PURCHASE AGREEMENT, RECEIPT
AND ESCROW INSTRUCTIONS
August 14, 2002
PENGE CORPORATION located at 1930 Village Center Circle 3, Suite 446, Las Vegas,
NV 89134 (hereinafter referred to as "BUYER"), hereby offers and agrees to
purchase certain farm real property, residential real property, tangible,
intangible and mixed assets attached hereto and incorporated herein by this
reference of M7 FARMS, a sole proprietorship; owned by Roger and Barbara Major,
together with the stock (the "Stock") of MAJOR TREES, INC. an Arizona
corporation wholly owned by Steven Sutherland ("Sutherland") (collectively, the
"Assets") upon the terms and conditions hereinafter set forth and as described
in the following Exhibit Agreements, all of which are part of and constitute the
purchase and sale transactions described herein and therein, and which are
incorporated by reference as:
EXHIBIT "A" Asset Purchase Agreement (M7 Farms)
EXHIBIT "B" Stock Purchase Agreement (Major Trees, Inc.)
EXHIBIT "C" Residential Real Property Purchase Agreement
EXHIBIT "D" Farm Real Property Purchase Agreement
EXHIBIT "E" Promissory Note and Security Documents
EXHIBIT "F1" Consulting Agreement (Sutherland)
EXHIBIT "F2" Consulting Agreement (Major)
EXHIBIT "GI" Non-Compete Agreement (Sutherland)
EXHIBIT "G2" Non Compete Agreement (Major)
EXHIBIT "H" Price Allocation
Roger and Barbara Major and Major Trees, Inc jointly operate the Assets as a
Christmas tree farm and tree wholesale business (the "Business") and are
hereinafter collectively referred to as "SELLER". M7 Farms is located at 14660
S. Highway 191, Elfrida, Cochise County, Arizona, and Major Trees, Inc. is
located at 5120 N. Indian Horse Trail, Tucson, Arizona: This Purchase Agreement,
Receipt and Escrow Instructions (the "Escrow Agreement) and all Exhibits A
through H shown above (the "Exhibit Agreements"), and all schedules attachments
and addenda hereto or thereto are collectively referred to as the "Purchase
Agreements."
PURCHASE PRICE: The total purchase price for all the Assets and Stock shall be
the sum of One Million, Two Hundred Thousand Dollars and No/100 ($1,200,000.00)
(the "Purchase Price"), to be allocated toward residential real property, farm
real and personal property, business assets, stock and customer information and
as described below, and under the terms and agreements set forth in the Purchase
Agreements. The total Purchase Price shall be payable as follows:
a. $10,000.00 by earnest money deposit (the "Earnest Money") in the
form of a company check payable and delivered by Broker to Fidelity National
Title Company, Inc. ("Escrow Agent") within 48 hours of BUYER's acceptance
hereof. BUYER acknowledges that any check accepted by Broker is subject to
collection; and
b. $140,000.00 to be paid to SELLER, by certified funds, or acceptable
alternative, payable at close of escrow; and
c. $250,000.00 for the farm residence to be paid to the SELLER pursuant
to the terms of Exhibit C (Residential Real Property Purchase Agreement) payable
at close of escrow; and
d. $800,000 to be paid to SELLER in the form of a Promissory Note as
shown in Exhibit E. Items "a" and "b" above to be paid by BUYER at closing shall
be allocated to the Assets in accordance with Exhibit "H" in the following
manner: $100,000 to the stock of Major Trees, Inc. and $50,000 to Farm
Equipment.
PURCHASE PRICE ALLOCATION: BUYER and SELLER agree that the Purchase Price shall
be allocated among the following categories as the parties may mutually agree
prior to closing:
o Approximately 275+/- acres of farmland including all buildings,
wells, pumps, irrigation systems and other farm improvements.
o An approximate 3,900 sq. ft., 6 bedroom residence and separate
garage, greenhouse and small pivot irrigation system on 5.0+/-
acres.
o Inventory/Crops being purchased under this agreement.
o Farm Buildings
o Equipment, Fixtures, other business assets of M7 Farms necessary
to continue normal operations of the Business.
o All issued and outstanding capital stock of Major Trees, Inc.
o Non-Compete and Non-Solicitation Agreement from Roger and Barbara
Major.
o Non-Compete and Non-Solicitation Agreement from Steven Sutherland.
o Consulting Agreement of Roger Major.
o Consulting Agreement of Steven Sutherland.
o Goodwill
BUYER and SELLER are aware of the tax implications which this transaction may
create and acknowledge that each must file with the Internal Revenue Services an
Asset Acquisition Statement Form 8594.
IT IS HEREBY AGREED, IN ADDITION TO THE TERMS SET FORTH ABOVE, THAT:
1. PURCHASE AGREEMENTS: Upon signing of this Escrow Agreement, BUYER and SELLER
agree to open escrow and deposit the Earnest Money with Escrow Agent as set
forth in paragraphs 12 and 13 below. Subsequent to the signing of this Escrow
Agreement and prior to the closing date, the parties agree to negotiate in good
faith to reach mutually acceptable terms and conditions for the Exhibit
Agreements "A" through "H", which terms and conditions will be set forth in such
Exhibit Agreements. This Escrow Agreement, the Exhibit Agreements, and all
addenda or schedules attached hereto and thereto shall be deemed to be, and
shall constitute the Purchase Agreements.
2. CLOSING: The closing date for this sale shall be on or before September 16,
2002 (the "Closing" or "Closing Date"). BUYER and SELLER agree that each Exhibit
Agreement is contingent upon execution and closing of each other Exhibit
Agreement and this sale is contingent upon a simultaneous closing of all
Agreements. BUYER and SELLER also agree to a two week extension of the Closing
Date or until September 30, 2002 if BUYER deems it necessary.
3. CONTINGENCIES: In addition to any other contingencies set forth herein or in
any of the other Purchase Agreements this Agreement and the Exhibit Purchase
Agreements are contingent on the following:
a. BUYER'S Financial Review. This Escrow Agreement, Exhibit Agreements
and Schedules hereto are contingent upon BUYERS review and acceptance of the
books and records of M7 Farms and Major Trees, Inc. This contingency shall be
deemed to have been satisfied unless BUYER provides SELLER with written notice
to the contrary by September 16, 2002.
b. Legal and Tax Review. This Escrow Agreement, Exhibit Agreements and
Schedules hereto are contingent upon the review and acceptance by the legal
counsel and tax advisors/accountants of the parties within ten (10) days of the
signing of each Agreement by all parties. This contingency will be deemed to
have been satisfied by all parties unless written notice is given by any party
to all other parties prior to the expiration of said ten (l0) days.
2
c. BUYER'S Inspection of Assets. This Escrow Agreement, Exhibit
Agreements and Schedules hereto are contingent upon the BUYER'S inspection and
acceptance of all Assets being sold. This contingency shall be deemed to have:
been satisfied unless BUYER provides SELLER with written notice to the contrary
by September 16, 2002.
4. INSPECTION AND WARRANTIES: BUYER has the right to perform any and all
inspections, investigations, and tests of any and all real property, Assets, and
rights included in this sale, including without limitation, SELLER's books and
records with respect to the Assets being sold hereunder and the Business and the
corporate books and records of Major Trees, Inc. BUYER is relying upon its own
judgment and decision in making this offer and in entering into and consummating
the purchase and sale of the Assets and Stock hereunder. No warranties,
representations, promises or agreements have been made between they parties
other than as expressly set forth herein or in the Purchase Agreements, and
neither BUYER, SELLER. nor Broker shall be, nor are they bound by any
warranties, representations, promises or agreements not set forth herein or in
the exhibit agreements. SELLER agrees to cooperate with any request for
inspection.
5. PRORATIONS AND CLOSING COSTS: The following items, if applicable, shall be
prorated as of the Closing Date: Real Property Taxes, Personal Property Taxes,
Utility Bills, Insurance, and Pre-Paid Deposits. SELLERS and BUYERS agree to
split the costs associated with closing, including but not limited to BUYERS'
and SELLERS' title policies,' house appraisal, EPA inspection, and escrow
agent's fees. SELLER agrees to provide a current survey of farm and house (house
with approximately 5 acres as required by zoning).
6. CONSULTING: Roger Major and Steven Sutherland agree to provide management
advisory and consulting services to BUYER concerning any and all aspects of the
Business commencing with the Closing Date as set forth in EXHIBITS "FI" and
"F2".
7. NON COMPETE: Roger Major, Barbara Major and Steven Sutherland each agree to
sign Non Compete and Non Solicitation Agreements as set forth in EXHIBITS "G1"
and "G2".
8. INCORPORATION OF EXHIBITS, SCHEDULES, ATTACHMENTS AND ADDENDA. The
undersigned BUYER expressly acknowledges fully reading, understanding and
receiving a true copy of this document including, without limitations, all
schedules, exhibits, attachments and addenda. The parties understand that all
schedules, exhibits, attachments or addenda attached hereto are expressly
incorporated herein by reference. As such, a breach of any schedule, exhibit,
attachment or addenda hereto is a breach of this Agreement as welt.
9. BREACH: If BUYER shall fail to pay at the Closing (as hereinafter defined
plus the two week extension) the balance of cash required to be so paid
hereunder or shall otherwise fail to complete the purchase as herein provided,
except as otherwise set out in the Purchase Agreements, including without
limitation, paragraphs 2, 3 and 4, of this Agreement, and provided that SELLER
is not in breach hereof; then SELLER shall have the right to retain the Earnest
Money Deposit paid by BUYER as liquidated and agreed damages in lieu of any
other remedy that may otherwise be available to SELLER at law or in equity.
10. ARBITRATION: In the event of any dispute arising from the Purchase
Agreements, subsequent to the closing of this sale, between the BUYER, SELLER
and/or Broker herein, the parties agree to submit the matter to arbitration in
accordance with the Commercial Dispute Rules of the American Arbitration
3
Association (AAA) or with a private arbitrators)The use of a private
arbitrator(s) is conditioned upon the parties' agreement thereto in advance of
commencing the arbitration claim. If no agreement to the use and choice of a
private arbitrator(s) is reached within ten (10) days from written notice by one
party to the others of the dispute, the parties shall proceed in accordance with
the Commercial Dispute Rules of the AAA If multiple arbitrators are utilized
then each party shall choose a single arbitrator and the two so chosen shall
choose a third arbitrator. Either party may be represented by legal counsel. The
decision of the Arbitrator(s) shall be final and conclusive and the right to
appeal is hereby waived. The prevailing party in such action shall be entitled
to recover from the non-prevailing party reasonable Attorney's fees incurred,
arbitration costs, and all other costs and expenses incurred in connection with
the prosecution or defense of such action, and the same shall be included in the
arbitrator's award rendered in such action.
11. TIME IS OF THE ESSENCE: Time is of the essence under this Agreement. Any
extension of time granted for the performance of any duty under this Agreement
shall not be considered an extension of time for the performance of any other
duty under this Agreement.
12. EARNEST MONEY: BUYER's Earnest Money hereunder is accepted by Broker,
subject to SELLER's executed acceptance of this Escrow Agreement.
13. ESCROW AGENT: To facilitate closing, Fidelity National Title Company, Inc.
shall be employed to receive, deposit, and distribute finds for the parties,
prepare and obtain execution of escrow instructions, conduct a Lien and Judgment
Search and a UCC search, see to the execution and distribution of appropriate
documents evidencing the terms and conditions of this sale by and between the
respective parties and see to the proper closing of sale, and distribution of
funds and to insure the simultaneous closing of this transaction and the real
property and Stock sale. BUYER and SELLER each agree to pay one-half (1/2) of
the Escrow Agent's fees and expenses relating to this sale.
14. BROKERS FEES: SELLER has engaged Arizona Sunbelt Business Brokers, LLC
(hereinafter "Broker") to act as Seller's broker. SELLER shall be solely
responsible for payment of Broker's fees.
15. ENTIRE AGREEMENT: This Escrow Agreement, the Exhibit Agreements, and all
schedules, attachments, amendments and addenda hereto, constitute the entire
agreement and understandings of the parties and cannot be modified except by a
writing executed by all of the parties hereto.
DATED AND ACCEPTED this 14th day of August, 2002.
BUYER:
Penge Corporation
By: KIRK J. FISCHER [HANDWRITTEN] By: LORI FISCHER [HANDWRITTEN]
----------------------------- --------------------------
/s/ KIRK J. FISCHER /s/ LORI FISCHER
----------------------------------- ------------------------------------
President (Title) SECRETARY [handwritten]
4
SELLER'S ACCEPTANCE
Roger Major and Barbara Major, husband and wife, doing business as M7 Farms;
Major Trees, Inc., an Arizona corporation, wholly owned by Steven Sutherland
hereby accept the foregoing offer and agree to sell the above described assets
and stock and to comply with all duties and obligations of the SELLER under the
terms and conditions of the foregoing Purchase Agreements. Exhibits, schedules,
attachments and addenda referenced therein. SELLER further hereby agrees to pay
Broker a commission is the amount specified in SELLER's listing agreement with
Broker.
DATED AND ACCEPTED this 15 [HANDWRITTEN] day of August, 2002.
SELLER:
ROGER MAJOR AND BARBARA MAJOR, HUSBAND AND WIFE, DBA M7 FARMS
By: By:
-------------------------------- --------------------------------
Roger Major Barbara Major
MAJOR TREES, INC., AN ARIZONA CORPORATION
By: /s/ STEVEN SUTHERLAND 8/15/02
--------------------------------
Steven Sutherland
President
ESCROW AGENT'S ACCEPTANCE
By its execution below, the Escrow Agent accepts this Agreement as its
escrow instructions and acknowledges receipt of the original and/or a copy of
this Agreement executed by both SELLER and BUYER, and further acknowledges
receipt of BUYER's earnest money deposit. The Escrow Agent agrees to perform in
accordance with the terms and provisions of this Agreement.
Roger Major and Barbara Major, husband and wife, doing business as M7 Farms;
Major Trees, Inc., an Arizona corporation, wholly owned by Steven Sutherland
hereby accept the foregoing offer and agree to sell the above described assets
and stock and to comply with all duties and obligations of the SELLER under the
terms and conditions of the foregoing Purchase Agreements. Exhibits, schedules,
attachments and addenda referenced therein. SELLER further hereby agrees to pay
Broker a commission is the amount specified in SELLER's listing agreement with
Broker.
DATED AND ACCEPTED this 14TH [HANDWRITTEN] day of August, 2002.
SELLER:
ROGER MAJOR AND BARBARA MAJOR, HUSBAND AND WIFE, DBA M7 FARMS
By: /s/ ROGER MAJOR By: /s/ BARBARA MAJOR
-------------------------------- --------------------------------
Roger Major Barbara Major
MAJOR TREES, INC., AN ARIZONA CORPORATION
By:
Steven Sutherland
President
ESCROW AGENT'S ACCEPTANCE
By its execution below, the Escrow Agent accepts this Agreement as its
escrow instructions and acknowledges receipt of the original and/or a copy of
this Agreement executed by both SELLER and BUYER, and further acknowledges
receipt of BUYER's earnest money deposit. The Escrow Agent agrees to perform in
accordance with the terms and provisions of this Agreement.
PURCHASE AGREEMENT, RECEIPT
AND ESCROW INSTRUCTIONS
August 14, 2002
PENGE CORPORATION located at 1930 Village Center Circle 3, Suite 446, Las Vegas,
NV 89134 (hereinafter referred to as "BUYER"), hereby offers and agrees to
purchase certain farm real property, residential real property, tangible,
intangible and mixed assets attached hereto and incorporated herein by this
reference of M7 FARMS, a sole proprietorship; owned by Roger and Barbara Major,
together with the stock (the "Stock") of MAJOR TREES, INC. an Arizona
corporation wholly owned by Steven Sutherland ("Sutherland") (collectively, the
"Assets") upon the terms and conditions hereinafter set forth and as described
in the following Exhibit Agreements, all of which are part of and constitute the
purchase and sale transactions described herein and therein, and which are
incorporated by reference as:
EXHIBIT "A" Asset Purchase Agreement (M7 Farms)
EXHIBIT "B" Stock Purchase Agreement (Major Trees, Inc.)
EXHIBIT "C" Residential Real Property Purchase Agreement
EXHIBIT "D" Farm Real Property Purchase Agreement
EXHIBIT "E" Promissory Note and Security Documents
EXHIBIT "F1" Consulting Agreement (Sutherland)
EXHIBIT "F2" Consulting Agreement (Major)
EXHIBIT "GI" Non-Compete Agreement (Sutherland)
EXHIBIT "G2" Non Compete Agreement (Major)
EXHIBIT "H" Price Allocation
Roger and Barbara Major and Major Trees, Inc jointly operate the Assets as a
Christmas tree farm and tree wholesale business (the "Business") and are
hereinafter collectively referred to as "SELLER". M7 Farms is located at 14660
S. Highway 191, Elfrida, Cochise County, Arizona, and Major Trees, Inc. is
located at 5120 N. Indian Horse Trail, Tucson, Arizona: This Purchase Agreement,
Receipt and Escrow Instructions (the "Escrow Agreement) and all Exhibits A
through H shown above (the "Exhibit Agreements"), and all schedules attachments
and addenda hereto or thereto are collectively referred to as the "Purchase
Agreements."
PURCHASE PRICE: The total purchase price for all the Assets and Stock shall be
the sum of One Million, Two Hundred Thousand Dollars and No/100 ($1,200,000.00)
(the "Purchase Price"), to be allocated toward residential real property, farm
real and personal property, business assets, stock and customer information and
as described below, and under the terms and agreements set forth in the Purchase
Agreements. The total Purchase Price shall be payable as follows:
a. $10,000.00 by earnest money deposit (the "Earnest Money") in the
form of a company check payable and delivered by Broker to Fidelity National
Title Company, Inc. ("Escrow Agent") within 48 hours of BUYER's acceptance
hereof. BUYER acknowledges that any check accepted by Broker is subject to
collection; and
b. $140,000.00 to be paid to SELLER, by certified funds, or acceptable
alternative, payable at close of escrow; and
c. $250,000.00 for the farm residence to be paid to the SELLER pursuant
to the terms of Exhibit C (Residential Real Property Purchase Agreement) payable
at close of escrow; and
d. $800,000 to be paid to SELLER in the form of a Promissory Note as
shown in Exhibit E. Items "a" and "b" above to be paid by BUYER at closing shall
be allocated to the Assets in accordance with Exhibit "H" in the following
manner: $100,000 to the stock of Major Trees, Inc. and $50,000 to Farm
Equipment.
7
ADDENDUM TO PURCHASE AGREEMENT
Addendum Number: 1 Date: September 10, 2002
The undersigned Seller and Buyer hereby amend that certain PURCHASE AGREEMENT
RECEIPT AND ESCROW INSTRUCTIONS dated AUGUST 14, 2002 between the following
parties:
SELLERS: Steven Sutherland, Roger Major and Barbara Major
BUYER: Penge Corporation
BUSINESS/PREMISES: Major Trees, Inc., M7-Farms, 14660 S. Highway 191, Elfrida,
Arizona
The following terms, conditions and /or revisions are hereby included as part of
the Agreement described above:
1. Promissory Note, Exhibit "E" has been replaced with two (2) Notes
described as follows: Promissory Note (Sutherland), Exhibit "El" and
Promissory Note (Major), Exhibit "E2".
2. Schedule "1" PRICE ALLOCATION BY CONTRACT is hereby added to and made a
part of the Escrow Agreement.
3. Schedule "2" CASH DISTRIBUTION TO SELLERS is hereby added to and made a
part of the Escrow Agreement
All other terms and conditions of the Agreement referred to above shall remain
unchanged. The undersigned agree to these additional terms, conditions and/or
revisions and acknowledges receipt of a copy hereof.
/s/ Roger Major 9-27-02 /s/ Kirk J. Fischer 9-27-02
---------------------------------- --------------------------------
Seller Date Buyer Date
/s/ Barbara Major 9-27-02 /s/ Jim Fischer 9-27-02
---------------------------------- --------------------------------
Seller Date Buyer Date
/s/ Steven Sutherland 9/27/02
8
ADDENDUM TO PURCHASE AGREEMENT
Addendum Number: 1 Date: September 10, 2002
The undersigned Seller and Buyer hereby amend that certain PURCHASE AGREEMENT
RECEIPT AND ESCROW INSTRUCTIONS dated AUGUST 14, 2002 between the following
parties:
SELLERS: Steven Sutherland, Roger Major and Barbara Major
BUYER: Penge Corporation
BUSINESS/PREMISES: Major Trees, Inc., M7-Farms, 14660 S. Highway 191, Elfrida,
Arizona
The following terms, conditions and /or revisions are hereby included as part of
the Agreement described above:
1. Promissory Note, Exhibit "E" has been replaced with two (2) Notes
described as follows: Promissory Note (Sutherland), Exhibit "El" and
Promissory Note (Major), Exhibit "E2".
2. Schedule "1" PRICE ALLOCATION BY CONTRACT is hereby added to and made a
part of the Escrow Agreement.
3. Schedule "2" CASH DISTRIBUTION TO SELLERS is hereby added to and made a
part of the Escrow Agreement
All other terms and conditions of the Agreement referred to above shall remain
unchanged. The undersigned agree to these additional terms, conditions and/or
revisions and acknowledges receipt of a copy hereof.
/s/ Steven Sutherland 9-23 /s/ Kirk J. Fischer 9-27-02
---------------------------------- --------------------------------
Seller Date Buyer Date
/s/ Jim Fischer 9-27-02
---------------------------------- --------------------------------
Seller Date Buyer Date
9
SCHEDULE 1
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
PENGE / MAJOR TREES / M7 FARMS
PRICE ALLOCATION BY CONTRACT
CONTRACT ITEM TOTAL
-------- ---- -----
Asset Purchase Agreement A
Farm Equipment 90,000.00
Tree Inventory/Crops 100,000.00
Goodwill 25,000.00 215,000.00
Stock Purchase Agreement B
Stock 220,000.00
Goodwill 25,000.00 245,000.00
Residential Purchase Agreement C 250,000.00 250,000.00
Farm Real Property Purchase Agreement D
Land 295,000.00
Buildings 85,000.00 380,000.00
Promissory Note (Sutherland) El 0.00 0.00
Promissory Note (Major) E2 0.00 0.00
Consulting Agreement (Sutherland) F 25,000.00 25,000.00
Consulting Agreement (Major) F2 25,000.00 25,000.00
Non-Compete Agreement (Sutherland) G1 30,000.00 30,000.00
Non-Compete Agreement (Major) G2 30,000.00 30,000.00
Price Allocation H 0.00 0.00
---------------- -----------------
1,200,000.00 1,200,000.00
10
SCHEDULE 2
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
STEVE SUTHERLAND, ROGER & BARBARA MAJOR
CASH DISTRIBUTION
ALLOCATION BY ASSET EXHIBIT AMOUNT SUTHERLAND MAJOR
------------------- ------- ------ ---------- -----
MTI Stock B 220,000.00 220,000.00
Sutherland Consulting Agreement F1 25,000.00 25,000.00
Sutherland Non-Compete G1 30,000.00 30,000.00
MTI Goodwill B 25,000.00 25,000.00
M7 Farm Land D 295,000.00 295,000.00
M7 Buildings C 85,000.00 85,000.00
Farm Equipment A 90,000.00 90,000.00
Inventory A 100,000.00 100,000.00
Major Consulting Agreement F2 25,000.00 25,000.00
Major Non-Compete G2 30,000.00 30,000.00
Residence C 253,000.00 253,000.00
M7 Goodwill A 25,000.00 25,000.00
--------------- --------------- --------------
TOTAL 1,203,000.00 300,000.00 903,000.00
ESCROW DEPOSIT
--------------
MTI Stock B 3,333.33 3,333.33
Sutherland Consulting Agreement Fl
Sutherland Non-Compete G1
MTI Goodwill B
M7 Farm Land D 3,333.33 3,333.33
M7 Buildings C
Farm Equipment A 3,333.33 3,333.33
Inventory A
Major Consulting Agreement F2
Major Non-Compete G2
Residence C
M7 Goodwill A 0.00
--------------- --------------- --------------
TOTAL 10,000.00 3,333.33 6,666.67
ADDITIONAL CASH DUE AT CLOSING
------------------------------
MTI Stock B 96,666.67 96,666.67
Sutherland Consulting Agreement F1
Sutherland Non-Compete G1
MTI Goodwill B
M7 Farm Land D 0.00
M7 Buildings C
Farm Equipment A 43,333.33 43,333.33
Inventory A
Major Consulting Agreement F2
Major Non-Compete G2
Residence C 253,000.00 253,000.00
M7 Goodwill A
--------------- --------------- --------------
TOTAL 393,000.00 96,666.67 296,333.33
TOTAL DUE SELLERS AT CLOSING 403,000.00 100,000.00 303,000.00
PROMISSORY NOTES
----------------
MTI Stock B 120,000.00 120,000.00
Sutherland Consulting Agreement F1 25,000.00 25,000.00
Sutherland Non-Compete G1 30,000.00 30,000.00
MTI Goodwill B 25,000.00 25,000.00
M7 Farm Land D 291,666.67 291,666.67
M7 Buildings C 85,000.00 85,000.00
Farm Equipment A 43,333.33 43,333.33
Inventory A 100,000.00 100,00.00
Major Consulting Agreement F2 25,000.00 25,000.00
Major Non-Compete G2 30,000.00 30,000.00
Residence C 0.00 0.00
M7 Goodwill A 25,000.00 25,000.00
--------------- --------------- --------------
TOTAL 800,000.00 200,000.00 600,000.00
Check Sum 1,203,000.00 300,000.00 903,000.00
[initials at bottom of page: RJM,, BM, JF, KJF, SCS]
11
EXHIBIT A
ASSET PURCHASE AGREEMENT
(M7 FARMS)
This Asset Purchase Agreement ("Agreement") is entered into this 27th
day of September, 2002, by and between ROGER MAJOR and BARBARA MAJOR, husband
and wife ("SELLER"), and Penge Corporation located at 1930 Village Center Circle
3, Suite 446, Las Vegas, NV 89134 ("BUYER").
RECITALS
A. SELLER is the sole owner of M7 Farms, a sole proprietorship, which
operates a Christmas tree farm located at 14660 S. Highway 191, Elfrida, Cochise
County, Arizona (the "Business").
B. SELLER desires to sell to BUYER, and BUYER desires to purchase from
SELLER, all assets owned by SELLER and used or intended to be used in connection
with the Business, including without limitation, tangible and intangible
personal property, all records relating to the Business, crops and all other
assets, rights and property of SELLER used or intended to be used in connection
with the Business (the "Assets"). Without limiting the generality of the
foregoing, the Assets are listed on Schedule A1 attached hereto and incorporated
by reference in this Agreement.
C. The parties hereto acknowledge that this Agreement is one of a group
of agreements which constitute the purchase and sale transaction between SELLER,
BUYER and Steven Sutherland ("Sutherland"), the sole owner of Major Trees, Inc.,
an Arizona corporation (the "Corporation"). Such other agreements describe the
BUYER's purchase of certain real property and improvements, Stock of the
Corporation, and other Assets related to the Business, and are described in the
Purchase Agreement, Receipt and Escrow Instructions dated August 14, 2002, by
and between SELLER, BUYER Sutherland and the Corporation (the "Escrow
Agreement"). Upon execution by the parties, this Agreement shall become part of
the Escrow Agreement and shall be incorporated therein.
AGREEMENT
1. INCORPORATION OF RECITALS: The recitals set forth above are hereby
incorporated in this Agreement as if fully set forth below.
2. PURCHASE AND SALE OF ASSETS: On and subject to the terms and
conditions of this Agreement, the Escrow Agreement, and the
additional agreements referenced in the Escrow Agreement, SELLER
agrees to sell, transfer, convey and deliver to BUYER, and BUYER
agrees to purchase and accept, free and clear of any encumbrances,
all of Seller's right, title and interest in and to all of the
Assets for the purchase price described in paragraph 3 below.
3. ASSET PURCHASE PRICE AND ALLOCATION: BUYER agrees to pay SELLER at
Closing the sum of One Hundred Ninety Thousand No/100 DOLLARS
($190,000.00) (the "Farm Assets Purchase Price"), which is a
portion of the purchase price described in the Escrow Agreement,
for purchase of the Assets of M7 Farms. BUYER and SELLER agree
that the Farm Assets Purchase Price, subject to any adjustments
herein provided for, shall be allocated as follows:
$46,666.67 is to be paid in certified funds at Closing and allocated to
Farm Equipment. The Earnest Money Deposit is to be applied toward the
cash due at closing. The balance of $168,333.33 is to be applied to the
Promissory Note per Exhibit "E2".
The above allocations for Equipment, Fixtures, Furniture and other
business assets, and for Inventory/Crops are subject to a physical
inventory and verification by BUYER on or before the Closing and, in
the event that such inventory and verification reveals that the
Equipment and other business assets, and Inventory/Crops is either less
than or greater than that specified above, the allocated portion of the
Purchase Price for such items may be adjusted, accordingly, with the
consent of the parties. The allocations provided above are subject to
revision and approval of the parties' respective legal and tax counsel.
The Allocation of the Purchase Price described in the Escrow Agreement
to Farm Real Property (approximately 272.596+/- acres plus
improvements), Residential Real Property, Stock of the Corporation and
other Business related assets shall be set forth in the separate
agreement relating to such transaction. The Purchase Price shall be
paid as set forth in the Escrow Agreement.
4. CLOSING; DELIVERIES AT CLOSING: The consummation of the transactions
contemplated herein ("Closing") shall occur on the "Closing Date" set
forth in the Escrow Instructions after satisfaction or waiver of all
conditions to the obligations of the parties to consummate the
transactions contemplated hereby (other than conditions with respect to
actions the respective parties will take at or after Closing itself) or
such other date as the parties may mutually agree. At Closing, SELLER
will deliver to BUYER all certificates, instruments and documents
referred to in this Agreement or in the Escrow Agreement, such
documents as necessary to transfer any intellectual property rights, a
bill of sale for the Assets, assignments of contracts, assignments of
intangible assets and such other instruments of sale, transfer,
conveyance and assignment as BUYER and its counsel may reasonably
request. At the closing the Buyer shall deliver to Seller, the cash
portion of the purchase price together with the Promissory Note for the
balance due.
5. INVENTORY OF GOODS/CROPS: It is agreed that as of the Closing Date, the
on-hand inventory of SELLER's marketable crops being purchased
hereunder by BUYER, at SELLER's cost, shall be One Hundred Thousand and
No/100 ($100,000.00). An itemized physical inventory shall be taken by
BUYER and SELLER prior to the Closing, and unless BUYER gives notice to
SELLER in writing of a discrepancy related to the inventory/crops prior
to closing, BUYER accepts the inventory/crops as is.
13
6. ACCOUNTS RECEIVABLE: All accounts receivable accruing up until the
Closing shall remain the property of and the responsibility of the
SELLER and are not included in this sale. Immediately from and after
the Closing, all subsequent sales and receivables of items purchased by
BUYER shall be the sole property and the responsibility of the BUYER.
7. LIABILITIES EXCLUDED: All accounts payable of the SELLER shall remain
the property of and the responsibility of the SELLER and are not
included in this sale. It is expressly understood and agreed by the
parties that this Agreement contemplates, and the parties specifically
agree that, all liabilities, obligations, duties, and responsibilities
in any respect of the SELLER are to and shall remain liabilities,
obligations, duties, and responsibilities of the SELLER, and that the
assets, rights and property being transferred and conveyed to the BUYER
hereunder shall be free and clear of any and all claims and liens
pertaining thereto and all such liabilities, obligations, duties, and
responsibilities, and that the SELLER shall be and remain obligated for
all such liabilities, obligations, duties, and responsibilities, shall
pay same on a current and timely basis, and shall indemnify, defend,
and hold harmless BUYER from and against, and reimburse BUYER with
respect to, any and all loss, liability, damage, injury, costs,
expenses, and claims, including reasonable attorneys' fees and court
costs, of any and every kind or character, relating to or arising out
of or in connection with such liabilities, obligations, duties,
responsibilities, claims or liens. The provisions of this paragraph,
and the obligations of SELLER hereunder, shall survive the Closing.
8. TAXES: SELLER shall deliver to the BUYER prior to the Closing Date,
letters or other written documentation (including, without limitation,
letters of good standing or otherwise issued by the Arizona Department
of Revenue and the finance and/or taxing departments of all
municipalities and governmental entities having jurisdiction over
SELLER) from the appropriate taxing authority, in form and content
satisfactory to the BUYER certifying that all applicable sales,
transaction, privilege, excise, personal property, use, ad valorem,
withholding, unemployment, other employee-related, and similar taxes
levied by or otherwise due to the respective authority with respect to
the SELLER, the SELLER's business, and/or the assets, rights, and
property being sold by SELLER hereunder, have been paid in full,
together with satisfactory evidence that all tax returns and payments
due since the date of such letters and/or other written documents have
been properly filed and made.
9. SALES TAXES RELATING TO SALE AND PURCHASE OF ASSETS The parties believe
that no state sales taxes or only limited state sales taxes will arise
or be due and owing as a result of the purchase and sale of the
acquired Assets agreed to herein. In the event any forms, filings or
returns are required to be filed with the State of Arizona or any other
state, Seller shall make all of such filings. In the event any state
sales taxes are due and owing as a result of the purchase and sale of
the assets, all of such sales taxes shall be paid by Seller.
10. EMPLOYEES: SELLER shall have responsibility for all obligations to,
and/or relating to, SELLER's employees for compensation, wages,
salaries, benefits, vacation pay, sick pay, insurance benefits,
pension/profit sharing/retirement benefits, taxes, withholding
obligations, workers' compensation, F.I.C.A., unemployment
compensation, and any other benefits, entitlement or compensation up to
the Closing Date; BUYER shall not be responsible for such and SELLER
14
shall indemnify, defend and hold BUYER harmless from and against any
and all liability, loss, costs, claims, expenses and damages,
including, without limitation, reasonable attorneys' fees and court
costs, of every kind and nature, arising out of or in any way connected
with any such matters. BUYER will notify SELLER in writing of any claim
made to BUYER by any employee of SELLER relating thereto. BUYER may
engage the services of some or all of SELLER's employees following the
Closing, at BUYER's sole and absolute discretion, and such is
acceptable to SELLER. However, the parties hereby acknowledge and agree
that BUYER is under no obligation whatsoever to hire any employees of
SELLER.
11. PROMISSORY NOTE: The $600,000.00 Promissory Note (the "Note")
constituting a part of the Purchase Price described in the Escrow
Agreement shall be delivered to the SELLER at the Closing in form and
substance essentially as set forth in EXHIBIT "E2" To the Escrow
Agreement, subject to the Right of Offset described below.
12. UCC-1 FILING: The Promissory Note and BUYER's obligations thereunder
shall be secured by a UCC-1 Financing Statement in favor of SELLER. The
subject of the UCC-1 filing shall be all the Assets purchased by BUYER
hereunder.
13. BUSINESS TELEPHONE NUMBER: SELLER hereby grants BUYER, effective as of
the Closing, any and all rights held by SELLER in the business
telephone and fax number 520-642-3766. SELLER agrees to work
cooperatively with BUYER and the telephone company to assign the
business telephone and fax number over to BUYER.
14. WARRANTY: In addition to and without limiting the SELLER's
representations and warranties otherwise set forth in this Agreement,
SELLER warrants that all outstanding liabilities, debts, and
obligations of SELLER, excepting as specifically set forth herein,
shall be paid in full on or before the Closing and that BUYER shall
receive possession and control of the Assets free and clear of any and
all encumbrances, obligations and liens, excepting for the security
interest granted SELLER hereunder.
15. BULK SALES ACT: BUYER waives compliance by the SELLER with any
applicable Bulk Sales Act provisions, provided however that the SELLER
hereby agrees to indemnify, defend and hold harmless the BUYER from and
against any and all claims of creditors of the SELLER who would have
been entitled to notice, claim, or other benefit had the parties
complied with any applicable bulk sales act, including, without
limitation, the costs and expenses incident thereto such as reasonable
attorneys' fees of the BUYER. In the event that BUYER learns of any
such claim, it shall proceed under the "Right of Offset" paragraph
below and as provided in the Note.
16. RIGHT OF OFFSET: It is understood and agreed that BUYER shall receive
possession and control of the Assets free and clear of any debts,
liens, claims and encumbrances except as specifically set forth herein.
If and in the event that, after the Closing, claims are submitted
against the Business or Assets by creditors for obligations incurred by
the SELLER which might adversely affect the Assets purchased by BUYER
hereunder, BUYER shall have the right to pay said debts or claims of
creditors and offset such payments from any amounts owed to SELLER
pursuant to the procedure set forth in the Promissory Note, EXHIBIT
"E2".
15
17. INDEMNIFICATION: SELLER, on behalf of itself and its heirs, successors
and assigns, shall and does hereby agree to indemnify and hold
harmless, and agree to defend, the BUYER and its representatives,
successors, assigns and agents from and against any and all claims,
demands, liabilities, actions, causes of action, losses, costs,
expenses, reasonable attorneys' fees and obligations arising out of or
in any way connected with: (i) the SELLER's ownership, use and/or
operations of the assets, rights, and property being purchased by BUYER
hereunder up to and through the Closing; (ii) SELLER's operation of its
Business; and (iii) any breach of or failure by the SELLER to perform
in accordance with any of its representations, warranties, covenants,
obligations, duties or agreements as set forth herein.
18. SELLER'S REPRESENTATIONS AND WARRANTIES: The SELLER hereby represents
and warrants unto the BUYER the following, all of which are deemed to
be material and which shall be effective as of the date of this
Agreement through eighteen (18) months after closing, and which are
made to induce the BUYER to enter into this Agreement:
a. All books, records, financial statements and instruments and other
documents provided by SELLER to the BUYER relating to the SELLER's
business and/or the assets being purchased hereunder are true,
correct, accurate and complete;
b. Within the time and in the manner prescribed by law, SELLER has
filed all federal, state and local tax returns required by law,
and all sales, transaction, privilege, excise, personal property,
use, ad valorem, withholding, unemployment, other employee-related
and similar taxes, including local, state and federal income taxes
and any penalty, interest or other charges arising from the late
payment thereof, due or owing as a result of or arising out of the
operation of SELLER's business and/or the ownership use or
possession of the assets being purchased hereunder, or otherwise
owed by SELLER, have been paid in full;
c. SELLER agrees to promptly notify the BUYER of any material change
in any condition with respect to the assets being purchased
hereunder or any event or circumstance which makes any
representation or warranty of SELLER contained in this Agreement
untrue or misleading, or any covenant of SELLER under this
Agreement incapable of being performed.
d. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Sellers has the
full power and authority to execute and deliver this Agreement and
to consummate the sale of the Assets (the "Transaction") No action
on the part of Seller is necessary to authorize this Agreement or
to consummate the Transaction. Subject to the laws of bankruptcy,
insolvency, general creditor's rights, and equitable principles,
this Agreement has been duly and validly executed and delivered by
each Seller and constitutes a valid and binding agreement of each
Seller, enforceable against it in accordance with its terms.
16
e. APPROVALS AND CONSENTS; NON-CONTRAVENTION.
1) No consent, approval, or other action by, or notice to or
registration or filing with, any governmental or
administrative agency or authority is required or necessary
to be obtained by Seller in connection with the execution,
delivery or performance of this Agreement by them or the
consummation of the Transaction.
2) No consent, approval, waiver or other action by any person
under any material contract, agreement, instrument, or other
document, or obligation to which either Seller is a party or
by which it or any of its assets are bound, is required or
necessary for the execution, delivery, and performance of
this Agreement by each Seller or the consummation of the
Transaction except as may be specifically required by the
terms of any Agreement.
3) The execution, delivery, or performance of this Agreement by
each Seller and the consummation of the Transaction will not:
(i) violate or conflict with any law, regulation, order,
judgment, award, administrative interpretation, injunction,
writ, or decree applicable to a Seller or by which it or any
of the acquired assets are bound, or any agreement or
understanding between any administrative or regulatory
authority, on the one hand, and a Seller on the other hand
which would have a material adverse effect on the acquired
assets taken as a whole; or (ii) violate or conflict with,
result in a material breach of, result in or permit the
acceleration or termination of, or constitute a default under
any agreement, instrument or understanding to which a Seller
is a party or by which it or any of the acquired assets are
bound which would have a material adverse effect on the
acquired assets taken as a whole.
f. LITIGATION AND PROCEEDINGS. Seller is not subject to any out
standing injunction, judgment, order, decree, ruling, or charge or
(ii) a party or, to the knowledge of Seller is threatened to be
made a party to any action, suit, proceeding, hearing, or
17
investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator.
g. CONTRACTS. SCHEDULE "A1" sets forth a complete and correct list of
all leases and all contracts, agreements, franchises, licenses, or
other commitments relating to the acquired assets which are to be
assigned to Buyer by Seller at Closing. To the knowledge of
Seller, and subject to the laws of bankruptcy, insolvency, general
creditor's rights, and equitable principles, all Contracts, are
valid and enforceable in all material respects.
h. MATERIAL CONTRACT DEFAULTS. To the knowledge of Seller, Sellers
are not in default in any material respect under the terms of any
Agreement, and there is no event of default or other event which,
with notice or lapse of time or both, would constitute a default
in any material respect under any such Agreement which defaults,
taken as a whole, would have a material adverse effect on the
acquired assets.
i. ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. Insofar as they relate
to the Business, Seller is in compliance with all Environmental,
Health, and Safety Requirements except where such non-compliance
would not have a material adverse effect on the acquired assets.
For purposes of this Agreement, the term Environmental, Health,
and Safety Requirements" shall mean all federal, state, local and
foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public
health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all
those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls, noise
or radiation.
19. BILL OF SALE: SELLER shall deliver to BUYER at the Closing a Bill of
Sale for the Assets included in this transaction, for which SELLER
warrants that it has good and marketable title, free and clear of all
liens and encumbrances.
18
20. CONDITION OF ASSETS: All Assets included in this sale as per Schedule
A1 are being purchased on an "as is" basis without warranty of
merchantability of fitness for any particular purpose; provided
however, that BUYER be afforded the opportunity to inspect said
equipment prior to closing. Notwithstanding the foregoing, all assets
shall be in good working order as of Closing.
21. LOSS/DAMAGE: In the event there is any loss or damage to any of the
Assets being purchased hereunder prior to the Closing, the risk of loss
shall be upon the SELLER. Immediately from and after the Closing, all
risk of loss or damage with respect to such items shall be upon the
BUYER, subject to any other applicable provision hereof to the
contrary.
22. COMPANY RECORDS; INSPECTION; ACCESS: SELLER has made and shall make
available to BUYER all books and records pertaining to the Assets being
purchased hereunder and pertaining to SELLER's business. At the
Closing, SELLER shall deliver to BUYER all books and records, and any
other documents pertinent to the Assets being purchased which SELLER
may have in any form or medium. Such records shall include without
limitation all accounting records, sales records and documents
necessary to conduct business with suppliers and customers of the
Business, as are applicable. SELLER will permit BUYER to have
reasonable access to all premises, properties, and personnel of the
Business and Assets prior to Closing for purposes of inspection and
review of the Assets.
23. PERMITS AND CERTIFICATES: SELLER hereby warrants that any and all
licenses, permits and certificates necessary to operate the business
shall be current and valid as of the Closing, a list of which is
attached hereto as Schedule A2.
