE DEEMED FILED FOR THE PURPOSE OF
SECTION 11 OF THE SECURITIES ACT OF 1933 AND SECTION 18 OF THE SECURITIES
EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF SUCH SECTIONS,
NOR SHALL IT BE DEEMED A PART OF ANY OTHER FILING WHICH INCORPORATES THIS REPORT
BY REFERENCE, UNLESS SUCH OTHER FILING EXPRESSLY INCORPORATES THIS EXHIBIT BY
REFERENCE.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 465,591
<SECURITIES> 0
<RECEIVABLES> 355,843
<ALLOWANCES> 0
<INVENTORY> 1,169,802
<CURRENT-ASSETS> 2,395,429
<PP&E> 5,528,040
<DEPRECIATION> 1,429,685
<TOTAL-ASSETS> 7,147,842
<CURRENT-LIABILITIES> 1,461,882
<BONDS> 908,513
0
0
<COMMON> 34,704
<OTHER-SE> 4,742,743
<TOTAL-LIABILITY-AND-EQUITY> 7,147,842
<SALES> 2,706,685
<TOTAL-REVENUES> 2,706,685
<CGS> 1,418,423
<TOTAL-COSTS> 1,418,423
<OTHER-EXPENSES> 739,875
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,433
<INCOME-PRETAX> 557,917
<INCOME-TAX> 201,000
<INCOME-CONTINUING> 356,917
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 356,917
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