24. OPERATION OF THE FARM PRIOR TO CLOSING: SELLER hereby agrees from the
date of execution of this Agreement to the date of Closing to carry on
the business activities and operation of the farm diligently and in
substantially the same manner as has been customary in the past.
25. ESCROW AGENT: In order to facilitate closing of this sale, Fidelity
National Title Company, Inc., Escrow Agent, shall be employed to
receive, deposit and distribute funds for the parties, prepare and
obtain execution of escrow instructions, conduct a Lien and Judgment
Search and a UCC search, see to the execution and distribution of
appropriate documents evidencing the terms and conditions of this sale
by and between the respective parties and see to the proper closing of
sale, and distribution of funds and to insure the simultaneous closing
of this transaction and the real property and stock sale. BUYER and
SELLER each agree to pay one-half (1/2) of the Escrow Agent's fees and
expenses relating to the Assets sale.
26. BINDING EFFECT: This Contract shall be binding upon and inure to the
benefit of the successors, assigns, personal representatives, heirs and
legatees of the parties hereto and upon execution by all parties, this
Contract shall be absolutely binding, non-assignable and fully
enforceable.
27. SEVERABILITY: In the event that any of the provisions, or portions
thereof, of this Contract are held to be unenforceable or invalid by
any court of competent jurisdiction or arbitration tribunal, the
validity and enforceability of the remaining provisions, or portions
thereof, shall not be affected thereby and effect shall be given to the
intent manifested by the provisions, or portions thereof, held to be
enforceable and valid.
19
28. CHOICE OF LAW/ DISPUTES: This Contract shall be governed by and
construed under the laws of the State of Arizona. In the event of any
dispute arising from this Agreement, subsequent to the closing of this
sale, between the BUYER, SELLER and/or Broker herein, the parties agree
to submit the matter to arbitration in accordance with the Commercial
Dispute Rules of the American Arbitration Association (AAA) or with a
private arbitrator(s). The use of a private arbitrator(s) is
conditioned upon the parties' agreement thereto in advance of
commencing the arbitration claim. If no agreement to the use and choice
of a private arbitrator(s) is reached within ten (10) days from written
notice by one party to the others of the dispute, the parties shall
proceed in accordance with the Commercial Dispute Rules of the AAA. If
multiple arbitrators are utilized then each party shall choose a single
arbitrator and the two so chosen shall choose a third arbitrator.
Either party may be represented by legal counsel. The decision of the
Arbitrator(s) shall be final and conclusive and the right to appeal is
hereby waived. The prevailing party shall be entitled to an award of
attorney's fees and costs.
29. COUNTERPARTS AND FACSIMILE: BUYER and SELLER agree that a fully
executed facsimile copy and/or counterparts that make up the whole of
the Agreement shall be treated as an original Contract.
30. NOTICES: All notices, demands or other communications required or
permitted to be given hereunder shall be in writing and shall be served
upon the other party by personal delivery (including by any
nationally-recognized overnight courier service) or by first-class,
registered or certified mail, postage prepaid, with return receipt
requested, addressed to the parties as follows:
To the SELLER: With a copy to:
M7 Farms; Roger and Barbara Major Monroe & Associates, P.C.
14660 S. Highway 191 Attn: Michael J. Monroe, Esq.
Elfrida, Arizona 85610 6280 E. Pima Street
Tucson, Arizona 85712
To the BUYER: With a copy to:
Penge Corporation
1930 Village Center Circle 3,
Suite 446
Las Vegas, NV 89134
Notices given by personal delivery shall be deemed to have been given
upon delivery to the appropriate address against receipt therefor (or
upon refusal of acceptance); and notices given by first-class mail
shall be deemed to have been given two (2) days after deposit in the
U.S. mail. Each party may designate, from time to time, another address
in place of the information set forth above by notifying the other
parties in the same manner as provided in this paragraph. If the date
of deemed delivery pursuant to this paragraph is not a business day,
then any such notice or communication shall be deemed to have been
given on the next business day thereafter.
20
BUYER: SELLER:
Penge Corporation M7 Farms, a Sole Proprietorship, owned by
Roger and Barbara Major
/s/ KIRK FISCHER /s/ ROGER MAJOR
-------------------------------- ----------------------------
Kirk Fischer, President Roger Major
/s/ JIM FISCHER /s/ BARBARA MAJOR
-------------------------------- ----------------------------
Jim Fischer, Vice President Barbara Major
21
SCHEDULE "A1" TO ASSET PURCHASE AGREEMENT
LIST OF ASSETS, RIGHTS, PERSONAL PROPERTY AND INVENTORY CONVEYED
EQUIPMENT, ASSETS AND RIGHTS CONVEYED
o 1 John Deere 4640 tractor, SN 019967R
o 1 John Deere 2840 tractor, SN 347046CD
o 1 John Deere disk, 14'
o 1 Toyota Forklift, Model 42-5FG25 SN405FGU25-79125
o 1983 Ford F-250, 3/4 ton, 4WD
o 1 1965 2 ton truck, Chevrolet
o 4 Farm Utility trailers, side-dump, 6 Wheel
o 4 Tree trailers, 4 wheel
o 1 8 Row Ag Sprayer
o 1 Will Rich chisel plow
o 1 Westgo 6 Row cultivator
o 1 Wesked Scraper, 12'
o 1 Tool Carrier
o 1 Bush Hog Shredder, Model 32145 SN 12-01172
o 1 900 Gallon Diesel Tank and Pump
o 1 Squash packing line, conveyors, brushes, etc.
o Various Shop Equipment including welders, compressors, hand and
power tools, parts inventory, tractor and forklift spare parts
inventory, pivot sprinkler spare parts inventory, miscellaneous
spare parts, etc.
o Misc. toolbars and cultivators
o Water Rights as further set forth in Schedule A2
o Seedling trays and tubes
o Tree inventory (2002, 2003 and 2004)
o 4 Wheeler and Lawn Mower
o Name: M7 Farms and Phone number 520-642-3766
o All Governmental Authorizations and all pending applications
therefor or renewals thereof, in each case to the extent
transferable to Buyer.
o All data and Records related to the operations of Seller,
including client and customer lists and records, referral sources,
research and development reports and records, production reports
and records, service and warranty records, equipment logs,
operating guides and manuals, financial and accounting records,
creative materials, advertising materials, promotional materials,
studies, reports, correspondence and other similar documents and
records and, subject to legal requirements, copies of all
personnel records and other records.
o All of the intangible rights and property of Seller, including
Intellectual Property Assets,
o going concern value, goodwill, telephone, telecopy and e-mail
addresses and listings.
INVENTORY/CROPS CONVEYED
o All seed stock on hand at time of closing.
o 2002 Harvest - Approximately 17,000 2 and 3 year old trees.
o 2003 Harvest - Approximately 21,000 2 and 3 year old trees.
o 2004 Harvest - Approximately 22,000 2 year old trees.
(Note: 2 year old trees are not planted until spring 2003)
22
SCHEDULE "A2" TO ASSET PURCHASE AGREEMENT
PERMITS, LICENSES AND REGISTRATIONS
Irrigation Authority Notice No. 60-203010.0001
Douglas Irrigation Non Expansion Area, State of Arizona Department of Water
Resources.
West Irrigation Water Well - Registration No. 55-606652.
East Irrigation Water Well - Registration No. 55-606653.
All Well Rights, Groundwater Rights and Surface Water Rights in possession of
Seller.
23
EXHIBIT B
STOCK PURCHASE AGREEMENT
(Major Trees, Inc.)
This Stock Purchase Agreement (the "Stock Purchase Agreement") is entered into
this 27th day of September, 2002, by and among Steven Sutherland ("Seller"),
Major Trees, Inc., an Arizona corporation (the "Corporation"), located at 5120
N. Indian Horse Trail, Tucson Arizona and Penge Corporation located at 1930
Village Center Circle 3, Suite 446, Las Vegas, NV 89134 (the "Buyer").
RECITALS:
A. Seller is the sole owner of one thousand (1,000) shares (the "Shares") of the
Corporation which constitutes all of the issued and outstanding shares of the
Corporation.
B. Seller desires to sell the Shares to Buyer and Buyer desires to purchase the
Shares from Seller.
C. The parties acknowledge that this Stock Purchase Agreement is one of a group
of Agreements which constitute the purchase and sale transaction between Seller,
Buyer and Roger Major and Barbara Major, husband and wife, dba M7 Farms, a sole
proprietorship ("M7 Farms"). Such other agreements describe the Buyer's purchase
of certain real property and improvements and other assets related to a
Christmas tree farm located in Elfrida, Arizona, owned and operated by Seller,
the Corporation and M7 Farms (the "Business"), and are described in the Purchase
Agreement, Receipt and Escrow Instructions dated August 14, 2002, by and between
Seller, the Corporation, M7 Farms and Buyer (the "Escrow Agreement") and other
Agreements described therein. Upon execution by the parties, this Stock Purchase
Agreement shall become part of the Escrow Agreement and shall be incorporated
therein.
AGREEMENT
1. PURCHASE AND SALE. Seller agrees to sell and Buyer agrees to purchase all the
Shares on the terms and conditions set forth in this Agreement.
2. PURCHASE PRICE. The total purchase price for the Shares shall be Three
Hundred Thousand Dollars ($245,000.00) (the "Purchase Price"), allocated as per
Price Allocation Exhibit H and payable as follows; $100,000.00 in cash or
certified funds at Closing and Two Hundred Thousand Dollars ($145,000.00)
applied to the Promissory Note (Exhibit "E1") pursuant to terms set forth in the
Escrow Agreement. Earnest Money Deposit of $3,333.33 shall be applied to cash
due at closing.
3. CLOSING. The closing of the transactions contemplated hereby (the "Closing")
shall take place on or before September 15, 2002 or such other date as agreed by
the parties pursuant to the Escrow Agreement (hereinafter called the "Closing
Date"). At the Closing, Seller shall deliver to Buyer, at Sellers' expense,
certificates representing all the Shares, duly endorsed in blank with
signatures, together with any other documents of transfer and title reasonably
24
requested by Buyer. Seller shall also deliver to Buyer at Closing, at Seller's
expense, all other documents required of Seller for closing of the sale and
purchase hereunder as well as all stock books, stock ledgers, seals and minute
books, financial and accounting records, tax returns and other records of the
Corporation. Seller shall pay any taxes, transfer fees or other charges which
arise out of the transfer of the Shares to Buyer. Closing of this agreement is
contingent upon:
(a) The simultaneous closing of the related agreements described in the
Escrow Agreement; and
(b) As of the Closing Date, the Corporation's accounting records will
have a clean cut-off date and all tax that may be due or assessed against the
Corporation generated by the Corporation's operations, withdrawal of assets or
otherwise shall be funded into the Corporation by the Seller, or such amounts
shall be offset by Buyer against any payments to be made to Seller under the
Note described in the Escrow Agreement or any other obligation owing from Buyer
to Seller pursuant to the Escrow Agreement.
4. EFFECTIVE DATE. The purchase and sale of the Shares shall be deemed effective
as of the Closing, or such other date as may be agreed to in writing by Buyer
and Seller (the "Effective Date").
5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants now
and as of Closing as follows:
(a) ORGANIZATION. The Corporation is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Arizona.
The Corporation has all corporate power necessary to carry on its business as
now being conducted. Seller has full power and authority to execute and deliver
this Agreement and to perform all obligations hereunder.
(b) CAPITALIZATION. The Corporation's capitalization consists of one
million (1,000,000) authorized shares of common stock (all of one class), one
dollar ($1.00) par value, of which one thousand (1,000) shares are issued and
outstanding (the "Shares") and none are issued and held as treasury shares. All
of the Shares are owned legally and beneficially by Seller. Each Share is
validly issued (including without limitation full compliance with all federal
and state securities laws), fully paid, and non-assessable. No other stock or
other securities of any kind whatsoever are issued or outstanding, including,
without limitation, bonds, debentures, or any other debt security, options,
rights, or warrants to purchase or subscribe for, or any commitment or
obligation of any kind to issue, any stock or securities of the Corporation, or
securities convertible into stock of the Corporation. There are no declared or
accrued and unpaid dividends.
(c) INVESTMENTS IN SUBSIDIARIES AND AFFILIATES. The Corporation has no
subsidiaries or any investment of any kind in any corporation, partnership,
trust, association or other firm or enterprise.
(d) ARTICLES AND BYLAWS. Attached as SCHEDULE B1 is a true and correct
copy of the Articles of Incorporation of the Corporation, together with all
amendments thereto and a true and correct copy of the Bylaws of the Corporation,
together with all amendments thereto, all certified by the secretary of the
Corporation. The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated hereby will not, conflict with the
terms and provisions of the Articles of Incorporation, as amended, of the Bylaws
of the Corporation, as amended.
25
(e) ABSENCE OF UNDISCLOSED LIABILITIES. The Corporation has no
liabilities or obligations of any nature whatsoever, whether accrued, absolute,
contingent, or otherwise (including, without limitation, tax liability, express
or implied contract or tort liability involving persons or property of any kind)
except as reflected in the Corporation's Financial Statements provided to Buyer,
and no facts or circumstances exist which could give rise to any such
liabilities or obligations. Seller hereby assumes all liability for, and Buyer's
acquisition of the Shares shall not be subject to, any liabilities or
obligations of the Corporation arising prior to the Closing Date.
(f) INTELLECTUAL PROPERTY. Seller and Corporation own or have the right
to use pursuant to license, sublicense, agreement, or permission all trade name
and trademark rights, advertising, telephone numbers, customer lists, supplier
lists, price lists, operational policies, systems and procedures, trade
information, marketing materials, manuals, licenses and similar rights relating
to the Business ("Intellectual Property") necessary or desirable for the
operation of the Business as presently conducted. Each item of Intellectual
Property owned or used by Seller and Corporation immediately prior to the
Closing hereunder will be owned or available for use by Buyer on identical terms
and conditions immediately subsequent to the Closing hereunder. Seller and
Corporation have taken all reasonable action to maintain and protect each item
of Intellectual Property that it owns or uses.
(i) Seller and Corporation have not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties. Seller (and employees with responsibility for
Intellectual Property matters) has never received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that Seller and Corporation
must license or refrain from using any Intellectual Property rights of any third
party). No third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of Seller and
Corporation .
(ii) SCHEDULE B2 attached hereto and incorporated herein,
identifies each patent or trade name or trade mark registration which has been
issued to Seller, Corporation or the Business with respect to any of its
Intellectual Property, identifies each pending patent application or application
for registration which Seller and Corporation have made with respect to any of
its Intellectual Property, and identifies each license, agreement, or other
permission which Seller and Corporation have granted to any third party with
respect to any of its Intellectual Property (together with any exceptions).
Seller and Corporation have delivered to Buyer correct and complete copies of
all such patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) and has made available to Buyer correct and
complete copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. With respect to each item of
Intellectual Property:
a. Seller and Corporation possess all right, title, and interest in
and to the item, free and clear of any Security Interest, license,
or other restriction;
b. the item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
c. no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or , to the knowledge of
any of the Stockholders and the directors and officers (and
employees with responsibility for Intellectual Property matters)
of Seller and Corporation, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item;
and
26
d. Seller and Corporation have never agreed to indemnify any person
for or against any interference, infringement, misappropriation,
or other conflict with respect to the item.
Except as listed in SCHEDULE B2 attached hereto and incorporated herein, Seller
and Corporation do not use Intellectual Property that any third party owns
pursuant to license, sublicense, agreement, or permission except in the ordinary
course of advertising and selling a product for which a trademark pertains.
(g) CONTRACTUAL RELATIONS. The Corporation, and all other parties
thereto, have complied fully with all the provisions of all Agreements,
Insurance Policies and Registrations, and neither the Corporation nor any such
other party is in default, breach or violation, nor is there any fact or
circumstance that with a lapse of time, notice or both would result in such a
default, breach or violation, under any of the foregoing. All Agreements and
Insurance Policies are set forth in SCHEDULE B3, conform with the terms of the
copies thereof or, where oral, the written summaries thereof contained in
SCHEDULE B3, are in full force and effect (and no notices of cancellation or
termination have been given or received) and are valid, binding and enforceable
in accordance with their terms. No term or provision of such Agreements,
Insurance Policies or Registrations violates any applicable domestic law. The
Corporation has not paid any obligations not yet due under any of its
Agreements, Insurance Policies or Registrations except as set forth in Schedule
3. The Corporation is not subject to a covenant not to compete or any other
restriction related to the business or assets of the Corporation.
(h) ASSETS LISTING; CONDITION. Attached as SCHEDULE B4 is a list
(including a description, the location and the nature of the Corporation's
interest) of all property of the Corporation or used in connection with the
business of the Corporation (the "assets"). The following assets and/or
liabilities of the corporation will be distributed by the Corporation to Seller
prior to Closing and will not be assets of the Corporation as of the stock sale:
1) Triple Crown Sports Girl's Softball Franchise;
2) Oppenheimer Funds Pension Plan benefiting Steven Sutherland;
3) A loan payable to Southwest Christmas Trees;
4) A loan from Seller to the Corporation;
5) A driveway at the Seller's residence; and
6) A well at the Seller's residence.
(i) TITLE TO ASSETS. The Corporation has good and marketable title to
all its assets. None of the assets is subject to any security interest,
financing statement, mortgage, pledge, lien, conditional sale agreement, lease,
license, encumbrance, charge, or claim of any kind or to any restriction,
qualification, limitation or right of any kind adversely affecting use,
marketability or title, except as specifically described herein. The Corporation
owns all machinery, equipment and other tangible assets necessary for the
conduct of the Corporation's business as presently conducted. All such tangible
assets owned by the Corporation are free from defects (patent and latent), have
been maintained in accordance with normal industry practice, are in good
operating condition and repair (subject to normal wear and tear), and are
suitable for the purposes for which they presently are used. All inventory of
the Corporation is merchantable and fit for the purpose for which it was
procured or manufactured and none of which is obsolete, damaged or defective.
27
(j) OPERATIONAL CONTINUITY. From the date of signing of the ESCROW
AGREEMENT through the Closing: (1) The business of the Corporation has been and
will be conducted in the usual and ordinary course as theretofore conducted in
accordance with sound and prudent business practice; (2) The Corporation has not
and will not, without Buyer's prior written approval: (i) taken any action, or
permitted any event or condition to occur which would materially affect the
value of the Shares and/or the Corporation, its business or assets, (ii) entered
into any material agreement, contract, commitment or undertaking, (iii) altered
any existing Agreement, (iv) increased or decreased materially its level of
inventory, (v) disposed of or altered any material asset or any material amount
of its assets, or (vi) instituted any material litigation, claim or other
proceeding before any court or governmental authority; (3) All books and records
(both corporate and financial) of the Corporation have been and will be
maintained completely and accurately without any change in accounting methods or
practices except as specifically approved by Buyer; and (4) Seller shall use his
best efforts to cause the Corporation to maintain, and the Corporation has and
shall have maintained, the good will of, and good business relations with, its
employees, agents, contractors, suppliers, customers and others having business
relationships with it, so as to keep such fully available to the Corporation
after Closing.
(k) TAXES AND TAX RETURNS. The Corporation is a "C" corporation under
the Internal Revenue Code and has not been classified as an "S" corporation at
any time. The Corporation has timely filed all required foreign and domestic
federal, state, and local income, payroll, franchise, transaction, privilege,
sales, and other tax returns and reports of every kind whatsoever with the
appropriate governmental authorities for all periods up to Closing and is not
the beneficiary of any extension of time in which to file any such returns. All
such returns and reports are complete, true, and accurate. All taxes, fees,
charges, duties and assessments of every kind whatsoever imposed upon the
Corporation or with respect to its business or assets, whether assessed or not
and whether incurred in respect of or measured by the income of the Corporation,
for any period before the Closing or arising out of transactions entered into or
any state of facts existing before the Closing have been fully paid or
sufficient cash has been reserved in the Corporation to pay any and all taxes
accrued or to become due as of Closing. No claim has ever been made by any
authority in a jurisdiction where the Corporation does not file tax returns that
the Corporation is or may be subject to taxation by that jurisdiction. No
security interests exist on any assets of the Corporation that arose in
connection with any failure, or alleged failure, to pay any tax. The Corporation
has withheld and paid all federal, state, local and foreign taxes of any kind
whatsoever required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor or third party.
Neither Seller nor the Corporation expects any authority to assess any
additional taxes for any period for which tax returns have been filed. There is
no dispute or claim concerning any tax liability of Seller or the Corporation
either claimed or raised by any authority in writing or as to which Seller has
knowledge based upon personal contact with any agent of such authority. Attached
as SCHEDULE B5 are copies of the Corporation's tax returns for the past three
years and all communications with tax authorities relating to the same.
28
(l) PROPER AUTHORITY AND APPLICABLE LAWS. The Corporation has had since
its formation, does have currently, and will have at the Closing, all requisite
corporate and other power and all necessary registrations, licenses, filings,
permits, exemptions, certificates, approvals, and other authorizations required
by any governmental authority, or any person, association or entity to carry on
and conduct its business in the manner in which its business has been and is
being conducted, and to own, lease, use, and operate its assets at the places
and in the manner in which its assets have been and are being owned, leased,
used, and operated ("Authorizations", the term Registrations to also include all
Authorizations for purposes of this Agreement). All meetings of the directors
and stockholders of the Corporation necessary to conduct its business have been
duly convened and held, and all requisite director and stockholder approval has
been obtained for all purported acts by the Corporation.
(m) LITIGATION. No litigation, proceeding, investigation or claim of
any kind whatsoever is pending or threatened, by, against or relating to the
Seller, the Shares, the Corporation, its business or assets. Neither Seller nor
the Corporation is subject to any outstanding injunction, judgment, order,
ruling, decree or charge of any court, agency, or arbitrator of any federal,
state, local or foreign jurisdiction. No claim or liability can, on the basis of
the Corporation's, Seller or their employees' or agents' actions, or of facts or
conditions existing prior to Closing, be asserted against the Corporation, its
business or assets or the owners of the Shares or the Shares by any individual,
entity, association or governmental authority, except as described in detail in
SCHEDULE B6, all of which shall remain the responsibility of Seller.
(n) BENEFIT, PENSION AND PROFIT-SHARING PLANS. The Company has an
established retirement plan managed by Oppenheimer Funds, and said plan will be
distributed from the Corporation to Seller and shall remain the property of
Seller.
(o) FREEDOM FROM RESTRICTIONS. The execution and delivery of this
Agreement, the consummation of the transaction contemplated hereby, and the
fulfillment of the terms hereof by Seller and the Corporation (i) do not violate
or conflict with, and will not result in a breach or default, or in any
occurrence that, with a lapse of time or action by a third party or both, could
result in a breach or default with respect to any Agreement or any contract,
agreement, commitment, or undertaking, either written or oral, by which Seller
is a party or are bound; (ii) will not violate any applicable foreign or
domestic law or public policy; (iii) will not result in an acceleration or
increase of any amounts due from the Corporation; and (iv) will not result in an
alteration to the detriment of the Corporation of the terms or conditions of any
Agreement, Insurance Policy or Registration. No contract, agreement, commitment,
or undertaking, either oral or written, or judgment, order, writ, injunction or
decree exists that in any other manner restricts, limits, or affects the
execution, delivery or performance of this Agreement, the transferability of the
Shares, or the business or assets of the Corporation.
(p) TITLE TO SHARES; POWER TO TRANSFER. Seller will have and deliver to
Buyer at Closing good and marketable title to the Shares free and clear of all
security interests, financing statements, pledges, liens, conditional sales
agreements, encumbrances, charges, proxies, agreements among shareholders,
claims, restrictions, qualifications, limitations or rights of any kind and will
have at Closing the right, power and authority to transfer the Shares without
breach or default with respect to any contract, agreement, commitment, or
undertaking by which Seller or the Shares are bound.
(q) BROKER'S FEES. Buyer has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Stock Purchase Agreement for which Seller could become
liable or obligated. Any such broker's fees shall be the sole responsibility and
liability of Seller and Seller shall indemnify, defend and hold Buyer harmless
from and against any liability arising therefrom.
29
(r) FINANCIAL STATEMENTS. Seller and the Corporation have provided to
Buyer the following financial statements (collectively, the "Financial
Statements"):
IRS Forms 1120 for tax years 1999, 2000, 2001, 2002
Accountant's Compilation Reports years ending June 30, 1999, 2000,
2001, 2002
The Financial Statements (including the notes thereto) have been
prepared in accordance with generally accepted accounting practices ("GAAP")
applied on a consistent basis throughout the periods covered thereby, present
fairly the financial condition of the Corporation as of the dates and the
results of operations of the Corporation for such periods are true, correct,
accurate and complete, and are consistent with the books and records of the
Corporation, which books and records are true, accurate, correct and complete.
(s) PRODUCT LIABILITY. To the best of Seller's knowledge, neither
Seller nor Corporation has any known, asserted, accrued or contingent liability
due or to become due ("Liability"), and to the best knowledge of Seller and the
Corporation there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
the Corporation giving rise to any Liability, arising out of any injury to any
individuals or property as a result of the possession or use of any product sold
or delivered by the Seller or the Corporation.
(t) EMPLOYEES. Neither Seller nor the Corporation is a party to or
bound by any collective bargaining agreement, nor has Seller or the Corporation
experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. Neither Seller nor the Corporation has committed
any unfair labor practice. Seller and the Corporation have no knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of Seller or the Corporation. Seller and
the Corporation represent and warrant that the Corporation has no employees
other than Seller, and that Seller's employment with the Corporation will
terminate effective as of Closing.
(u) LEGAL COMPLIANCE. Seller and the Corporation have complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings and charges thereunder) of all federal,
state, local and foreign governments (and all agencies thereof), and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand or
notice has been filed or commenced against or served on Seller or the
Corporation alleging any failure so to comply.
(v) INSURANCE. Seller and the Corporation have been covered during the
past five (5) years by insurance in scope and amount customary and reasonable
for the business in which the Corporation has engaged during the aforementioned
period and will maintain such insurance coverage in full force and effect
through Closing. With respect to each insurance policy insuring the
Corporation's business: (i) The policy is legal, valid, binding, enforceable,
and in full force and effect; (ii) neither Seller, the Corporation or any other
party to the policy is in breach or default (including with respect to the
payment of premiums or the giving of notices) and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification or acceleration under such policy; and (iii) no
party to the policy has repudiated any provision thereof.
30
(w) EMPLOYEE BENEFITS. Neither Seller nor the Corporation maintains any
employee benefit plans covering any of its employees.
(x) DISCLOSURE. The representations and warranties contained herein do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained herein.
As used herein, the following terms have the meanings ascribed below:
Assets": All tangible and intangible, real or personal, assets of the
Seller and the Business to be transferred to Buyer pursuant to the Escrow
Agreement and the Agreement;
"Closing" or "Closing Date": The date on which the transactions
contemplated in the Escrow Agreement the Agreement are consummated;
"Environmental, Health and Safety Requirements": All federal, state,
local and foreign statutes, rules, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation, all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control or cleanup of any hazardous materials, substances or
wastes, chemical substances or mixtures, pesticides, pollutants, contaminants,
toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect;
"Person": An individual, partnership, corporation, association, joint
venture, limited liability company, organization or governmental entity (or any
department, agency or political subdivision thereof);
"Tax": Any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including without limitation, taxes under
Internal Revenue Code ss. 59A), customs duties, capital stock, franchise,
profits withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated or other tax of any kind
whatsoever, plus interest, penalty or addition thereto, whether or not disputed.
6. SCHEDULES. All Schedules under this Agreement are incorporated herein by
reference.
7. SURVIVAL OF WARRANTIES. All representations, warranties, covenants, and
agreements contained herein, and all lists, descriptions, financial statements,
certificates, Schedules and other documents delivered under this Agreement or in
connection with the transactions contemplated hereby, are true now, will be true
at Closing, and are binding and will survive the Closing regardless of the
waiver or satisfaction of any condition precedent to Closing or of any
investigation or express or implied approval or acceptance by or on behalf of
any party hereto.
8. SELLER'S INDEMNITY. Seller hereby agrees to indemnify Buyer (and its
officers, directors, shareholders and affiliates) and defend and hold them
harmless from and against any and all claims, damages, losses, costs, and
expenses (including reasonable attorney fees, court costs, expert witness fees
31
and costs, and other expenses incident to any proceeding, investigation or any
claim, including without limitation in any suit by Buyer against Seller)
attributable directly or indirectly to the breach by Seller of any obligation
hereunder or the inaccuracy of any representation or warranty made by Seller
herein or in any instrument delivered pursuant hereto or in connection with the
transactions contemplated hereby. A claim for indemnification shall be made only
by Buyer notifying Seller of the existence of the claim for which
indemnification is sought. Buyer shall thereafter be entitled, at its option, to
control, or participate in, any prosecution or defense relating to such claim
for indemnity (including without limitation decisions to settle or appeal)
through attorneys and agents of its choosing, all at the expense of the Seller
(except in any suit by Buyer against any Seller). The results of any such
prosecution or defense shall be binding upon Buyer and Seller for purposes of
resolving any claim for indemnity. The amount of any resolved claim for
indemnity, by agreement, failure of Seller to contest a claim for indemnity
within thirty (30) days following notice from Buyer, failure of Seller to
diligently prosecute a claim for indemnity they have contested by non-action or
failing to respond for a period of thirty (30) days, settlement, arbitration,
court action or otherwise ("resolution"), may be set off by Buyer against any
payments to be made to Seller under the Note or any other obligation owing from
Buyer to Seller. The full amount of any then pending claim for indemnity shall
be withheld from any payment on the Note when such payment comes due, until
resolution.
9. NO PUBLICITY. Except as required by law, without prior consultation and
agreement, neither the Corporation, the Seller, the Buyer or the Agent, nor
their respective employees or agents, shall make any public disclosure of the
facts of this transaction (although disclosure of the existence of the sale may
be made by Seller to creditors and suppliers in form satisfactory to Buyer and
may be made by Buyer), the parties hereto, the terms or any other related
matter. Until the Closing, Buyer, its counsel, accountants, and other
representatives, shall maintain in confidence all information provided by Seller
or the Corporation in connection with Buyer's investigation of the business of
the Corporation. Seller shall maintain all information concerning the
Corporation, its business and assets in confidence following execution hereof
and at all times thereafter.
10. ADDITIONAL ACT OR DOCUMENTATION. Seller, the Corporation and Buyer agree to
make, execute, and deliver such additional documents and instruments and take
such actions as may be necessary or appropriate to carry out the full intent and
purpose of this Agreement.
11. NOTICES. Any notices that may be required under this Agreement shall be in
writing, shall be effective on the earlier of the date when received or the
third day following mailing, and shall be given by personal service, or by
certified or registered mail, return receipt requested, to the addresses set
forth below, or to such other addresses as may be specified in writing to all
parties hereto.
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, and their respective successors in interest,
but in no event shall any party be relieved of its obligations hereunder without
the express written consent of each other party except as expressly provided
herein.
32
13. SEVERABILITY. To the fullest extent possible each provision of this
Agreement shall be interpreted in such fashion as to be effective and valid
under applicable law. If any provision of this Agreement is declared void or
unenforceable with respect to particular circumstances, such provision shall
remain in full force and effect in all other circumstances. If any provision of
this Agreement is declared void or unenforceable, such provision shall be deemed
severed from this Agreement, which shall otherwise remain in full force and
effect.
14. COUNTERPARTS AND FACSIMILE. This Agreement may be executed in any number of
counterparts and/or by facsimile, all such counterparts and/or facsimile copies
shall be deemed to constitute one and the same instrument, and each of the
executed counterparts shall be deemed an original hereof.
15. GOVERNING LAW. This Agreement shall be deemed to be made under, and shall be
construed in accordance with and shall be governed by, the internal laws of the
State of Arizona.
16. ARBITRATION. In the event of any dispute arising from this Agreement,
subsequent to the closing of this sale, between the BUYER, SELLER and/or Broker
herein, the parties agree to submit the matter to arbitration in accordance with
the Commercial Dispute Rules of the American Arbitration Association (AAA) or
with a private arbitrator(s). The use of a private arbitrator(s) is conditioned
upon the parties' agreement thereto in advance of commencing the arbitration
claim. If no agreement to the use and choice of a private arbitrator(s) is
reached within ten (10) days from written notice by one party to the others of
the dispute, the parties shall proceed in accordance with the Commercial Dispute
Rules of the AAA. If multiple arbitrators are utilized then each party shall
choose a single arbitrator and the two so chosen shall choose a third
arbitrator. Either party may be represented by legal counsel. The decision of
the Arbitrator(s) shall be final and conclusive and the right to appeal is
hereby waived. The prevailing party shall be entitled to an award of attorney's
fees, court costs, litigation expenses, expert witness fees and costs.
17. ENTIRE AGREEMENT; CAPTIONS. This Agreement, the Escrow Agreement and the
agreements referenced herein or therein contain the entire agreement and
understanding of the parties with respect to the subject matter hereof, and all
prior agreements and understandings of the parties with respect to such subject
matter are hereby superseded. No representations, promises, agreements, or
understandings not contained in this Agreement, the Escrow Agreement or the
agreements referenced herein or therein regarding the subject matter hereof
shall be of any force or effect unless in writing, executed by the party to be
bound and dated on or subsequent to the date hereof. Captions and headings are
for convenience only and shall not alter any provision or be used in construing
this Agreement.
18. TIME IS OF THE ESSENCE. Time is of the essence of this Agreement and each
and every provision hereof. Any extension of time granted for the performance of
any duty under this Agreement shall not be considered an extension of time for
the performance of any other duty under this Agreement.
33
19. GENDER AND NUMBER. Wherever from the context it appears appropriate, each
item stated in the singular shall include the plural and vice versa, and the
masculine, feminine, or neuter form shall include the masculine, feminine, and
neuter forms.
20. MODIFICATIONS AND WAIVERS. No change, modification, or waiver of any
provision of this Agreement shall be valid or binding unless it is in writing
dated after the date hereof and signed by the parties intended to be bound. No
waiver of any breach, term, or condition of this Agreement by either party shall
constitute a subsequent waiver of the same or any other breach, term, or
condition or a continuing waiver after demand for strict compliance.
IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement
effective as of the date first above written.
CORPORATION: SELLER:
Major Trees, Inc.
By: [HANDWRITTEN] STEVEN SUTHERLAND /s/ STEVEN SUTHERLAND
---------------------------------- --------------------------------
Steven Sutherland Steven Sutherland
President
BUYER:
Penge Corporation
Kirk Fischer Jim Fischer
------------------------- --------------------
X /s/ KIRK FISCHER X /s/ JIM FISCHER
-------------------------------------- --------------------------------
President Vice President
34
SCHEDULE B1 TO STOCK PURCHASE AGREEMENT
ARTICLES OF INCORPORATION
BYLAWS
ATTACHED
35
SCHEDULE B2 TO STOCK PURCHASE AGREEMENT
TRADENAMES AND/OR TRADEMARKS
Goldwater Arizona Pine
Texas Lone Star Pine
36
SCHEDULE B3 TO STOCK PURCHASE AGREEMENT
LIST AND SUMMARY OF ALL AGREEMENTS AND INSURANCE POLICIES
ATTACHED
37
SCHEDULE B4 TO STOCK PURCHASE AGREEMENT
LIST OF PROPERTY AND EQUIPMENT INCLUDED
38
SCHEDULE B5 TO STOCK PURCHASE AGREEMENT
CORPORATE TAX RETURNS FOR 1999, 2000 AND 2001
ATTACHED
39
SCHEDULE B6 TO STOCK PURCHASE AGREEMENT
LITIGATION
NONE
40
[LOGO] FIDELITY NATIONAL TITLE
AGENCY, INC.
5151 East Broadway, Suite 185, Tucson, AZ 85711
(520) 570-1180 o FAX (520) 570-1199
DATE: September 26, 2002 TIME: 09:31:44
ESCROW NO.: 10024297-RB
ESCROW OFFICER: Robin Bateman CLOSING DATE: September 30, 2002
SELLER ESTIMATED CLOSING STATEMENT
SELLER(S): Steven Sutherland
BUYER(S): Penge Corporation
PROPERTY: Stock Purchase - Major Trees, Inc., AZ
--------------------------------------------------------------------------------
$ DEBITS $ CREDITS
FINANCIAL:
Total Consideration 245,000.00
New 1st Trust Deed to Seller Herein 200,000.00
PRORATIONS/ADJUSTMENTS:
Consulting/Non Compete Agreement 55,000.00
TITLE CHARGES:
Recording 12.00
ESCROW CHARGES
Settlement or Closing Fee 575.00
COMMISSIONS:
Listing Brokers Commission to Arizona Sunbelt 22,500.00
Business Brokers, LLC 0.00%
MISCELLANEOUS CHARGES:
Fidelity National Title Agency, Inc. Set Up Fee 37.50
Secretary of State Filing Fee 2.50
--------------------------------------------------------------------------------
ESTIMATED NET PROCEEDS DUE SELLER $ 76,873.00
ESTIMATED TOTALS $ 300,000.00 $ 300,000.00
/s/ STEVEN SUTHERLAND
-----------------------------------------
Steven Sutherland
41
STOCK POWER
FOR VALUE RECEIVED, THE UNDERSIGNED hereby sell, assign and transfer unto
________________________ (______) shares of the __________________ Capital Stock
of the MAJOR TREES, INC. standing in OUR name on the books of said CORPORATION
represented by Certificate No. ___________ herewith and do hereby irrevocably
constitute and appoint FIDELITY NATIONAL TITLE attorney to transfer the said
stock on the book of the within named company with full power of substitution in
the premises.
THIS STOCK POWER TO BE USED ONLY IN THE EVENT OF A DEFAULT ON THAT CERTAIN
PROMISSORY NOTE DATED SEPTEMBER 27, 2002 BETWEEN PENGE CORPORATION AS MAKER AND
STEVEN SUTHERLAND AS HOLDER IN THE FACE AMOUNT OF $200,000.00.
STOCK
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of , is by
and between PENGE CORPORATION (the "Pledgor"),
and STEVEN SUTHERLAND (the "Pledgee"):
WITNESSETH
WHEREAS, Pledgor owns ONE MILLION
(1,000,000.00) shares of the issued and outstanding common capital stock of
MAJOR TREES, INC. , A(n)
Corporation (the "Corporation"), as evidenced by Certificate Number(s)
(the "Pledged Property");
42
WHEREAS, PLEDGOR HAS GUARANTEED payment to Pledgee in the sum of TWO
HUNDRED THOUSAND AND 00/100* * DOLLARS, U.S. ($ 200,000.00 ), said loan being
evidenced by Note(s)) executed by the Pledgor; and
WHEREAS, THE PARTIES hereto have entered into this pledge Agreement in
order to provide security for said loan;
NOW THEREFORE, in consideration of the premises, Pledgor hereby
pledges, mortgages, assigns, transfers, delivers, deposits and grants unto
Pledgee and his successors and assigns, a security interest in the Pledge
Property owned by Pledgor, to be held and disposed of as hereinafter set forth;
1. PROPERTIES PLEDGED. Pledgor pledges, in addition to the Pledged
Property, any and all stocks, other documents, rights or properties which
Pledgor may hereafter deliver or cause to be delivered to Pledgee, and any and
all dividends (including stock dividends), stock issued as a result of stock
splits, interests, rights, income or other benefits arising out of or pertaining
to the Pledged Property, together with stock powers, endorsed in blank, and all
other instruments necessary or convenient to transfer title to the Pledged
Property and the items described in this paragraph.
2. INDEBTEDNESS SECURED. The Pledged Property is pledged to secure the
payment of the Note, and any and all liabilities arising thereunder.
3. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants to
Pledgee the following:
(a) Pledgor is the sole owner of the pledged
property.
(b) Pledgor has the right to pledge the Pledged
Property without limitation or restriction
for any reason.
(c) There are no liens, charges, encumbrances or
other claims upon or against the Pledged
Property.
4. COVENANTS. Pledgor agrees to take no action which would adversely
affect the value of the Pledged Property or which would encumber, dilute or
cloud Pledgor's title or interest therein. Pledgor shall not, as stockholder,
director, corporate officer or in any other capacity, vote for, ratify, accept
or approve any proposed transaction concerning the Pledged Property or reducing
the net worth thereof or of diluting or reducing the proportionate interest of
Pledgor therein or of creating any equities or interest which would be prior to
or superior in claim or right to the title and interest of Pledgor or to the
rights of Pledgee under the pledge.
5. DELIVERY OF INSTRUMENTS. Pledgor is to deliver to Pledgee or order,
all stock certificates and all documents evidencing ownership of the Pledged
Property, or which are necessary or convenient for Pledgee's use in order for
Pledgee to hold the Pledged Property or for Pledgee to exercise any of his right
as Pledgee.
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6. VOTING. So long as Pledgor is not in default under this Pledge
Agreement, any pledged stock may be voted by Pledgor at all meeting(s) of the
stockholder(s) while this Agreement is in effect, subject to the restrictions of
paragraph 4 hereof.
7. EVENTS OF DEFAULT. Any one or more of the following will constitute
an Event of Default under this Pledge Agreement:
(a) If any representation or warranty made by Pledgor under
this Pledge Agreement is or becomes untrue in any material respect, or
if Pledgor fails to perform or observe any term of this Pledge
Agreement, the Note secured hereby or any document or instrument
delivered to Pledgee in connection herewith.
(b) If the Pledgor or Corporation becomes insolvent or
bankrupt or admits in writing his or its inability to pay his or its
debts as they mature, or makes an assignment for the benefit of
creditors, or applies for or consents to the appointment of a trustee
or receiver over a substantial part of his or its property, or if any
Pledgor commences any proceeding relating to his or its bankruptcy,
reorganization, arrangement, insolvency, readjustment, dissolution or
insolvency or liquidation proceeding under the law of any jurisdiction.
(c) If any judgement, writ of attachment, or any other legal
process or proceeding for the execution upon, seizure of, or liening
of, any of Pledgor's assets is entered or issued against Pledgor, or
against any of Pledgor's assets, and remains unsatisfied and unappealed
for more than ten (10) days.
8. PROCEDURE ON DEFAULT. If any Event of Default shall occur, all of
the indebtedness secured hereby may, at the option of Pledgee and without demand
or notice of any kind, be declared due and payable. Pledgee shall have all the
rights and remedies on default provided by the Uniform Commercial Code, this
Pledge and other applicable law, including the right to offer and sell the
Pledged Property privately to purchasers subject to compliance with all
applicable federal and state laws relating to the registration or qualification
of securities and provided that Pledgee shall make a good-faith effort to sell
the Pledged Property for not less than its fair market value, taking into
consideration any restrictions that may be imposed upon its transferability
under federal or state securities laws. Any proceeds of any disposition of the
Pledged Property for not less than its fair market value, taking into
consideration any restrictions that may be imposed upon its transferability
under federal and state securities laws may be applied toward the payment of
expenses in connection with the Pledged Property, including reasonable
attorney's fees and legal expenses, and any balance of such proceeds may be
applied by Pledgee toward payment of the indebtedness evidenced by the Note.
Pledgor shall be entitled to any surplus, but Pledgor shall remain liable for
any deficiency. The parties specifically contemplate that Pledgee shall have the
right, without prior notice, to retain the Pledged Property in satisfaction of
the indebtedness and agree that in the event pledgee so elects, pledgor shall be
released from any liability represented by the Note and any other indebtedness
of the Corporation to Pledgees, but shall have no claim against Pledgee or the
Corporation for loans made to the Corporation or amounts paid by Pledgor for the
44
Pledged Property, it being intended that such amounts shall be retained by
Pledgee as liquidated damages due to the default of Pledgor. By the election of
any remedy, Pledgee shall not be deemed to have waived their rights to any other
remedy. In all cases where Pledgor is in default, whether any other remedy or
remedies are exercised by Pledgee, Pledgor shall pay all costs and expenses
incurred, including reasonable attorney's fees, whether or not suit is brought.
9. EXTENSION OF TIME. Pledgor agrees that the Pledge Agreement shall
remain in full force and effect notwithstanding any extension of the time of
payment of the whole or any part of the Note or any change in the terms and
conditions of the Note.
10. TRANSFER ON DEFAULT. Upon the occurrence of an Event of Default,
Pledgee is constituted and empowered, irrevocably and with full power of
substitution and revocation as Pledgor's attorney-in-fact, to sell, transfer,
foreclose and deliver the Pledged Property, and to complete and deliver all
stock powers and other related instruments, in Pledgee's own name or in the name
of the Pledgee's nominee or in the name of Pledgor.
11. TERM. This Pledge Agreement and the pledge made hereunder shall
terminate upon the satisfaction of the Note. Upon termination of this Pledge
Agreement, Pledgee agrees to return to Pledgor; or to Pledgor's order, any of
the Pledged Property which is then in Pledgee's possession, together with any
stock powers or other documents or instruments pertaining thereto then in his
possession.
12. ENTIRE AGREEMENT. This Pledge Agreement contains the entire
agreement of the parties with respect to the subject matter hereof; all former
oral or written agreements entered into prior are revoked and superseded by this
Pledge Agreement; and no representations, warranties or inducements have been
made by either of the parties except as expressly set forth herein. This Pledge
Agreement may not be changed, modified or rescinded except in writing signed by
both parties, and any attempt at oral modification of this Pledge Agreement
shall be void and of no effect.
13. MISCELLANEOUS. This Pledge Agreement binds, and inures to the
benefit of, the respective parties and their heirs, successors, administrators,
executors and assigns. All communications under this Pledge Agreement are to be
in writing and shall be considered to have been given when delivered personally,
or when sent by registered mail, postage prepaid. This Pledge Agreement shall be
construed under the laws of the State of Arizona. This Pledge Agreement may be
executed in two (2) counterparts, each of which shall be deemed an original. In
case any one or more of the provisions contained in this Pledge Agreement shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of the Pledge Agreement, but this Pledge Agreement shall be construed
as if such invalid or illegal or unenforceable provision had never been
contained herein.
14. INDEMNIFICATION. The Pledgors and Pledgees hereunder understand and
agree that in the event FIDELITY NATIONAL TITLE has been appointed Escrow Agent
and/or Account Servicing Agent and they are hereby authorized and instructed to
implement the terms and conditions of this agreement. Pledgors and Pledgees
hereby indemnify and save harmless FIDELITY NATIONAL TITLE against all costs,
damages, attorney's fees, or expenses which it may incur or sustain in
connection with this agreement or any court action arising therefrom and will
pay same upon demand.
45
IN WITNESS WHEREOF, the parties have executed this agreement the day
first above written.
ADDITIONAL TERMS AND CONDITIONS:
PLEDGOR: PLEDGEE:
-------- --------
PENGE CORPORATION /s/ STEVEN SUTHERLAND
------------------------------------- -----------------------------------
STEVEN SUTHERLAND
/S/ KIRK FISCHER
------------------------------------- -----------------------------------
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EXHIBIT C
RESIDENTIAL REAL ESTATE PURCHASE AND SALE AGREEMENT
SELLER: Roger and Barbara Major
BUYER: Thomas B. Chandler or Assigns
ESCROW AGENT: Fidelity National Title Company
ESCROW NUMBER: __________________
1. BINDING AGREEMENT. This agreement ("Agreement") is entered into by
Thomas B. Chandler ("Buyer") and Roger and Barbara Major ("Seller"). This
Agreement shall constitute a binding contract between Seller and Buyer for the
purchase and sale of the real property and improvements described in Schedule C1
attached hereto, and incorporated by this reference (the "Property").
2. ACCEPTANCE, OPENING AND CLOSE OF ESCROW. The offer represented by
this Agreement shall be deemed accepted upon Buyer's and Seller's execution and
delivery of a counterpart of this Agreement. Escrow shall be opened when (i) one
fully executed or counterparts of this Agreement executed by Seller and Buyer,
respectively, have been delivered to Escrow Agent, along with any Earnest Money
Deposit ("Opening of Escrow"). Escrow Agent shall advise Seller and Buyer, in
writing, of the Opening of Escrow and the date thereof. Consummation of the
purchase of the Property contemplated hereby (the "Close of Escrow" or
"Closing") shall take place on or before September 30, 2002. On or before
Closing, each party shall execute and deliver such documents and perform such
acts as are provided for herein. All monies and documents required to be
delivered under this Agreement shall be deposited in escrow on or before Close
of Escrow.
3. TITLE INSURANCE: CONVEYANCE OF TITLE. The Property, including all
rights and privileges appurtenant to or arising from the Property, shall be
conveyed by Seller to Buyer upon Close of Escrow by special warranty deed (the
"Deed"). The Property shall be conveyed by Buyer free and clear of all matters,
claims, liens, and encumbrances except: (i) taxes not yet due and payable at
Close of Escrow; (ii) reservations in patents from the United States or the
State of Arizona; and (iii) any other matters disclosed by the preliminary title
report (or any amended report) which are deemed waived or approved by Buyer in
accordance with this Agreement. Escrow Agent shall issue or cause to be issued
an extended coverage owner's policy of title insurance in the amount of the
Purchase Price, for which Seller shall bear the cost.
4. CONVEYANCE BY SPECIAL WARRANTY DEED: AFFIDAVIT OF VALUE. Seller
shall duly execute, acknowledge, and deliver to Escrow Agent, for recordation
upon Close of Escrow, a special warranty deed, on Escrow Agent's standard form,
conveying title to the Property to Buyer. Buyer and Seller shall execute,
acknowledge. and deliver to Escrow Agent an Affidavit of Property Value.
5. POSSESSION. Upon Close of Escrow, Seller shall vacate the Property
and deliver possession to Buyer, and all risk of loss of, or damage to, the
Property from any source shall, at that time, pass to and become the sole
responsibility of Buyer.
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6. PAYMENT OF PURCHASE PRICE.
(a) The Purchase Price for the Property shall be $ 253,000.00,
payable in certified funds or by other mutually acceptable means at Close of
Escrow.
(b) Earnest Money Deposit - $0.00.
7. CLOSING: FEES. TAXES, AND ASSESSMENTS: COSTS. Escrow shall close on
or before September 30, 2002. Real property taxes shall be prorated to the Close
of Escrow, and all recording fees, escrow service fees, and other Escrow closing
costs shall be charged by Escrow Agent to, and paid by, the respective parties
in accordance with local custom as determined by Escrow Agent unless payment of
such costs is specifically provided for in this Agreement (and, specifically, in
the Escrow Instruments). Seller shall pay in full, at Close of Escrow, any
existing improvement lien or other assessment affecting the Property, whether
such liens or assessments are then due and payable, bonded, or otherwise due on
one or more future dates.
8. EXPENSES OF ESCROW. Title insurance premiums. loan fees, and all
other costs or expenses of escrow shall be paid as follows:
(a) The cost of securing the title insurance policy to be issued
by Escrow Agent referred to in this Agreement shall be paid by Seller.
(b) The cost of recording the Deed described herein and of filing
the Affidavit of Real Property Value (if any) shall be paid by Seller.
(c) All other closing expenses of escrow shall be paid by Seller.
9. BUYER'S CONTINGENCIES. Buyer's obligation to consummate the
transactions contemplated by this Agreement is subject to satisfaction of all of
the following conditions precedent (any or all of which may be waived by Buyer,
but, except as otherwise provided herein, only in a writing signed by Buyer or
its duly authorized agent):
(a) STATUS OF TITLE. Seller shall cause Escrow Agent, as soon as
is reasonably possible after execution of this Agreement, to provide Buyer and
Seller with a preliminary report of the title to the Property, disclosing all
matters of record which relate to the title to the Property and Escrow Agent's
requirements for both closing the escrow created by this Agreement and issuing
the policy of title insurance described in paragraph 2 of this Agreement. At
such time as Buyer receives the preliminary title report (and any amended report
adding additional title exceptions). Seller shall also cause legible copies of
all instruments referred to in the report or amended report to be furnished to
Buyer. Buyer shall have ten (10) days after receipt of the preliminary title
report (and any amended report adding additional title exceptions) and the
furnishing of all instruments described in the report, to object in writing to
any matter shown in the report. If Buyer fails to object within the ten (10) day
period, the condition of title to the Property shall be deemed approved by
Buyer. In the event Buyer does object in writing to any matter disclosed in the
preliminary title report or any amended report, Seller shall attempt, in good
faith and using due diligence, to remove such objection before Close of Escrow.
If any such matter cannot be removed after Seller's attempts to do so, Seller
shall so notify Buyer, in writing, and Buyer shall elect within two (2) days
after receipt of Seller's notice to either: (i) cancel this Agreement and
receive return of all Earnest Money paid, together with any interest accrued
thereon; or (ii) close escrow waiving and taking title subject to such matters.
Failure of Buyer to give notice to Seller of Buyer's election shall constitute
an election by Buyer to waive the objection.
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(b) SELLER'S PROPERTY DISCLOSURE STATEMENT. Within five (5) days
of the date of this Agreement, Seller shall provide Buyer with a current Arizona
Association of Realtors approved Residential Seller's Property Disclosure
Statement.
(c) LEAD-BASED PAINT DISCLOSURE. Seller hereby notifies Buyer that
the improvements conveyed as part of the Property may have been built prior to
1978, and that these improvements may contain lead-based paint or lead-based
paint hazards. Seller is unaware if any of the improvements contain lead-based
paint.
(d) INVESTIGATION AND INSPECTION. Buyer shall have from the date
of this Agreement until September 16, 2002, to examine the Property at any
reasonable time with any persons whom it shall designate ("Inspection Period").
Seller shall reasonably permit access to the Property by Buyer and the persons
so designated by it and shall afford them the opportunity to inspect and perform
any tests upon the Property. Buyer shall, in good faith during the Inspection
Period, conduct all such inspections, investigations, and tests and be
responsible for returning the Property to substantially the condition in which
it was prior to the time of any entry. Further, Buyer shall have until the end
of the Inspection Period to investigate any and all other matters concerning the
Property, including zoning; access; easements; the availability of water, sewer,
and other utilities and services to the Property; availability of financing; the
existence and effect of electrical, agricultural,, improvement, or other
districts or associations; future installments or obligations relating to
assessments and improvement liens; and any restrictions or other matters
concerning the Property. In the event Buyer, after conducting in good faith such
inspections, investigations, and tests, in its sole discretion, in light of its
investigation and review, determines that the Property or any part thereof is
not suitable for its purposes, then Buyer may elect at any time on or prior to
the end of the Inspection Period to cancel this Agreement by written notice to
Escrow Agent, in which event Escrow Agent shall return to Buyer all Earnest
Money deposited (if any), and any interest accrued thereon together with all
other documents Buyer deposited with Escrow Agent in connection with the escrow,
and Escrow Agent shall return to Seller all documents Seller deposited with
Escrow Agent in connection with the escrow, and thereupon this Agreement shall
be deemed null and void and neither party shall have any further obligation or
liability under this Agreement. If Buyer does not elect to cancel the escrow on
or prior to the end of the Inspection Period, Buyer shall be deemed to have
approved all matters concerning the Property, except as otherwise provided in
this paragraph.
10. TESTS. Buyer, its agents, and designees. shall have the right to
enter upon the Property at all times prior to Close of Escrow for the purposes
of inspecting the Property and making, preparing, and obtaining any tests,
surveys, or studies it may desire including, without limitation, any drainage,
percolation. and soil tests and studies, and other engineering or archaeological
tests and studies. Buyer agrees to indemnify, pay, defend and hold harmless
Seller from all claims and liabilities for personal injury or physical property
damage, or mechanics' or materialmen's liens, which may be asserted against
Seller as a result of any entry by Buyer, its agents, or designees onto the
Property. Promptly after the completion of any tests, Buyer shall return the
Property to essentially the condition existing prior to the conduct of the
tests.
11. DOCUMENTS PERTAINING TO THE PROPERTY. Upon execution of this
Agreement, Seller shall allow Buyer to inspect and copy any and all information,
data, documents, and other materials in Seller's possession or reasonably
available to Seller relating to the property. Seller shall deliver the original
of the information, data, documents, and materials in Seller's possession to
Buyer at the Close of the Escrow and Seller's interest in them shall pass to
Buyer as of the Close of the Escrow.
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12. INFORMATION: LIMITATION ON LIABILITY. Buyer acknowledges that any
tax information, engineering data, feasibility or marketing reports, soil
reports, or other information of any kind or nature relating to the Property
which Buyer has received or may receive from Seller or its agents, is, will be,
or has been furnished on the express condition that Buyer shall make its own
independent verification of the accuracy of the information. Buyer agrees that
it shall not attempt to assert any liability against Seller by reason of
Seller's having furnished such information or by reason of any such information
becoming or proving to have been incorrect or inaccurate in any respect, and
Buyer does hereby covenant and agree to defend, pay, indemnify, and hold Seller
harmless from and against any and all such claims of liability by any person or
entity.
13. NO WARRANTIES. Buyer agrees that the Property shall be purchased in
an "as-is" and "where-is" condition, with no representation or warranty of any
type or nature being made by Seller, except as specifically set forth herein.
Buyer acknowledges and agrees that it is purchasing the Property solely upon the
basis of its investigation and inspection described above and not on the basis
of any representation, express or implied, written or oral, made by Seller.
Without limiting the generality of the foregoing, Seller makes no warranty as to
the sufficiency of the Property for Buyer's purposes, the square footage or
acreage contained within the Property, the sufficiency or completeness of any
plans for the Property, the approval of the county of any plans, plats, zoning,
or other development items relating to the Property, or as to any improvements
on the Property.
14. SELLER'S REPRESENTATIONS. WARRANTIES, AND COVENANTS. Seller
warrants, represents, and covenants that:
(a) Except as reflected in the preliminary title report at the
time of execution of this Agreement, there are no claims, actions, suits, or
other proceedings pending or threatened by any governmental department or agency
or any other corporation, partnership, entity, or person whomsoever, nor any
voluntary actions or proceedings contemplated by Seller, which in any manner or
to any extent may detrimentally affect Buyer's right, title, or interest in and
to the Property or the value of the Property or Seller's ability to perform
Seller's obligations under this Agreement.
(b) Seller owns the Property in fee simple absolute, subject only
to the matters reflected in the preliminary title report.
(c) There is no pending or threatened condemnation or similar
proceeding affecting any part of the Property, and Seller has not received any
notice of any such proceeding and has no knowledge that any such proceeding is
contemplated.
(d) No work has been performed or is in progress at the Property
and no materials have been furnished to the Property which might give rise to
mechanic's, materialman's, or other liens against any part of the Property.
(e) Seller is not prohibited from consummating the transactions
contemplated by this Agreement by any law, regulation, agreement, instrument,
restriction, order, or judgment.
(p) The Property is, as of the date of this Agreement, zoned RU-4
by the County of Cochise. Seller may consent to, request, or apply for any
change in such zoning with respect to the Property, but will give notice to
Buyer of any such request.
15. WATER RIGHTS. At Close of Escrow. Seller shall, without further
act, be deemed to have assigned, transferred, conveyed, and set over unto Buyer
all of the grandfathered water rights, well rights, groundwater rights, and
surface water rights, if any, with respect to the Property, and Seller agrees,
if so requested by Buyer, to make, execute, and deliver an assignment of or deed
to such rights in such form as Buyer may reasonably require at or after Close of
Escrow to evidence the same.
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16. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer warrants, represents,
and covenants that:
(a) Buyer has full power and authority to enter into and perform
this Agreement in accordance with its terms.
(b) Buyer is a sophisticated and knowledgeable commercial,
industrial or farm user who is familiar with the special characteristics of the
Property and has ready access to any legal and financial advice which may be
necessary to meet Buyer's obligations hereunder.
(c) Buyer acknowledges that it has prior to close of escrow
inspected and investigated the Property and has entered into this Agreement
based upon such inspection and investigation and its own examination of the
condition of the Property (including the presence or absence of any radioactive,
hazardous, petroleum-based, or toxic substances), and Seller is hereby released
from all responsibility regarding the valuation or condition of the Property.
Buyer agrees to accept the Property in its present condition "AS IS".
(d) Buyer acknowledges that no person acting on behalf of Seller
is authorized to make, and by execution of this Agreement, Buyer acknowledges
that no person acting or purporting to act on behalf of Seller has made, any
representation, warranty, guaranty, or promise, whether oral or written, except
as set forth in this Agreement; and any agreement, statement, representation, or
promise made by any person which is not contained in this Agreement shall not be
valid or binding upon Seller.
(e) Buyer represents that it has readily available funds to
perform under the terms
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement (and in any instrument delivered by or on
behalf of any party pursuant hereto or in connection with the transactions
contemplated hereby) are true on and as of the date so made, will be true in all
material respects on and as of the Closing Date, and will survive Close of
Escrow and execution, delivery, and recordation of the Deed. In the event that
any representation or warranty by a party is untrue, the other party shall have
all rights and remedies available at law, in equity, or as provided in this
Agreement.
18. NO ASSUMPTION OF SELLER'S LIABILITIES. Buyer is acquiring only the
Property from
Seller and is not the successor of Seller. Buyer does not assume, agree to pay,
or indemnify Seller or any other person against any liability, obligation, or
expense of Seller or relating in any way to the Property except to the extent.
if any, expressly and specifically provided for in this Agreement.
19. INDEMNIFICATION AND LIABILITIES. Subject to the limitations and
other provisions contained in this Agreement, Seller shall, and it hereby does,
indemnify and agree to pay, defend, and hold harmless Buyer from any liability,
obligation, action, suit. judgment, fine, award, loss, claim, demand, or expense
(including attorneys' fees) arising from any act or omission of Seller
pertaining in any manner to the Property for the period of time prior to the
Close of Escrow. Buyer does not agree to perform or assume any liability,
encumbrance, or obligation of any kind or character whatsoever relating in any
manner to all or any part of the Property: (i) except as specifically provided
herein; and (ii) except that Buyer agrees to pay, defend, indemnify, and hold
harmless Seller from any liability, obligation, action, suit, judgment, fine,
award, loss, claim, demand, or expense (including attorneys' fees) arising from
any act or omission of Buyer, Buyer's agents and employees, and any independent
contractor whose services are retained by Buyer, in connection with any
inspection or testing of or on the Property conducted pursuant to the provisions
of this Agreement.
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20. REMEDIES.
(a) In the event of default by Buyer, Seller may elect the to
cancel this Agreement and to retain the Earnest Money (if any), together with
all accrued interest as liquidated damages, if Seller retains said Earnest Money
as its damages thereafter neither party shall have any further obligations to
the other under this Agreement. Upon default by Buyer, Seller may forego its
liquidated damages remedy and elect any remedy available at law and/or equity to
enforce the terms and conditions of this Agreement.
(b) In the event of default by Seller, Buyer may: (i) cancel this
Agreement by written notice to Seller and Escrow Agent, in which event Escrow
Agent shall, after confirmation of the default with the Seller, return to Buyer
all Earnest Money deposited by Buyer together with all other documents Buyer has
deposited with Escrow Agent in connection with this escrow in which case Buyer
and Seller shall have no other rights or obligations under this Agreement; or
(ii) proceed to enforce the rights and remedies available to Buyer under this
Agreement, at law or in equity.
21. NOTICES. Notices required or permitted hereunder shall be given in
writing and personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or by a nationally recognized overnight
courier service (e.g., Federal Express, DEL)
To Seller: Roger and Barbara Major
14660 S. Highway 191
Elfrida, Arizona 85610
To Buyer: Thomas B. Chandler
-----------------------------
-----------------------------
To Escrow Agent: Fidelity National Title Company
5151 F. Broadway Blvd. Suite 185
Tucson, AZ 85711
or at any other address designated by Buyer, Seller, or Escrow Agent, in
writing, and any such notice of communication shall be deemed to have been given
as of the date of delivery, if hand or courier delivered, or as of three days
after the date of mailing, if mailed certified, return receipt requested,
postage prepaid. Copies of all notices or communications to Buyer or Seller
shall be hand or courier delivered or mailed, in the manner set forth above, to
Escrow Agent, and copies of all notices by Buyer or Seller to Escrow Agent shall
be hand or courier delivered or mailed, in the manner set forth above, to the
other party.
22. ATTORNEYS' FEES. In the event suit is brought or an attorney is
retained by any party to this Agreement to seek interpretation or construction
of any term or provision of this Agreement, to enforce the terms of this
Agreement, to collect any money due, or to obtain any money damages or equitable
relief for breach, the prevailing party shall be entitled to recover, in
addition to any other available remedy, reimbursement for reasonable attorneys'
fees, court costs, costs of investigation, and other related expenses.
23. INTENDED AGREEMENT. This Agreement is the result of arms-length
negotiations between parties of roughly equivalent bargaining power and
expresses the complete, actual, and intended agreement of the parties. This
Agreement shall not be construed for or against either party as a result of its
participation, or the participation of its counsel, in the preparation and/or
drafting of this Agreement or any exhibits hereto.
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24. RELATIONSHIP. This Agreement shall not be construed as creating a
joint venture, partnership, or any other cooperative or joint arrangement
between Buyer and Seller, and it shall be construed strictly in accordance with
its terms.
25. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors in interest
and permitted assigns.
26. FURTHER INSTRUMENTS AND DOCUMEnts. Each party hereto shall,
promptly upon the request of the other party or Escrow Agent, acknowledge and
deliver to the other party or Escrow Agent any and all further instruments,
documents and assurances reasonably requested or appropriate to evidence or give
effect to the provisions of this Agreement.
27. INTEGRATION CLAUSE: NO ORAL MODIFICATION. This Agreement represents
the entire agreement of the parties with respect to its subject matter, and all
agreements, oral or written, entered into prior to this Agreement are revoked
and superseded by this Agreement. No representations, warranties, inducements,
or oral agreements have been made by any of the parties except as expressly set
forth herein, or in other contemporaneous written Agreements. This Agreement may
not be changed, modified, or rescinded, except in a writing, signed by all
parties hereto, and any attempt at oral modification of this Agreement shall be
void and of no effect.
28. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Arizona. Any action brought to enforce or construe any
provision of this Agreement shall be maintained in the Superior Court of the
State of Arizona in and for the County of Cochise, or other county as mutually
agreed by the parties.
29. SEVERABILITY. If any provision of this Agreement is declared void
or unenforceable, such provision shall be deemed severed from this Agreement,
and this Agreement shall otherwise remain in full force and effect.
30. WAIVER. Failure of any party to exercise any right, remedy, or
option arising out of a breach of this Agreement shall not be deemed a waiver of
any right, remedy, or option with respect to any subsequent or different breach,
or the continuance of any existing breach.
31. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all the counterparts shall be deemed to constitute one instrument,
and each counterpart shall be deemed an original. If counterparts are employed
then, upon Close of Escrow, Escrow Agent shall assemble all counterpart
signature pages into a single document containing all original signatures, and
this document shall be delivered to Buyer's counsel with copies of the document
(including all signatures) to be delivered contemporaneously, by Escrow Agent,
to Seller, Seller's counsel and Buyer.
32. TIME OF ESSENCE. Time is hereby declared to be of the essence for
the performance of all conditions and obligations under this Agreement.
33. CONSTRUCTION/INTERPRETATION. The captions and paragraph headings
used in this Agreement are for convenience and reference only and are not
intended to define, limit, or describe the scope or intent of any provision of
this Agreement. When used herein, the terms "include" or "including" shall mean
without limitation by reason of the enumeration. All grammatical usage herein
shall be deemed to refer to the masculine, feminine, neuter, singular, or plural
as the identity of the person or persons may require. The term "person" shall
53
include an individual, corporation, partnership, trust, estate, or any other
entity. If the last day of any time period stated herein shall fall on a
Saturday, Sunday, or legal holiday in the State of Arizona, then the duration of
such time period shall be extended so that it shall end on the next succeeding
day which is not a Saturday, Sunday, or legal holiday in the State of Arizona.
34. REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each remedy shall be cumulative and shall be in addition to every' other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. The election of any one or more remedies shall not
constitute a waiver of the right to pursue other remedies available under this
Agreement, at law or in equity
35. FOREIGN TAX WITHHOLDINGS. Seller shall provide to Buyer and Escrow
Agent at Closing appropriate affidavits stating that it is not a foreign person
and that no withholding is required pursuant to Internal Revenue Code ss. 1445.
In the event such affidavits are not forthcoming or in the event either Escrow
Agent or Buyer knows or has reason to know that they are false, Escrow Agent is
hereby irrevocably authorized and directed to withhold 10% of Seller's proceeds
of the purchase price pursuant to Code ss. 1445 for disposition in accordance
therewith and in accordance with applicable regulations.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement on
the dates set forth below.
SELLER:
Date: 8/22/02 /s/ BARBARA MAJOR
------------------- --------------------------------
Barbara Major
Date: 8/22/02 /s/ ROGER MAJOR
------------------- --------------------------------
Roger Major
BUYER:
Date: 8/26/02 By: /s/ THOMAS L. CHANDLER
------------------- --------------------------------
Thomas L [handwritten]. Chandler
ESCROW AGENT:
Date: 8/22/02 By:
------------------- ----------------------------
Its:
---------------------------
54
SCHEDULE C1
PROPERTY DESCRIPTION
- 7.404 +/- acres (430' x 750") of real property, legal description:
A portion of the northwest quarter of Section 34, Township 18 south, Range 26
east, Gila and Salt River Meridian. Cochise County, Arizona, more particularly
described as:
Commencing at the northwest corner of said Section 34, then South
0(degree)03'00" West, 560.00 ft. along the west line of Section 34 TO the True
Point of Beginning;
Then continuing S 0(degree)03'00" W, 430.00 ft along the west line of Section
34;
Then S 89(degree)55'22" E, 750.00 ft.;
Then N 0(degree)03'00" E, 430.00 ft. parallel to the west line of Section 34;
Then N 89(degree)55'22" W, 750.00 ft. to the True Point of Beginning.
Including and easement for State Highway 191, consisting of the West 50 feet of
the above described property, as recorded in Docket 127, Page 522, Cochise
County Recorder's Office.
- 3,900 + square foot residence, and all fixtures, but NOT including the
following:
Various personal belongings to be disclosed to Buyer and removed prior
to closing.
- 32' X 52" Garage and Workshop.
- 10' X 10" Water Valve Shed.
- One (1) Olson One Tower Center Pivot Sprinkler.
55
EXHIBIT D
FARM PROPERTY PURCHASE AND SALE AGREEMENT
SELLER: Roger and Barbara Major
BUYER: Penge Corporation, a Nevada Corporation
ESCROW AGENT: Fidelity National Title Company
ESCROW NUMBER: ______________________
1. BINDING AGREEMENT. This agreement ("Agreement") is entered into by
Penge Corporation, a Nevada Corporation ("Buyer") and Roger and Barbara Major
("Seller"). This Agreement shall constitute a binding contract between Seller
and Buyer for the purchase and sale of the real property, improvements, and
water rights described in Schedule D1 attached hereto and incorporated by this
reference (the "Property").
2. ACCEPTANCE. Opening and Close of Escrow. The offer represented by
this Agreement shall be deemed accepted upon Buyer's and Seller's execution and
delivery of a counterpart of this Agreement. Escrow shall be opened when (i) one
fully executed or counterparts of this Agreement executed by Seller and Buyer,
respectively, have been delivered to Escrow Agent, along with any Earnest Money
Deposit ("Opening of Escrow"). Escrow Agent shall advise Seller and Buyer, in
writing, of the Opening of Escrow and the date thereof Consummation of the
purchase of the Property contemplated hereby (the "Close of Escrow" or
`Closing") shall take place on or before September 30, 2002. On or before
Closing, each party shall execute and deliver such documents and perform such
acts as are provided for herein. All monies and documents required to be
delivered under this Agreement shall be deposited in escrow on or before Close
of Escrow. This Agreement is contingent upon the execution and closing of the
Purchase Agreement, Receipt and Escrow Instructions ("Business Purchase
Agreement"), dated August 14. 2002, relating to the sale of a Christmas Tree
Farm located at 14660 5. Highway 191, Elfrida, Cochise County, Arizona, and the
execution and closing of all Exhibits and Agreements related to said Purchase
Agreement.
3. TITLE INSURANCE: CONVEYANCE OF TITLE. The Property, including all
rights and privileges appurtenant to or arising from the Property, shall be
conveyed by Seller to Buyer upon Close of Escrow by special warranty deed (the
"Deed"). The Property shall be conveyed by Buyer free and clear of all matters,
claims, liens, and encumbrances except: (i) taxes not yet due and payable at
Close of Escrow; (ii) reservations in patents from the United States or the
State of Arizona; and (iii) any other matters disclosed by the preliminary title
report (or any amended report) which are deemed waived or approved by Buyer in
accordance with this Agreement. Escrow Agent shall issue or cause to be issued
an extended coverage owner's policy of title insurance in the amount of the
Purchase Price, for which one-half will be paid for by Seller and one-half by
Buyer.
4. CONVEYANCE BY SPECIAL WARRANTY DEED: AFFIDAVIT OF VALUE. Seller
shall duly execute acknowledge and deliver to Escrow Agent. for recordation upon
Close of Escrow. a special warranty deed, on Escrow Agent's standard form,
conveying title to the Property to Buyer. Buyer and Seller shall execute,
acknowledge, and deliver to Escrow Agent an Affidavit of Property Value.
56
5. POSSESSION. Upon Close of Escrow, Seller shall vacate the Property
and deliver possession to Buyer, and all risk of loss of, or damage to, the
Property from any source shall, at that time, pass to and become the sole
responsibility of Buyer.
6. PAYMENT OF PURCHASE PRICE.
(a) The Purchase Price for the Property shall be $ 380,000.00,
financed entirely by the Seller as a portion of the $600,000.00 Promissory Note
as set out in Exhibit E2 of the Business Purchase Agreement. Receipt and Escrow
Agreement, incorporated herein by this reference. The Purchase Price shall be
allocated as per Price Allocation Exhibit H.
(b) The Promissory Note shall be secured by a deed of trust,
which shall not be subordinated to any other loan without the prior written
consent of the Seller, such consent within the sole discretion of Seller.
(c) Earnest Money Deposit - $3,333.33
7. CLOSING: FEES. TAXES, AND ASSESSMENTS: COSTS. Escrow shall close on
or before September 30, 2002. Real property taxes shall be prorated to the Close
of Escrow, and all recording fees, escrow service fees, and other Escrow closing
costs shall be charged by Escrow Agent to, and paid by, one-half by Seller and
one-half by Buyer, unless payment of such costs is specifically provided for in
this Agreement (and, specifically, in the Escrow Instruments). Seller shall pay
in full, at Close of Escrow, any existing improvement lien or other assessment
affecting the Property, whether such liens or assessments are then due and
payable, bonded, or otherwise due on one or more future dates.
8. EXPENSES OF ESCROW. Title insurance premiums, loan fees, and all
other costs or expenses of escrow shall be paid as follows:
(a) The cost of securing the title insurance policy to be
issued by Escrow Agent referred to in this Agreement shall be paid one-half by
Seller and one-half by Buyer.:
(b) The cost of recording the Deed described herein and of
filing the Affidavit of Real Property Value (if any) shall be paid one-half by
Seller and one-half by Buyer.;
(c) All other expenses of escrow shall be paid one-half by
Seller and one-half by Buyer.
9. BUYER'S CONTINGENCIES. Buyer's obligation to consummate the
transactions contemplated by this Agreement is subject to satisfaction of all of
the following conditions precedent (any or all of which may be waived by Buyer,
but, except as otherwise provided herein, only in a writing signed by Buyer or
its duly authorized agent):
(a) STATUS OF TITLE. Seller shall cause Escrow Agent. as soon
as is reasonably possible after execution of this Agreement, to provide Buyer
and Seller with a preliminary report of the title to the Property, disclosing
all matters of record which relate to the title to the Property and Escrow
Agent's requirements for both closing the escrow created by this Agreement and
issuing the policy of title insurance described in paragraph 2 of this
Agreement. At such time as Buyer receives the preliminary title report (and any
amended report adding additional title exceptions), Seller shall also cause
legible copies of all instruments referred to in the report or amended report to
be furnished to Buyer. Buyer shall have ten (10) days after receipt of the
preliminary title report (and any amended report adding additional title
57
exceptions) and the furnishing of all instruments described in the report, to
object in writing to any matter shown in the report. If Buyer fails to object
within the ten (10) day period, the condition of title to the Property shall be
deemed approved by Buyer. In the event Buyer does object in writing to any
matter disclosed in the preliminary title report or any amended report, Seller
shall attempt, in good faith and using due diligence, to remove such objection
before Close of Escrow. If any such matter cannot be removed after Seller's
attempts to do so, Seller shall so notify Buyer, in writing, and Buyer shall
elect within two (2) days after receipt of Seller's notice to either: (i) cancel
this Agreement and receive return of all Earnest Money paid, together with any
interest accrued thereon; or (ii) close escrow waiving and taking title subject
to such matters. Failure of Buyer to give notice to Seller of Buyer's election
shall constitute an election by Buyer to waive the objection.
(b) SELLER'S PROPERTY DISCLOSURE STATEMENT. Within five (5)
days of the date of this Agreement, Seller shall provide Buyer with a current
Arizona Association of Realtors approved Vacant Land Property Disclosure
Statement.
(c) INVESTIGATION AND INSPECTION. Buyer shall have from the
date of this Agreement until September 16, 2002, to examine the Property at any
reasonable time with any persons whom it shall designate ("Inspection Period").
Seller shall reasonably permit access to the Property by Buyer and the persons
so designated by it and shall afford them the opportunity to inspect and perform
any tests upon the Property. Buyer shall, in good faith during the Inspection
Period, conduct all such inspections, investigations, and tests and be
responsible for returning the Property to substantially the condition in which
it was prior to the time of any entry. Further, Buyer shall have until the end
of the Inspection Period to investigate any and all other matters concerning the
Property, including zoning; access; easements; the availability of water, sewer,
and other utilities and services to the Property; availability of financing; the
existence and effect of electrical, agricultural, improvement, or other
districts or associations; future installments or obligations relating to
assessments and improvement liens; and any restrictions or other matters
concerning the Property. In the event Buyer, after conducting in good faith such
inspections, investigations, and tests, in its sole discretion, in light of its
investigation and review, determines that the Property or any part thereof is
not suitable for its purposes, then Buyer may elect at any time on or prior to
the end of the Inspection Period to cancel this Agreement by written notice to
Escrow Agent, in which event Escrow Agent shall return to Buyer all Earnest
Money deposited (if any), and any interest accrued thereon together with all
other documents Buyer deposited with Escrow Agent in connection with the escrow,
and Escrow Agent shall return to Seller all documents Seller deposited with
Escrow Agent in connection with the escrow, and thereupon this Agreement shall
be deemed null and void and neither party shall have any further obligation or
liability under this Agreement. If Buyer does not elect to cancel the escrow on
or prior to the end of the Inspection Period. Buyer shall be deemed to have
approved all matters concerning the Property, except as otherwise provided in
this paragraph.
10. SELLER'S CONTINGENCY. At time of scheduled Closing Seller will have
already planted a squash crop on the property. Buyer agrees this planted squash
crop will remain the sole property of the Seller after closing and Buyer agrees
to allow Seller full access to the property from and after the date of Closing
to irrigate, cultivate, maintain, harvest, pack and ship Seller's crop. Buyer
also agrees to allow Seller frill use of the packing building and packing
equipment on the property. Seller agrees to reimburse Buyer for the full cost of
utilities used by Seller during this period. The Squash harvest is scheduled to
take place sometime between September 25, 2002 and October 17, 2002.
11. TESTS. Buyer, its agents, and designees. shall have the right to
enter upon the Property at all times prior to Close of Escrow for the purposes
of inspecting the Property and making, preparing, and obtaining any tests,
surveys, or studies it may desire including, without limitation, any drainage,
percolation, and soil tests and studies. and other engineering or archaeological
tests and studies. Buyer agrees to indemnify, pay, defend, and hold harmless
58
Seller from all claims and liabilities for personal injury or physical property
damage, or mechanics' or materialmen's liens, which max' be asserted against
Seller as a result of any entry by Buyer, its agents, or designees onto the
Property. Promptly after the completion of any tests, Buyer shall return the
Property to essentially the condition existing prior to the conduct of the
tests.
12. DOCUMENTS PERTAINING TO THE PROPERTY. Upon execution of this
Agreement, Seller shall allow Buyer to inspect and copy any and all information,
data, documents, and other materials in Seller's possession or reasonably
available to Seller relating to the property. Seller shall deliver the original
of the information, data, documents, and materials in Seller's possession to
Buyer at the Close of the Escrow and Seller's interest in them shall pass to
Buyer as of the Close of the Escrow.
13. INFORMATION: LIMITATION ON LIABILITY. Buyer acknowledges that any
tax information, engineering data, feasibility or marketing reports, soil
reports, or other information of any kind or nature relating to the Property
which Buyer has received or may receive from Seller or its agents, is, will be,
or has been furnished on the express condition that Buyer shall make its own
independent verification of the accuracy of the information. Buyer agrees that
it shall not attempt to assert any liability against Seller by reason of
Seller's having furnished such information or by reason of any such information
becoming or proving to have been incorrect or inaccurate in any respect, and
Buyer does hereby covenant and agree to defend, pay, indemnify, and hold Seller
harmless from and against any and all such claims of liability by any person or
entity.
14. NO WARRANTIES. Buyer agrees that the Property shall be purchased in
an "as-is" and "where-is" condition, with no representation or warranty of any
type or nature being made by Seller, except as specifically set forth herein.
Buyer acknowledges and agrees that it is purchasing the Property and all
improvements. structures. and buildings thereon solely upon the basis of its
investigation and inspection described above and not on the basis of any
representation, express or implied, written or oral, made by Seller. Without
limiting the generality of the foregoing. Seller makes no warranty as to the
sufficiency of the Property for Buyer's purposes, the square footage condition,
or acreage contained within the Property, the sufficiency or completeness of any
plans for the Property, the approval of the county of any plans, plats, zoning,
or other development items relating to the Property, or as to any improvements
on the Property
15. SELLER'S REPRESENTATIONS. Warranties, and Covenants. Seller
warrants, represents, and covenants that:
(a) Except as reflected in the preliminary title report at the
time of execution of this Agreement. there are no claims, actions, suits, or
other proceedings pending or threatened by any governmental department or agency
or any other corporation, partnership, entity, or person whomsoever, nor any
voluntary actions or proceedings contemplated by Seller, which in any manner or
to any extent may detrimentally affect Buyer's right, title, or interest in and
to the Property or the value of the Property or Seller's ability to perform
Seller's obligations under this Agreement.
(b) Seller owns the Property in fee simple absolute, subject
only to the matters reflected in the preliminary title report.
(c) There is no pending or threatened condemnation or similar
proceeding affecting any part of the Property, and Seller has not received any
notice of any such proceeding and has no knowledge that any such proceeding is
contemplated.
59
(d) No work has been performed or is in progress at the
Property and no materials have been furnished to the Property which might give
rise to mechanic's, materialman's, or other liens against any part of the
Property.
(e) Seller is not prohibited from consummating the
transactions contemplated by this Agreement by any law, regulation, agreement,
instrument, restriction, order, or judgment.
(p) The Property is, as of the date of this Agreement, zoned
RU-4 by the County of Cochise. Seller may consent to, request, or apply for any
change in such zoning with respect to the Property, but will give notice to
Buyer of any such request.
16. WATER RIGHTS. At Close of Escrow, Seller shall, without further
act, be deemed to have assigned, transferred, conveyed, and set over unto Buyer
all of the grandfathered water rights, well rights, groundwater rights, and
surface water rights, if any, with respect to the Property, and Seller agrees,
if so requested by Buyer, to make, execute, and deliver an assignment of or deed
to such rights in such form as Buyer may reasonably require at or after Close of
Escrow to evidence the same.
17. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer warrants, represents,
and covenants that:
(a) Buyer has full power and authority to enter into and
perform this Agreement in accordance with its terms.
(b) Buyer is a sophisticated and knowledgeable commercial,
industrial or farm user who is familiar with the special characteristics of the
Property and has ready access to any legal and financial advice which may be
necessary to meet Buyer's obligations hereunder.
(c) Buyer acknowledges that it has prior to close of escrow
inspected and investigated the Property and has entered into this Agreement
based upon such inspection and investigation and its own examination of the
condition of the Property (including the presence or absence of any radioactive,
hazardous, petroleum-based, or toxic substances), and Seller is hereby released
from all responsibility regarding the valuation or condition of the Property.
Buyer agrees to accept the Property in its present condition "AS IS".
(d) Buyer acknowledges that no person acting on behalf of
Seller is authorized to make, and by execution of this Agreement. Buyer
acknowledges that no person acting or purporting to act on behalf of Seller has
made, any representation, warranty, guaranty, or promise, whether oral or
written, except as set forth in this Agreement; and any agreement. statement,
representation, or promise made by any person which is not contained in this
Agreement shall not be valid or binding upon Seller.
(e) Buyer represents that it is a duly formed, validly
existing Nevada Corporation with full power and authority to execute this
Agreement.
(f) Buyer represents that it has readily available funds to
perform under the terms of this Agreement.
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement (and in any instrument delivered by or on
behalf of any party pursuant hereto or in connection with the transactions
contemplated hereby) are true on and as of the date so made, will be true in all
material respects on and as of the Closing Date, and will survive Close of
Escrow and execution, delivery, and recordation of the Deed. In the event that
any representation or warranty by a party is untrue, the other party shall have
all rights and remedies available at law, in equity, or as provided in this
Agreement.
60
19. NO ASSUMPTION OF SELLER'S LIABILITIES. Buyer is acquiring only the
Property from Seller and is not the successor of Seller. Buyer does not assume,
agree to pay, or indemnify Seller or any other person against any liability,
obligation, or expense of Seller or relating in any way to the Property except
to the extent, if any. expressly and specifically provided for in this
Agreement.
20. INDEMNIFICATION AND LIABILITIES. Subject to the limitations and
other provisions contained in this Agreement, Seller shall, and it hereby does.
indemnify and agree to pay, defend, and hold harmless Buyer from any liability,
obligation, action, suit, judgment, fine, award, loss, claim, demand, or expense
(including attorneys' fees) arising from any act or omission of Seller
pertaining in any manner to the Property for the period of time prior to the
Close of Escrow. Buyer does not agree to perform or assume any liability,
encumbrance, or obligation of any kind or character whatsoever relating in any
manner to all or any part of the Property: (i) except as specifically provided
herein; and (ii) except that Buyer agrees to pay, defend, indemnify, and hold
harmless Seller from any liability. obligation. action. suit, judgment, fine,
award, loss, claim, demand, or expense (including attorneys' fees) arising from
any act or omission of Buyer, Buyer's agents and employees. and any independent
contractor whose services are retained by Buyer. in connection with any
inspection or testing of or on the Property conducted pursuant to the provisions
of this Agreement.
21. REMEDIES.
(a) In the event of default by Buyer, Seller may elect the to
cancel this Agreement and to retain the Earnest Money (if any), together with
all accrued interest as liquidated damages; if Seller retains said Earnest Money
as its damages thereafter neither party shall have any further obligations to
the other under this Agreement. Upon default by Buyer, Seller may forego its
liquidated damages remedy and elect any remedy available at law and/or equity to
enforce the terms and conditions of this Agreement.
(b) In the event of default by Seller, Buyer may: (i) cancel
this Agreement by written notice to Seller and Escrow Agent, in which event
Escrow Agent shall, after confirmation of the default with the Seller, return to
Buyer all Earnest Money deposited by Buyer together with all other documents
Buyer has deposited with Escrow Agent in connection with this escrow in which
case Buyer and Seller shall have no other rights or obligations under this
Agreement; or (ii) proceed to enforce the rights and remedies available to Buyer
under this Agreement, at law or in equity.
22. NOTICES. Notices required or permitted hereunder shall be given in
writing and personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or by a nationally recognized overnight
courier service (e.g.. Federal Express, DHL) addressed as follows:
To Seller: Roger and Barbara Major
14660 5. Highway 191
Elfrida, Arizona 85610
To Buyer: Penge Corporation,
Attn: Kirk Fischer
1930 Village Center Circle 3, # 446
Las Vegas, Nevada 89134
To Escrow Agent: Fidelity National Title Company
5151 E. Broadway Blvd. Suite 185
Tucson. AZ 85711
61
or at any other address designated by Buyer, Seller, or Escrow Agent, in
writing, and any such notice of communication shall be deemed to have been given
as of the date of delivery, if hand or courier delivered, or as of three days
after the date of mailing, if mailed certified, return receipt requested.
postage prepaid. Copies of all notices or communications to Buyer or Seller
shall be hand or courier delivered or mailed, in the manner set forth above, to
Escrow Agent, and copies of all notices by Buyer or Seller to Escrow Agent shall
be hand or courier delivered or mailed, in the manner set forth above, to the
other party.
23. NO ASSIGNMENT. This Agreement shall not be assigned, conveyed, or
transferred by Buyer to any other party without the express prior written
consent of Seller (which consent may be withheld in Seller's sole discretion).
and any attempted assignment of this Agreement without Seller's prior written
consent shall be null and void (and vest no rights or interest in the purported
assignee) and shall, at the election of Seller, constitute a default by Buyer.
Seller's consent to assignment of Buyer's interest herein shall not be deemed a
consent to any further or additional assignment, and may be conditioned upon
Buyer's assignee's assumption and agreement to be bound by all terms and
conditions of this Agreement, provided that Seller's consent to any such
assignment by Buyer shall not release Buyer from any obligations under this
Agreement, notwithstanding the assumption by Buyer's assignee of all of Buyer's
obligations.
24. ATTORNEYS' FEES. In the event suit is brought or an attorney is
retained by any party to this Agreement to seek interpretation or construction
of any term or provision of this Agreement, to enforce the terms of this
Agreement, to collect any money due, or to obtain any money damages or equitable
relief for breach, the prevailing party shall be entitled to recover, in
addition to any other available remedy, reimbursement for reasonable attorneys'
fees, court costs, costs of investigation, and other related expenses.
25. INTENDED AGREEMENT. This Agreement is the result of arms-length
negotiations between parties of roughly equivalent bargaining power and
expresses the complete, actual, and intended agreement of the parties. This
Agreement shall not be construed for or against either party as a result of its
participation, or the participation of its counsel, in the preparation and/or
drafting of this Agreement or any exhibits hereto.
26. RELATIONSHIP. This Agreement shall not be construed as creating a
joint venture, partnership, or any other cooperative or joint arrangement
between Buyer and Seller, and it shall be construed strictly in accordance with
its terms.
27. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors in interest
and permitted assigns.
28. FURTHER INSTRUMENTS AND DOCUMENTS. Each party hereto shall,
promptly upon the request of the other party or Escrow Agent, acknowledge and
deliver to the other party or Escrow Agent any and all further instruments,
documents and assurances reasonably requested or appropriate to evidence or give
effect to the provisions of this Agreement.
29. INTEGRATION CLAUSE: NO ORAL MODIFICATION. This Agreement represents
the entire agreement of the parties with respect to its subject matter, and all
agreements, oral or written, entered into prior to this Agreement are revoked
and superseded by this Agreement. No representations, warranties, inducements,
or oral agreements have been made by any of the parties except as expressly set
forth herein, or in other contemporaneous written Agreements. This Agreement may
not be changed, modified, or rescinded, except in a writing, signed by all
parties hereto, and any attempt at oral modification of this Agreement shall be
void and of no effect.
62
30. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Arizona. Any action brought to enforce or construe any
provision of this Agreement shall be maintained in the Superior Court of the
State of Arizona in and for the County of Cochise, or other county as mutually
agreed by the parties.
31. SEVERABILITY. If any provision of this Agreement is declared void
or unenforceable, such provision shall be deemed severed from this Agreement,
and this Agreement shall otherwise remain in full force and effect.
32. WAIVER. Failure of any party to exercise any right, remedy, or
option arising out of a breach of this Agreement shall not be deemed a waiver of
any right, remedy, or option with respect to any subsequent or different breach,
or the continuance of any existing breach.
33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all the counterparts shall be deemed to constitute one instrument,
and each counterpart shall be deemed an original. If counterparts are employed
then, upon Close of Escrow, Escrow Agent shall assemble all counterpart
signature pages into a single document containing all original signatures, and
this document shall be delivered to Buyer's counsel with copies of the document
(including all signatures) to be delivered contemporaneously. by Escrow Agent,
to Seller, Seller's counsel and Buyer.
34. TIME OF ESSENCE. Time is hereby declared to be of the essence for
the performance of all conditions and obligations under this Agreement.
35. CONSTRUCTION/INTERPRETATION. The captions and paragraph headings
used in this Agreement are for convenience and reference only and are not
intended to define, limit, or describe the scope or intent of any provision of
this Agreement. When used herein, the terms "include" or "including" shall mean
without limitation by reason of the enumeration. All grammatical usage herein
shall be deemed to refer to the masculine, feminine, neuter, singular, or plural
as the identity of the person or persons may require. The term "person" shall
include an individual, corporation. partnership, trust, estate, or any other
entity. If the last day of any time period stated herein shall fall on a
Saturday, Sunday, or legal holiday in the State of Arizona, then the duration of
such time period shall be extended so that it shall end on the next succeeding
day which is not a Saturday, Sunday, or legal holiday in the State of Arizona.
36. REMEDIES NOT EXCLUSIVE. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. The election of any one or more remedies shall not
constitute a waiver of the right to pursue other remedies available under this
Agreement, at law or in equity.
37. FOREIGN TAX WITHHOLDINGS. Seller shall provide to Buyer and Escrow
Agent at Closing appropriate affidavits stating that it is not a foreign person
and that no withholding is required pursuant to Internal Revenue Code ss. 1445.
In the event such affidavits are not forthcoming or in the event either Escrow
Agent or Buyer knows or has reason to know that they are false, Escrow Agent is
hereby irrevocably authorized and directed to withhold 10% of Seller's proceeds
of the purchase price pursuant to Code ss. 1445 for disposition in accordance
therewith and in accordance with applicable regulations.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement
on the dates set forth below.
63
SELLER:
Date: 9/27/02 /s/ BARBARA MAJOR
--------------------- ----------------------------------
Barbara Major
Date: 9/27/02 /s/ ROGER MAJOR
--------------------- ----------------------------------
Roger Major
BUYER:
Date: 9/27/02 By: /s/ KIRK FISCHER
--------------------- ------------------------------
Kirk Fischer, President, Penge
Corporation
Date: 9/27/02 By: /s/ JIM FISCHER
--------------------- ------------------------------
Jim Fischer, Vice President, Penge
Corp.
ESCROW AGENT:
Fidelity National Title Company
Date: By:
--------------------- ------------------------------
Its:
------------------------------
A parcel of land in Section 34, Township I S south, Range 26 east, Gila and Salt
River Meridian, Cochise County. Arizona, more particularly described as:
The north half of said Section 34, EXCEPT the north half of the north half of
the north half of the north half of the section.
INCLUDING an easement for the ingress and egress across the north 30 feet of the
subject parcel, as recorded at fee number 000821845, Cochise County Recorder's
Office.
AND INCLUDING an easement for Highway 191, consisting of the west fifty feet of
the subject parcel, recorded in Docket 127, Page 522, Cochise County Recorder's
Office.
AND EXCEPTING the following described parcel:
Commencing at the northwest corner of said Section 34. then South
0(degree)03'00" West, 560.00 ft. along the west line of Section 34 TO the True
Point of Beginning;
Then continuing S 0(degree)03'00" W, 430.00 ft along the west line of Section
34;
Then S 89(degree)55'22" E, 750.00 ft.;
Then N 0(degree)03'00" E, 430.00 ft. parallel to the west line of Section 34;
Then N 89(degree)55'22" W, 750.00 ft. to the True Point of Beginning.
Including and easement for State Highway 191, consisting of the West 50 feet of
the above described property, as recorded in Docket 127, Page 522. Cochise
County Recorder's Office.
- All Tree Crops being grown on the Property.
- Two (2) Lockwood 2100 Center Pivot Sprinkler Systems.
- Miscellaneous farm buildings and structures, further described as:
40' X 75' Butler Farmstead II Metal Shop/Equipment Barn.
50' X 200' Metal Packing Shed with a 30' X 120' Lean-to.
20" X 84' Greenhouse with Heating and Cooling System.
All buildings and structures are sold as-is, where-is.
- Wells and all water rights appurtenant thereto including:
Arizona Department of Water Resources, Well numbers 55-606652,
55-606653, and 55-84997.
- Underground Water Distribution System - All fences on property
65
EXHIBIT E1
PROMISSORY NOTE
$200.000.00 Cochise County, Arizona
September 27, 2002
FOR VALUE RECEIVED. Penge Corporation, a Nevada Corporation located at
1930 Village Center Circle 3, Suite 446, Las Vegas, NV 89134 (hereinafter
"Maker"), promises to pay Steven Sutherland, (Holder), at 5120 N. Indian Horse
Trail, Tucson, Arizona, or at such other place as Holder may from time to time
designate in writing, in lawful money of the United States of America, the
principal sum of Two Hundred Thousand and No/l00 Dollars ($200,000.00), together
with interest on the principal outstanding from time to time (the "Principal
Balance") from the date of this promissory note (this "Note") until paid, at the
rate of seven percent (7%) per annum, compounded monthly. Payments shall be
payable as follows:
a. Fifty Thousand Dollars and 00/100 ($50,000) principle and
interest due on March 1, 2003.
b. Fifty Thousand Dollars and 00/100 ($50,000) principle and
interest due on March 1, 2004.
c. Fifty Thousand Dollars and 00/100 ($50,000) principle and
interest due on March 1, 2005.
d. Fifty Thousand Dollars and 00/100 ($50,000) principle and
interest due on March 1, 2006.
e. Entire balance of principle and interest shall be due on
March 1, 2007.
Any payments hereunder shall be credited first to interest then due,
and the remainder to principal. Prepayments of principal, in whole or in part.
may be made at any time, without penalty of kind, nature or amount.
Maker is providing this Note to Holder pursuant to the terms of a
Purchase Agreement, Receipt and Escrow Instructions dated August 14, 2002 in
which Maker is the "Buyer" and Holder is the "Seller" (the "Escrow Agreement").
and such other documents referenced in the Escrow Agreement, which Agreements
are collectively referred to as the "Purchase Agreements".
This Note is secured by the assets shown in Schedule E1 (the "Security
Document") wherein Maker is the "Debtor" and Holder is the "Secured Party,"
pertaining to those certain assets, rights and property described therein. All
agreements, conditions, covenants, provisions and stipulations contained in the
Security Document which are to be kept and performed in favor of the Holder
and/or the Secured Party are hereby made a part of this Note, fully and
completely, to the same extent and with the same force and effect as if they
were fully set forth herein, and Maker covenants and agrees to keep and perform
them or cause them to be kept and performed strictly in accordance with their
terms.
If any installment payment due under this Note is not paid within
fifteen (15) days of its due date and after Makers receipt of a notice of
nonpayment, then the Maker shall pay to the Holder a late charge equal to five
percent (5%) of the amount so due. In addition to the late charge, any payment
due Holder which is more than thirty (30) days past due shall be subject to a
default interest rate of fifteen percent (15%). Holder may accelerate this note
66
making all principal, interest and other charges immediately due and payable if
Maker is more than thirty (30) days late in making payment and Holder provides
Maker with written notice of such acceleration ten (10) business days prior to
such acceleration taking effect, and any amounts then due under the Note are not
paid within said ten (10) business day period.
This Note shall be governed and construed according to the laws of the
State of Arizona.
Any instruction by Holder to Maker purporting to change the place of
payment must be signed by all Holders to be effective.
MAKER'S RIGHT OF OFFSET
In the event that, after closing of the transactions contemplated in
any or all of the Purchase Agreements, any claims are submitted against the
business, assets, property or stock which are the subject of any or all of the
Purchase Agreements by creditors, taxing authorities, auditors, or any other
person, arising out of obligations incurred by any Holder, all Holders
collectively, or any of the Holder's businesses, assets or stock which is the
subject of the Purchase Agreements, Maker shall have the right to pay such debts
or claims and offset from any amounts due under this Note the amount so paid,
pursuant to the following procedure:
Maker shall send a copy of any bill, invoice or claim to Holders by certified
mail together with a demand for the Holders, or the applicable Holder, within
fifteen (15) days of the date of the certified delivery date, to prove that such
debt, invoice or claim has been paid in full, or to deliver to Maker a cashier's
check payable to the appropriate creditor in the full amount of the debt,
invoice or claim. In the event Holders fail to either provide evidence of
payment or provide a cashier's check for payment within the fifteen (15) day
period set forth above, then Maker shall have the right to pay such debt,
invoice or claim and deduct such amount from payments due under this Note. Maker
shall reasonably cooperate with Holders where applicable in resolving any
disputed claims. Should any disputed claims be resolved to the benefit of the
Holder, or the applicable Holder, after the Maker has exercised the right of
offset contained herein, and the Maker has received payment for such resolved
claim, then Maker agrees to promptly reimburse Holder, or the applicable Holder,
for the amount of the payment received by Maker. This Right Of Offset is
specifically for the failure of the Seller to have paid all outstanding debts
against the Business and for no other reason.
The prevailing party in any action or arbitration arising out of the
terms of this Note shall be entitled to an award of reasonable attorney's fees,
court costs, litigation costs and expenses. and expert witness fees and costs.
MAKER:
Penge Corporation
X /s/ KIRK FISCHER Date: 9/27/02
------------------------- ------------
Kirk Fischer, President
X /s/ JIM FISCHER Date: 9/27/02
------------------------- ------------
Jim Fischer, Vice President
67
HOLDER:
X /s/ STEVEN SUTHERLAND Date: 9/27/02
------------------------- ------------
Steven Sutherland
68
SCHEDULE E1
TO
PROMISSORY NOTE
SECURED ASSETS, RIGHTS AND PROPERTY
All outstanding shares of Major Trees, Inc. stock
Name: Arizona Goldwater Pine
Name: Texas Lone Star Pine
Name: Las Vegas Blue Pine
Customer list of Major Trees Inc.
All financial books and records of the business.
All original equipment and furniture transferred in sale.
Phone Number: 520-749-6428
69
EXHIBIT E2
PROMISSORY NOTE
$600,000.00 Cochise County, Arizona
September ____ 2002
FOR VALUE RECEIVED. Penge Corporation, a Nevada Corporation located at
1930 Village Center Circle 3, Suite 446, Las Vegas, NV 89134 (hereinafter
"Maker"), promises to pay jointly to Roger Major and Barbara Major (collectively
hereinafter "Holder"), at _____________________________________ Arizona, or at
such other place as Holder may from time to time designate in writing, in lawful
money of the United States of America, the principal sum of Six Hundred Thousand
and No/100 Dollars ($600,000.00), together with interest on the principal
outstanding from time to time (the "Principal Balance") from the date of this
promissory note (this "Note') until paid, at the rate of seven percent (7%) per
annum, compounded monthly. Payments shall be payable as follows:
a. One Hundred Fifty Thousand Dollars and 00/100 ($150,000)
principal and interest due on March 1, 2003.
b. One Hundred Fifty Thousand Dollars and 00/100 ($150,000)
principal and interest due on March 1, 2004.
c. One Hundred Fifty Thousand Dollars and 00/100 ($150,000)
principal and interest due on March 1, 2005.
d. One Hundred Fifty Thousand Dollars and 00,/100 ($150,000)
principal and interest due on March 1, 2006.
e. Entire balance of principle and interest shall be due on
March 1, 2007.
Any payments hereunder shall be credited first to interest then due,
and the remainder to principal. Prepayments of principal, in whole or in part.
may be made at any time, without penalty of kind, nature or amount.
Maker is providing this Note to Holder pursuant to the terms of a
Purchase Agreement, Receipt and Escrow Instructions dated August 14, 2002 in
which Maker is the "Buyer" and Holder is the "Seller" (the "Escrow Agreement").
and such other documents referenced in the Escrow Agreement, which Agreements
are collectively referred to as the "Purchase Agreements".
This Note is secured by a Deed of Trust dated the same date as this
Note, securing Holder's interest in 272.596+/- acres of farmland located at
14660 S. Highway 191 Elfrida, Arizona (which is the subject of the Escrow
Agreement), and by the assets shown in Schedule E2 (the "Security Document")
wherein Maker is the "Debtor" and Holder is the "Secured Party," pertaining to
those certain assets, rights and property described therein. All agreements,
conditions, covenants, provisions and stipulations contained in the Deed of
Trust or Security Document which are to be kept and performed in favor of the
Holder and/or the Secured Party are hereby made a part of this Note, fully and
completely, to the same extent and with the same force and effect as if they
were fully set forth herein, and Maker covenants and agrees to keep and perform
them or cause them to be kept and performed strictly in accordance with their
terms.
70
If any installment payment due under this Note is not paid within
fifteen (15) days of its due date and after Maker's receipt of a notice of
nonpayment, then the Maker shall pay to the Holder a late charge equal to five
percent (5%) of the amount so due. In addition to the late charge, any payment
due Holder which is more than thirty (30) days past due shall be subject to a
default interest rate of fifteen percent (15%). Holder may accelerate this note
making all principal, interest and other charges immediately due and payable if
Maker is more than thirty (30) days late in making payment and Holder provides
Maker with written notice of such acceleration ten (10) business days prior to
such acceleration taking effect, and any amounts then due under the Note are not
paid within said ten (10) business day period.
This Note shall be governed and construed according to the laws of the
State of Arizona.
Any instruction by Holder to Maker purporting to change the place of
payment must be signed by all Holders to be effective.
MAKER'S RIGHT OF OFFSET
In the event that, after closing of the transactions contemplated in
any or all of the Purchase Agreements, any claims are submitted against the
business, assets, property or stock which are the subject of any or all of the
Purchase Agreements by creditors, taxing authorities, auditors, or any other
person, arising out of obligations incurred by any Holder. all Holders
collectively, or any of the Holder's businesses, assets or stock which is the
subject of the Purchase Agreements, Maker shall have the right to pay such debts
or claims and offset from any amounts due under this Note the amount so paid,
pursuant to the following procedure:
Maker shall send a copy of any bill, invoice or claim to Holders by certified
mail together with a demand for the Holders, or the applicable Holder, within
fifteen (15) days of the date of the certified delivery date, to prove that such
debt, invoice or claim has been paid in full, or to deliver to Maker a cashier's
check payable to the appropriate creditor in the full amount of the debt,
invoice or claim. In the event Holders fail to either provide evidence of
payment or provide a cashier's check for payment within the fifteen (15) day
period set forth above, then Maker shall have the rig to pay such debt. invoice
or claim and deduct such amount from payments due under this Note. Maker shall
reasonably cooperate with Holders where applicable in resolving any disputed
claims. Should any disputed claims be resolved to the benefit of the Holder, or
the applicable Holder, after the Maker has exercised the right of offset
contained herein, and the Maker has received payment for such resolved claim,
then Maker agrees to promptly reimburse Holder, or the applicable Holder, for
the amount of the payment received by Maker. This Right Of Offset is
specifically for the failure of the Seller to have paid all outstanding debts
against the Business and for no other reason.
The prevailing party in any action or arbitration arising out of the
terms of this Note shall be entitled to an award of reasonable attorney's fees,
court costs, litigation costs and expenses, and expert witness fees and costs.
MAKER:
Penge Corporation
X /s/ KIRK FISCHER Date: 9/27/02
Kirk Fischer, President
X /s/ JIM FISCHER Date: 9/27/02
------------------------- ------------
Jim Fischer, Vice President
71
HOLDERS:
/s/ ROGER MAJOR Date: 9/27/02
----------------------- ------------
Roger Major
/s/ BARBARA MAJOR Date: 9/27/02
----------------------- ------------
72
SCHEDULE E2
TO
PROMISSORY NOTE
SECURED ASSETS, RIGHTS AND PROPERTY
All 272.596+/- acres of M7 farmland located at 14660 S. Highway 191 Elfrida,
Arizona
2 Lockwood 2100 Center Pivot Sprinklers
I John Deere 4640 tractor, SN 01 9967R
I John Deere 2840 tractor, SN 347046CD
I S Row Ag Sprayer
1 Will Rich chisel plow
I John Deere disk, 14'
I Westgo 6 Row cultivator
I Tool Carrier
I Wesked Scraper, 12'
1 Toyota Forklift, Model 42-5FG25 5N405FGU25-79 125
1 Bush Hog Shredder, Model 32145 SN 12-01172
1 1965 2 ton truck, Chevrolet
1 900 Gallon Diesel Tank and Pump
I Squash packing line, conveyors, brushes, etc.
Various Shop Equipment including welders, compressors. hand and power tools,
parts inventory, tractor and forklift spare parts inventory, pivot
sprinkler spare parts inventory, miscellaneous spare parts, etc.
4 Farm Utility trailers, side-dump, 6 Wheel
4 Tree trailers, 4 wheel
1983 Ford F-250, 3/4 ton, 4WD
Misc. toolbars and cultivators
Underground water distribution system
Water Rights as further set forth in the Asset Purchase Agreement (Exhibit "A")
Greenhouse with seedling trays and tubes
2 Metal outbuildings
Fencing
All tree inventory and crops located on the property in Elfrida Arizona
Name: M7 Farms
Phone Number: 520-642-3766
73
EXHIBIT F1
CONSULTING AGREEMENT
(STEVEN SUTHERLAND)
This Consulting Agreement ("Agreement"), dated September 27, 2002 (the
"Effective Date") is between Penge Corporation located at 1930 Village Center
Circle 3, Suite 446, Las Vegas, NV 89134 ("Buyer"), and Steven Sutherland
("Seller").
RECITALS:
A. Buyer and Seller, among other parties, entered into a Purchase
Agreement, Receipt and Escrow Instructions dated August 14, 2002 (the "Escrow
Agreement") and other agreements referred to therein, to purchase from Seller
certain assets and stock of Major Trees, Inc., an Arizona corporation wholly
owned by Seller, used by Seller together with certain real and personal property
owned by Roger and Barbara Major, husband and wife, dba M7 Farms, in a Christmas
tree farming and wholesale business (the "Business") known as M7 Farms located
in Elfrida, Arizona.
B. Seller has owned and operated Major Trees, Inc. over an extended
period of time and is a recognized expert in the growing and selling of live
elderica pine trees;
C. Seller has developed, acquired and compiled trade secrets, unique
methods and techniques and other valuable confidential and proprietary
information necessary to the continued successful operation of the Business;
D. The Escrow Agreement requires that the Seller will provide
management advisory and consulting services to Buyer and such services are
further described in this Consulting Agreement.
E. Buyer has purchased the Business from Seller with the understanding
and under the condition that Seller will provide full and complete training to
Buyer in all aspects of the Business and will consult with Buyer in connection
therewith.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, including the consideration contained in the
Recitals above, and in further consideration of the promises and agreements that
follow, the parties agree to the following terms, conditions, covenants and
promises:
2. AREAS AND SCOPE OF CONSULTATION. Seller agrees to provide consulting
in all areas of the sales and marketing operation of the Business as well as:
pruning, cutting, shipping, marketing, selling and shipping live trees, and
compliance with all applicable laws, rules or regulations pertinent to
activities conducted in the Business. Seller agrees to provide Buyers with
hands-on training and demonstration of the methods and techniques of all areas
of consultation described above. Seller is not required to provide or
participate in physical labor beyond the occasional hands-on demonstration of
methods and techniques necessary to instruct Buyers as to any of the areas of
consultation.
74
3. TERM. Seller agrees to provide consulting for a period of time
commencing as of closing and ending three hundred and sixty (360) days
thereafter.
4. AVAILABILITY OF SELLER. Seller agrees to make himself available to
Buyer on an as-needed basis for reasonable telephone and in-person consultation
regarding the Business during normal working hours of the Business. Seller
understands and agrees that during critical operations such as planting,
harvesting, packaging, shipping and sales, Seller will provide training to Buyer
in-person and on-premises during normal working hours of the Business as
reasonably requested by Buyer within the time limits set forth in section four
(4) below. During non-critical periods of operation, Seller may provide
consulting to Buyer via telephone, fax, e-mail or other method of communication
unless Buyer reasonably requests Seller to be on-premises. Seller shall notify
Buyer in advance of any periods for which Seller is not available, such as
during vacations, or shall provide Buyer with appropriate information necessary
to contact Seller.
5. TIME COMMITMENT. Seller and Buyer agree that the number of hours of
on-site consultation provided by Seller shall be as-needed and reasonably
requested by Buyer. Seller shall not be required to provide more than eight (8)
hours of consultation in any one day or thirty (30) hours of consultation in any
one month except during tree harvest in the months of November and December when
Seller may be required to contribute up to one hundred (100) hours per month as
reasonably requested by Buyer. Phone consultation shall be reasonable but
unlimited during the term of this Agreement.
6. TRAVEL. Seller shall be responsible for Seller's reasonable and
customary expenses for travel, meals, lodging and communications necessary to
perform the consulting services required hereunder. Buyer will reimburse Seller
only for any additional travel expenses incurred by Seller in the performance of
this Agreement over and above Seller's ordinary travel expenses to and from the
farm Business location.
7. TRADE SHOWS. During the term of this Agreement, Seller agrees to
accompany and to assist Buyers in attending and/or exhibiting at industry trade
shows as reasonably requested by Buyer. Buyer will be responsible for Seller's
travel and lodging expenses associated with the attendance at trade shows.
8. COMPENSATION. Seller's consultation services are being provided to
Buyer as a condition of purchase evidenced by the Escrow Agreement and related
agreements signed by Seller and Buyer. Seller is entitled to compensation for
the performance of this Agreement in accordance with the allocation set forth in
the Price Allocation schedule (Exhibit H).
9. GENERAL PROVISIONS.
A. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the successors, assigns, personal
representatives and heirs of the parties hereto, and upon
execution by all parties, this Agreement shall be absolutely
binding, non-assignable and fully enforceable.
B. SEVERABILITY. In the event that any provision or portion of
this Agreement is held to be unenforceable or invalid by any
court of competent jurisdiction or arbitration tribunal, the
validity and enforceability of the remaining provisions, or
portions thereof, shall not be affected thereby and effect
shall be given to the intent manifested by the provisions, or
portions thereof, held to be enforceable and valid.
75
C. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Arizona.
D. ARBITRATION. This Agreement shall be governed by the
arbitration provisions set forth in the Escrow Agreement,
which are hereby incorporated herein as if set forth fully in
this Agreement.
E. COUNTERPARTS. This Agreement may be executed in counterparts,
and all counterpart signatures shall constitute the whole of
this Agreement and be treated as the original Agreement.
F. NOTICES. All notices, demands or other communications
required or permitted to be given hereunder shall be in
writing and shall be served upon the other party by personal
delivery (including by any nationally-recognized overnight
courier service) or by first-class, registered or certified
mail, postage prepaid, with return receipt requested,
addressed to the parties as follows:
To the SELLER: With a copy to:
Steven Sutherland Monroe & Associates, P.C.
5120 N. Indian Horse Trail Attn: Michael J. Monroe, Esq.
Tucson, Arizona 85749 6280 E. Pima Street
Tucson, Arizona 85712
To the BUYER: With a copy to:
Penge Corporation _________________________
1930 Village Center Circle 3 _________________________
Suite 446 _________________________
Las Vegas, NV 89134 _________________________
Notices given by personal delivery shall be deemed to have
been given upon delivery to the appropriate address against receipt therefor (or
upon refusal of acceptance); and notices given by first-class mail shall be
deemed to have been given two (2) days after deposit in the U.S. mail. Each
party may designate, from time to time, another address in place of the
information set forth above by notifying the other parties in the same manner as
provided in this paragraph. If the date of deemed delivery pursuant to this
paragraph is not a business day, then any such notice or communication shall be
deemed to have been given on the next business day thereafter.
G. ATTORNEY'S FEES. In the event any action or proceeding is
taken to enforce any of the terms or covenants set forth in
this Agreement, the prevailing party shall be entitled to an
award of reasonable attorney's fees and costs incurred,
litigation expenses, expert witness fees and costs.
H. INCORPORATION OF RECITALS. The Recitals are hereby
incorporated in and made part of this Agreement.
76
IN WITNESS WHEREOF, the parties hereto have signed their names as of
the date and year first above written.
SELLER:
/s/ STEVEN SUTHERLAND
-------------------------------------
Steven Sutherland
BUYER:
Penge Corporation
------------------------------------- -------------------------------------
Kirk Fischer Jim Fischer
X /s/ KIRK FISCHER X /s/ JIM FISCHER
------------------------------------- -------------------------------------
President Vice President
77
EXHIBIT F2
CONSULTING AGREEMENT
(ROGER MAJOR)
This Consulting Agreement ("Agreement"), dated September 27, 2002 (the
"Effective Date") is between Penge Corporation located at 1930 Village Center
Circle 3, Suite 446, Las Vegas, NV 89134 ("Buyer"), and Roger Major ("Seller").
RECITALS:
A. Buyer and Seller, among other parties, entered into a Purchase
Agreement, Receipt and Escrow Instructions dated August 14, 2002 (the "Escrow
Agreement") and other agreements referred to therein, to purchase from Seller
certain real property, personal property and business assets owned and used by
Seller in a Christmas tree farming business (the "Business") known as M7 Farms
located in Elfrida, Arizona, as well as certain assets and stock owned by Steven
Sutherland ("Sutherland") used in connection with the Business;
B. Seller has owned and operated the Business over a long period of
time and is a recognized expert in the growing and selling of live elderica pine
trees;
C. Seller has developed, acquired and compiled trade secrets, unique
methods and techniques and other valuable confidential and proprietary
information necessary to the continued successful operation of the Business;
D. The Escrow Agreement requires that the Seller will provide
management advisory and consulting services to Buyer and such services are
further described in this Consulting Agreement.
E. Buyer has purchased the Business from Seller with the understanding
and under the condition that Seller will provide full and complete training to
Buyer in all aspects of the Business and will consult with Buyer in connection
therewith.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, including the consideration contained in the
Recitals above, and in further consideration of the promises and agreements that
follow, the parties agree to the following terms, conditions, covenants and
promises:
10. AREAS AND SCOPE OF CONSULTATION. Seller agrees to provide
consulting in all areas of operation of the Business including but not limited
to: seed harvesting, seed planting, green house operations, field planting,
cultivating, fertilizing, watering, pruning, cutting and tree harvesting,
packaging and shipping, general farm management techniques and equipment
operation, shipping live trees, and compliance with all applicable laws, rules
or regulations pertinent to activities conducted in the Business. Seller agrees
to provide Buyer with hands-on training and demonstration of the methods and
techniques of all areas of consultation described above. Seller is not required
to provide or participate in physical labor beyond the occasional hands-on
demonstration of methods and techniques necessary to instruct Buyer as to any of
the areas of consultation.
78
11. TERM. Seller agrees to provide consulting for a period of time
commencing as of the closing date of sale and ending three hundred and sixty
(360) days thereafter.
12. AVAILABILITY OF SELLER. Seller agrees to make himself available to
Buyer on an as-needed basis for reasonable telephone and in-person consultation
regarding the Business during normal working hours of the Business. Seller
understands and agrees that during critical operations such as planting and
harvesting, Seller will provide training to Buyer in-person and on-premises
during normal working hours of the Business. During non-critical periods of
operation, Seller may provide consulting to Buyer via telephone, fax, e-mail or
other method of communication unless Buyer reasonably requests Seller to be
on-premises. Seller shall notify Buyer in advance of any periods for which
Seller is not available, such as during vacations, or shall provide Buyers with
appropriate information necessary to contact Seller.
13. TIME COMMITMENT. Seller and Buyers agree that the number of hours
of on-site consultation provided by Seller shall be as-needed and reasonably
requested by Buyer. However, Seller shall not be required to provide more than
eight (8) hours of consultation in any one day or more than thirty (30) hours in
any one month except during tree harvest in the months of November and December
when Seller may be required to contribute up to one hundred (100) hours per
month as reasonably requested by Buyer. Phone consultation shall be reasonable
but unlimited during the term of this Agreement.
14. TRAVEL. Seller shall be responsible for Seller's reasonable and
customary expenses for travel, meals, lodging and communications necessary to
perform the consulting services required hereunder. Buyer will reimburse Seller
only for any additional travel expenses incurred by Seller in the performance of
this Agreement over and above Seller's ordinary travel expenses to and from the
farm Business location.
15. TRADE SHOWS. During the term of this Agreement, Seller is not
required to assist Buyer in attending and/or exhibiting at industry trade shows.
16. COMPENSATION. Seller's consultation services are being provided to
Buyers a condition of purchase evidenced by the Escrow Agreement and related
agreements signed by Seller and Buyer. Seller is entitled to compensation for
the performance of this Agreement in accordance with the Price Allocation
schedule (Exhibit H).
17. GENERAL PROVISIONS.
A. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the successors, assigns, personal
representatives and heirs of the parties hereto, and upon
execution by all parties, this Agreement shall be absolutely
binding, non-assignable and fully enforceable.
B. SEVERABILITY. In the event that any provision or portion of
this Agreement is held to be unenforceable or invalid by any
court of competent jurisdiction or arbitration tribunal, the
validity and enforceability of the remaining provisions, or
portions thereof, shall not be affected thereby and effect
shall be given to the intent manifested by the provisions, or
portions thereof, held to be enforceable and valid.
79
C. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Arizona.
D. ARBITRATION. This Agreement shall be governed by the
arbitration provisions set forth in the Escrow Agreement,
which are hereby incorporated herein as if set forth fully in
this Agreement.
E. COUNTERPARTS. This Agreement may be executed in counterparts,
and all counterpart signatures shall constitute the whole of
this Agreement and be treated as the original Agreement.
F. NOTICES. All notices, demands or other communications
required or permitted to be given hereunder shall be in
writing and shall be served upon the other party by personal
delivery (including by any nationally-recognized overnight
courier service) or by first-class, registered or certified
mail, postage prepaid, with return receipt requested,
addressed to the parties as follows:
To the SELLER: With a copy to:
Roger Major Monroe & Associates, P.C.
___________________ Attn: Michael J. Monroe, Esq.
___________________ 6280 E. Pima Street
Tucson, Arizona 85712
To the BUYER: With a copy to:
Penge Corporation _________________________
1930 Village Center Circle 3 _________________________
Suite 446 _________________________
Las Vegas, NV 89134 _________________________
Notices given by personal delivery shall be deemed to have
been given upon delivery to the appropriate address against receipt therefor (or
upon refusal of acceptance); and notices given by first-class mail shall be
deemed to have been given two (2) days after deposit in the U.S. mail. Each
party may designate, from time to time, another address in place of the
information set forth above by notifying the other parties in the same manner as
provided in this paragraph. If the date of deemed delivery pursuant to this
paragraph is not a business day, then any such notice or communication shall be
deemed to have been given on the next business day thereafter.
G. ATTORNEY'S FEES. In the event any action or proceeding is
taken to enforce any of the terms or covenants set forth in
this Agreement, the prevailing party shall be entitled to an
award of reasonable attorney's fees and costs incurred,
litigation expenses, expert witness fees and costs.
H. INCORPORATION OF RECITALS. The Recitals are hereby
incorporated in and made part of this Agreement.
80
IN WITNESS WHEREOF, the parties hereto have signed their names as of
the date and year first above written.
SELLER:
/s/ ROGER MAJOR
-------------------------------------
Roger Major
BUYER:
Penge Corporation
------------------------------------- ------------------------------------
Kirk Fischer Jim Fischer
X /s/ KIRK FISCHER X /s/ JIM FISCHER
------------------------------------- ------------------------------------
President Vice President
81
EXHIBIT G1
NON-COMPETE, CONFIDENTIALITY
AND
NON-SOLICITATION AGREEMENT
(STEVEN SUTHERLAND)
This Non-compete, Confidentiality and Non-solicitation Agreement (the
"Non-compete Agreement") is entered into effective the 27th day of September,
2002, by and between STEVEN SUTHERLAND, ("Seller"), and PENGE CORPORATION
located at 1930 Village Center Circle 3, Suite 446, Las Vegas, NV 89134
("Buyer").
RECITALS:
A. Seller and Buyer entered into a Purchase Agreement, Receipt and
Escrow Instructions dated August 14, 2002 (the "Escrow Agreement") in connection
with the Seller's sale to Buyer and Buyer's purchase from Seller of Seller's
stock in Major Trees, Inc., an Arizona corporation (the "Corporation"),
operating as a Christmas tree wholesale business (the "Business"). The Escrow
Agreement also provides for the sale of farm and residential real property and
Business assets owned by Roger and Barbara Major ("Major") and used in
connection with the Business.
B. As an express condition of the Buyer's agreement to purchase the
Assets as defined in the Escrow Agreement, Seller has agreed to provide this
non-compete agreement to Buyer. A similar agreement will be provided to Buyer by
Major. Breach by Buyer of the Escrow Agreement shall be deemed a breach of this
Agreement thereby relieving Seller from the obligations of this Agreement.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
18. INCORPORATION OF RECITALS. The Recitals set forth above are hereby
incorporated as terms of this Non-compete Agreement.
19. NON-COMPETE AGREEMENT. In addition to all other agreements of the
Seller set forth in the Escrow Agreement and any and all documents, exhibits,
schedules and instruments referred to therein or attached thereto, Seller hereby
agrees that beginning as of the Closing Date as defined in the Escrow Agreement,
and for a period of five (5) years thereafter, Seller shall not own, operate,
manage or become employed in, directly or indirectly, whether as an owner,
partner, shareholder, member, investor, joint venturer, manager, advisor,
consultant, employee or otherwise, any Christmas tree farm business, Christmas
tree sale business or other business involving the farming, distribution and
sale of any Christmas, Landscaping, or Nursery trees. The non-compete provisions
herein shall apply in Arizona, Texas, New Mexico, California, and Nevada. Seller
acknowledges that the non-compete restrictions, the time limit, and the
geographic area described above are reasonable in all respects.
82
20. NON-DISCLOSURE/CONFIDENTIALITY. From and after the date of Closing
as defined in the Escrow Agreement, and for an indefinite period of time
thereafter, Seller shall not disclose to any third party any proprietary or
confidential information of or relating to the Business. Seller agrees not to
disseminate any proprietary or confidential information regarding the Business
to others. The preceding shall not apply to information that: (a) is, was or
becomes generally known or available to the public or the industry other than as
a result of a disclosure by Seller; (b) is subsequently obtained by Seller from
an independent third-party source having no obligation of confidentiality to
Buyer; or (c) is required to be disclosed by law. Seller shall advise Buyer in
writing of any requests, including a subpoena or similar legal inquiry, to
disclose any such confidential information such that Buyer can seek appropriate
legal relief.
For purposes of this Agreement, the term "Confidential Information"
means:
(a) any and all trade secrets concerning the Business, product
specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current and planned
research and development, current and planned manufacturing
and distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists,
market studies, business plans, computer software and
programs (including object code and source code), database
technologies, systems, structures architectures processes,
improvements, devices, know-how, discoveries, concepts,
methods, information and any other information, however
documented, of Seller that is a trade secret within the
meaning of the Arizona trade secret law;
(b) any and all information concerning the Business which
includes historical financial statements, financial
projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds
of key personnel, contractors, agents, suppliers and
potential suppliers, personnel training and techniques and
materials, purchasing methods; and
(c) any and all notes, analysis, compilations, studies, summaries
and other material prepared by or for Seller containing or
based, in whole or in part, upon any information included in
the foregoing.
21. NON-SOLICITATION. Seller agrees that it will not solicit, directly
or indirectly, any customer of the Business to purchase Christmas trees from any
source other than the Buyer, or any employee of Seller, the Business or any
co-Seller to leave the employee's employment position with the Buyer.
22. REDUCTION OF SCOPE AND SEVERABILITY. If a final judgment of a court
or arbitrator of competent jurisdiction declares that any term or provision of
this Non-compete Agreement is invalid or unenforceable, the parties agree that
the court or arbitrator making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
83
23. GENERAL PROVISIONS.
a) BINDING EFFECT. This Non-compete Agreement shall be binding
upon and inure to the benefit of the successors, assigns,
personal representatives and heirs of the parties hereto, and
upon execution by all parties, this Non-compete Agreement
shall be absolutely binding, non-assignable and fully
enforceable.
b) SEVERABILITY. In the event that any provision or portion of
this Non-compete Agreement is held to be unenforceable or
invalid by any court of competent jurisdiction or arbitration
tribunal, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected
thereby and effect shall be given to the intent manifested by
the provisions, or portions thereof, held to be enforceable
and valid.
c) GOVERNING LAW. This Non-compete Agreement shall be governed
by and construed in accordance with the laws of the State of
Arizona.
d) ARBITRATION. With the exception of Buyer's right to a
temporary restraining order, a preliminary injunction or a
permanent injunction, controversies under, or claims arising
out of, or relating to this Agreement, or any breach thereof,
shall be resolved by arbitration in accordance with the
arbitration provisions set forth in the Escrow Agreement,
which are hereby incorporated herein as if set forth fully in
this Non-compete Agreement.
e) COUNTERPARTS. This Non-compete Agreement may be executed in
counterparts, and all counterpart signatures shall constitute
the whole of this Non-compete Agreement and be treated as the
original Non-compete Agreement.
f) COMPENSATION. As consideration for the covenants in Section 2
of this Agreement, Buyer will compensate Seller in accordance
with the Price Allocation schedule, Exhibit H, which is a
part of this Agreement.
g) NOTICES. All notices, demands or other communications
required or permitted to be given hereunder shall be in
writing and shall be served upon the other party by personal
delivery (including by any nationally-recognized overnight
courier service) or by first-class, registered or certified
mail, postage prepaid, with return receipt requested,
addressed to the parties as follows:
To the SELLER: With a copy to:
Steven Sutherland Monroe & Associates, P.C.
5120 N. Indian Horse Trail Attn: Michael J. Monroe, Esq.
Tucson, Arizona 85749 6280 E. Pima Street
Tucson, Arizona 85712
To the BUYER: With a copy to:
Penge Corporation ________________________
1930 Village Center Circle 3 ________________________
Suite 446 ________________________
Las Vegas, NV 89134 ________________________
84
A. Notices given by personal delivery shall be deemed to have
been given upon delivery to the appropriate address against
receipt therefor (or upon refusal of acceptance); and notices
given by first-class mail shall be deemed to have been given
two (2) days after deposit in the U.S. mail. Each party may
designate, from time to time, another address in place of the
information set forth above by notifying the other parties in
the same manner as provided in this paragraph. If the date of
deemed delivery pursuant to this paragraph is not a business
day, then any such notice or communication shall be deemed to
have been given on the next business day thereafter.
h) ATTORNEY'S FEES. In the event any action or proceeding is
taken to enforce any of the terms or covenants set forth in
this Non-compete Agreement, the prevailing party shall be
entitled to an award of reasonable attorney's fees and costs
incurred, litigation expenses, expert witness fees and costs.
IN WITNESS WHEREOF, the parties hereto have signed their names as of
the date and year first above written.
SELLER:
/s/ STEVEN SUTHERLAND
------------------------------------
Steven Sutherland
BUYER:
Penge Corporation
------------------------------------ ------------------------------------
Kirk Fischer Jim Fischer
X /s/ KIRK FISCHER X /s/ JIM FISCHER
------------------------------------ ------------------------------------
President Vice President
85
EXHIBIT G2
NON-COMPETE, CONFIDENTIALITY
AND
NON-SOLICITATION AGREEMENT
(ROGER AND BARBARA MAJOR)
This Non-compete, Confidentiality and Non-solicitation Agreement (the
"Non-compete Agreement") is entered into effective the 27th day of September,
2002, by and between ROGER MAJOR AND BARBARA MAJOR, husband and wife
(collectively referred to as "Seller"), and PENGE CORPORATION located at 1930
Village Center Circle 3, Suite 446, Las Vegas, NV 89134 ("Buyer").
RECITALS:
A. Seller and Buyer entered into a Purchase Agreement, Receipt and
Escrow Instructions dated August 14, 2002 (the "Escrow Agreement") in connection
with the Seller's sale to Buyer and Buyer's purchase from Seller of certain farm
real property, residential real property, tangible, intangible and mixed assets
used by Seller in connection with a Christmas tree farm and sale business (the
"Business") known as M7 Farms, a sole proprietorship owned by Seller. The Escrow
Agreement also provides for the sale of the stock of Major Trees, Inc., an
Arizona corporation (the "Corporation"), wholly owned by Steven Sutherland
("Sutherland") and certain customer information owned by Sutherland also used in
connection with the Business.
B. As an express condition of the Buyer's agreement to purchase the
Assets as defined in the Escrow Agreement, Seller had agreed to provide this
Non-compete Agreement to Buyer. A similar agreement will be provided to Buyer by
Sutherland. Breach by Buyer of the Escrow Agreement shall be deemed a breach of
this Agreement thereby relieving Seller from the obligations of this Agreement.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
24. INCORPORATION OF RECITALS. The Recitals set forth above are hereby
incorporated as terms of this Non-compete Agreement.
25. NON-COMPETE AGREEMENT. In addition to all other agreements of the
Seller set forth in the Escrow Agreement and any and all documents, exhibits,
schedules and instruments referred to therein or attached thereto, Seller,
individually and jointly, hereby agree that beginning as of the Closing Date as
defined in the Escrow Agreement, and for a period of five (5) years thereafter,
Seller shall not own, operate, manage or become employed in, directly or
indirectly, whether as an owner, partner, shareholder, member, investor, joint
venturer, manager, advisor, consultant, employee or otherwise, any Christmas
tree farm business, Christmas tree sale business or other business involving the
farming, distribution and sale of any Christmas, Landscaping, or Nursery trees.
The non-compete provisions herein shall apply in Arizona, Texas, New Mexico,
California, and Nevada. Seller acknowledges that the non-compete restrictions,
the time limit, and the geographic area described above are reasonable in all
respects.
86
26. NON-DISCLOSURE/CONFIDENTIALITY. From and after the date of Closing
as defined in the Escrow Agreement, and for an indefinite period of time
thereafter, Seller shall not disclose to any third party any proprietary or
confidential information of or relating to the Business. Seller agrees not to
disseminate any proprietary or confidential information regarding the Business
to others. The preceding shall not apply to information that: (a) is, was or
becomes generally known or available to the public or the industry other than as
a result of a disclosure by Seller; (b) is subsequently obtained by Seller from
an independent third-party source having no obligation of confidentiality to
Buyer; or (c) is required to be disclosed by law. Seller shall advise Buyer in
writing of any requests, including a subpoena or similar legal inquiry, to
disclose any such confidential information such that Buyer can seek appropriate
legal relief.
For purposes of this Agreement, the term "Confidential Information"
means:
(d) any and all trade secrets concerning the Business, product
specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current and planned
research and development, current and planned manufacturing
and distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists,
market studies, business plans, computer software and
programs (including object code and source code), database
technologies, systems, structures architectures processes,
improvements, devices, know-how, discoveries, concepts,
methods, information and any other information, however
documented, of Seller that is a trade secret within the
meaning of the Arizona trade secret law;
(e) any and all information concerning the Business which
includes historical financial statements, financial
projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds
of key personnel, contractors, agents, suppliers and
potential suppliers, personnel training and techniques and
materials, purchasing methods; and
(f) any and all notes, analysis, compilations, studies, summaries
and other material prepared by or for Seller containing or
based, in whole or in part, upon any information included in
the foregoing.
27. NON-SOLICITATION. Seller agrees that it will not solicit, directly
or indirectly, any customer of the Business to purchase Christmas trees from any
source other than the Buyer, or any employee of Seller, the Business or any
co-Seller to leave the employee's employment position with the Buyer.
28. REDUCTION OF SCOPE AND SEVERABILITY. If a final judgment of a court
or arbitrator of competent jurisdiction declares that any term or provision of
this Non-compete Agreement is invalid or unenforceable, the parties agree that
the court or arbitrator making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
87
29. GENERAL PROVISIONS.
a) BINDING EFFECT. This Non-compete Agreement shall be binding
upon and inure to the benefit of the successors, assigns,
personal representatives and heirs of the parties hereto, and
upon execution by all parties, this Non-compete Agreement
shall be absolutely binding, non-assignable and fully
enforceable.
b) SEVERABILITY. In the event that any provision or portion of
this Non-compete Agreement is held to be unenforceable or
invalid by any court of competent jurisdiction or arbitration
tribunal, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected
thereby and effect shall be given to the intent manifested by
the provisions, or portions thereof, held to be enforceable
and valid.
c) GOVERNING LAW. This Non-compete Agreement shall be governed
by and construed in accordance with the laws of the State of
Arizona.
d) ARBITRATION. With the exception of Buyer's right to a
temporary restraining order, a preliminary injunction or a
permanent injunction, controversies under, or claims arising
out of, or relating to this Agreement, or any breach thereof,
shall be resolved by arbitration in accordance with the
arbitration provisions set forth in the Escrow Agreement,
which are hereby incorporated herein as if set forth fully in
this Non-compete Agreement.
e) COUNTERPARTS. This Non-compete Agreement may be executed in
counterparts, and all counterpart signatures shall constitute
the whole of this Non-compete Agreement and be treated as the
original Non-compete Agreement.
f) COMPENSATION. As consideration for the covenants in Section 2
of this Agreement, Buyer will compensate Seller in accordance
with the Price Allocation schedule, Exhibit H, which is a
part of this Agreement.
g) NOTICES. All notices, demands or other communications
required or permitted to be given hereunder shall be in
writing and shall be served upon the other party by personal
delivery (including by any nationally-recognized overnight
courier service) or by first-class, registered or certified
mail, postage prepaid, with return receipt requested,
addressed to the parties as follows:
To the SELLER: With a copy to:
M7 Farms; Roger and Barbara Major Monroe & Associates, P.C.
_____________________ Attn: Michael J. Monroe, Esq.
_____________________ 6280 E. Pima Street
Tucson, Arizona 85712
88
To the BUYER: With a copy to:
Penge Corporation _________________________
1930 Village Center Circle 3 _________________________
Suite 446 _________________________
Las Vegas, NV 89134 _________________________
Notices given by personal delivery shall be deemed to have
been given upon delivery to the appropriate address against
receipt therefor (or upon refusal of acceptance); and notices
given by first-class mail shall be deemed to have been given
two (2) days after deposit in the U.S. mail. Each party may
designate, from time to time, another address in place of the
information set forth above by notifying the other parties in
the same manner as provided in this paragraph. If the date of
deemed delivery pursuant to this paragraph is not a business
day, then any such notice or communication shall be deemed to
have been given on the next business day thereafter.
h) ATTORNEY'S FEES. In the event any action or proceeding is
taken to enforce any of the terms or covenants set forth in
this Non-compete Agreement, the prevailing party shall be
entitled to an award of reasonable attorney's fees and costs
incurred, litigation expenses, expert witness fees and costs.
IN WITNESS WHEREOF, the parties hereto have signed their names as of the date
and year first above written.
SELLER:
/s/ ROGER MAJOR /s/ BARBARA MAJOR
------------------------------------ ------------------------------------
Roger Major Barbara Major
BUYER:
Penge Corporation
------------------------------------ ------------------------------------
Kirk Fischer Jim Fischer
X /s/ KIRK FISCHER X /s/ JIM FISCHER
------------------------------------ ------------------------------------
President Vice President
89
EXHIBIT H
MAJOR TREES / M7 FARMS PRICE ALLOCATION
MAJOR TREES
Stock 220,000
Sutherland Consulting Agreement 25,000
Sutherland Non Compete Agreement 30,000
Goodwill 25,000
-------------
300,000
M7 FARMS
--------
Farm Land 295,000
Farm Buildings 85,000
Farm Equipment 90,000
Inventory/Crops 100,000
Major Consulting Agreement 25,000
Major Non Compete Agreement 30,000
Residence 250,000
Goodwill 25,000
-------------
900,000
=============
Total $1,200,000
[initials at bottom of page:
BM, RJM, JF, KJR, SCS]
90
AMENDED [handwritten]
EXHIBIT H
MAJOR TREES / M7 FARMS PRICE ALLOCATION
MAJOR TREES
Stock 220,000
Sutherland Consulting Agreement 25,000
Sutherland Non Compete Agreement 30,000
Goodwill 25,000
----------------
300,000
M7 FARMS
Farm Land 295,000 295,000 [handwritten]
Farm Buildings 85,000 55,000 [handwritten]
Farm Equipment 90,000 10,000 [handwritten]
Inventory/Crops 100,000 210,000 [handwritten]
Major Consulting Agreement 25,000 25,000 [handwritten]
Major Non Compete Agreement 30,000 30,000 [handwritten]
Residence ? sold to Chandler/Leaseback
[handwritten] 250,000 275,000 [handwritten]
Goodwill 25,000 0 [handwritten]
---------------- --------------------------
900,000 900,000 [handwritten]
================
Total $1,200,000
Penge Corp / Major Trees has amended this exhibit H to reflect more
accurate final numbers with agreement from M7 Farm / Roger Major.
/s/ KIRK FISCHER /s/ ROGER MAJOR
------------------------------------ ------------------------------------
Kirk Fischer [handwritten] Roger Major [handwritten]
91
EXHIBIT 4.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PENGE CORP.
ARTICLE I
Name
The name of the corporation (hereinafter called "Corporation") is Penge
Corp.
ARTICLE II
Duration
The duration of the Corporation shall be perpetual, or until terminated
by law.
ARTICLE III
Purposes And Powers
The Corporation is organized for any and all lawful purposes for which
a corporation may be organized under the Nevada Revised Statutes.
ARTICLE IV
Authorized Shares
A. The Corporation is authorized to issue shares of two classes of
stock: fifty million (50,000,000) shares of Common Stock, $.001 par value, and
ten million (10,000,000) shares of Preferred Stock, $.001 par value.
B. Holders of Common Stock are entitled to one vote per share on any
matter submitted to the shareholders. Subject to any preferential rights of the
Preferred Stock, holders of Common Stock are entitled to dividends when, as and
if declared and paid by the Board of Directors of the Corporation. On
dissolution of the Corporation, after any preferential amount with respect to
the Preferred Stock has been paid or set aside, the holders of Common Stock and
the holders of any series of Preferred Stock entitled to participate in the
distribution of assets are entitled to receive the net assets of the
Corporation.
1
C. The Board of Directors is authorized, subject to limitations
prescribed by the Nevada Revised Statutes, as amended from time to time (the
"NRS"), and by the provisions of this Article, to provide for the issuance of
shares of Preferred Stock in series, to establish from time to time the number
of shares to be included in each series and to prescribe the voting powers,
designations, relative rights, preferences and limitations of the shares of each
series. The authority of the Board of Directors with respect to each series
includes, without limitation, determination of the following:
(1) The number of shares in and the distinguishing designation of
that series;
(2) Whether shares of that series shall have full, special,
conditional, limited or no voting rights, except to the extent
otherwise provided by the NRS;
(3) Whether shares of that series shall be convertible and the
terms and conditions of the conversion, including provision
for adjustment of the conversion rate;
(4) Whether shares of that series shall be redeemable and the
terms and conditions of redemption, including the date or
dates upon or after which they shall be redeemable and the
amount per share payable in case of redemption, which amount
may vary under different conditions or at different redemption
dates;
(5) The dividend rate, if any, on shares of that series, the
manner of calculating any dividends and the preferences of any
dividends;
(6) The rights of shares of that series in the event of voluntary
or involuntary dissolution of the Corporation and the rights
of priority of that series relative to the Common Stock and
any other series of Preferred Stock on the distribution of
assets on dissolution; and
(7) Any other rights, preferences and limitations of that series
that are permitted by law to vary.
ARTICLE V
Directors and Cumulative Voting
The Board of Directors shall consist of three to nine members, the
number thereof to be determined from time to time by resolution of the Board of
Directors or the stockholders. Within this range, the number of directors of the
Corporation may be changed and re-established, from time to time, by the
stockholders or the Board of Directors of the Corporation, but no decrease in
the number of directors of the Corporation may shorten the term of any incumbent
director.
There shall be no cumulative voting of shares of this Corporation.
2
ARTICLE VI
No Preemptive Rights
Except as may otherwise be provided by the Board of Directors, no
holder of any shares of this Corporation shall have any preemptive right to
purchase, subscribe for or otherwise acquire any securities of this Corporation
of any class or kind now or hereafter authorized.
ARTICLE VII
Regulation of Internal Affairs
The Board of Directors may adopt Bylaws for the Corporation which are
consistent with these Articles of Incorporation and the NRS and may amend,
restate and repeal from time to time any Bylaw as provided hereafter.
No contract, lease or other transaction between the Corporation and any
other corporation, and no other act of the Corporation with relation to any
other corporation shall, in the absence of fraud, in any way be invalidated or
otherwise affected by the fact that any one or more of the directors of the
Corporation is pecuniarily or otherwise interested in, or are directors or
officers of such other corporation. Any director of the Corporation may vote
upon any contract or other transaction between the Corporation and any
subsidiary or affiliated Corporation without regard to the fact that he is also
a director of such subsidiary or affiliated Corporation. Any director of the
Corporation, individually, or any firm or association of which any director may
be a member, may be a party to, or may be pecuniarily or otherwise interested
in, any contract, lease or other transaction with the Corporation, provided that
the fact that he individually, or as a member of such firm or association is
such a party to, or is so interested in, any contract, lease or other
transaction with the Corporation, shall disclose, or shall have been known, to
the Board of Directors or by a majority of such members thereof as shall be
present at any meeting of the Board of Directors at which action upon any such
contract or transaction shall be taken; and in any case described in this
Article, any such director may be counted in determining the existence of a
quorum at any meeting of the Board of Directors which shall authorize any such
contract, lease or other transaction and may vote thereat to authorize any such
contract or transaction.
ARTICLE VIII
Limitation on Liability and Indemnification of Directors
To the fullest extent permitted by Nevada law, the directors and
officers of the Corporation shall not be liable to the Corporation or its
stockholders for damages for their conduct or omissions as directors or
officers.
The Corporation shall indemnify and advance expenses to its directors,
officers, employees, fiduciaries or agents and to any person who is or was
serving at the Corporation's request as a director, officer, partner, trustee,
employee, fiduciary or agent of another domestic or foreign corporation or other
person or of an employee benefit plan (and their respective estates or personal
representatives) to the fullest extent as from time to time permitted by Nevada
law.
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Any amendment to or repeal of this Article shall not adversely affect
any right of an individual with respect to any right to indemnification arising
prior to such amendment or repeal.
ARTICLE IX
Nonassessability
Shares of the Corporation shall be nonassessable.
ARTICLE X
Combinations with Interested Stockholders
The Corporation hereby opts out of the provisions of Sections 78.411
through 78.444, inclusive, of the NRS, and the provisions of those sections do
not apply in any way to the Corporation or to any combination of the
Corporation.
ARTICLE XI
Right to Amend
The Corporation reserves the right to amend, alter, change or repeal
any provisions of these Articles of Incorporation, in the manner now or
hereafter prescribed by law and by these Articles of Incorporation, and all
rights and powers conferred herein to the shareholder and directors are subject
to this reserved power.
ARTICLE XII
Amended And Restated Articles
These Amended and Restated Articles of Incorporation supersede,
replace, and restate in their entirety the original Articles of Incorporation of
the Corporation and any subsequent amendments thereto. Any reference herein to
Articles of Incorporation will be deemed a reference to these Amended and
Restated Articles of Incorporation.
4
EXHIBIT 4.2
AMENDED AND RESTATED BYLAWS
OF
PENGE CORP.
ARTICLE 1
STOCKHOLDERS MEETINGS
1.1 ANNUAL MEETING. An annual meeting of the stockholders of Penge
Corp. (the "CORPORATION") shall be held each year on the date, at the time, and
at the place, fixed by the Board of Directors. The annual meeting shall be held
for the purpose of electing directors and for the transaction of such other
business as may properly come before the meeting. Failure to hold an annual
meeting as required by these Bylaws shall not invalidate any action taken by the
Board of Directors or officers of the Corporation.
1.2 SPECIAL MEETINGS. Special meetings of the stockholders, for any
purposes, unless otherwise prescribed by statute, may be called by the Chief
Executive Officer, President or the Board of Directors and shall be called by
the President at the request of the holder(s) of not less than thirty percent
(30%) of all outstanding votes of the Corporation entitled to be cast on any
issue at the meeting.
1.3 PLACE OF MEETINGS. Meetings of the stockholders shall be held at
any place in or out of Nevada designated by the Board of Directors.
1.4 MEETING BY TELEPHONE CONFERENCE. Stockholders may participate in an
annual or special meeting by, or conduct the meeting through, use of any means
of communication by which all stockholders participating may simultaneously hear
each other during the meeting.
ARTICLE 2
BOARD OF DIRECTORS
2.1 NUMBER AND TERM. The number of directors of the Corporation shall
be not less than three (3) (unless the number of stockholders entitled to vote
for the directors of the Corporation is less than three (3), then the number of
directors may be equal to or greater than the number of such stockholders) nor
more than nine (9). The number of directors may be fixed or changed within the
range specified in this Section 2.1 by means of a resolution adopted by the
stockholders or by the Board of Directors.
2.2 REGULAR MEETINGS. A regular meeting of the Board of Directors shall
be held without notice other than this Bylaw immediately after, and at the same
place as, the annual meeting of the stockholders.
2.3 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by the Chairman or Vice Chairman of the Board of Directors or the Chief
Executive Officer, President or any two directors. The person or persons calling
a special meeting of the Board of Directors may fix any place in or out of
Nevada as the place for holding the special meeting of the Board of Directors.
1
2.4 NOTICE. Special meetings of the Board of Directors must be preceded
by at least 24 hours notice to the directors prior to the meeting of the date,
time, and place of the meeting. Notice may be communicated in person, by
telephone, by any form of electronic communication, by mail, or by private
carrier. At the written request of any director, notice of any special meeting
of the Board of Directors shall be given to such director by facsimile or telex,
as the case may be, at the number designated in writing by such director from
time to time.
ARTICLE 3
OFFICERS
3.1 APPOINTMENT. The Board of Directors shall appoint a President, a
Secretary and a Treasurer. The Board of Directors may appoint any other
officers, assistant officers, and agents as the Board of Directors determines
from time to time, including, without limitation, a Chief Executive Officer. Any
two or more offices may be held by the same person.
3.2 TERM. The term of office of all officers commences upon their
appointment and continues until their successors are appointed or until their
resignation or removal.
3.3 REMOVAL. Any officer or agent appointed by the Board of Directors
may be removed by the Board of Directors at any time with or without cause.
3.4 CHIEF EXECUTIVE OFFICER. If appointed, the Chief Executive Officer
shall, subject to the direction and supervision of the Board of Directors (i) be
the chief executive officer of the Corporation and have general and active
control of its affairs and business and general supervision of its officers,
agents and employees; (ii) in the absence of the Chairman and the Vice Chairman
of the Board of Directors, preside at all meetings of the stockholders and the
Board of Directors; (iii) see that all orders and resolutions of the Board of
Directors are carried into effect; and (iv) perform all other duties incident to
the office of Chief Executive Officer and as from time to time may be assigned
to him or her by the Board of Directors.
3.5 PRESIDENT. The President shall, subject to the direction and
supervision of the Board of Directors and the Chief Executive Officer (if one is
appointed) (i) have general and active control of the Corporation's affairs and
business and general supervision of the Corporation's officers, agents and
employees; (ii) see that all orders and resolutions of the Board of Directors
are carried into effect; (iii) perform all duties incumbent upon the Chief
Executive Officer during the absence or disability of the Chief Executive
Officer; and (iv) perform all other duties incident to the office of President
and as from time to time may be assigned to him or her by the Board of Directors
or the Chief Executive Officer (if one has been appointed).
3.6 VICE PRESIDENTS. Vice Presidents, if appointed, shall perform all
duties incumbent upon the President during the absence or disability of the
President and in general perform all duties incident to the office of Vice
President and as from time to time may be assigned by the Board of Directors,
the Chief Executive Officer or the President.
2
3.7 SECRETARY. The Secretary shall record and keep the minutes of all
meetings of the Board of Directors and stockholders in one or more books
provided for that purpose and perform any other duties prescribed by the Board
of Directors, the Chief Executive Officer or the President.
3.8 TREASURER. The Treasurer shall have the care and custody of and be
responsible for all the funds and securities of the Corporation and shall
perform any other duties prescribed by the Board of Directors, the Chief
Executive Officer or the President.
ARTICLE 4
ISSUANCE OF STOCK
4.1 ADEQUACY OF CONSIDERATION. The authorization by the Board of
Directors of the issuance of stock for stated consideration shall evidence a
determination by the Board that such consideration is adequate.
4.2 CERTIFICATES FOR STOCK. Every holder of stock of the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by two officers of the Corporation certifying the number of shares
of stock owned by him or her in the Corporation. Any of or all the signatures on
the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
ARTICLE 5
INDEMNIFICATION
5.1 THIRD PARTY ACTIONS. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, except an action by or in the right of the Corporation, by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in connection with the action, suit or proceeding if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
does not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and that, with respect to any criminal
action or proceeding, he had reasonable cause to believe that his or her conduct
was unlawful.
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5.2 DERIVATIVE ACTIONS. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him or her in connection with the defense or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation. Indemnification shall not be made for any claim, issue or matter as
to which such a person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the Corporation or
for amounts paid in settlement to the Corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
5.3 SUCCESS ON MERITS OR OTHERWISE. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Sections 5.1 and 5.2 or in defense of any claim, issue or matter therein, the
Corporation shall indemnify him or her against expenses, including attorneys'
fees, actually and reasonably incurred by him or her in connection with the
defense.
5.4 DETERMINATION. Any indemnification pursuant to Sections 5.1 or 5.2,
unless ordered by a court or advanced pursuant to Section 5.5, shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances. The determination must be made:
(a) By the stockholders;
(b) By the Board of Directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties
to the act, suit or proceeding cannot be obtained, by independent legal counsel
in a written opinion.
5.5 PAYMENT IN ADVANCE. The expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding shall be paid by the
Corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
Corporation. The provisions of this Section 5.5 do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
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5.6 OTHER INDEMNIFICATION; PERIOD OF INDEMNIFICATION. The
indemnification and advancement of expenses authorized in or ordered by a court
pursuant to this Article 5:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under the
Articles of Incorporation, these Bylaws, an agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his or her
official capacity or an action in another capacity while holding his or her
office, except that indemnification, unless ordered by a court pursuant to
Sections 5.1 or 5.2 or for the advancement of expenses made pursuant to Section
5.5, may not be made to or on behalf of any director or officer if a final
adjudication establishes that his or her acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE 6
ACQUISITION OF CONTROLLING INTEREST
The Corporation hereby opts out of the provisions of Sections 78.378
through 78.3793, inclusive, of the Nevada Revised Statutes, and the provisions
of those sections do not apply in any way to the Corporation or to the
acquisition of a controlling interest in the Corporation.
ARTICLE 7
AMENDMENTS
The Corporation's Board of Directors may amend these Bylaws, except to
the extent that the Articles of Incorporation, these Bylaws, or Chapter 78 of
the Nevada Revised Statutes reserve this power exclusively to the stockholders
in whole or in part. The Corporation's stockholders may amend or repeal the
Corporation's Bylaws even though the Bylaws may also be amended or repealed by
the Corporation's Board of Directors.
Adopted effective as of October 22, 2004.
5
EXHIBIT 4.3
NUMBER SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
PENGE CORP
pengecorp.com
The Corporation is authorized to issue 50,000,000 Common Shares
- Par Value $.001 each.
This Certifies that _______________________________________ is the owner of
_____________________________________________________________ fully paid and
non-assessable Shares of the above Corporation transferable only on the books of
the Corporation by the holder hereof in person or by duly authorized Attorney
upon surrender of this Certificate properly endorsed.
In Witness Whereof the said Corporation has caused this Certificate to be signed
By its duly authorized officers and to be sealed with the Seal of the
Corporation.
Transfer of the shares evidenced by this
Dated _________________________ certificate is subject to the Provisions of
Rule 144 adopted pursuant to the Securities
_______________________________ Act of 1933.
CEO or PRESIDENT
EXHIBIT 10.1
PENGE CORP.
2002 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of this Penge Corp. 2002 Stock Incentive Plan
(the "PLAN") is to enable Penge Corp. (the "COMPANY") to attract and retain the
services of (i) selected employees, officers and directors of the Company or any
parent or subsidiary of the Company and (ii) selected non-employee agents,
consultants, advisers and independent contractors of the Company or any parent
or subsidiary of the Company. For purposes of this Plan, a person is considered
to be employed by or in the service of the Company if the person is employed by
or in the service of any entity that is either the Company or a parent or
subsidiary of the Company (the "EMPLOYER").
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided below
and in Section 10, the shares to be offered under the Plan shall consist of
Common Stock of the Company, and the total number of shares of Common Stock that
may be issued under the Plan shall be 8,000,000 shares. If an option or
Performance-Based Award granted under the Plan expires, terminates or is
canceled, the unissued shares subject to that option or Performance-Based Award
shall again be available under the Plan. If shares awarded as a bonus pursuant
to Section 7 or sold pursuant to Section 8 under the Plan are forfeited to or
repurchased by the Company, the number of shares forfeited or repurchased shall
again be available under the Plan.
3. EFFECTIVE DATE AND DURATION OF PLAN.
3.1 EFFECTIVE DATE. The Plan shall become effective as of
October 30, 2002. No Incentive Stock Option (as defined in Section 5
below) granted under the Plan shall become exercisable and no payments
shall be made under a Performance-Based Award, however, until the Plan
is approved by the written consent of the holders of a majority of the
shares of Common Stock or by the affirmative vote of the holders of a
majority of the shares of Common Stock represented at a shareholders
meeting at which a quorum is present, and the exercise of any Incentive
Stock Options granted under the Plan before approval shall be
conditioned on and subject to that approval. Subject to this
limitation, options and Performance-Based Awards may be granted and
shares may be awarded as bonuses or sold under the Plan at any time
after the effective date and before termination of the Plan.
3.2 DURATION. The Plan shall continue in effect until all
shares available for issuance under the Plan have been issued and all
restrictions on the shares have lapsed. The Board of Directors may
suspend or terminate the Plan at any time except with respect to
options, Performance-Based Awards and shares subject to restrictions
then outstanding under the Plan. Termination shall not affect any
outstanding options, any outstanding Performance-Based Awards or any
right of the Company to repurchase shares or the forfeitability of
shares issued under the Plan.
4. ADMINISTRATION.
4.1 BOARD OF DIRECTORS. The Plan shall be administered by the
Board of Directors of the Company, which shall determine and designate
the individuals to whom awards shall be made, the amount of the awards
and the other terms and conditions of the awards. Subject to the
provisions of the Plan, the Board of Directors may adopt and amend
rules and regulations relating to administration of the Plan, advance
the lapse of any waiting period, accelerate any exercise date, waive or
modify any restriction applicable to shares (except those restrictions
imposed by law) and make all other determinations in the judgment of
the Board of Directors necessary or desirable for the administration of
the Plan. The interpretation and construction of the provisions of the
Plan and related agreements by the Board of Directors shall be final
and conclusive. The Board of Directors may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any
related agreement in the manner and to the extent it deems expedient to
carry the Plan into effect, and the Board of Directors shall be the
sole and final judge of such expediency.
4.2 COMMITTEE. The Board of Directors may delegate to any
committee of the Board of Directors (the "COMMITTEE") any or all
authority for administration of the Plan. If authority is delegated to
the Committee, all references to the Board of Directors in the Plan
shall mean and relate to the Committee, except (i) as otherwise
provided by the Board of Directors and (ii) that only the Board of
Directors may amend or terminate the Plan as provided in Sections 3 and
11.
5. TYPES OF AWARDS, ELIGIBILITY, LIMITATIONS. The Board of Directors
may, from time to time, take the following actions, separately or in
combination, under the Plan: (i) grant Incentive Stock Options, as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "CODE"), as
provided in Sections 6.1 and 6.2; (ii) grant options other than Incentive Stock
Options ("NON-STATUTORY STOCK OPTIONS") as provided in Sections 6.1 and 6.3;
(iii) award stock bonuses as provided in Section 7; (iv) sell shares subject to
restrictions as provided in Section 8; and (v) award Performance-Based Awards as
provided in Section 9. Awards may be made to employees, including employees who
are officers or directors, and to other individuals described in Section 1
selected by the Board of Directors; provided, however, that only employees of
the Company or any parent or subsidiary of the Company (as defined in
subsections 424(e) and 424(f) of the Code) are eligible to receive Incentive
Stock Options under the Plan. The Board of Directors shall select the
individuals to whom awards shall be made and shall specify the action taken with
respect to each individual to whom an award is made. At the discretion of the
Board of Directors, an individual may be given an election to surrender an award
in exchange for the grant of a new award. No employee may be granted options for
more than an aggregate of 1,000,000 shares of Common Stock in the calendar year
in which the employee is hired or 1,000,000 shares of Common Stock in any other
calendar year.
6. OPTION GRANTS.
6.1 GENERAL RULES RELATING TO OPTIONS.
6.1.1 TERMS OF GRANT. The Board of Directors may
grant options under the Plan. With respect to each option grant, the
Board of Directors shall determine the number of shares subject to the
option, the exercise price, the period of the option, the time or times
at which the option may be exercised and whether the option is an
Incentive Stock Option or a Non-Statutory Stock Option. At the time of
2
the grant of an option or at any time thereafter, the Board of
Directors may provide that an optionee who exercised an option with
Common Stock of the Company shall automatically receive a new option to
purchase additional shares equal to the number of shares surrendered
and may specify the terms and conditions of such new options.
6.1.2 EXERCISE OF OPTIONS. Except as provided in
Section 6.1.4 or as determined by the Board of Directors, no Incentive
Stock Option granted under the Plan may be exercised unless at the time
of exercise the optionee is employed by the Company and shall have been
so employed continuously since the date the option was granted. Except
as provided in Sections 6.1.4 and 10, options granted under the Plan
may be exercised from time to time over the period stated in each
option in amounts and at times prescribed by the Board of Directors,
provided that options may not be exercised for fractional shares.
Unless otherwise determined by the Board of Directors, if an optionee
does not exercise an option in any one year for the full number of
shares to which the optionee is entitled in that year, the optionee's
rights shall be cumulative and the optionee may purchase those shares
in any subsequent year during the term of the option.
6.1.3 NONTRANSFERABILITY. Each Incentive Stock Option
and, unless otherwise determined by the Board of Directors, each other
option granted under the Plan by its terms (i) shall be nonassignable
and nontransferable by the optionee, either voluntarily or by operation
of law, except by will or by the laws of descent and distribution of
the state or country of the optionee's domicile at the time of death,
and (ii) during the optionee's lifetime, shall be exercisable only by
the optionee.
6.1.4 TERMINATION OF EMPLOYMENT OR SERVICE. Except as
otherwise determined by the Board of Directors, Sections 6.1.4(a) and
(b) shall only apply to Incentive Stock Options.
(a) GENERAL RULE. Unless otherwise
determined by the Board of Directors, if an
optionee's employment with the Company terminates for
any reason other than because of total disability or
death as provided in Sections 6.1.4(b) and (c), his
or her option may be exercised at any time before the
expiration date of the option or the expiration of 3
months after the date of termination, whichever is
the shorter period, but only if and to the extent the
optionee was entitled to exercise the option at the
date of termination.
(b) TERMINATION BECAUSE OF TOTAL DISABILITY.
Unless otherwise determined by the Board of
Directors, if an optionee's employment with the
Company terminates because of total disability, his
or her option may be exercised at any time before the
expiration date of the option or before the date 12
months after the date of termination, whichever is
the shorter period, but only if and to the extent the
optionee was entitled to exercise the option at the
date of termination. The term "total disability"
means a medically determinable mental or physical
impairment that is expected to result in death or has
lasted or is expected to last for a continuous period
of 12 months or more and that, in the opinion of the
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Company and two independent physicians, causes the
optionee to be unable to perform his or her duties as
an employee, director, officer or consultant of the
Employer and unable to be engaged in any substantial
gainful activity. Total disability shall be deemed to
have occurred on the first day after the two
independent physicians have furnished their written
opinion of total disability to the Company and the
Company has reached an opinion of total disability.
(c) TERMINATION BECAUSE OF DEATH. Unless
otherwise determined by the Board of Directors, if an
optionee dies while employed by or providing service
to the Company, his or her option may be exercised at
any time before the expiration date of the option or
before the date 12 months after the date of death,
whichever is the shorter period, but only if and to
the extent the optionee was entitled to exercise the
option at the date of death and only by the person or
persons to whom the optionee's rights under the
option shall pass by the optionee's will or by the
laws of descent and distribution of the state or
country of domicile at the time of death.
(d) AMENDMENT OF EXERCISE PERIOD APPLICABLE
TO TERMINATION. The Board of Directors may at any
time extend the 3-month and 12-month exercise periods
any length of time not longer than the original
expiration date of the option; provided, however,
that in the event of any extension of the periods set
forth in Sections 6.1.4(a) or (b), the option will no
longer qualify for the favorable tax treatment
afforded Incentive Stock Options. The Board of
Directors may at any time increase the portion of an
option that is exercisable, subject to terms and
conditions determined by the Board of Directors.
(e) FAILURE TO EXERCISE OPTION. To the
extent that the option of any deceased optionee or
any optionee whose employment or service terminates
is not exercised within the applicable period, all
further rights to purchase shares pursuant to the
option shall cease and terminate.
(f) LEAVE OF ABSENCE. Absence on leave
approved by the Employer or on account of illness or
disability shall not be deemed a termination or
interruption of employment or service. Unless
otherwise determined by the Board of Directors,
vesting of options shall continue during a medical,
family or military leave of absence, whether paid or
unpaid, and vesting of options shall be suspended
during any other unpaid leave of absence.
6.1.5 PURCHASE OF SHARES.
(a) NOTICE OF EXERCISE. Unless the Board of
Directors determines otherwise, shares may be
acquired pursuant to an option granted under the Plan
only upon the Company's receipt of written notice
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from the optionee of the optionee's binding
commitment to purchase shares, specifying the number
of shares the optionee desires to purchase under the
option and the date on which the optionee agrees to
complete the transaction, and, if required to comply
with the Securities Act of 1933, containing a
representation that it is the optionee's intention to
acquire the shares for investment and not with a view
to distribution.
(b) PAYMENT. Unless the Board of Directors
determines otherwise, on or before the date specified
for completion of the purchase of shares pursuant to
an option exercise, the optionee must pay the Company
the full purchase price of those shares in cash or by
check or, with the consent of the Board of Directors,
in whole or in part, in Common Stock of the Company
valued at fair market value, restricted stock or
other contingent awards denominated in either stock
or cash, promissory notes and other forms of
consideration. Unless otherwise determined by the
Board of Directors, any Common Stock provided in
payment of the purchase price must have been
previously acquired and held by the optionee for at
least six months. The fair market value of Common
Stock provided in payment of the purchase price shall
be the closing price of the Common Stock last
reported before the time payment in Common Stock is
made or, if earlier, committed to be made, if the
Common Stock is publicly traded, or another value of
the Common Stock as specified by the Board of
Directors. No shares shall be issued until full
payment for the shares has been made, including all
amounts owed for tax withholding. With the consent of
the Board of Directors, an optionee may request the
Company to apply automatically the shares to be
received upon the exercise of a portion of a stock
option (even though stock certificates have not yet
been issued) to satisfy the purchase price for
additional portions of the option.
(c) TAX WITHHOLDING. Each optionee who has
exercised an option shall, immediately upon
notification of the amount due, if any, pay to the
Company in cash or by check amounts necessary to
satisfy any applicable federal, state and local tax
withholding requirements. If additional withholding
is or becomes required (as a result of exercise of an
option or as a result of disposition of shares
acquired pursuant to exercise of an option) beyond
any amount deposited before delivery of the
certificates, the optionee shall pay such amount, in
cash or by check, to the Company on demand. If the
optionee fails to pay the amount demanded, the
Company or the Employer may withhold that amount from
other amounts payable to the optionee, including
salary, subject to applicable law. With the consent
of the Board of Directors, an optionee may satisfy
this obligation, in whole or in part, by instructing
the Company to withhold from the shares to be issued
upon exercise or by delivering to the Company other
shares of Common Stock; provided, however, that the
number of shares so withheld or delivered shall not
exceed the minimum amount necessary to satisfy the
required withholding obligation.
5
(d) REDUCTION OF RESERVED SHARES. Upon the
exercise of an option, the number of shares reserved
for issuance under the Plan shall be reduced by the
number of shares issued upon exercise of the option
(less the number of any shares surrendered in payment
for the exercise price or withheld to satisfy
withholding requirements).
6.1.6 LIMITATIONS ON GRANTS TO NON-EXEMPT EMPLOYEES.
Unless otherwise determined by the Board of Directors, if an employee
of the Company or any parent or subsidiary of the Company is a
non-exempt employee subject to the overtime compensation provisions of
Section 7 of the Fair Labor Standards Act (the "FLSA"), any option
granted to that employee shall be subject to the following
restrictions: (i) the option price shall be at least 85 percent of the
fair market value, as described in Section 6.2.4, of the Common Stock
subject to the option on the date it is granted; and (ii) the option
shall not be exercisable until at least six months after the date it is
granted; provided, however, that this six-month restriction on
exercisability will cease to apply if the employee dies, becomes
disabled or retires, there is a change in ownership of the Company, or
in other circumstances permitted by regulation, all as prescribed in
Section 7(e)(8)(B) of the FLSA.
6.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be
subject to the following additional terms and conditions:
6.2.1 LIMITATION ON AMOUNT OF GRANTS. If the
aggregate fair market value of stock (determined as of the date the
option is granted) for which Incentive Stock Options granted under this
Plan (and any other stock incentive plan of the Company or its parent
or subsidiary corporations, as defined in subSections 424(e) and 424(f)
of the Code) are exercisable for the first time by an employee during
any calendar year exceeds $100,000, the portion of the option or
options not exceeding $100,000, to the extent of whole shares, will be
treated as an Incentive Stock Option and the remaining portion of the
option or options will be treated as a Non-Statutory Stock Option. The
preceding sentence will be applied by taking options into account in
the order in which they were granted. If, under the $100,000
limitation, a portion of an option is treated as an Incentive Stock
Option and the remaining portion of the option is treated as a
Non-Statutory Stock Option, unless the optionee designates otherwise at
the time of exercise, the optionee's exercise of all or a portion of
the option will be treated as the exercise of the Incentive Stock
Option portion of the option to the full extent permitted under the
$100,000 limitation. If an optionee exercises an option that is treated
in part as an Incentive Stock Option and in part as a Non-Statutory
Stock Option, the Company will designate the portion of the stock
acquired pursuant to the exercise of the Incentive Stock Option portion
as Incentive Stock Option stock by issuing a separate certificate for
that portion of the stock and identifying the certificate as Incentive
Stock Option stock in its stock records.
6.2.2 LIMITATIONS ON GRANTS TO 10 PERCENT
SHAREHOLDERS. An Incentive Stock Option may be granted under the Plan
to an employee possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or any parent or
subsidiary (as defined in subSections 424(e) and 424(f) of the Code)
6
only if the option price is at least 110 percent of the fair market
value, as described in Section 6.2.4, of the Common Stock subject to
the option on the date it is granted and the option by its terms is not
exercisable after the expiration of five years from the date it is
granted.
6.2.3 DURATION OF OPTIONS. Subject to Sections 6.1.2,
6.1.4 and 6.2.2, Incentive Stock Options granted under the Plan shall
continue in effect for the period fixed by the Board of Directors,
except that by its terms no Incentive Stock Option shall be exercisable
after the expiration of 10 years from the date it is granted.
6.2.4 OPTION PRICE. The option price per share shall
be determined by the Board of Directors at the time of grant. Except as
provided in Section 6.2.2, the option price shall not be less than 100
percent of the fair market value of the Common Stock covered by the
Incentive Stock Option at the date the option is granted. The fair
market value shall be the closing price of the Common Stock last
reported before the time the option is granted, if the stock is
publicly traded, or another value of the Common Stock as specified by
the Board of Directors.
6.2.5 LIMITATION ON TIME OF GRANT. No Incentive Stock
Option shall be granted on or after the tenth anniversary of the last
action by the Board of Directors adopting the Plan or approving an
increase in the number of shares available for issuance under the Plan,
which action was subsequently approved within 12 months by the
shareholders.
6.2.6 EARLY DISPOSITIONS. If within two years after
an Incentive Stock Option is granted or within 12 months after an
Incentive Stock Option is exercised, the optionee sells or otherwise
disposes of Common Stock acquired on exercise of the Option, the
optionee shall within 30 days of the sale or disposition notify the
Company in writing of (i) the date of the sale or disposition, (ii) the
amount realized on the sale or disposition and (iii) the nature of the
disposition (e.g., sale, gift, etc.).
6.3 NON-STATUTORY STOCK OPTIONS. Non-Statutory Stock Options
shall be subject to the following terms and conditions, in addition to
those set forth in Section 6.1 above:
6.3.1 OPTION PRICE. The option price for
Non-Statutory Stock Options shall be determined by the Board of
Directors at the time of grant and may be any amount determined by the
Board of Directors.
6.3.2 DURATION OF OPTIONS. Non-Statutory Stock
Options granted under the Plan shall continue in effect for the period
fixed by the Board of Directors.
7. STOCK BONUSES. The Board of Directors may award shares under the
Plan as stock bonuses. Shares awarded as a bonus shall be subject to the terms,
conditions and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability and forfeiture
of the shares awarded, together with any other restrictions determined by the
Board of Directors. The Board of Directors may require the recipient to sign an
agreement as a condition of the award, but may not require the recipient to pay
any monetary consideration other than amounts necessary to satisfy tax
7
withholding requirements. The agreement may contain any terms, conditions,
restrictions, representations and warranties required by the Board of Directors.
The certificates representing the shares awarded shall bear any legends required
by the Board of Directors. The Company may require any recipient of a stock
bonus to pay to the Company in cash or by check upon demand amounts necessary to
satisfy any applicable federal, state or local tax withholding requirements. If
the recipient fails to pay the amount demanded, the Company or the Employer may
withhold that amount from other amounts payable to the recipient, including
salary, subject to applicable law. With the consent of the Board of Directors, a
recipient may satisfy this obligation, in whole or in part, by instructing the
Company to withhold from any shares to be issued or by delivering to the Company
other shares of Common Stock; provided, however, that the number of shares so
withheld or delivered shall not exceed the minimum amount necessary to satisfy
the required withholding obligation. Upon the issuance of a stock bonus, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued, less the number of shares withheld or delivered to
satisfy withholding obligations.
8. RESTRICTED STOCK. The Board of Directors may issue shares under the
Plan for any consideration (including promissory notes and services) determined
by the Board of Directors. Shares issued under the Plan shall be subject to the
terms, conditions and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability, repurchase by
the Company and forfeiture of the shares issued, together with any other
restrictions determined by the Board of Directors. All Common Stock issued
pursuant to this Section 8 shall be subject to a purchase agreement, which shall
be executed by the Company and the prospective purchaser of the shares before
the delivery of certificates representing the shares to the purchaser. The
purchase agreement may contain any terms, conditions, restrictions,
representations and warranties required by the Board of Directors. The
certificates representing the shares shall bear any legends required by the
Board of Directors. The Company may require any purchaser of restricted stock to
pay to the Company in cash or by check upon demand amounts necessary to satisfy
any applicable federal, state or local tax withholding requirements. If the
purchaser fails to pay the amount demanded, the Company or the Employer may
withhold that amount from other amounts payable to the purchaser, including
salary, subject to applicable law. With the consent of the Board of Directors, a
purchaser may satisfy this obligation, in whole or in part, by instructing the
Company to withhold from any shares to be issued or by delivering to the Company
other shares of Common Stock; provided, however, that the number of shares so
withheld or delivered shall not exceed the minimum amount necessary to satisfy
the required withholding obligation. Upon the issuance of restricted stock, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued, less the number of shares withheld or delivered to
satisfy withholding obligations.
9. PERFORMANCE-BASED AWARDS. The Board of Directors may grant awards
intended to qualify as qualified performance-based compensation under Section
162(m) of the Code and the regulations thereunder ("PERFORMANCE-BASED AWARDS").
Performance-Based Awards shall be denominated at the time of grant either in
Common Stock ("STOCK PERFORMANCE AWARDS") or in dollar amounts ("DOLLAR
PERFORMANCE AWARDS"). Payment under a Stock Performance Award or a Dollar
Performance Award shall be made, at the discretion of the Board of Directors, in
Common Stock ("PERFORMANCE SHARES"), or in cash or in any combination thereof.
Performance-Based Awards shall be subject to the following terms and conditions:
8
9.1 AWARD PERIOD. The Board of Directors shall determine the period of
time for which a Performance-Based Award is made (the "AWARD PERIOD").
9.2 PERFORMANCE GOALS AND PAYMENT. The Board of Directors shall
establish in writing objectives ("PERFORMANCE GOALS") that must be met by the
Company or any subsidiary, division or other unit of the Company ("BUSINESS
UNIT") during the Award Period as a condition to payment being made under the
Performance-Based Award. The Performance Goals for each award shall be one or
more targeted levels of performance with respect to one or more of the following
objective measures with respect to the Company or any Business Unit: earnings,
earnings per share, stock price increase, total shareholder return (stock price
increase plus dividends), return on equity, return on assets, return on capital,
economic value added, revenues, operating income, inventories, inventory turns,
cash flows or any of the foregoing before the effect of acquisitions,
divestitures, accounting changes, and restructuring and special charges
(determined according to criteria established by the Board of Directors). The
Board of Directors shall also establish the number of Performance Shares or the
amount of cash payment to be made under a Performance-Based Award if the
Performance Goals are met or exceeded, including the fixing of a maximum payment
(subject to Section 9.4). The Board of Directors may establish other
restrictions to payment under a Performance-Based Award, such as a continued
employment requirement, in addition to satisfaction of the Performance Goals.
Some or all of the Performance Shares may be issued at the time of the award as
restricted shares subject to forfeiture in whole or in part if Performance Goals
or, if applicable, other restrictions are not satisfied.
9.3 COMPUTATION OF PAYMENT. During or after an Award Period, the
performance of the Company or Business Unit, as applicable, during the period
shall be measured against the Performance Goals. If the Performance Goals are
not met, no payment shall be made under a Performance-Based Award. If the
Performance Goals are met or exceeded, the Board of Directors shall certify that
fact in writing and certify the number of Performance Shares earned or the
amount of cash payment to be made under the terms of the Performance-Based
Award.
9.4 MAXIMUM AWARDS. No participant may receive in any fiscal year Stock
Performance Awards under which the aggregate amount payable under the Awards
exceeds the equivalent of 1,000,000 shares of Common Stock or Dollar Performance
Awards under which the aggregate amount payable under the Awards exceeds
$1,000,000.
9.5 TAX WITHHOLDING. Each participant who has received Performance
Shares shall, upon notification of the amount due, pay to the Company in cash or
by check amounts necessary to satisfy any applicable federal, state and local
tax withholding requirements. If the participant fails to pay the amount
demanded, the Company or the Employer may withhold that amount from other
amounts payable to the participant, including salary, subject to applicable law.
With the consent of the Board of Directors, a participant may satisfy this
obligation, in whole or in part, by instructing the Company to withhold from any
shares to be issued or by delivering to the Company other shares of Common
Stock; provided, however, that the number of shares so delivered or withheld
9
shall not exceed the minimum amount necessary to satisfy the required
withholding obligation.
9.6 EFFECT ON SHARES AVAILABLE. The payment of a Performance-Based
Award in cash shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan. The number of shares of Common Stock reserved for
issuance under the Plan shall be reduced by the number of shares issued upon
payment of an award, less the number of shares delivered or withheld to satisfy
withholding obligations.
10. CHANGES IN CAPITAL STRUCTURE.
10.1 STOCK SPLITS, STOCK DIVIDENDS. If the outstanding Common Stock of
the Company is hereafter increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the Company by
reason of any stock split, combination of shares, dividend payable in shares,
recapitalization or reclassification, appropriate adjustment shall be made by
the Board of Directors in the number and kind of shares available for grants
under the Plan and in all other share amounts set forth in the Plan. In
addition, the Board of Directors shall make appropriate adjustment in the number
and kind of shares as to which outstanding options, or portions thereof then
unexercised, shall be exercisable, so that the optionee's proportionate interest
before and after the occurrence of the event is maintained. Notwithstanding the
foregoing, the Board of Directors shall have no obligation to effect any
adjustment that would or might result in the issuance of fractional shares, and
any fractional shares resulting from any adjustment may be disregarded or
provided for in any manner determined by the Board of Directors. Any such
adjustments made by the Board of Directors shall be conclusive.
10.2 MERGERS, REORGANIZATIONS, ETC. In the event of a merger,
consolidation, plan of exchange, acquisition of property or stock, split-up,
split-off, spin-off, reorganization or liquidation to which the Company is a
party or any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
the Company (each, a "TRANSACTION"), the Board of Directors shall, in its sole
discretion and to the extent possible under the structure of the Transaction,
select one of the following alternatives for treating outstanding options under
the Plan:
10.2.1 Outstanding options shall remain in effect in
accordance with their terms.
10.2.2 Outstanding options shall be converted into
options to purchase stock in one or more of the corporations, including
the Company, that are the surviving or acquiring corporations in the
Transaction. The amount, type of securities subject thereto and
exercise price of the converted options shall be determined by the
Board of Directors of the Company, taking into account the relative
values of the companies involved in the Transaction and the exchange
rate, if any, used in determining shares of the surviving
corporation(s) to be held by holders of shares of the Company following
the Transaction. Unless otherwise determined by the Board of Directors,
10
the converted options shall be vested only to the extent that the
vesting requirements relating to options granted hereunder have been
satisfied.
10.2.3 The Board of Directors shall provide a period
of 30 days or less before the completion of the Transaction during
which outstanding options may be exercised to the extent then
exercisable, and upon the expiration of that period, all unexercised
options shall immediately terminate. The Board of Directors may, in its
sole discretion, accelerate the exercisability of options so that they
are exercisable in full during that period.
10.3 DISSOLUTION OF THE COMPANY. In the event of the dissolution of the
Company, options shall be treated in accordance with Section 10.2.3.
10.4 RIGHTS ISSUED BY ANOTHER CORPORATION. The Board of Directors may
also grant options and stock bonuses and Performance-Based Awards and issue
restricted stock under the Plan with terms, conditions and provisions that vary
from those specified in the Plan, provided that any such awards are granted in
substitution for, or in connection with the assumption of, existing options,
stock bonuses, Performance-Based Awards and restricted stock granted, awarded or
issued by another corporation and assumed or otherwise agreed to be provided for
by the Company pursuant to or by reason of a Transaction.
11. AMENDMENT OF THE PLAN. The Board of Directors may at any time modify or
amend the Plan in any respect. Except as provided in Section 10, however, no
change in an award already granted shall be made without the written consent of
the holder of the award if the change would adversely affect the holder.
12. APPROVALS. The Company's obligations under the Plan are subject to the
approval of state and federal authorities or agencies with jurisdiction in the
matter. The Company will use its best efforts to take steps required by state or
federal law or applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange on which the Company's
shares may then be listed, in connection with the grants under the Plan. The
foregoing notwithstanding, the Company shall not be obligated to issue or
deliver Common Stock under the Plan if such issuance or delivery would violate
state or federal securities laws.
13. EMPLOYMENT AND SERVICE RIGHTS. Nothing in the Plan or any award pursuant to
the Plan shall (i) confer upon any employee any right to be continued in the
employment of an Employer or interfere in any way with the Employer's right to
terminate the employee's employment at will at any time, for any reason, with or
without cause, or to decrease the employee's compensation or benefits, or (ii)
confer upon any person engaged by an Employer any right to be retained or
employed by the Employer or to the continuation, extension, renewal or
modification of any compensation, contract or arrangement with or by the
Employer.
14. RIGHTS AS A SHAREHOLDER. The recipient of any award under the Plan shall
have no rights as a shareholder with respect to any shares of Common Stock until
the date the recipient becomes the holder of record of those shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date occurs before the date the
recipient becomes the holder of record.
This Agreement is between Penge Corp., a Nevada corporation (the
"COMPANY"), and ______________ (the "OPTIONEE"), pursuant to the Company's 2002
Stock Incentive Plan (the "PLAN"). The Company and the Optionee agree as
follows:
1. OPTION GRANT. The Company hereby grants to the Optionee, on the
terms and conditions of this Agreement, the right and the option (the "OPTION")
to purchase all or any part of ____________ (____________) shares of the
Company's Common Stock at a purchase price of _____________ ($____) per share.
The terms and conditions of the Option grant set forth in attached Exhibit A are
incorporated into and made a part of this Agreement. The Option is intended to
be an Incentive Stock Option as defined in Section 422 of the Internal Revenue
Code of 1986, as amended.
2. GRANT DATE; EXPIRATION DATE. The Grant Date for this Option is
__________. The Option shall continue in effect until the fifth anniversary of
the Grant Date (the "EXPIRATION DATE") unless earlier terminated as provided in
Sections 6 or 7 of Exhibit A. The Option shall not be exercisable on or after
the Expiration Date.
3. EXERCISE OF OPTION. The Option will become exercisable in accordance
with Section 1 of Exhibit A.
The parties have executed this Agreement in duplicate as of the Grant
Date.
Address: 1930 Village Center Circle 3-446
Las Vegas, Nevada 89134
PENGE CORP.
EXHIBIT A TO
STOCK OPTION AGREEMENT
1. TIME OF EXERCISE OF OPTION. Until it expires or is terminated as
provided in Sections 6 or 7 of this Exhibit A, the Option may be exercised from
time to time to purchase whole shares of the Company's Common Stock as to which
it has become exercisable. The Option shall become exercisable for 50% of the
shares on the first anniversary of the Grant Date and for the remaining 50% of
the shares on the second anniversary of the Grant Date, so that the Option will
be fully exercisable on the second anniversary of the Grant Date.
2. METHOD OF EXERCISE OF OPTION. Except as otherwise provided in this
Agreement, the Option may be exercised in accordance with the terms of the Plan.
3. DISQUALIFYING DISPOSITION. If within two years after the Grant Date
or within 12 months after the exercise of the Option, the Optionee sells or
otherwise disposes of Common Stock acquired on exercise of the Option, the
Optionee shall within 30 days of the sale or disposition notify the Company in
writing of (i) the date of the sale or disposition, (ii) the amount realized on
the sale or disposition and (iii) the nature of the disposition (e.g., sale,
gift, etc.).
4. NONTRANSFERABILITY. The Option is nonassignable and nontransferable
by the Optionee, either voluntarily or by operation of law, except by will or by
the laws of descent and distribution of the state or country of the Optionee's
domicile at the time of death, and during the Optionee's lifetime, the Option is
exercisable only by the Optionee.
5. STOCK SPLITS, STOCK DIVIDENDS. If the outstanding Common Stock of
the Company is hereafter increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the Company by
reason of any stock split, combination of shares, dividend payable in shares,
recapitalization or reclassification, appropriate adjustment shall be made by
the Company in (i) the number and kind of shares subject to the Option, or the
unexercised portion thereof, and (ii) the Option price per share, so that the
Optionee's proportionate interest before and after the occurrence of the event
is maintained. Notwithstanding the foregoing, the Company shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Company. Any
such adjustments made by the Company shall be conclusive.
6. MERGERS, REORGANIZATIONS, ETC. In the event of a merger,
consolidation, plan of exchange, acquisition of property or stock, split-up,
split-off, spin-off, reorganization or liquidation to which the Company is a
party or any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
the Company (each, a "TRANSACTION"), the Company shall, in its sole discretion
and to the extent possible under the structure of the Transaction, select one of
the following alternatives for treating the Option:
6.1 The Option shall remain in effect in accordance with its
terms.
6.2 The Option shall be converted into an option to purchase
stock in one or more of the corporations, including the Company, that are the
surviving or acquiring corporations in the Transaction. The amount, type of
securities subject thereto and exercise price of the converted Options shall be
determined by the Company, taking into account the relative values of the
companies involved in the Transaction and the exchange rate, if any, used in
determining shares of the surviving corporation(s) to be held by holders of
shares of the Company following the Transaction. The converted Option shall be
vested only to the extent that the vesting requirements relating to the Option
have been satisfied.
6.3 The Company shall provide a period of 30 days or less
before the completion of the Transaction during which the Option may be
exercised to the extent then exercisable, and upon the expiration of that
period, the Option shall immediately terminate. The Company may, in its sole
discretion, accelerate the exercisability of the Option so that the Option is
exercisable in full during that period.
7. DISSOLUTION. In the event of the dissolution of the Company, the
Company shall provide a period of 30 days or less before the dissolution of the
Company during which the Option may be exercised to the extent then exercisable,
and upon the expiration of that period, the Option shall immediately terminate.
The Company may, in its sole discretion, accelerate the exercisability of the
Option so that the Option is exercisable in full during that period.
8. CONDITIONS ON OBLIGATIONS. The Company shall not be obligated to
issue shares of Common Stock upon exercise of the Option if the Company is
advised by its legal counsel that such issuance would violate applicable state
or federal laws, including securities laws. The Company will use its best
efforts to take steps required by state or federal law or applicable regulations
in connection with issuance of shares upon exercise of the Option.
9. NO RIGHT TO EMPLOYMENT OR SERVICE. Nothing in the Plan or this
Agreement shall (i) confer upon the Optionee any right to be continued in the
employment of an Employer or interfere in any way with the Employer's right to
terminate the Optionee's employment at will at any time, for any reason, with or
without cause, or to decrease the Optionee's compensation or benefits, or (ii)
confer upon the Optionee any right to be retained or employed by the Employer or
to the continuation, extension, renewal or modification of any compensation,
contract or arrangement with or by the Employer.
10. SUCCESSORS OF COMPANY. This Agreement shall be binding upon and
shall inure to the benefit of any successor of the Company but, except as
provided herein, the Option may not be assigned or otherwise transferred by the
Optionee.
11. NOTICES. Any notices under this Agreement must be in writing and
will be effective when actually delivered or, if mailed, three days after
deposit into the United States mail by registered or certified mail, postage
prepaid. Mail shall be directed to the addresses stated on the face page of this
Agreement or to such address as a party may certify by notice to the other
party.
12. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock until the date the
Optionee becomes the holder or record of those shares. No adjustment shall be
2
made for dividends or other rights for which the record date occurs before the
date the Optionee becomes the holder of record.
13. AMENDMENTS. The Company may at any time amend this Agreement if the
amendment does not adversely affect the Optionee. Otherwise, this Agreement may
not be amended without the written consent of the Optionee and the Company.
14. GOVERNING LAW. This Agreement shall be governed by the laws of the
state of Nevada.
15. COMPLETE AGREEMENT. This Agreement constitutes the entire agreement
between the Optionee and the Company, both oral and written concerning the
matters addressed herein, and all prior agreements or representations concerning
the matters addressed herein, whether written or oral, express or implied, are
terminated and of no further effect.
This AGREEMENT is between Penge Corp., a Nevada corporation (the
"COMPANY"), and ____________ (the "OPTIONEE"), pursuant to the Company's 2002
Incentive Stock Plan (the "PLAN"). The Company and the Optionee agree as
follows:
1. OPTION GRANT. The Company hereby grants to the Optionee, on the
terms and conditions of this Agreement, the right and the option (the "OPTION")
to purchase all or any part of _______________ (_________) shares of the
Company's Common Stock at a purchase price of ___________ ($____) per share. The
terms and conditions of the Option grant set forth in attached Exhibit A are
incorporated into and made a part of this Agreement. The Option will not be
treated as an Incentive Stock Option as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, and is therefore a Non-Statutory Stock Option.
2. GRANT DATE; EXPIRATION DATE. The Grant Date for this Option is
September 1, 2003. The Option shall continue in effect until the tenth
anniversary of the Grant Date (the "EXPIRATION DATE") unless earlier terminated
as provided in Sections 5 or 6 of Exhibit A. The Option shall not be exercisable
on or after the Expiration Date.
3. EXERCISE OF OPTION. The Option will become exercisable in accordance
with Section 1 of Exhibit A.
The parties have executed this Agreement in duplicate as of the Grant
Date.
Address: 1930 Village Center Circle 3-446
Las Vegas, Nevada 89134
PENGE CORP.
EXHIBIT A TO
STOCK OPTION AGREEMENT
1. TIME OF EXERCISE OF OPTION. Until it expires or is terminated as
provided in Sections 5 or 6 of this Exhibit A, the Option may be exercised from
time to time to purchase whole shares as to which it has become exercisable. The
Option shall be fully exercisable on the Grant Date.
2. METHOD OF EXERCISE OF OPTION. Except as otherwise provided in this
Agreement, the Option may be exercised in accordance with the terms of the Plan.
3. NONTRANSFERABILITY. The Option is nonassignable and nontransferable
by the Optionee, either voluntarily or by operation of law, except by will or by
the laws of descent and distribution of the state or country of the Optionee's
domicile at the time of death, and during the Optionee's lifetime, the Option is
exercisable only by the Optionee.
4. STOCK SPLITS, STOCK DIVIDENDS. If the outstanding Common Stock of
the Company is hereafter increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the Company by
reason of any stock split, combination of shares, dividend payable in shares,
recapitalization or reclassification, appropriate adjustment shall be made by
the Company in (i) the number and kind of shares subject to the Option, or the
unexercised portion thereof, and (ii) the Option price per share, so that the
Optionee's proportionate interest before and after the occurrence of the event
is maintained. Notwithstanding the foregoing, the Company shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Company. Any
such adjustments made by the Company shall be conclusive.
5. MERGERS, REORGANIZATIONS, ETC. In the event of a merger,
consolidation, plan of exchange, acquisition of property or stock, split-up,
split-off, spin-off, reorganization or liquidation to which the Company is a
party or any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
the Company (each, a "TRANSACTION"), the Company shall, in its sole discretion
and to the extent possible under the structure of the Transaction, select one of
the following alternatives for treating the Option:
5.1 The Option shall remain in effect in accordance with its
terms.
5.2 The Option shall be converted into an option to purchase
stock in one or more of the corporations, including the Company, that are the
surviving or acquiring corporations in the Transaction. The amount, type of
securities subject thereto and exercise price of the converted Options shall be
determined by the Company, taking into account the relative values of the
companies involved in the Transaction and the exchange rate, if any, used in
determining shares of the surviving corporation(s) to be held by holders of
shares of the Company following the Transaction. The converted Option shall be
vested only to the extent that the vesting requirements relating to the Option
have been satisfied.
5.3 The Company shall provide a period of 30 days or less
before the completion of the Transaction during which the Option may be
exercised to the extent then exercisable, and upon the expiration of that
period, the Option shall immediately terminate. The Company may, in its sole
discretion, accelerate the exercisability of the Option so that the Option is
exercisable in full during that period.
6. DISSOLUTION. In the event of the dissolution of the Company, the
Company shall provide a period of 30 days or less before the dissolution of the
Company during which the Option may be exercised to the extent then exercisable,
and upon the expiration of that period, the Option shall immediately terminate.
The Company may, in its sole discretion, accelerate the exercisability of the
Option so that the Option is exercisable in full during that period.
7. CONDITIONS ON OBLIGATIONS. The Company shall not be obligated to
issue shares of Common Stock upon exercise of the Option if the Company is
advised by its legal counsel that such issuance would violate applicable state
or federal laws, including securities laws. The Company will use its best
efforts to take steps required by state or federal law or applicable regulations
in connection with issuance of shares upon exercise of the Option.
8. NO RIGHT TO EMPLOYMENT OR SERVICE. Nothing in the Plan or this
Agreement shall (i) confer upon the Optionee any right to be continued in the
employment of an Employer or interfere in any way with the Employer's right to
terminate the Optionee's employment at will at any time, for any reason, with or
without cause, or to decrease the Optionee's compensation or benefits, or (ii)
confer upon the Optionee any right to be retained or employed by the Employer or
to the continuation, extension, renewal or modification of any compensation,
contract or arrangement with or by the Employer.
9. SUCCESSORS OF COMPANY. This Agreement shall be binding upon and
shall inure to the benefit of any successor of the Company but, except as
provided herein, the Option may not be assigned or otherwise transferred by the
Optionee.
10. NOTICES. Any notices under this Agreement must be in writing and
will be effective when actually delivered or, if mailed, three days after
deposit into the United States mail by registered or certified mail, postage
prepaid. Mail shall be directed to the addresses stated on the face page of this
Agreement or to such address as a party may certify by notice to the other
party.
11. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock until the date the
Optionee becomes the holder or record of those shares. No adjustment shall be
made for dividends or other rights for which the record date occurs before the
date the Optionee becomes the holder of record.
12. AMENDMENTS. The Company may at any time amend this Agreement if the
amendment does not adversely affect the Optionee. Otherwise, this Agreement may
not be amended without the written consent of the Optionee and the Company.
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13. GOVERNING LAW. This Agreement shall be governed by the laws of the
state of Nevada.
14. COMPLETE AGREEMENT. This Agreement constitutes the entire agreement
between the Optionee and the Company, both oral and written concerning the
matters addressed herein, and all prior agreements or representations concerning
the matters addressed herein, whether written or oral, express or implied, are
terminated and of no further effect.
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EXHIBIT 10.4
ENGAGEMENT AGREEMENT
BETWEEN PENGE CORP AND ____________
This ENGAGEMENT AGREEMENT BETWEEN PENGE CORP AND __________ (this
"Agreement"), signed on the dates set forth below to be effective as of
______________ (the "Effective Date"), is entered into by and between PENGE
CORP, a Nevada corporation (the "Company"), and _____________ a resident of the
State of __________ ("Employee"). The Company and Employee are referred to
collectively herein as the "Parties."
In consideration of the mutual covenants and promises contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:
1. ENGAGEMENT. The Company hereby engages Employee as the
_______________ of the Company. Employee hereby accepts such engagement and
agrees to perform those duties and undertake those responsibilities that are
customarily performed by professionals holding similar positions in similar
businesses, including, without limitation, the duties and responsibilities that
are assigned to Employee from time to time by the Directors of the Company.
Employee shall also perform the duties that are described in the Job Description
attached hereto as Exhibit 1.
2. EMPLOYMENT EFFORTS. Employee shall work such necessary time for the
Company, and shall devote Employee's full time and attention to the performance
of Employee's obligations under this Agreement at such times as engaged therein.
Employee shall use his best efforts to promote the success of the Company's
business interests.
3. TERM OF ENGAGEMENT. The term of Employee's engagement shall commence
on the Effective Date and, unless terminated earlier pursuant to the provisions
of this Agreement, shall continue for fifteen months (the "Initial Term"). The
term of this Agreement as provided in this Section 3 is referred to herein as
the "Term."
4. COMPENSATION.
(a) SALARY. The Company shall pay Employee compensation as
follows:
Fair and reasonable salaries and bonuses or benefits based on
performance as reviewed by the executive team and the board of
directors.
(b) BONUS. Employee shall receive such bonus amounts as the
Directors may determine.
(c) BENEFITS. Employee shall be entitled to participate in all
the Company's benefit plans including health insurance, cell phone,
expense account etc.
(d) CONFIDENTIALITY AGREEMENT. As a condition of Employee's
engagement and as consideration to Company for entering into this
Agreement with Employee, Employee and the Company will enter into the
Employee Confidentiality (the "Confidentiality Agreement") dated as of
the Effective Date, a copy of which is attached hereto as Exhibit 2.
The attached Confidentiality Agreement is a part of this Agreement and
is hereby incorporated herein by reference. The terms of the
Confidentiality Agreement shall survive the termination of Employee's
engagement by the Company under this Agreement for any reason for a
period of one year.
5. TERMINATION WITH OR WITHOUT CAUSE. The Company shall be entitled to
terminate Employee's engagement at any time with or without cause by giving the
Employee a written notice that has been approved by a majority of the board. If
the Company terminates the Employee's engagement, Employee shall be paid the
compensation provided for above through the life of this agreement. Employee
shall retain ownership of any Stock Options, which shall immediately vest in
full.
6. MISCELLANEOUS.
(a) Payments made to or for the benefit of Employee under this
Agreement shall be paid as W-2 wages.
(b) For purposes of this Agreement, notices, approvals and
other communications provided for herein shall be in writing and shall
be deemed to have been duly given when delivered in person, by
facsimile transmission, by express courier, or by first class United
States Mail, postage prepaid, return receipt requested. Notices to the
Company shall be sent to the attention of the current Manager or as
shall be provided in writing to Employee from time to time in
accordance with this section. Notices to Employee shall be addressed to
Employee's most recent address as set forth in the personnel records of
the Company. Notices shall be effective upon receipt. Either party
shall be entitled to change the address at which notice is to be given
by providing notice to the other party of such change in the manner
provided herein.
(c) This Agreement, together with Confidentiality Agreement
attached hereto as Exhibit 2, sets forth the entire agreement of the
parties with respect to the subject matter hereof, and supersedes all
prior agreements, whether written or oral.
(d) This Agreement may not be assigned by Employee, but the
Company may assign any or all of its rights under this Agreement to any
affiliate or subsidiary company of the Company, so long as the Company
remains liable for the performance by that affiliate or subsidiary of
the payment obligations of the Company hereunder. Except as provided in
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the preceding sentences of this Section 11(d), this Agreement shall be
binding upon, and inure to the benefit of, the parties and their
respective personal representatives, successors and assigns.
(e) No provision of this Agreement shall be altered, amended,
revoked or waived except by an instrument in writing signed by the
Party sought to be charged with such amendment, revocation or waiver.
(f) No waiver of any provision of this Agreement shall be
valid unless it is in writing and signed by the party against whom it
is charged.
(g) The invalidity or unenforceability of any provision of
this Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed as if such invalid or unenforceable
provision were omitted.
(h) This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement on the dates set forth below, to be effective as of the Effective
Date.
PENGE CORP, a Nevada corporation
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
Date: ______________________________________
_______________________, Employee
Date: ______________________________________
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EXHIBIT 1
JOB DESCRIPTION
EXHIBIT 2
EMPLOYEE CONFIDENTIALITY AGREEMENT
This EMPLOYEE CONFIDENTIALITY AGREEMENT (this "Agreement"), signed on
the dates set forth below to be effective as of _______________ (the "Effective
Date"), is entered into by and between PENGE CORP, a Nevada corporation (the
"Company"), and ____________ a resident of the State of __________ ("Employee").
The Company and Employee are referred to collectively herein as the "Parties."
Recitals
A. As of the Effective Date, the Company and Employee have entered into
a separate Engagement Agreement (the "Engagement Agreement"). Unless otherwise
defined herein, capitalized terms used in this Agreement have the meanings given
in the Engagement Agreement. In the event of any conflict between the terms of
this Agreement and the Engagement Agreement, the terms of the Engagement
Agreement shall govern.
B. Employee's employment by the Company creates a relationship of
confidence and trust between Employee and the Company with respect to certain
information applicable to the business of the Company and its clients or
customers.
C. The Company possesses and will continue to possess information that
has commercial value and is treated by Company as confidential. Such information
may include information belonging to Company's owners, Directors, clients,
business partners, and its subsidiaries, customers or suppliers. All such
information is hereinafter called "Confidential Information," provided that
Confidential Information shall not include information provided to the Company
by Employee. Confidential Information for purposes of this Agreement includes,
without limitation, all of the following, to the extent and only to the extent
that they relate to the Company's business developments, designs, improvements,
inventions, blueprints, structures, software, processes, computer programs,
know-how, data, techniques, formulas, marketing, and business plans and
outlines, strategies, budgets, forecasts, projections, unpublished financial
statements, costs, fee schedules, client and supplier lists, client and
prospective client databases, access codes and similar security information and
procedures, and all patents, copyrights, maskworks, trade secrets and other
proprietary rights relating thereto; also provided, however, that the term
"Confidential Information" shall not include any of the foregoing that is in the
public domain other than as the result of a breach of an obligation of
confidentiality.
D. Employee recognizes that any unauthorized use or disclosure of
Confidential Information would cause serious injury to Company, and that the
Company's willingness to employ Employee depends upon Employee's commitment to
protect Company's Confidential Information and to comply with all of the
provisions of this Agreement.
Agreement
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Employee hereby
agrees as follows.
1. PROTECTION OF THE CONFIDENTIAL INFORMATION. At all times during and
after Employee's engagement, Employee shall hold all Confidential Information in
confidence. Employee shall not disclose, retain, copy, or permit any
unauthorized person to disclose or copy any of the Confidential Information,
except as may be necessary for the conduct of the Company's business. Employee
shall not use Confidential Information except as necessary to perform Employee's
duties as an employee of the Company as provided in this Agreement and in the
Engagement Agreement.
2. CONFIDENTIAL INFORMATION BELONGING TO THIRD PARTIES. In the event
that Employee has or has had access to any Confidential Information belonging to
any third party, including but not limited to any of Employee's previous
employers, Employee shall hold all such Confidential Information in confidence
and shall comply with the terms of all agreements between Employee or Company
and any third party with respect to such Confidential Information.
3. EXCEPTIONS. This Agreement does not prevent the use or disclosure by
Employee of information that (a) is required by law to be disclosed, but only to
the extent that such disclosure is legally required, (b) becomes a part of the
public knowledge other than by a breach of an obligation of confidentiality, or
(c) is rightfully received from a third party and neither the Company nor
Employee is obligated to hold such information confidential.
4. RETURN OF CONFIDENTIAL INFORMATION. Upon the Company's request, and
in any event upon termination of Employee's engagement by the Company for any
reason, Employee shall promptly return to Company all materials in Employee's
possession or control that contain or represent Confidential Information,
including but not limited to documents, drawings, diagrams, flow charts,
computer programs or files, memoranda, notes, and every other medium, and all
copies thereof.
5. MISCELLANEOUS.
(a) EQUITABLE REMEDIES. Employee acknowledges that breach of
this Agreement would cause Company to suffer irreparable harm for which
monetary damages would be inadequate compensation. Employee agrees that
Company will be entitled to an injunction restraining any actual or
threatened breach of this Agreement, or specific performance, if
applicable, in addition to any monetary damages.
(b) ENGAGEMENT RELATIONSHIP. The relationship between Employee
and the Company is governed by the Employment Agreement and, as
applicable, this Agreement.
2
(c) ENTIRE AGREEMENT. This Agreement and the Engagement
Agreement to which this Agreement is attached as an exhibit set forth
the entire agreement of the parties with respect to the subject matter
hereof, and supersedes all prior agreements, whether written or oral.
(d) WAIVER AND AMENDMENT. This Agreement may be amended only
by a writing signed by both parties hereto. No oral waiver, amendment
or modification of this Agreement shall be effective under any
circumstances. The waiver by the Company of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach of this Agreement by Employee.
(e) TERM OF AGREEMENT. This Agreement will remain in force
during Employee's engagement by the Company and will continue
thereafter for one year after termination of Employee's engagement by
the Company.
(f) SURVIVAL. The provisions of this Agreement shall survive
termination or expiration of this Agreement and termination of the
Engagement Agreement, for any reason, for a period of one year after
termination of the Term of the Engagement Agreement.
(g) SUCCESSORS AND ASSIGNS. This Agreement may not be assigned
by Employee, but the Company may assign any or all of its rights under
this Agreement to any affiliate or subsidiary company of the Company,
so long as the Company remains liable for the performance by that
affiliate or subsidiary of the payment obligations of the Company
hereunder. Except as provided in the preceding sentence, this Agreement
shall be binding upon, and inure to the benefit of, the parties and
their respective personal representatives, successors and assigns.
(h) SEVERABILITY. Should any provision of this Agreement be
considered unenforceable by a court of law, the remainder of this
Agreement shall remain in force to the fullest extent permitted by law.
(i) GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Nevada.
Employee hereby consents to the personal jurisdiction of the state and
federal courts located in the State of Nevada in connection with any
litigation related to this Agreement and agrees that the exclusive
venue for any such litigation shall be in such courts located in the
State of Nevada.
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IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement on the dates set forth below, to be effective as of the Effective
Date.
PENGE CORP, a Nevada corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Date: ___________________________________
_______________________, Employee
Date: ___________________________________
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EXHIBIT 10.5
PENGE CORP 1930 Village Center Circle 3
Suite 446
Las Vegas, NV 89134
702-562-3176 Kirk Fischer
801-541-9543 KC Holmes
March 5, 2003
Hi Roger,
Per our conversation yesterday here is a consulting agreement like we talked
about
CONSULTING AGREEMENT BETWEEN ROGER MAJOR AND PENGE CORP.
Penge Corp would like to hire Roger Major on an ongoing basis to consult with
Penge Corp related to Tree Farm and other business opportunities for
approximately 500 hours a year. This lime is flexible and is primarily intended
to be used as strategy, information and relationship introduction time.
Penge Corp agrees to pay Roger Major $1,000 a month consulting fee beginning
April 1st, 2003. Either party can cancel this consulting fee with 30 days
written notice.
Penge Corp agrees to pay 150,000 shares of Penge common stock as a consulting
signing bonus on April 1st, 2003. Penge Corp agrees that on or before April
15th, 2004 Roger will be able to sell the shares on the open market to cover
$30,000 worth of personal taxes. If Roger is unable to sell the shares on the
open market then Penge Corp agrees to purchase the 150,000 shares for $30,000
before April 15th, 2004.
[HANDWRITTEN] *CHANGED TO 150,000 @ .10 = $15,000 ON 2/1/04
Roger Major Kirk Fischer, Penge Corp
/S/ Roger Major /S/ Kirk Fischer
------------------------------------ ------------------------------------
Date March 5, 2003 Date March 5, 2003
-------------------------------- --------------------------------
EXHIBIT 10.6
CONVERTIBLE NOTE PURCHASE AGREEMENT
THIS CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as of _________________
(the "AGREEMENT"), is made by and between Penge Corp., a Nevada corporation
("PENGE") and the purchaser identified as the Purchaser on the signature page
hereof (the "PURCHASER"). In consideration of the mutual promises contained
herein and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. SALE AND ISSUANCE OF THE NOTE. Subject to the terms and conditions of this
Agreement, the Purchaser agrees to purchase and the Company agrees to sell and
issue to Purchaser a convertible promissory note (the "NOTE") in the original
principal amount of ___________________ (the "PURCHASE PRICE"). The Note shall
be in the form attached to this Agreement as EXHIBIT B. Immediately following
the execution of this Agreement, the Company shall deliver the Note to the
Purchaser and the Purchaser shall deliver to the Company the amount of the
Purchase Price for such Note in immediately available funds.
2. CONVERSION. The Purchaser shall have the option of converting the entire
outstanding principal amount of the Note, and any accrued interest thereon, into
shares of the Company's common stock (the "COMMON STOCK") pursuant to the terms
and conditions set forth in the Note. If the Note is converted into Common Stock
as provided above, no fractional shares will be issued in connection with such
conversion. In lieu of fractional shares which would otherwise be issuable, the
Company shall pay cash equal to the product of such fraction multiplied by the
Conversion Price.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser hereby represents
and warrants to the Company that:
(a) AUTHORIZATION. This Agreement constitutes the Purchaser's valid and
legally binding obligation, enforceable in accordance with its terms subject to
applicable bankruptcy, insolvency, and other similar laws affecting creditors'
rights, and rules of law governing specific performance, and the Purchaser has
full power and authority to enter into this Agreement.
(b) REPRESENTATIONS NOT MADE BY COMPANY. The Purchaser represents and
affirms that none of the following information has ever been represented,
guaranteed or warranted to the Purchaser, expressly or by implication, by any
person: (i) the approximate or exact length of time that the Purchaser will be
required to remain a security holder of the Company; (ii) the percentage of
profit and/or amount of or type of consideration, profit or loss to be realized,
if any, as a result of an investment in the Company; or (iii) the possibility
that the past performance or experience on the part of the Company or any
affiliate, or any officer, director, employee or agent of the foregoing, might
in any way indicate or predict the results of ownership of any of the Securities
(as defined below) or the potential success of the Company's operations.
(c) PURCHASE FOR OWN ACCOUNT. The Purchaser is the sole and true party
in interest, is acquiring the Note and the Common Stock that may be issuable in
connection therewith (collectively, the "SECURITIES") for its own account for
investment, is not purchasing the Securities for the benefit of any other
person, and has no present intention of holding or managing the Securities with
others or of selling, distributing or otherwise disposing of any portion of the
Securities. If an entity, the Purchaser is duly organized and in good standing
in its jurisdiction of organization and has its principal place of business in
the state set forth below the Purchaser's name on the signature page hereof. If
an individual, the Purchaser has his or her principal residence in the state set
forth below the Purchaser's name on the signature page hereof.
1
(d) DISCLOSURE AND REVIEW OF INFORMATION. The Purchaser acknowledges
and represents that it has received and reviewed a copy of the Summary (as
defined below). In addition, the Purchaser acknowledges and represents that the
Purchaser has been given a reasonable opportunity to review all documents, books
and records of the Company pertaining to this investment, and has been supplied
with all additional information concerning the Company and the Securities that
has been requested by the Purchaser, has had a reasonable opportunity to ask
questions of and receive answers from the Company or its representatives
concerning this investment, and that all such questions have been answered to
the full satisfaction of the Purchaser. The Purchaser has received, and
acknowledges that it is receiving, no representations, written or oral, from the
Company or its officers, directors, employees, attorneys or agents other than
those contained in this Agreement and the Summary. In making its decision to
purchase the Securities, the Purchaser has relied solely upon its review of the
Summary, this Agreement, and independent investigations made by it or its
representatives without assistance of the Company.
(e) SPECULATIVE INVESTMENT. The Purchaser understands that (i) it must
bear the economic risk of the investment in the Securities for an indefinite
period of time because the Securities have not been registered under the
Securities Act or qualified under the Securities Act of 1933, as amended (the
"SECURITIES ACT") or the securities laws of any other jurisdiction and (ii) its
investment in the Company represented by the Securities is highly speculative in
nature and is subject to a high degree of risk of loss in whole or in part. The
Purchaser has adequate means of providing for its current needs and possible
contingencies, and is able to bear the high degree of economic risk of this
investment, including, but not limited to, the possibility of the complete loss
of the Purchaser's entire investment and the limited transferability of the
Securities, which may make the liquidation of this investment impossible for the
indefinite future.
(f) ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited
investor" within the meaning of Rule 501(a) promulgated under the Securities
Act.
(g) INVESTMENT EXPERIENCE. The Purchaser has experience as an investor
in securities and acknowledges that it can bear the economic risk of its
investment in the Securities. By reason of the Purchaser's business or financial
experience or the business or financial experience of its professional advisors
who are unaffiliated with and who are not compensated by the Company or any
affiliate or selling agent of the Company, directly or indirectly, the Purchaser
has the capacity to protect its own interests in connection with its purchase of
the Securities. The Purchaser has the financial capacity to bear the risk of
this investment and has received from the Company all information it has
requested and considers necessary or appropriate for deciding whether to
purchase the Securities. If an entity, the Purchaser has not been organized
solely for the purpose of acquiring the Securities.
(h) RESTRICTED SECURITIES. The Purchaser understands that the
Securities are and will be "restricted securities" under the Securities Act
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering, and that, under the Securities Act and applicable
regulations thereunder, such Securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
the Purchaser represents that it is familiar with Rule 144 promulgated under the
Securities Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
(i) LEGENDS. The Purchaser understands that the certificates evidencing
the Common Stock will bear the legend set forth below, together with any other
legends required by applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES
2
ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY
DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, IS IN EFFECT WITH
RESPECT TO SUCH SECURITIES OR THE COMPANY HAS RECEIVED AN
OPINION FROM LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE COMPANY PROVIDING THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, IS AVAILABLE.
The legend set forth above shall be removed by the Company from any certificate
evidencing any of the Common Stock only (i) upon receipt by the Company of an
opinion from legal counsel in form and substance satisfactory to the Company
that such legend may be removed pursuant to Rule 144 promulgated under the
Securities Act, or (ii) upon confirmation that a registration statement under
the Securities Act is at that time in effect with respect to the legended Common
Stock and that such transfer will not jeopardize the exemption or exemptions
from registration pursuant to which the respective Common Stock was issued.
(j) INDEMNIFICATION. The Purchaser acknowledges that it understands the
meaning and legal consequences of the representations and warranties set forth
in this Section 3 and that the Company and the officers, directors, employees
and agents of the Company have relied and will rely upon such representations
and warranties. The Purchaser hereby agrees to indemnify and hold harmless the
Company and each of its respective officers, directors, employees and agents
from and against any and all loss, claim, damage, liability, cost or expense
(including attorneys' fees) to which any such person may become subject due to
or arising out of: (i) any breach by the Purchaser of any such representation or
warranty; (ii) any inaccuracy in the representations and warranties hereinabove
set forth; (iii) the disposition of any of the Securities by the Purchaser
contrary to the foregoing representations and warranties; and (iv) any action,
suit, proceeding, demand, assessment or judgment incident to or based upon any
of the matters so indemnified against. Notwithstanding the foregoing, however,
no representation, warranty, acknowledgement or agreement made herein by the
Purchaser shall in any manner be deemed to constitute a waiver of any rights
granted to it under federal or state securities laws.
(k) SUMMARY. For purposes of this Section 3, the "SUMMARY" shall mean
1. The Company Business Plan dated _________________
(the "BUSINESS PLAN"); and
2. The Risk Factors / Capitalization Table delivered to
Purchaser with the Business Plan.
4. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the Note contain a final and
complete integration of all prior expressions of the parties with respect to the
subject matter hereof and thereof and shall constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
thereof, superseding all prior oral and written or written understandings.
(b) NOTICES. Any notice or other communication provided for under this
Agreement or the Note shall be in writing and shall be sent by (a) personal
delivery, (b) registered or certified mail (return receipt requested) or (c)
nationally recognized overnight courier service, to Company or to the Purchaser
at their respective addresses set forth on the signature pages hereto. A notice
or other communication shall be deemed to have been duly received (a) if
personally delivered, on the date of such delivery, (b) if mailed, on the date
3
set forth on the signed return receipt or (c) if delivered by overnight courier,
on the date of actual delivery (as evidenced by the receipt of the overnight
courier service).
(c) BINDING EFFECT; ASSIGNABILITY. This Agreement shall be binding upon
and inure to the benefit of Company and Purchaser and their respective
successors and permitted assigns. Neither party may assign this Agreement or any
of its rights hereunder without the prior written consent of the other party
hereto.
(d) EXECUTION IN COUNTERPARTS; SEVERABILITY. This Agreement may be
executed in counterparts, both of which when so executed shall be deemed to be
an original and both of which when taken together shall constitute one and the
same agreement. Signature pages transmitted via facsimile shall be deemed to be
original. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
(e) AMENDMENT AND WAIVER. This Agreement and any provision hereof may
be changed, waived, discharged or terminated only by a written instrument signed
by both of the parties hereto.
(f) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada. The Company and the Purchaser
hereby irrevocably consent to the exclusive jurisdiction and venue of State and
federal courts within the city of Las Vegas, Nevada for any dispute arising out
of this Agreement.
(g) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement.
[SIGNATURE PAGE FOLLOWS]
4
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Convertible Note Purchase Agreement to be executed by their duly authorized
representatives as of the date first written above.
"PURCHASER"
_______________________________________ ___________________________
Print Name of Purchaser Type of Entity
_______________________________________
Signature of Authorized Representative
_______________________________________
Capacity of Signatory
(i.e. President, Manager, Member, etc)
BY SIGNING ABOVE, THE PURCHASER REPRESENTS AND WARRANTS TO THE COMPANY
THAT IT HAS REVIEWED THE DEFINITION OF "ACCREDITED INVESTOR" ON EXHIBIT A
ATTACHED HERETO AND THAT PURCHASER IS AN ACCREDITED INVESTOR UNDER PART
____________ OF THAT DEFINITION. _______________ (INITIAL HERE)
(THIS CONVERTIBLE NOTE PURCHASE AGREEMENT IS NOT COMPLETE IF THE FOREGOING HAS
NOT BEEN COMPLETED AND INITIALED)
1. Purchaser's state of principal place of business or principal residence:
2. Purchaser's mailing address for all communications:
ACCEPTED BY THE COMPANY AS OF _______________:
PENGE CORP.,
a Nevada corporation
By:____________________________________
_________________, its ________________
Address: 1930 Village Center Circle, Suite 3-446
Las Vegas, Nevada 89134
Facsimile: (702) 562-3174
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EXHIBIT A
DEFINITION OF ACCREDITED INVESTOR
"ACCREDITED INVESTOR" shall mean any person who comes within any of the
following categories, or who the issuer reasonably believes comes within any of
the following categories, at the time of the sale of the securities to that
person:
(1) Any bank as defined in section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934; any insurance company as defined in section
2(13) of the Securities Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
section 2(a)(48) of that Act; any Small Business Investment Company licensed by
the U.S. Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit plan within the meaning of
the Employee retirement Income Security Act of 1974 if the investment decision
is made by a plan fiduciary, as defined in section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
(2) Any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuers
of the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceed $1,000,000;
(6) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered whose purchase is
directed by a sophisticated person as described in ss. 230.506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited
investors.
EXHIBIT B
THE CONVERTIBLE NOTE
EXHIBIT 10.7
THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS AND HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION THEREOF. THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE
UPON THE CONVERSION OF THIS NOTE MAY NOT BE SOLD, ASSIGNED, OR OTHERWISE
TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
CONCURRED IN BY COUNSEL FOR THE COMPANY THAT REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
PENGE CORP.
CONVERTIBLE PROMISSORY NOTE
$___________ Issue Date: _______________
FOR VALUE RECEIVED, Penge Corp., a Nevada corporation (the "COMPANY"),
hereby promises to pay to the order of ________________ (the "HOLDER") in lawful
money of the United States at the address of the Holder set forth below, the
principal amount of ______________________ Dollars ($____________), with simple
interest at the rate of __________ (____%) per annum. Interest will be
calculated on a 365-day year for the actual number of days elapsed and shall
commence on the Issue Date and continue on the outstanding principal until paid
in full or converted as provided below.
1. PURCHASE AGREEMENT. This note (the "NOTE") is issued pursuant to the
terms of that certain Convertible Note Purchase Agreement (the "AGREEMENT")
dated as of _________ between the Company and the Holder.
2. MATURITY DATE. The entire outstanding principal balance of this
Note, and any unpaid accrued interest, shall be due and payable in full on the
date that is ___________ from the Issue Date first set forth above (the
"MATURITY DATE") unless prepaid or converted by the Holder prior to the Maturity
Date pursuant to the terms of this Note.
3. CONVERSION.
(a) For purposes of this Note, the "CONVERSION PRICE" shall
mean (A) $____ for a conversion occurring on or before the six-month anniversary
of the Issue Date, (B) $____ for a conversion occurring after the six-month
anniversary of the Issue Date but on or before the one-year anniversary of the
Issue Date, or (C) $____ for a conversion occurring after the one-year
anniversary of the Issue Date but on or before the Maturity Date.
(b) At any time before 5:00 p.m. Utah time on the Maturity
Date, the Holder may, in its sole discretion, upon timely written notice to the
Company stating the amount of principal and interest the Holder intends to
convert, convert all, or part, of the outstanding principal amount of this Note
and accrued interest on the principal amount, into shares of common stock of the
Company ("COMMON STOCK"). The number of shares of Common Stock into which this
Note is convertible shall be calculated in accordance with the following
formula:
X = Y/Z
Where
X = the whole number of shares of Common Stock into which this
Note is Convertible;
Y = the principal amount of this Note converted plus accrued
interest on the principal amount converted; and
Z = the Conversion Price
(c) If the outstanding shares of Common Stock of the Company
are divided into a greater number of shares, the Conversion Price shall be
proportionately reduced. Conversely, if the outstanding shares of Common Stock
are combined into a smaller number of shares, the Conversion Price shall be
proportionately increased. The increases and reductions provided for in this
subsection (c) shall be made with the intent and, as nearly as practicable, the
effect that percentage of the total equity of the Company obtainable in the
event of a conversion under this Section 3 shall be not be affected by any event
described in this subsection (c).
4. DELIVERY OF CERTIFICATE(S). Upon the timely conversion of this Note
as set forth above, the Holder shall deliver this Note to the Company, and the
Company shall deliver to the Holder a certificate or certificates representing
that number of shares of Common Stock into which the Holder is entitled to
receive upon such conversion.
5. FRACTIONAL SHARES. In the event this Note is converted into Common
Stock as provided above, no fractional shares will be issued in connection with
such conversion. In lieu of fractional shares which would otherwise be issuable,
the Company shall pay cash equal to the product of such fraction multiplied by
the Conversion Price.
6. REGISTRATION RIGHTS. When the Company registers any of its
securities for its own account or for the account of other security holders of
the Company on registration form SB-2, the Company shall include in such
registration the Common Stock issuable upon conversion of this Note.
7. PAYMENT. All amounts payable hereunder shall be paid by the Company
in immediately available and freely transferable funds at the place designated
by the Holder to the Company for such payment.
8. ASSIGNMENT. This Note is not assignable, negotiable, or transferable
by the holder unless (i) a registration statement with respect to this Note is
effective under the Securities Act of 1933, as amended, and any applicable state
securities law requirements have been met, or (ii) exemptions from the
registration requirements under the Securities Act of 1933, as amended, and the
registration or qualification requirements of applicable state securities law
are available.
9. SUCCESSORS AND ASSIGNS. All covenants, agreements and undertakings
in this Note by or on behalf of any of the parties shall bind and inure to the
benefit of the respective successors and assigns of the parties whether so
expressed or not.
10. SEVERABILITY. If any provision of the Note is held to be illegal,
invalid or unenforceable under any present or future law, then: (i) such
provision, or any portion thereof, shall be fully severable; (ii) this Note will
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; (iii) the remaining provisions of this Note
shall remain in full force and effect and shall not be affected by the illegal,
2
invalid or unenforceable provision or its severance from this Note; and (iv) in
lieu of such illegal, invalid or unenforceable provision there will
automatically be added as a part of this Note a legal, valid and enforceable
provision on terms as substantially similar as possible to the terms of the
illegal, invalid or unenforceable provision.
11. AMENDMENT. This Note and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Company and the Holder.
12. GOVERNING LAW. The terms of this Note shall be construed in
accordance with the laws of the State of Nevada as applied to contracts entered
into by Nevada residents within the State of Nevada, which contracts are to be
performed entirely within the State of Nevada.
13. NOTICE. Any notice or other communication provided for under this
Note shall be in writing and shall be sent by (a) personal delivery, (b)
registered or certified mail (return receipt requested) or (c) nationally
recognized overnight courier service, to Company or to the Purchaser at their
respective addresses set forth on the signature pages of the Agreement. A notice
or other communication shall be deemed to have been duly received (a) if
personally delivered, on the date of such delivery, (b) if mailed, on the date
set forth on the signed return receipt or (c) if delivered by overnight courier,
on the date of actual delivery (as evidenced by the receipt of the overnight
courier service).
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
PENGE CORP.
By: _____________________________________
Name: ___________________________________
Title: __________________________________
3
Exhibit 10.8
THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS AND HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION THEREOF. THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE
UPON THE CONVERSION OF THIS NOTE MAY NOT BE SOLD, ASSIGNED, OR OTHERWISE
TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
CONCURRED IN BY COUNSEL FOR THE COMPANY THAT REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
MAJOR TREES CORP.
PROMISSORY NOTE
$50,000 Issue Date: August 16, 2004
FOR VALUE RECEIVED, Major Trees Corp., a Nevada corporation (the
"COMPANY"), hereby promises to pay to the order of STANFORD GOULDING AS TRUSTEE
FOR SURVIVOR'S TRUST (the "HOLDER") in lawful money of the United States at the
address of the Holder set forth below, the principal amount of Fifty Thousand
Dollars ($50,000), with simple interest at the rate of ten percent (10.0%) per
annum with an additional bonus of 50,000 options of Common Stock good for 10
years at a strike price of $0.30 per share (the current price of the Common
Stock in the last private placement).
Interest will be calculated on a 365-day year for the actual number of
days elapsed and shall commence on the Issue Date and continue on the
outstanding principal until paid in full or converted as provided below.
1. PURCHASE TERMS. This note (the "NOTE") is issued pursuant to the
terms outlined below and dated August 16, 2004.
o This note is a twenty-four month note
o The note carries monthly interest payments due on the 15th of each
month
o A $50,000 balloon of the principal is due on August 15, 2006.
o There is also an additional bonus of 50,000 options of Common
Stock good for 10 years at a strike price of $0.30 per share (the
current price of the Common Stock in the last private placement).
2. MATURITY DATE. The entire outstanding principal balance of this
Note, and any unpaid accrued interest, shall be due and payable in full on the
date that is 24 months from the Issue Date first set forth above (the "MATURITY
DATE") unless prepaid or converted by the Holder prior to the Maturity Date
pursuant to the terms of this Note. Interest payments shall be made on a
quarterly basis.
4. DELIVERY OF CERTIFICATE(S). Within ten (20) days from the signing of
this note, the company shall deliver to the Holder a certificate or certificates
representing the number of options of Common Stock that the Holder is entitled
to receive under the terms of this note if applicable.
5. FRACTIONAL SHARES. In the event this Note contains Common Stock
option provisions above, no fractional shares will be issued in connection with
such options. In lieu of fractional shares, which would otherwise be issuable,
the Company shall pay cash equal to the product of such fraction multiplied by
the Conversion Price.
6. REGISTRATION RIGHTS. When the Company registers any of its
securities for its own account or for the account of other security holders of
the Company on registration form SB-2, the Company shall include such
registration the Common Stock options issuable under the terms of this Note.
7. PAYMENT. All amounts payable hereunder shall be paid by the Company
in immediately available and freely transferable funds at the place designated
by the Holder to the Company for such payment.
8. ASSIGNMENT. This Note is not assignable, negotiable, or transferable
by the holder unless (i) a registration statement with respect to this Note is
effective under the Securities Act of 1933, as amended, and any applicable state
securities law requirements have been met, or (ii) exemptions from the
registration requirements under the Securities Act of 1933, as amended, and the
registration or qualification requirements of applicable state securities law
are available.
9. SUCCESSORS AND ASSIGNS. All covenants, agreements and undertakings
in this Note by or on behalf of any of the parties shall bind and inure to the
benefit of the respective successors and assigns of the parties whether so
expressed or not.
10. SEVERABILITY. If any provision of the Note is held to be illegal,
invalid or unenforceable under any present or future law, then: (i) such
provision, or any portion thereof, shall be fully severable; (ii) this Note will
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; (iii) the remaining provisions of this Note
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or its severance from this Note; and (iv) in
lieu of such illegal, invalid or unenforceable provision there will
automatically be added as a part of this Note a legal, valid and enforceable
provision on terms as substantially similar as possible to the terms of the
illegal, invalid or unenforceable provision.
11. AMENDMENT. This Note and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Company and the Holder.
2
12. GOVERNING LAW. The terms of this Note shall be construed in
accordance with the laws of the State of Nevada as applied to contracts entered
into by Nevada residents within the State of Nevada, which contracts are to be
performed entirely within the State of Nevada.
13. NOTICE. Any notice or other communication provided for under this
Note shall be in writing and shall be sent by (a) personal delivery, (b)
registered or certified mail (return receipt requested) or (c) nationally
recognized overnight courier service, to Company or to the Purchaser at their
respective addresses set forth on the signature pages of the Agreement. A notice
or other communication shall be deemed to have been duly received (a) if
personally delivered, on the date of such delivery, (b) if mailed, on the date
set forth on the signed return receipt or (c) if delivered by overnight courier,
on the date of actual delivery (as evidenced by the receipt of the overnight
courier service).
14. COLLATERAL. The Company agrees to provide 7,500 trees on the Major
Trees Arizona Farm as collateral for this note and agreement. The trees will be
secured by UCC-1 filing within 20 days of the signing of this note, filed by the
Company in the state of Arizona.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
MAJOR TREES CORPORATION
By: /s/ KIRK FISCHER
----------------
Name: KIRK FISCHER
------------
Title: CEO
---
Date: AUGUST 16, 2004
---------------
Lender:
By: STANFORD GOULDING AS TRUSTEE FOR:
Name: GOULDING SURVIVOR'S TRUST
[HANDWRITTEN] AMENDMENT:
MAJOR TREES IS INSTRUCTED TO PUT ALL STOCK OPTIONS IN JOINT TENANTS WITH RIGHT
OF SURVIVORSHIP IN THE NAMES OF STANFORD GOULDING AND BARBARA GOULDING.
/s/ STANFORD GOULDING
/s/ BARBARA GOULDING
AUGUST 16, 2004
3
Exhibit 10.9
THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS AND HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION THEREOF. THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE
UPON THE CONVERSION OF THIS NOTE MAY NOT BE SOLD, ASSIGNED, OR OTHERWISE
TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
CONCURRED IN BY COUNSEL FOR THE COMPANY THAT REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
MAJOR TREES CORP.
PROMISSORY NOTE
$50,000 Issue Date: August 16, 2004
FOR VALUE RECEIVED, Major Trees Corp., a Nevada corporation (the
"COMPANY"), hereby promises to pay to the order of STANFORD GOULDING AS TRUSTEE
FOR MARITAL TRUST (the "HOLDER") in lawful money of the United States at the
address of the Holder set forth below, the principal amount of Fifty Thousand
Dollars ($50,000), with simple interest at the rate of twelve percent (12.0%)
per annum with an additional three percent (3.0%) bonus at maturity.
Interest will be calculated on a 365-day year for the actual number of
days elapsed and shall commence on the Issue Date and continue on the
outstanding principal until paid in full or converted as provided below.
1. PURCHASE TERMS. This note (the "NOTE") is issued pursuant to the
terms outlined below and dated August 16, 2004.
o This note is a twenty-four month note
o The note carries monthly interest payments due on the 15th of each
month
o A $50,000 balloon of the principal is due on August 15, 2006.
o There is also a profit sharing bonus of 3% of the principal due on
maturity on August 15, 2006.
2. MATURITY DATE. The entire outstanding principal balance of this
Note, and any unpaid accrued interest, shall be due and payable in full on the
date that is 24 months from the Issue Date first set forth above (the "MATURITY
DATE") unless prepaid or converted by the Holder prior to the Maturity Date
pursuant to the terms of this Note. Interest payments shall be made on a
quarterly basis.
4. DELIVERY OF CERTIFICATE(S). Within ten (20) days from the signing of
this note, the company shall deliver to the Holder a certificate or certificates
representing the number of options of Common Stock that the Holder is entitled
to receive under the terms of this note if applicable.
5. FRACTIONAL SHARES. In the event this Note contains Common Stock
option provisions above, no fractional shares will be issued in connection with
such options. In lieu of fractional shares, which would otherwise be issuable,
the Company shall pay cash equal to the product of such fraction multiplied by
the Conversion Price.
6. REGISTRATION RIGHTS. When the Company registers any of its
securities for its own account or for the account of other security holders of
the Company on registration form SB-2, the Company shall include such
registration the Common Stock options issuable under the terms of this Note.
7. PAYMENT. All amounts payable hereunder shall be paid by the Company
in immediately available and freely transferable funds at the place designated
by the Holder to the Company for such payment.
8. ASSIGNMENT. This Note is not assignable, negotiable, or transferable
by the holder unless (i) a registration statement with respect to this Note is
effective under the Securities Act of 1933, as amended, and any applicable state
securities law requirements have been met, or (ii) exemptions from the
registration requirements under the Securities Act of 1933, as amended, and the
registration or qualification requirements of applicable state securities law
are available.
9. SUCCESSORS AND ASSIGNS. All covenants, agreements and undertakings
in this Note by or on behalf of any of the parties shall bind and inure to the
benefit of the respective successors and assigns of the parties whether so
expressed or not.
10. SEVERABILITY. If any provision of the Note is held to be illegal,
invalid or unenforceable under any present or future law, then: (i) such
provision, or any portion thereof, shall be fully severable; (ii) this Note will
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; (iii) the remaining provisions of this Note
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or its severance from this Note; and (iv) in
lieu of such illegal, invalid or unenforceable provision there will
automatically be added as a part of this Note a legal, valid and enforceable
provision on terms as substantially similar as possible to the terms of the
illegal, invalid or unenforceable provision.
11. AMENDMENT. This Note and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Company and the Holder.
12. GOVERNING LAW. The terms of this Note shall be construed in
accordance with the laws of the State of Nevada as applied to contracts entered
into by Nevada residents within the State of Nevada, which contracts are to be
performed entirely within the State of Nevada.
2
13. NOTICE. Any notice or other communication provided for under this
Note shall be in writing and shall be sent by (a) personal delivery, (b)
registered or certified mail (return receipt requested) or (c) nationally
recognized overnight courier service, to Company or to the Purchaser at their
respective addresses set forth on the signature pages of the Agreement. A notice
or other communication shall be deemed to have been duly received (a) if
personally delivered, on the date of such delivery, (b) if mailed, on the date
set forth on the signed return receipt or (c) if delivered by overnight courier,
on the date of actual delivery (as evidenced by the receipt of the overnight
courier service).
14. COLLATERAL. The Company agrees to provide 7,500 trees on the Major
Trees Arizona Farm as collateral for this note and agreement. The trees will be
secured by UCC-1 filing within 20 days of the signing of this note, filed by the
Company in the state of Arizona.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
MAJOR TREES CORPORATION
By: /s/ KIRK FISCHER
----------------
Name: KIRK FISCHER
------------
Title: CEO
---
Date: AUGUST 16, 2004
---------------
[HANDWRITTEN] AMENDMENT:
MAJOR TREES IS INSTRUCTED TO MAKE PAYMENT OF THE 3% MATURITY BONUS IN THE NAMES
OF STANFORD GOULDING AND BARBARA GOULDING AS JOINT TENANTS IN COMMON WITH THE
RIGHT OF SURVIVORSHIP.
/s/ STANFORD GOULDING
/s/ BARBARA GOULDING
AUGUST 16, 2004
3
Exhibit 10.10
REAL ESTATE LIEN NOTE
(WITH WRAPAROUND PROVISIONS)
DATE: May 26, 2004
MAKER: PENGE CORP., a Nevada corporation, and KIRK J.
FISCHER
MAKERS' MAILING ADDRESS: 1930 Village Center Circle, Suite 3-446
Las Vegas, Nevada 89134
PAYEE: SAMPRES TREE FARM, L.L.C. and
H. PRESTON FRANKS and wife, SHIRLEY M. FRANKS
PLACE FOR PAYMENT: 5580 Andershire Drive
Conroe, Texas 77301
PRINCIPAL AMOUNT: $400,000.00
ANNUAL INTEREST RATE ON UNPAID PRINCIPAL FROM DATE:
This note shall bear interest at the rate of SEVEN (7.0%) PERCENT per
annum for the first year hereof.
Thereafter, this note shall bear interest at the rate of EIGHT (8.0%)
PERCENT per annum for the second and third years hereof.
Thereafter, this note shall bear interest at the rate of NINE (9.0%)
PERCENT per annum for the fourth and fifth years hereof.
ANNUAL INTEREST RATE ON MATURED. UNPAID AMOUNT: EIGHTEEN (18%) PERCENT PER ANNUM
TERMS OF PAYMENT:
This note shall be due and payable in equal monthly installments of
$3,101.20 each, including principal and interest, the first installment
being due and payable on or before July 1, 2004, and a like installment
being due and payable on or before the same day of each month
thereafter until and including January 1, 2005.
A principal payment in the amount of $50,000.00 shall be due and
payable on or before September 1, 2004.
1
A principal payment in the amount of $50,000.00 shall be due and
payable on or before January 1, 2005. Thereafter, this note shall be
due and payable in equal monthly installments of $2,500.00 each,
including principal and interest, the first installment being due and
payable on or before February 1, 2005, and a like installment being due
and payable on or before the same day of each month thereafter until
May 1, 2009, at which time the entire principal balance of this note,
plus accrued interest, shall be due and payable.
LATE CHARGE: If any payment becomes past due for more than five (5) days, then a
late charge will be assessed in the amount of $100.00.
PREPAYMENT: Maker shall have the right to prepay the principal balance of this
note at any time without penalty.
SECURITY FOR PAYMENT:
1. Vendor's lien retained in Warranty Deed with Wraparound Provisions,
of even date herewith, to Maker, and additionally secured by Deed of Trust, of
even date herewith, to Robert L. Page, Trustee, against the following described
real property:
17.006 acres of land in the James Lee Survey, A-316, Montgomery County,
Texas; said 17.006 acres being described by metes and bounds on Exhibit
"A" attached hereto and incorporated herein.
2. Security Agreement and UCC-1 Financing Statement against the assets
listed on Exhibit "B" attached hereto.
Maker promises to pay to the order of Payee at the place for payment
and according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
If Maker defaults in the payment of this note or in the performance of
any obligation in any instrument securing or collateral to it, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
Payee may declare the unpaid principal balance and earned interest on this note
immediately due. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, notices of acceleration of maturity, protests, and notices
of protest, to the extent permitted by law.
If this note or any instrument securing or collateral to it is given to
an-attorney for collection or enforcement, or if suit is brought for collection
or enforcement, or it is collected or enforced through probate, bankruptcy, or
other judicial proceeding, then Maker shall pay Payee all costs of collection
and enforcement, including reasonable attorney's fees and court costs, in
addition to other amounts due. Reasonable attorney's fees shall be 15% of all
amounts due unless either party pleads otherwise.
2
Interest on the debt evidenced by this note shall not exceed the
maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of that maximum
amount shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
It is understood and agreed that this note is an all inclusive or
"wraparound" note and there is included in the principal amount of this note the
unpaid principal balance owing on the following described promissory notes:
1. Promissory Note dated April 29, 2002, in the original principal amount
of $105,000.00, executed by H. Preston Franks and wife, Shirley M.
Franks, payable to the order of Houston Community Bank, N.A., secured
by vendor's lien retained in warranty deed of even date therewith,
recorded under Clerk's File No. 2002-044902, Real Property Records of
Montgomery County, Texas, and additionally secured by Deed of Trust, of
even date therewith, recorded under Clerk's File No. 2002-044903, Real
Property Records of Montgomery County, Texas; said note further secured
by Assignment of Leases and Rents recorded under Clerk's File No.
2002-044904, Real Property Records of Montgomery County, Texas, and (b)
Financing Statement recorded at Clerk's File No. 2003-099020, Real
Property Records of Montgomery County, Texas; said note and liens
renewed and extended by instrument dated August 7, 2003, recorded under
Clerk's File No. 2003-099021, Real Property Records of Montgomery
County, Texas; and
2. Promissory Note dated August 11, 2003, in the original principal amount
of $75,000.00, executed by H. Preston Franks and wife, Shirley M.
Franks, payable to the order of Houston Community Bank, N.A., secured
by Deed of Trust, of even date therewith, recorded under Clerk's File
No. 2003-099023, Real Property Records of Montgomery County, Texas;
which said notes are herein referred to as the "Underlying Indebtedness".
The holder of this note is obligated, from the payments made hereon, to
pay the installments of principal and interest as they mature on the above
described Underlying Indebtedness, and upon request, the holder shall furnish to
the Maker hereof sufficient evidence of the fact that all payments on the notes
above referred to have been paid when due.
Payee agrees that upon receipt of any notice of default given by the
holder of the Underlying Indebtedness pursuant thereto or pursuant to the Deed
of Trust securing same, he shall immediately send to Maker a copy of same.
Provided, further, that should any default occur on the above described
Underlying Indebtedness, maker of this Wraparound Note is given the right to
cure said default on the Underlying Indebtedness, and any sums paid by Maker to
cure said default shall be considered as payments on the Wraparound Note, and
the principal amount of the wraparound note shall be reduced in an amount equal
to the sum so paid by Maker, with said amount being applied to the next maturing
installment or installments of this Wraparound Note. Further, in the event Maker
is required to employ an attorney to enforce this right to cure Payee's default,
Payee agrees that, in addition to other amounts due, Payee shall pay a
reasonable attorney fee of fifteen (15%) percent of the amount due unless either
party pleads otherwise.
3
Each Maker is responsible for all obligations represented by this note.
When the context requires, singular nouns and pronouns include the
plural.
PENGE CORP.
By /s/ Kirk J. Fischer
-------------------
KIRK J. FISCHER
Chief Executive Officer
/s/ Kirk J. Fischer
------------------------
KIRK J. FISCHER
4
DEED OF TRUST
(with wraparound provisions)
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.
DATE: May 26, 2004
GRANTOR: PENGE CORP., a Nevada corporation, and
KIRK J. FISCHER
GRANTOR'S MAILING ADDRESS: 1930 Village Center Circle, Suite 3-446
Las Vegas, Nevada 89134
TRUSTEE: ROBERT L. PAGE
TRUSTEE'S MAILING ADDRESS: 2040 Loop 336 West, Suite 212
Conroe, Montgomery County, Texas 77304
BENEFICIARY: SAMPRES TREE FARM, L.L.C. and H.
PRESTON FRANKS and wife, SHIRLEY M.
FRANKS
BENEFICIARY'S MAILING ADDRESS: 5580 Andershire Drive
Conroe, Texas 77301
WRAPAROUND NOTE
DATE: May 26, 2004
AMOUNT: $400,000.00
MAKER: PENGE CORP. and
KIRK J. FISCHER
PAYEE: SAMPRES TREE FARM, L.L.C. and H.
PRESTON FRANKS and wife, SHIRLEY M.
FRANKS
FINAL MATURITY DATE: May 26, 2009
TERMS OF PAYMENT: As provided in said note
PROPERTY (including any improvements):
17.006 acres of land in the James Lee Survey, A-316, Montgomery County,
Texas; said 17.006 acres being described by metes and bounds on Exhibit
"A" attached hereto and incorporated herein.
5
PRIOR LIEN(S): (a) Vendor's lien retained in Warranty Deed recorded under
Clerk's File No. 2002-044902, (b) Deed of Trust recorded under Clerk's File No.
2002-044903, Real Property Records of Montgomery County, Texas, and (c) Deed of
Trust recorded under Clerk's File No. 2003-099023, Real Property Records of
Montgomery County, Texas.
OTHER EXCEPTIONS TO CONVEYANCE AND WARRANTY: Any and all valid covenants,
conditions, restrictions, easements and outstanding mineral and/or royalty
interests in the oil, gas, and other minerals and leases thereon, now
outstanding or affecting the premises herein conveyed, now of record in the
County Clerk's office of Montgomery County, Texas, but only to the extent they
are still in force and effect.
For value received and to secure payment of the note, Grantor conveys
the property to Trustee in trust, Grantor warrants and agrees to defend the
title to the property. If Grantor performs all the covenants and pays the note
according to its terms, this deed of trust shall have no further effect, and
Beneficiary shall release it at Grantor's expense.
GRANTOR'S OBLIGATIONS
Grantor agrees to:
1. keep the property in good repair and condition;
2. pay all taxes and assessments on the property when due;
3. preserve the lien's priority as it is established in this deed
of trust;
4. maintain, in a form acceptable to Beneficiary, an insurance
policy that:
a. covers all improvements for their full insurable
value as determined when the policy is issued and
renewed, unless Beneficiary approves a smaller amount
in writing;
b. contains an 80% coinsurance clause
c. provides fire and extended coverage, including
windstorm coverage;
d. protects Beneficiary with a standard mortgage clause;
e. provides flood insurance at any time the property
is in a flood hazard area; and
f. contains such other coverage as Beneficiary may
reasonably require;
5. comply at all times with the requirements of the 80% coinsurance
clause;
6. deliver the insurance policy to Beneficiary and deliver renewals
to Beneficiary at least ten days before expiration;
7. keep any buildings occupied as required by the insurance policy;
8. if this is not a first lien, pay Lien notes that Grantor is
personally liable and abide by all prior lien instruments;
9. not make alterations or changes to the improvements on the
property without Beneficiary's written consent; and
10. furnish Beneficiary, on or before March 1 of each year, with
copies of paid tax receipts showing that all ad valorem taxes
for the previous year have been paid when due.
BENEFICIARY'S RIGHTS
1. Beneficiary may appoint in writing a substitute or successor
trustee, succeeding to all rights and responsibilities of
Trustee.
6
2. If Grantor fails to perform any of Grantor's obligations,
Beneficiary may perform those obligations and be reimbursed by
Grantor on demand at the place where the note is payable for
any sums so paid, including attorney's fees, plus interest on
those sums from the dates of payment at the rate stated in the
note for matured, unpaid amounts. The sum to be reimbursed
shall be secured by this deed of trust.
3. If Grantor defaults on the note or fails to perform any of
Grantor's obligations or if default occurs on a prior lien
which it must be cured, as may be required by law or by
written agreement, then Beneficiary may:
a. declare the unpaid principal balance and earned
interest on the note immediately due;
b. request Trustee to foreclose this lien, in which case
Beneficiary or Beneficiary's agent shall give notice of
the foreclosure sale as provided by the Texas Property
Code as then amended; and
c. chase the property at any foreclosure sale by offering
the highest bid and then have the bid credited on the
note.
TRUSTEE'S DUTIES
If requested by Beneficiary to foreclose this lien, Trustee shall:
1. either personally or by agent give notice of the foreclosure
sale as required by the Texas Property Code as then amended;
2. sell and convey all or part of the property to the highest
bidder for cash with a general warranty binding Grantor;
subject to prior liens and to other exceptions to conveyance
and warranty; and
3. from the proceeds of the sale, pay, in this order:
a. expenses of foreclosure; including a commission to
Trustee of 5% of the bid;
b. to Beneficiary, the full amount of principal, interest,
attorney's fees, and other charges due and unpaid;
c. any amounts required by law to be paid before payment
to Grantor; and
d. to Grantor, any balance.
GENERAL PROVISIONS
1. If any of the property is sold under this deed of trust, Grantor
shall immediately surrender possession to the purchaser. If
Grantor fails to do so, Grantor shall become a tenant at
sufferance of the purchaser, subject to an action for forcible
detainer.
2. Recitals in any Trustee's deed conveying the property will be
presumed to be true.
3. Proceeding under this deed of trust, filing suit for
foreclosure, or pursuing any other remedy will not constitute an
election of remedies.
4. This lien shall remain superior to liens later created even if
the time of payment of all or part of the note is extended or
part of the property is released.
5. If any portion of the note cannot be lawfully secured by this
deed of trust, payments shall be applied first to discharge that
portion.
6. Grantor assigns to Beneficiary all sums payable to or received
by Grantor from condemnation of all or part of the property,
from private sale in lieu of condemnation, and from damages
caused by public works or construction on or near the property.
7
After deducting any expenses incurred, including attorney's
fees, Beneficiary may release any remaining sums to Grantor or
apply such sums to reduce the note. Beneficiary shall not be
liable for failure to collect or to exercise diligence in
collecting any such sums.
7. Grantor assigns to Beneficiary absolutely, not only as
collateral, all present and future rent and other income and
receipts from the property. Leases are not assigned. Grantor
warrants the validity and enforceability of the assignment.
Grantor may as Beneficiary's licensee collect rent and other
income and receipts as long as Grantor is not in default under
the note or this deed of trust. Grantor will apply all rent and
other income and receipt to payment of the note and performance
of this deed of trust, but if the rent and other income and
receipts exceed the amount due under the note and deed of trust,
Grantor may retain the excess. If Grantor defaults in payment of
the note or performance of this deed of trust, Beneficiary may
terminate Grantor's license to collect and then as Grantor's
agent may rent the property if it is vacant and collect all rent
and other income and receipts. Beneficiary neither has nor
assumes any obligations as lessor or landlord with respect to
any occupant of the property. Beneficiary may exercise
Beneficiary's rights and remedies under this paragraph without
taking possession of the property. Beneficiary shall apply all
rent and other income and receipts collected under this
paragraph first to expenses incurred in exercising Beneficiary's
rights and remedies and then to Grantor's obligations under the
note and this deed of trust in the order determined by
Beneficiary. Beneficiary is not required to act under this
paragraph, and acting under this paragraph does not waive any of
Beneficiary's other rights or remedies. If Grantor becomes a
voluntary or involuntary bankrupt, Beneficiary's filing a proof
of claim in bankruptcy will be tantamount to the appointment of
a receiver under Texas law.
8. Interest on the debt secured by this deed of trust shall not
exceed the maximum amount of nonusurious interest that may be
contracted for, taken, reserved, charged, or received under law;
any interest in excess of that maximum amount shall be credited
on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted
prepayment, any such excess shall be canceled automatically as
of the acceleration or prepayment or, if already paid, credited
on the principal of the debt or, if the principal of the debt
has been paid, refunded. This provision overrides other
provisions in this and all other instruments concerning the
debt.
9. When the context requires, singular nouns and pronouns include
the plural.
10. The term note includes all sums secured by this deed of trust.
11. This deed of trust shall bind, inure to the benefit of, and be
exercised by successors in interest of all parties.
12. If Grantor and Maker are not the same person, the term Grantor
shall include Maker.
13. The note secured hereby is an all-inclusive or "wraparound note"
which includes within its principal balance the unpaid balance
due and owing on that certain promissory notes:
8
A. Promissory Note dated April 29, 2002, in the original
principal amount of $105,000.00, executed by H. Preston
Franks and wife, Shirley M. Franks, payable to the
order of Houston Community Bank, N.A., secured by
vendor's lien retained in warranty deed of even date
therewith, recorded under Clerk's File No. 2002-044902,
Real Property Records of Montgomery County, Texas, and
additionally secured by Deed of Trust, of even date
therewith, recorded under Clerk's File No. 2002-044903,
Real Property Records of Montgomery County, Texas; said
note further secured by Assignment of Leases and Rents
recorded under Clerk's File No. 2002-044904, Real
Property Records of Montgomery County, Texas, and (b)
Financing Statement recorded at Clerk's File No.
2003-099020, Real Property Records of Montgomery
County, Texas; said note and liens renewed and extended
by instrument dated August 7, 2003, recorded under
Clerk's File No. 2003-099021, Real Property Records of
Montgomery County, Texas; and
B. Promissory Note dated August 11, 2003, in the original
principal amount of $75,000.00, executed by H. Preston
Franks and wife, Shirley M. Franks, payable to the
order of Houston Community Bank, N.A., secured by Deed
of Trust, of even date therewith, recorded under
Clerk's File No. 2003-099023, Real Property Records of
Montgomery County, Texas;
which said notes are herein referred to as the "Underlying
Indebtedness".
14. The indebtedness, the payment of which is hereby secured, is in
part payment of the purchase price of the real property
hereinabove described and is also secured by a vendor's lien
retained in warranty deed of even date herewith from Beneficiary
to Grantor, and this Deed of Trust is given as additional
security therefor.
15. The lien created by this instrument shall be and remain second
and inferior to the liens securing payment of the "Underlying
Indebtedness"
16. Beneficiary, in accordance with the provisions of the wraparound
note described above, agrees to make all payments of principal
and interest on the Underlying Indebtedness hereinabove referred
to as they become due.
17. Beneficiary hereby agrees that upon receipt of any notice of
default given by the holder of the Underlying Indebtedness
pursuant thereto or pursuant to the Deed of Trust securing same,
he shall immediately send to Grantor a copy of same. Provided,
further, that should any default occur on the above described
Underlying Indebtedness, maker of the Wraparound Note is given
the right to cure said default on the Underlying Indebtedness,
and any sums paid by maker thereof to cure said default shall be
considered as payments on the Wraparound Note, and the principal
amount of the wraparound note shall be reduced in an amount
equal to the sum so paid by Grantor, with said amount being
applied to the next maturing installment or installments of said
wraparound note. Further, in the event Grantor is required to
employ an attorney to enforce this right to cure Beneficiary's
default, Beneficiary agrees that, in addition to other amounts
due, Beneficiary shall pay a reasonable attorney's fee of
fifteen (15%) percent of the amount due unless either party
pleads otherwise.
9
18. Beneficiary covenants and agrees that at such time as the note
hereby secured is paid in full, whether by prepayment or payment
according to its terms, Beneficiary will obtain a release of the
liens securing the Underlying Indebtedness as to the property
herein described.
GRANTOR: PENGE CORP.
By /s/ Kirk J. Fischer
--------------------------------
KIRK J. FISCHER
Chief Executive Officer
/s/ Kirk J. Fischer
------------------------------------
KIRK J. FISCHER
ACCEPTED BY BENEFICIARY:
SAMPRES TREE FARM, L.L.C.
By /s/ H. Preston Franks
---------------------
H. PRESTON FRANKS, Manager
/s/ H. Preston Franks
---------------------
H. PRESTON FRANKS
/s/ Shirley M. Franks
---------------------
SHIRLEY M. FRANKS
10
STATE OF TEXAS ss.
COUNTY OF MONTGOMERY ss.
This instrument was acknowledged before me on the 26 day of May, 2004,
by KIRK J. FISCHER, individually and as Chief Executive Officer of PENGE CORP.,
a Texas corporation, on behalf of said corporation.
/s/ Rui Cain
-----------------------------
Notary Public, State of Texas
[SEAL]
After recording return to:
11
SURVEY OF 17.006 ACRES OF LAND IN THE JAMES LEE SURVEY A-316 MONTGOMERY COUNTY
TEXAS, AND BEING OUT OF A 36.314 ACRE TRACT DESCRIBED IN DEED RECORDED IN VOLUME
531, PAGE 225 DEED RECORDS AND BEING MORE PARTICULARLY DESCRIBED BY METES AND
BOUNDS AS FOLLOWS, TO WIT:
BEGINNING AT THE NORTHWEST CORNER OF ABOVE MENTIONED 36.314 ACRE TRACT AN OLD
3/4 INCH IRON PIPE FOR CORNER;
THENCE SOUTH 01(degree) 14' WEST, 10.43 FEET ALONG THE WEST LINE OF SAID 36.31.4
ACRE TRACT TO A POINT IN THE EAST RIGHT-OF-WAY LINE OF ROADWAY;
THENCE ALONG THE RIGHT-OF-WAY LINE OF ROAD AS FOLLOWS:
1. SOUTH 53(degree)39'09" EAST, 29.29 FEET TO 1/2" I.R. SET
2. SOUTH 23(degree)02'00" EAST, 272.42 FEET TO SET 1/2" I.R.;
3. SOUTH 09(degree)44'00" EAST, 369.31 FEET TO SET 1/2" I.R.;
4. SOUTH 12(degree)12'00" WEST, 344.93 FEET TO SET 1/2" I.R.;
5. SOUTH 27(degree)40'00" EAST, 223.31 FEET TO SET 1/2" I.R.;
6. SOUTH 11(degree)47'00" EAST, 276.16 FEET TO SET 1/2" I.R.;
7. SOUTH 41(degree)44'00" EAST, 128.30 FEET TO SET 1/2" I.R.;
8. SOUTH 75(degree)23'00" EAST, 81.48 FEET TO SET 1/2" I.R.;
9. NORTH 69(degree)39'00" EAST, 252.42 FEET TO SET 1/2" I.R.;
THENCE NORTH 01(degree) 14' FEET 11.38 FEET PASSING A FOUND 1/2 INCH IRON PIPE
IN ALL A TOTAL DISTANCE OF 1367.14 FEET ALONG THE EAST LINE OF 36.314 ACRES TO
AN 3/4 INCH IRON PIPE FOR THE NORTHEAST CORNER OF SAME;
THENCE NORTH 89(degree) 06' 00" WEST 693.10 FEET TO THE PLACE OF BEGINNING AND
CONTAINING 17.006 ACRES OF LAND.
EXHIBIT "A"
12
Exhibit 10.11
THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS AND HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION THEREOF. THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE
UPON THE CONVERSION OF THIS NOTE MAY NOT BE SOLD, ASSIGNED, OR OTHERWISE
TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
CONCURRED IN BY COUNSEL FOR THE COMPANY THAT REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED.
PENGE CORP.
CONVERTIBLE PROMISSORY NOTE
$300,000 Issue Date: March 31, 2004
FOR VALUE RECEIVED, Penge Corp., a Nevada corporation (the "COMPANY"),
hereby promises to pay to the order of MONITOR FINANCE LC AND FIRST CAPITAL
FUNDING LC (the "HOLDER") in lawful money of the United States at the address of
the Holder set forth below, the principal amount of three hundred thousand
Dollars ($300,000) with simple interest at the rate of ten percent (10.0%) per
annum. This $300,000 is made up of $150,000 from Monitor Finance LC and $150,000
from First Capital Funding LC.
Interest will be calculated on a 365-day year for the actual number of
days elapsed and shall commence on the Issue Date and continue on the
outstanding principal until paid in full or converted as provided below. The
Company will make monthly payments of 4,125.00 [HANDWRITTEN], due on the 1st
of each month. The final amortization of payments will be reconciled at the
settlement date on the twelve-month anniversary of the Issue Date.
1. PURCHASE AGREEMENT. This note (the "NOTE") is issued pursuant to the
terms of that certain Convertible Note Purchase Agreement (the "AGREEMENT")
dated as of March 31, 2004 between the Company and the Holder.
2. MATURITY DATE. The entire outstanding principal balance of this
Note, and any unpaid accrued interest, shall be due and payable in full on the
date that is 12 months from the Issue Date first set forth above (the "MATURITY
DATE") unless prepaid or converted by the Holder prior to the Maturity Date
pursuant to the terms of this Note.
3. CONVERSION.
(a) For purposes of this Note, the "CONVERSION PRICE" shall
mean $0.30 for a conversion occurring on or before the twelve-month anniversary
of the Issue Date.
(b) At any time before 5:00 p.m. Utah time on the Maturity
Date, the Holder may, in its sole discretion, upon timely written notice to the
Company stating the amount of principal and interest the Holder intends to
convert, convert all, or part, of the outstanding principal amount of this Note
and accrued interest on the principal amount, into shares of common stock of the
Company ("COMMON STOCK"). The number of shares of Common Stock into which this
Note is convertible shall be calculated in accordance with the following
formula:
X = Y/Z
Where
X = the whole number of shares of Common Stock into which this
Note is Convertible;
Y = the principal amount of this Note converted plus accrued
interest on the principal amount converted; and
Z = the Conversion Price
(c) If the outstanding shares of Common Stock of the Company
are divided into a greater number of shares, the Conversion Price shall be
proportionately reduced. Conversely, if the outstanding shares of Common Stock
are combined into a smaller number of shares, the Conversion Price shall be
proportionately increased. The increases and reductions provided for in this
subsection (c) shall be made with the intent and, as nearly as practicable, the
effect that percentage of the total equity of the Company obtainable in the
event of a conversion under this Section 3 shall be not be affected by any event
described in this subsection (c).
(d) If the Holder elects to convert into Common Stock, the
Common Stock will be split between Monitor Finance LC and First Capital Funding
LC in ratio with their initial loaned capital.
4. DELIVERY OF CERTIFICATE(S). Upon the timely conversion of this Note
as set forth above, the Holder shall deliver this Note to the Company, and the
Company shall deliver to the Holder a certificate or certificates representing
that number of shares of Common Stock into which the Holder is entitled to
receive upon such conversion.
5. FRACTIONAL SHARES. In the event this Note is converted into Common
Stock as provided above, no fractional shares will be issued in connection with
such conversion. In lieu of fractional shares which would otherwise be issuable,
the Company shall pay cash equal to the product of such fraction multiplied by
the Conversion Price.
6. REGISTRATION RIGHTS. When the Company registers any of its
securities for its own account or for the account of other security holders of
the Company on registration form SB-2, the Company shall include in such
registration the Common Stock issuable upon conversion of this Note.
7. PAYMENT. All amounts payable hereunder shall be paid by the Company
in immediately available and freely transferable funds at the place designated
by the Holder to the Company for such payment.
8. ASSIGNMENT. This Note is not assignable, negotiable, or transferable
by the holder unless (i) a registration statement with respect to this Note is
effective under the Securities Act of 1933, as amended, and any applicable state
securities law requirements have been met, or (ii) exemptions from the
registration requirements under the Securities Act of 1933, as amended, and the
registration or qualification requirements of applicable state securities law
are available.
9. SUCCESSORS AND ASSIGNS. All covenants, agreements and undertakings
in this Note by or on behalf of any of the parties shall bind and inure to the
benefit of the respective successors and assigns of the parties whether so
expressed or not.
2
10. SEVERABILITY. If any provision of the Note is held to be illegal,
invalid or unenforceable under any present or future law, then: (i) such
provision, or any portion thereof, shall be fully severable; (ii) this Note will
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; (iii) the remaining provisions of this Note
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or its severance from this Note; and (iv) in
lieu of such illegal, invalid or unenforceable provision there will
automatically be added as a part of this Note a legal, valid and enforceable
provision on terms as substantially similar as possible to the terms of the
illegal, invalid or unenforceable provision.
11. AMENDMENT. This Note and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Company and the Holder.
12. GOVERNING LAW. The terms of this Note shall be construed in
accordance with the laws of the State of Nevada as applied to contracts entered
into by Nevada residents within the State of Nevada, which contracts are to be
performed entirely within the State of Nevada.
13. NOTICE. Any notice or other communication provided for under this
Note shall be in writing and shall be sent by (a) personal delivery, (b)
registered or certified mail (return receipt requested) or (c) nationally
recognized overnight courier service, to Company or to the Purchaser at their
respective addresses set forth on the signature pages of the Agreement. A notice
or other communication shall be deemed to have been duly received (a) if
personally delivered, on the date of such delivery, (b) if mailed, on the date
set forth on the signed return receipt or (c) if delivered by overnight courier,
on the date of actual delivery (as evidenced by the receipt of the overnight
courier service).
14. ADDITIONAL TERMS. Additional terms are listed in Addendum One (1).
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
1. The Company agrees to give the Holder an additional Lien using a Trust
Deed and Trust Deed Note, against Major Trees as listed in the attached
legal description. See Addendum Two (2).
2. The Company agrees to give the Holder a second position Lien using a
Trust Deed and Trust Deed Note, against Ambassador Grass Farm as listed
in the attached legal description. See Addendum Three (3).
3. The Company agrees to provide a term life insurance policy on Kirk
Fischer and Jim Fischer in the amount of $550,000 each with the Holder
as beneficiary. The Company agrees to begin obtaining these policies
immediately and to obtain them in a reasonable time period.
4
EXHIBIT 10.12
TRUST DEED NOTE
$226,449.00 DATED: AUGUST 22, 2003
1. PROMISE TO PAY. For value received, Kirk Fischer and Penge Corp., a
Nevada Corporation (hereinafter individually referred to as "Maker" and
collectively referred to as "Makers") each promise to pay to the order of
Monitor Finance, L.C., a Utah limited liability company as to an undivided 50%
interest and First Capital Funding, L.C., a Utah limited liability company as to
an undivided 50% interest ("Holder"), at 3191 North Canyon Road, Provo, Utah
84604, or at such other place as Holder may from time to time designate, in
lawful money of the United States of America, the principal sum of TWO HUNDRED
TWENTY SIX THOUSAND FOUR HUNDRED FORTY NINE DOLLARS ($226,449.00), or so much of
that sum as may be advanced under this Trust Deed Note by the Holder, together
with any other advances made pursuant to this Trust Deed Note {collectively the
"Principal Indebtedness"), plus interest as computed below along with any other
cost, fee or expenditure contemplated herein (the "Total Indebtedness"). All of
the terms and conditions of that certain Trust Deed, of even date which secures
this obligation are hereby incorporated and made a part of this Trust Deed Note.
2. TERM. This Trust Deed Note calls for a principal reduction. The
first principal reduction in the amount of $113,000 shall be due January 2,
2004. The balance shall fully mature on February 15, 2004 {the "Maturity Date").
3. INTEREST. The outstanding balance of the Principal Indebtedness
shall bear interest from August 22, 2003 until fully paid at a fixed interest
rate of eighteen percent (18%) per annum. Interest shall accrue daily on the
outstanding balance of the Principal Indebtedness both before and after
judgment, and shall be calculated on the basis of a 360-day year. Interest is
compounded on a 360-day year simple interest basis by applying the ratio for the
annual interest rate over a year of 360 days (365/360), multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding.
4. PAYMENTS. Interest payments are due on the first of each month
beginning September 1, 2003. This Trust Deed Note calls for a balloon payment to
become due and payable on the Maturity Date. On the Maturity Date the Total
Indebtedness shall be due and payable in full. Checks will constitute payment
only when collected. If any payment (installment or balloon) is not made within
five (5) calendar days of the due date, a late penalty equal to ten percent
(10%) of any such installment/or balloon payment owed hereunder shall
automatically be assessed. There shall be no grace period and no further notice
shall be required. In the event that a payment date falls on a weekend, or
public holiday, payment shall be due and payable the following business day.
1
5. ORIGINATION AND DOCUMENT FEES. As part of this transaction, Makers
agree to pay to Holder the amount of $11,300.00 as an origination fee (the
"Origination Fee"). Said Origination Fee shall be due and paid by the Makers on
August 22, 2003. Makers also agree to pay all of the costs incurred in
documenting, recording and closing this transaction (the "Documentation Fee").
Makers agree that both the Origination Fee and Documentation Fee may be
subtracted directly from the principal amount at closing.
6. HOLDER'S EXPENDITURES. Makers agree to pay on demand any
expenditures made by Holder in accordance with the Trust Deed and this Trust
Deed Note, including, but not limited to, the payment of taxes, insurance
premiums, costs of maintenance and preservation of the collateral, common
expense and other assessments relating to the collateral, and attorney fees and
costs incurred in connection with any matter pertaining hereto or to the
security pledged to secure the Principal Indebtedness or any portion thereof
(collectively the "Holder Expenditures"). At the election of Holder, all Holder
Expenditures may be added to the unpaid balance of this Trust Deed Note and
become a part of and on a parity with the Principal Indebtedness secured by the
Trust Deed and shall accrue interest at such rate as may be computed from time
to time in the manner prescribed in this Trust Deed Note.
7. PREPAYMENT. Makers shall have the right, from time to time and at
any time, to prepay all, or any part, of this Trust Deed Note at any time or
times prior to the Maturity Date of this note without payment of any premium or
penalty. Prepaid Interest will be pro rated if this Note is paid off early.
8. DEFAULT. Makers will be in default if any of the following happens:
(a) Makers fail to make any payment when due; (b) any Maker breaks any promise
Maker has made to Holder, or any Maker fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Trust
Deed Note or any agreement related to this Trust Deed Note; (c) any Maker
defaults under any loan, extension of credit security agreement, purchase or
sales agreement, or any other in favor of any other creditor or person that may
materially affect any Maker's property or any Maker's ability to repay this
Trust Deed Note or perform Maker's obligations under this Trust Deed Note or any
of the Related Documents; (d) any representation or statement made or furnished
to Holder by any Maker or on any Maker's behalf is false or misleading in any
material respect either now or at the time made or furnished; (e) any Maker
dissolves (regardless of whether election to continue is made), any member
withdraws from any Maker, any member dies, or any of the members of any Maker
becomes insolvent, a receiver is appointed for any part of any Maker's property,
any Maker makes an assignment for the benefit of creditors, or any proceeding is
commenced either by any Maker or against any Maker under any bankruptcy or
insolvency laws; (f) any creditor tries to take any of any Maker's property on
or in which Holder has a lien or security interest; (g) a material adverse
change occurs in any Maker's financial condition, or Holder believes the
prospect of payment or performance of the Indebtedness is impaired; (h) Holder
in good faith deems itself insecure.
2
9. DEFAULT INTEREST RATE. Notwithstanding anything above to the
contrary, if default occurs in the payment of any principal, interest, fee or
cost, when due, or if any Event of Default occurs hereunder, time being of the
essence hereof, if said default remains uncured for five (5) calendar days,
thereafter, all outstanding Principal Indebtedness shall bear interest at a
default rate of thirty-eight percent (38%) until paid, both before and after
judgment. If this Trust Deed Note becomes in default or payment is accelerated,
Makers agree to pay to the Holder of the Trust Deed Note all collections costs,
including reasonable attorney's fees and legal expenses incurred both before and
after judgment, including any bankruptcy proceeding or appeal, in addition to
all other sums due under this Trust Deed Note.
10. APPLICATION OF PAYMENTS. Any and all payments by any Maker under
this Trust Deed Note shall be applied as follows: first, to the repayment of any
Holder Expenditures advanced by Holder under this Trust Deed Note; second, to
the payment of any late charges; third, to the payment of accrued interest on
the Principal Indebtedness; and fourth, to the payment of the Principal
Indebtedness.
11. EXTENSION. The time for any payment required under this Trust Deed
Note may be extended from time to time at the sole discretion of the Holder.
Makers agree to pay to Holder an extension fee in the sum of ten percent (10%)
of the Total Indebtedness then outstanding under this Trust Deed Note (the
"Extension Fee"). The Extension Fee shall be paid to Monitor Finance, L.C., at
3191 North Canyon Road, Provo, Utah 84604. In addition to the Extension Fee,
Makers further agree to pay any and all documentation and recording costs
incurred in the preparation of said extension. Both the Extension Fee and the
extension documentation costs shall be due and payable at the time the extension
is executed. Acceptance by Holder of any additional security or guarantees for
the performance of the terms and provisions contained in this Trust Deed Note
shall not in any way affect the liability of an individual Maker.
12. GOVERNING LAW. This Trust Deed Note has been delivered to Holder in
the State of Utah. If there is a lawsuit, Makers agree upon Holder's request to
submit to the jurisdiction of the courts of Utah County, the State of Utah. This
Trust Deed Note shall be governed by and construed in accordance with the laws
of the State of Utah.
13. JOINT AND SEVERAL LIABILITY. In the event this Trust Deed Note is
executed, endorsed, guaranteed or assumed by more than one person, corporation,
or any other entity, all of the parties shall be jointly and severally liable
and do hereby waive presentment, demand, protest and notice of non-payment and
of protest. Furthermore, each of the parties hereto agrees that his, her or its
obligation shall continue in full force and effect notwithstanding the death,
bankruptcy (or commencement thereof), dissolution or release of any other party
and notwithstanding the taking or release of other or additional security and
notwithstanding any waiver, amendment or modification (including, but not
limited to, extensions of time or performance) by the holder of this Trust Deed
Note as to the obligations under this Trust Deed Note or under any other Loan
Document of any of the other parties, with or without notice. Without limiting
the generality of the foregoing, each of the parties to this Trust Deed Note
agree that a separate action or actions may be brought against him, her or it,
whether or not such action is brought against any of the other parties to this
Trust Deed Note.
3
14. INTEREST LIMITATION. All agreements between the parties to this
Trust Deed Note and the Holder of this Trust Deed Note are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
deferment or advancement of the proceeds of the loan evidenced by this Trust
Deed Note, acceleration of maturity of the Loan, or otherwise shall the amount
paid or agreed to be paid to Holder for the use, forbearance or detention of the
money to be loaned under this Trust Deed Note exceed the maximum interest rate
permissible under applicable law. If, from any circumstance whatsoever,
fulfillment of any provision of this Trust Deed Note or of any other agreement
between the parties to this Trust Deed Note and the Holder, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then, IPSO FACTO, the obligation to be fulfilled
shall be reduced to the limit of such validity. In the event that any payment is
received by the Holder of this Trust Deed Note which would otherwise be deemed
to by a payment of interest in excess of the maximum allowed by law, such
payment shall be deemed to have been paid on account of principal at the time of
receipt. This provision shall never be superseded or waived and shall control
every other provision of the Trust Deed Note and all agreements between the
parties and the holder of this Trust Deed Note.
15. GENERAL PROVISIONS. Both Holder and Maker acknowledge and agree
that any and all monies provided by Holder to Maker pursuant to the terms hereof
are for a business purpose. Holder may delay or forego enforcing any of its
rights or remedies under this Trust Deed Note without losing them. Upon any
change in the terms of this Trust Deed Note, and unless otherwise expressly
stated in writing, no party who sign this Trust Deed Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Holder may renew or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Holder's security interest in the
collateral; and take any other action deemed necessary by Holder without the
consent of or notice to anyone. All such parties also agree that Holder may
modify this Trust Deed Note without the consent of or notice to anyone other
than the party with whom the modification is made.
DATED this ___22ND____ day of _____AUGUST______________, 2003.
Monitor Finance L.C.
3191 North Canyon Rd
Provo, UT 84604
Escrow No. 104902-MH
DEED OF TRUST AND ASSIGNMENT OF RENT
DATE: AUGUST.22, 2003
TRUSTOR: PENGE CORPORATION, A NEVADA CORPORATION
WHOSE ADDRESS IS:1930 VILLAGE CENTER CIRCLE 3, #445, LAS VEGAS, NV 89134
BENEFICIARY: MONITOR FINANCE L.C. A UTAH LIMITED LIABILITY COMPANY AS TO AN
UNDIVIDED 50% INTEREST AND FIRST CAPITAL FUNDING, L.C., A UTAH LIMITED LIABILITY
COMPANY AS TO AN UNDIVIDED 50% INTEREST
WHOSE ADDRESS IS: 3191 NORTH CANYON ROAD, PROVO, UTAH 84604
TRUSTEE: FIDELITY NATIONAL TITLE AGENCY INC. AN ARIZONA CORPORATION
333 W. WILCOX, SIERRA VISTA, AZ 85635
Property in COCHISE County, State of Arizona, described as:
SEE EXHIBIT ONE ATTACHED HERETO AND MADE A PART HEREOF
Together with all buildings, improvements and fixtures thereon.
THIS DEED OF TRUST, made on the above date between the Trustor, Trustee and
Beneficiary above named;
WITNESSETH: That Trustor irrevocably grants and conveys to Trustee in Trust,
with Power of Sate, the above described real property, together with leases,
rents, issues, profits, or income thereof, (all of which are hereinafter called
"property income") SUBJECT , HOWEVER, to the right , power, and authority
hereinafter given to and conferred upon Beneficiary to collect and apply such
property income; AND SUBJECT TO existing taxes, assessments, liens,
encumbrances, covenants, conditions, restrictions, rights of way, and easements
of record.
FOR THE PURPOSE OF SECURING: A. Performance of each agreement of Trustor herein
contained. B. Payment of the indebtedness evidenced by promissory note or notes
of even date herewith, and any extension or renewal thereof, in the principal
sum of $226,469.00 executed by Trustor in favor of Beneficiary or order. C.
Payment of additional sums and interest thereon which may hereafter be loaned to
Trustor, or his successors or assigns, when evidenced by a promissory note or
notes reciting that they are secured by this Deed of Trust.
INITIALS _____ _____ _____ _____
5
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:
(1) To keep said property in good condition and repair; not to remove or
demolish any building thereon; to complete or restore promptly and in good and
workmanlike manner any building which may be constructed, damaged or destroyed
thereon and to pay when due all claims for labor performed and materials
furnished therefor; to comply with all laws affecting said property or requiring
any alterations or improvements to be made thereon; not to commit or permit
waste thereof; not to commit, suffer or permit any act upon said property in
violation of law; and do all other acts which from the character or use of said
property may be reasonably necessary, the specific enumerations herein not
excluding the general.
(2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory
to and with loss payable to Beneficiary. The amount collected under any fire or
other insurance policy may be applied by Beneficiary upon any indebtedness
secured hereby and in such order as Beneficiary may determine, or at option of
Beneficiary the entire amount so collected or any part thereof may be released
to Trustor. Such application or release shall not cure or waive any default or
notice of Trustee's sale hereunder or invalidate any act done pursuant to such
notice.
(3) To appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Beneficiary or Trustee; including
cost of evidence of title and attorney's fees in a reasonable sum, in any such
action or proceeding in which Beneficiary or Trustee may appear, and in any suit
brought by Beneficiary to foreclose this Deed of Trust.
(4) To pay before delinquent, all taxes and assessments affecting said property,
when due, all encumbrances, charges and liens, with interest, on said property
or any part thereof, which appear to be prior or superior hereto; all costs,
fees and expenses of this Trust, including, without limiting the generality of
the foregoing, the fees of Trustee for issuance of any Deed of Partial Release
and Partial Reconveyance or Deed of Release and Full Reconveyance, and all
lawful charges, costs, and expenses in the event of reinstatement of, following
default in, this Deed of Trust or obligations secured hereby .
Should Trustor fail to make any payment or to do any act as herein
provided, then Beneficiary or Trustee, but without obligation so to do and
without notice to or demand upon Trustor and without releasing Trustor from any
obligation hereof, Beneficiary or Trustee being authorized to enter upon said
property for such purposes; appear in and defend any action or proceeding
purporting to affect the security hereof or the rights or powers of Beneficiary
or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien
which in the judgment of either appears to be prior or superior hereto; and, in
exercising any such powers, pay necessary expenses, employ counsel and pay his
reasonable fees.
(5) To pay immediately and without demand all sums so expended by Beneficiary or
Trustee pursuant to the provisions hereof, together with interest from date of
expenditure at the same rate as is provided for in the note secured by this Deed
of Trust or at the highest legal rate, whichever be the greater rate. Any
amounts so paid by Beneficiary or Trustee shall become a part of the debt
secured by this Deed of Trust and a lien on said premises or immediately due and
payable at option of Beneficiary or Trustee.
IT IS MUTUALLY AGREED:
(6) That any award of damages in connection with any condemnation or any such
taking, or for injury to the property by reason of public use, or for damages
for private trespass or injury thereto, is assigned and shall be paid to
Beneficiary as further security for all obligations secured hereby (reserving
unto the Trustor, however, the right to sue therefor and the ownership thereof
subject to this Deed of Trust), and upon receipt of such moneys, Beneficiary may
hold the same as such further security, or apply or release the same in the same
manner and with the same effect as above provided for disposition of proceeds of
fire or other insurance.
(7) That time is of the essence of this Deed of Trust, and that by accepting
payment of any sum secured hereby after its due date, Beneficiary does not waive
his right either to require prompt payment when due of all other sums so secured
or to declare default for failure so to pay.
INITIALS _____ _____ _____ _____
6
(8) That at any time or from time to time, without notice, upon written request
of Beneficiary and presentation of this Deed of Trust and said note(s) for
endorsement, and without liability therefor, and without affecting the personal
liability of any person for payment of the indebtedness secured hereby, and
without affecting the security hereof for the full amount secured hereby on all
property remaining subject hereto, and without the necessity that any sum
representing the value or any portion thereof of the property affected by the
Trustee's action be credited on the indebtedness, the Trustee may: (a) release
and reconvey all or any part of said property; (b) consent to the making and
recording, or either, of any map or plat of the property or any part thereof;.
(c) join in granting any easement thereon; (d) join in or consent to any
extension agreement or any agreement subordinating the lien, encumbrance, or
charge hereof.
(9) That upon written request of Beneficiary stating that all sums secured
hereby have been paid, and upon surrender of this Deed of Trust and said note(s)
to Trustee for cancellation and retention, and upon payment of its fees, Trustee
shall release and reconvey, without covenant of warranty, express or implied,
the property then held hereunder. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The
Grantee in such reconveyance may be described as "the person or persons legally
entitled thereto.
(10) That as additional security, Trustor hereby gives to and confers upon
Beneficiary the right, power and authority, during the continuance of this
Trust, to collect the property income, reserving unto Trustor the right, prior
to any default by Trustor in payment of any indebtedness secured hereby or in
performance of any agreement hereunder, to collect and retain such property
income as it becomes due and payable. Upon any such default, Beneficiary may at
any time without notice, either in person, by agent, or by a receiver to be
appointed by a court, and without regard to the adequacy of any security for the
indebtedness hereby secured, enter upon and take possession of said property or
any part thereof, in his own name sue for or otherwise collect such property
income, including that past due and unpaid, and apply the same, less costs and
expenses of operation and collection, including reasonable attorney's fees, upon
any indebtedness secured hereby, and in such order as Beneficiary may determine.
The entering upon and taking possession of said property, the collection of such
property income, and the application thereof as aforesaid, shall not cure or
waive any default or notice of Trustee's sale hereunder or invalidate any act
done pursuant to such notice.
(11) That upon default by Trustor in payment of any indebtedness secured hereby
or in performance of any agreement hereunder, Beneficiary may declare all sums
secured hereby immediately due and payable by delivery to Trustee of written
declaration of default and demand for sale and of written notice thereof,
setting forth the nature thereof, and of the election to cause to be sold said
property, under this Deed of Trust.
Beneficiary also shall deposit with Trustee this Deed of Trust, said
note(s) and all documents evidencing expenditures secured hereby.
Trustee shall record and give notice of Trustee's sale in the manner
required by law, and after the lapse of such time as may be required by law,
Trustee shall sell, in the manner required by law, said property at public
auction at the time and place fixed by it in said notice of Trustee's sale to
the highest bidder for cash of lawful money of the United States, payable at
time of sale. Trustee may postpone or continue the sale by giving notice of
postponement or continuance by public declaration at the time and place last
appointed for the sale. Trustee shall deliver to such purchaser its Deed
conveying the property so sold, but without any covenant or warranty, expressed
or implied. Any person, including Trustor, Trustee, or Beneficiary may purchase
at such sale.
After deducting all costs, fees and expenses of Trustee and of this Trust,
including cost of evidence of title in connection with sale and reasonable
attorney's, Trustee shall apply the proceeds of sale to payment of: All sums
then secured hereby and all other sums due under the terms hereof. To the extent
permitted by law, an action be maintained by Beneficiary to recover a deficiency
judgment for any balance due hereunder.
In lieu of sale pursuant to the power of sale conferred hereby, This Deed
of Trust may be foreclosed in the same manner provided by law for the
foreclosure of mortgages on real property. Beneficiary shall also have all other
rights and remedies available to it hereunder at law or in equity. All rights
and remedies shall be cumulative.
(12) That Beneficiary may appoint a successor Trustee in the manner prescribed
by law. A successor Trustee herein shall, without conveyance from the
predecessor Trustee, succeed to all the predecessor's title, estate, rights,
powers and duties. Trustee may resign by mailing or delivering notice thereof to
Beneficiary and Trustor.
INITIALS _____ _____ _____ _____
7
(13) That this Deed applies to, inures to the benefit of, and binds all parties
hereto, their heirs, legatees, devisees, administrators, executors, successors
and assigns. The term Beneficiary shall mean the owner and holder of the note(s)
secured hereby, whether or not named as Beneficiary herein. In this Deed of
Trust, whenever the context so requires, the masculine gender includes the
feminine and neuter, and the singular number includes the plural.
(14) That Trustee accepts this Trust when this Deed of Trust, duly executed and
acknowledged, is made a public record as provided by law. Trustee is not
obligated to notify any party hereto of pending sale under any other Deed of
Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee
shall be a party unless brought by Trustee.
The undersigned Trustor requests that a copy of any notice of Trustee's
sale hereunder be mailed to him at his address hereinbefore set forth.
Penge Corporation, a Arizona corporation
By:/S/ KIRK FISCHER
------------------------
Kirk Fischer, CEO
STATE OF NEVADA
COUNTY OF CLARK
This instrument was acknowledged before me the __________22ND________ day of
_AUGUST, 2002____________ by Kirk Fischer, as CEO of Penge Corporation
/S/ SIGNATURE ILLEGIBLE
--------------------------------
NOTARY PUBLIC
NOTARY EXPIRATION DATE:
ESCROW NO. 104902-MH
TITLE ORDER NO. 00104902
EXHIBIT ONE
Parcel I:
The North half of Section 34, Township 18 South, Range 26 East of the Gila and
Salt River Base and Meridian, Cochise County, Arizona,
EXCEPT the North half of the North half of the North half of the North half,
thereof, and
EXCEPT that portion described as follows:
Commencing at the Northwest corner of said Section 34;
Thence South 00 degrees, 03 minutes, 00 seconds West, 430.00 feet, along the
West line of said Section 34 to the POINT OF BEGINNING;
Thence continuing South 00 degrees, 03 minutes, 00 seconds West, along the West
line of said Section 34'a distance of 430.00 feet;
Thence South 89 degrees, 55 minutes, 22 seconds East, a distance of 750.00 feet;
Thence North 00 degrees, 03 minutes, 80 seconds East, parallel to the West line
of said Section 34, a distance of 430.00 feet;
Thence North 89 degrees, 55 minutes, 22 seconds West, a distance of 750.00 feet
to the POINT OF BEGINNING.
8
MODIFICATION & EXTENSION OF TRUST DEED NOTE
On August 22, 2003, Penge Corporation and Kirk Fischer executed a Note
and Trust Deed in favor of Monitor Finance, L.C. and First Capital Funding, L.C.
in the amount of $226,469.00. the trust Deed was recorded on August 22, 2003 as
Entry No. 030829929 in the records of the Cochise County Recorder. The Trust
Deed encumbered the real property described on the attached Exhibit "A." Penge
Corporation and Kirk Fischer hereby acknowledge that the current balance owing
is $115,129.33.
The parties hereby modify said Trust Deed Note as follows:
"The loan amount is amended to be $250,000.00"
"The interest rate shall be amended as of 3/1/04 to 14% APR"
"The balloon date is amended as follows: $125,000 shall be due on or before
1/5/05. The balance shall be due on or before 3/1/05."
"A fee of $25,000.00 shall be charged for said extension"
"the Fischer loan, with a balance owing of $55,887.32 as of 3/1/04, shall be
combined with this loan."
The parties acknowledge that the same terms and conditions of the original Note
and Trust Deed will apply to the amended amount.
/S/ MILES C. PITCHER
-----------------------------
Monitor Finance, L.C.
By: Miles C. Pitcher
Its: Co-Operating Manager
/S / DEREK OLLIVIER
First Capital Funding, L.C.
By: Derek Ollivier
Its: Member
9
EXHIBIT 10.13
EXHIBIT E1
PROMISSORY NOTE
$200,000.00 Cochise County, Arizona
September 27, 2002
FOR VALUE RECEIVED, Penge Corporation, a Nevada Corporation located at
1930 Village Center Circle 3, Suite 446, Las Vegas, NV 89134 (hereinafter
"Maker"), promises to pay Steven Sutherland, (Holder), at 5120 N. Indian Horse
Trail, Tucson, Arizona, or at such other place as Holder may from time to time
designate in writing, in lawful money of the United States of America, the
principal sum of Two Hundred Thousand and No/100 Dollars ($200,000.00), together
with interest on the principal outstanding from time to time (the "Principal
Balance") from the date of this promissory note (this "Note") until paid, at the
rate of seven percent (7%) per annum, compounded monthly. Payments shall be
payable as follows:
a. Fifty Thousand Dollars and 00/100 ($50,000) principle and
interest due on March 1, 2003.
b. Fifty Thousand Dollars and 00/100 ($50,000) principle and
interest due on March 1, 2004.
c. Fifty Thousand Dollars and 00/100 ($50,000) principle and
interest due on March 1, 2005.
d. Fifty Thousand Dollars and 00/100 ($50,000) principle and
interest due on March 1, 2006.
e. Entire balance of principle and interest shall be due on March
1, 2007.
Any payments hereunder shall be credited first to interest then due,
and the remainder to principal. Prepayments of principal, in whole or in part,
may be made at any time, without penalty of kind, nature or amount.
Maker is providing this Note to Holder pursuant to the terms of a
Purchase Agreement, Receipt and Escrow Instructions dated August 14, 2002 in
which Maker is the "Buyer" and Holder is the "Seller" (the "Escrow Agreement"),
and such other documents referenced in the Escrow Agreement, which Agreements
are collectively referred to as the "Purchase Agreements".
This Note is secured by the assets shown in Schedule E1 (the "Security
Document") wherein Maker is the "Debtor" and Holder is the "Secured Party,"
pertaining to those certain assets, rights and property described therein. All
agreements, conditions, covenants, provisions and stipulations contained in the
Security Document which are to be kept and performed in favor of the Holder
and/or the Secured Party are hereby made a part of this Note, fully and
completely, to the same extent and with the same force and effect as if they
were fully set forth herein, and Maker covenants and agrees to keep and perform
them or cause them to be kept and performed strictly in accordance with their
terms.
If any installment payment due under this Note is not paid within
fifteen (15) days of its due date and after Maker's receipt of a notice of
nonpayment, then the Maker shall pay to the Holder a late charge equal to five
percent (5%) of the amount so due. In addition to the late charge, any payment
due Holder which is more than thirty (30) days past due shall be subject to a
default interest rate of fifteen percent (15%). Holder may accelerate this note
making all principal, interest and other charges immediately due and payable if
Maker is more than thirty (30) days late in making payment and Holder provides
Maker with written notice of such acceleration ten (10) business days prior to
such acceleration taking effect, and any amounts then due under the Note are not
paid within said ten (10) business day period.
This Note shall be governed and construed according to the laws of the
State of Arizona.
Any instruction by Holder to Maker purporting to change the place of
payment must be signed by all Holders to be effective.
MAKER'S RIGHT OF OFFSET
In the event that, after closing of the transactions contemplated in
any or all of the Purchase Agreements, any claims are submitted against the
business, assets, property or stock which are the subject of any or all of the
Purchase Agreements by creditors, taxing authorities, auditors, or any other
person, arising out of obligations incurred by any Holder, all Holders
collectively, or any of the Holder's businesses, assets or stock which is the
subject of the Purchase Agreements, Maker shall have the right to pay such debts
or claims and offset from any amounts due under this Note the amount so paid,
pursuant to the following procedure:
Maker shall send a copy of any bill, invoice or claim to Holders by
certified mail together with a demand for the Holders, or the applicable Holder,
within fifteen (15) days of the date of the certified delivery date, to prove
that such debt, invoice or claim has been paid in full, or to deliver to Maker a
cashier's check payable to the appropriate creditor in the full amount of the
debt, invoice or claim. In the event Holders fail to either provide evidence of
payment or provide a cashier's check for payment within the fifteen (15) day
period set forth above, then Maker shall have the right to pay such debt,
invoice or claim and deduct such amount from payments due under this Note. Maker
shall reasonably cooperate with Holders where applicable in resolving any
disputed claims. Should any disputed claims be resolved to the benefit of the
Holder, or the applicable Holder, after the Maker has exercised the right of
offset contained herein, and the Maker has received payment for such resolved
claim, then Maker agrees to promptly reimburse Holder, or the applicable Holder,
for the amount of the payment received by Maker. This Right Of Offset is
specifically for the failure of the Seller to have paid all outstanding debts
against the Business and for no other reason.
2
The prevailing party in any action or arbitration arising out of the
terms of this Note shall be entitled to an award of reasonable attorney's fees,
court costs, litigation costs and expenses, and expert witness fees and costs.
MAKER:
Penge Corporation
X /s/ Kirk Fischer Date: 9-27-02
----------------------------------- --------------------------
Kirk Fischer, President
X /s/ Jim Fischer Date: 9-27-02
----------------------------------- --------------------------
Jim Fischer, Vice President
HOLDER:
X /s/ Steven Sutherland Date: 9-27-02
Steven Sutherland
3
SCHEDULE E1
TO
PROMISSORY NOTE
SECURED ASSETS, RIGHTS AND PROPERTY
All outstanding shares of Major Trees, Inc. stock
Name: Arizona Goldwater Pine
Name: Texas Lone Star Pine
Name: Las Vegas Blue Pine
Customer list of Major Trees Inc.
All financial books and records of the business.
All original equipment and furniture transferred in sale.
Phone Number: 520-749-6428
EXHIBIT 10.14
EXHIBIT E2
PROMISSORY NOTE
$600,000.00 Cochise County, Arizona
September 27, 2002
FOR VALUE RECEIVED, Penge Corporation, a Nevada Corporation located at
1930 Village Center Circle 3, Suite 446, Las Vegas, NV 89134 (hereinafter
"Maker"), promises to pay jointly to Roger Major and Barbara Major (collectively
hereinafter "Holder"), at _____________________________________________,
Arizona, or at such other place as Holder may from time to time designate in
writing, in lawful money of the United States of America, the principal sum of
Six Hundred Thousand and No/100 Dollars ($600,000.00), together with interest on
the principal outstanding from time to time (the "Principal Balance") from the
date of this promissory note (this "Note") until paid, at the rate of seven
percent (7%) per annum, compounded monthly. Payments shall be payable as
follows:
a. One Hundred Fifty Thousand Dollars and 00/100 ($150,000)
principle and interest due on March 1, 2003.
b. One Hundred Fifty Thousand Dollars and 00/100 ($150,000)
principle and interest due on March 1, 2004.
c. One Hundred Fifty Thousand Dollars and 00/100 ($150,000)
principle and interest due on March 1, 2005.
d. One Hundred Fifty Thousand Dollars and 00/100 ($150,000)
principle and interest due on March 1, 2006.
e. Entire balance of principle and interest shall be due on March
1, 2007.
Any payments hereunder shall be credited first to interest then due,
and the remainder to principal. Prepayments of principal, in whole or in part,
may be made at any time, without penalty of kind, nature or amount.
Maker is providing this Note to Holder pursuant to the terms of a
Purchase Agreement, Receipt and Escrow Instructions dated August 14, 2002 in
which Maker is the "Buyer" and Holder is the "Seller" (the "Escrow Agreement"),
and such other documents referenced in the Escrow Agreement, which Agreements
are collectively referred to as the "Purchase Agreements".
This Note is secured by the assets shown in Schedule E2 (the "Security
Document") wherein Maker is the "Debtor" and Holder is the "Secured Party,"
pertaining to those certain assets, rights and property described therein. All
agreements, conditions, covenants, provisions and stipulations contained in the
Security Document which are to be kept and performed in favor of the Holder
and/or the Secured Party are hereby made a part of this Note, fully and
completely, to the same extent and with the same force and effect as if they
were fully set forth herein, and Maker covenants and agrees to keep and perform
them or cause them to be kept and performed strictly in accordance with their
terms.
If any installment payment due under this Note is not paid within
fifteen (15) days of its due date and after Maker's receipt of a notice of
nonpayment, then the Maker shall pay to the Holder a late charge equal to five
percent (5%) of the amount so due. In addition to the late charge, any payment
due Holder which is more than thirty (30) days past due shall be subject to a
default interest rate of fifteen percent (15%). Holder may accelerate this note
making all principal, interest and other charges immediately due and payable if
Maker is more than thirty (30) days late in making payment and Holder provides
Maker with written notice of such acceleration ten (10) business days prior to
such acceleration taking effect, and any amounts then due under the Note are not
paid within said ten (10) business day period.
This Note shall be governed and construed according to the laws of the
State of Arizona.
Any instruction by Holder to Maker purporting to change the place of
payment must be signed by all Holders to be effective.
MAKER'S RIGHT OF OFFSET
In the event that, after closing of the transactions contemplated in
any or all of the Purchase Agreements, any claims are submitted against the
business, assets, property or stock which are the subject of any or all of the
Purchase Agreements by creditors, taxing authorities, auditors, or any other
person, arising out of obligations incurred by any Holder, all Holders
collectively, or any of the Holder's businesses, assets or stock which is the
subject of the Purchase Agreements, Maker shall have the right to pay such debts
or claims and offset from any amounts due under this Note the amount so paid,
pursuant to the following procedure:
Maker shall send a copy of any bill, invoice or claim to Holders by
certified mail together with a demand for the Holders, or the applicable Holder,
within fifteen (15) days of the date of the certified delivery date, to prove
that such debt, invoice or claim has been paid in full, or to deliver to Maker a
cashier's check payable to the appropriate creditor in the full amount of the
debt, invoice or claim. In the event Holders fail to either provide evidence of
payment or provide a cashier's check for payment within the fifteen (15) day
period set forth above, then Maker shall have the right to pay such debt,
invoice or claim and deduct such amount from payments due under this Note. Maker
shall reasonably cooperate with Holders where applicable in resolving any
disputed claims. Should any disputed claims be resolved to the benefit of the
Holder, or the applicable Holder, after the Maker has exercised the right of
offset contained herein, and the Maker has received payment for such resolved
claim, then Maker agrees to promptly reimburse Holder, or the applicable Holder,
for the amount of the payment received by Maker. This Right Of Offset is
specifically for the failure of the Seller to have paid all outstanding debts
against the Business and for no other reason.
2
The prevailing party in any action or arbitration arising out of the
terms of this Note shall be entitled to an award of reasonable attorney's fees,
court costs, litigation costs and expenses, and expert witness fees and costs.
MAKER:
Penge Corporation
X /s/ Kirk Fischer Date: 9-27-02
----------------------------------- --------------------------
Kirk Fischer, President
X /s/ Jim Fischer Date: 9-27-02
----------------------------------- --------------------------
Jim Fischer, Vice President
HOLDERS:
X /s/ Roger Major Date: 9-27-02
----------------------------------- --------------------------
Roger Major
X /s/ Barbara Major Date: 9-27-02
----------------------------------- --------------------------
Barbara Major
3
SCHEDULE E2
TO
PROMISSORY NOTE
SECURED ASSETS, RIGHTS AND PROPERTY
All 272.596+/- acres of M7 farmland located at 14660 S. Highway 191 Elfrida,
Arizona
2 Lockwood 2100 Center Pivot Sprinklers
1 John Deere 4640 tractor, SN 019967R
1 John Deere 2840 tractor, SN 347046CD
1 8 Row Ag Sprayer
1 Will Rich chisel plow
1 John Deere disk, 14'
1 Westgo 6 Row cultivator
1 Tool Carrier
1 Wesked Scraper, 12'
1 Toyota Forklift, Model 42-5FG25 SN405FGU25-79125
1 Bush Hog Shredder, Model 32145 SN 12-01172
1 1965 2 ton truck, Chevrolet
1 900 Gallon Diesel Tank and Pump
1 Squash packing line, conveyors, brushes, etc.
Various Shop Equipment including welders, compressors, hand and power tools,
parts inventory, tractor and forklift spare parts inventory, pivot sprinkler
spare parts inventory, miscellaneous spare parts, etc.
4 Farm Utility trailers, side-dump, 6 Wheel
4 Tree trailers, 4 wheel
1983 Ford F-250, 3/4 ton, 4WD
Misc. toolbars and cultivators
Underground water distribution system
Water Rights as further set forth in the Asset Purchase Agreement (Exhibit "A")
Greenhouse with seedling trays and tubes
2 Metal outbuildings
Fencing
All tree inventory and crops located on the property in Elfrida Arizona
Name: M7 Farms
Phone Number: 520-642-3766
EXHIBIT 21.1
SUBSIDIARIES OF PENGE CORP.
JURISDICTION OF
NAME INCORPORATION/ORGANIZATION
Major Trees, Inc. Arizona
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 for Penge Corp., of our report dated July 9,
2004, except for Note 18, as to which the date is October 21, 2004, relating to
the June 30, 2004 and 2003 financial statements of Penge Corp., which appears in
such Prospectus. We also consent to the reference to us under the heading
"Experts".
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