EXHIBIT 10.2
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PalWeb Corporation
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Plastic Pallet Production, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
January 10, 2003
Xxxx X. Xxxxxx
0000 X. XxXxx, Xxxxx 000
Xxxxxx, XX 00000
Re: $7,000,000 Financing of PalWeb Corporation and Plastic Pallet
Production, Inc.
Dear Xxxx:
This letter is intended to memorialize the terms of the agreement
between you and PalWeb Corporation ("PalWeb") and Plastic Pallet Production,
Inc. ("PPP"), pursuant to which you have agreed to loan seven million dollars
($7,000,000) to PalWeb and PPP (the "Loan").
1. Financing. You or your affiliates are making a loan to PalWeb and
PPP on the date hereof (the "Closing Date"), in the amount of $7,000,000. The
terms of the Loan are as set forth in a loan agreement, promissory note,
security agreement and stock pledge agreement being executed and delivered on
the Closing Date.
2. Assignment of Judgments and Agreement Regarding Collection. As
additional consideration for the Loan, PalWeb and PPP do hereby transfer, assign
and convey to Xxxx X. Xxxxxx or his designee all of their rights and interests
in and to the judgments ("Judgments") entered against (i) Vimonta AG, a Swiss
company, in Case No.3:00-CV-1388-P, in the United States District Court for the
Northern District of Texas (the "Vimonta Judgment") and (ii) Xxxxxxxx Xxxxxxx,
Rosarin Chaisayan, Chartex AG and New Inter HKB AG, in Case Nos. DV99-00110-E
and 99-10249-B in the District Court of Dallas County, Texas (the "Xxxxxxx
Judgments"), to be effective as of the dates set forth below. The parties agree
that the Judgments currently have no value to PalWeb or PPP and that any value
associated with the Judgments is dependent upon further collection action which
is highly speculative and uncertain.
(a) The Vimonta Judgment. The assignment of the Vimonta Judgment
shall be effective after a final default judgment is entered against Vimonta AG
pursuant to PalWeb's and PPP's Request for Leave to Submit Final Default
Judgment and for additional Time to Serve Defendant in Accordance with the Hague
Convention as filed in the United States District Court for the Northern
District of Texas on August 28, 2002. PalWeb and PPP agree to undertake
diligently and to complete all things reasonably necessary to have such final
judgment entered in the name of PalWeb and PPP against Vimonta AG, including,
but not limited to, the filing and
service of appropriate papers in accordance with the Hague Convention. You shall
reimburse promptly upon demand all costs incurred by PalWeb or PPP from and
after the Closing Date in connection with the perfection and enforcement of the
Vimonta Judgment. Promptly after the entry of such final judgment, PalWeb and
PPP shall execute and deliver such assignments as may be necessary to assign the
judgment of record to you.
(b) The Xxxxxxx Judgments. The assignment of the Xxxxxxx Judgment
shall be effective immediately on the Closing Date; provided, that PalWeb shall
be entitled to share in the proceeds of the Xxxxxxx Judgments as follows. You
shall complete an investigation, at your own expense, to determine what actions
are necessary to enforce the Xxxxxxx Judgments against the judgment debtors in
Germany, and you shall report the conclusions of such investigation to PalWeb
together with an estimate of the costs and expenses, including legal fees,
necessary to collect the Xxxxxxx Judgments and an estimate of the probability of
collection of such judgments. If PalWeb elects to participate with you in the
costs of enforcement and collection of the Xxxxxxx Judgments, PalWeb will
receive its pro rata share of the proceeds collected based on PalWeb's expense
sharing percentage. In any event, PalWeb will be entitled to receive five
percent (5%) of any amounts collected on such Xxxxxxx Judgments in excess of the
investigation, enforcement and collection expenses incurred by you with regard
to such judgments.
3. Pallet Sales. You and PPP will execute and deliver the
Non-Exclusive Distribution Agreement attached hereto as Exhibit A.
4. Stonegate. PalWeb and PPP shall permit Stonegate Securities to
continue its engagement through the completion of its research report pursuant
to the terms of the existing letter agreement between PalWeb and Stonegate, and
PalWeb shall cause to be paid the balance of $50,000 owed to Stonegate in
accordance with the terms of such agreement. You will assist continuing
management of PalWeb with introductions to Stonegate and will make Xxxxx Xxxxxxx
available for assistance with completion of the research report.
5. Stock Options. PalWeb has heretofore granted to you the following
options to purchase shares of PalWeb's common stock, par value $0.0001 per share
("Options"):
Current
Number of Option Grant Expiration
Options Price Date Date
50,000 $2.00 5/11/01 5/11/11
150,000 $3.125 4/11/02 4/11/12
25,000 $1.60 6/26/02 6/26/12
Notwithstanding the terms and provisions of the stock option agreements
previously executed by you and PalWeb with respect to such Options, all of such
Options are hereby amended to provide that (i) they shall be fully vested as of
the Closing Date, and may be exercised, in whole or in part, at any time and
from time to time until the expiration date; and (ii) the expiration date shall
be January 10, 2008. Except as so amended, the terms of the options shall remain
in full force and effect. PalWeb recognizes that such modifications in terms
will result in a different accounting treatment for such options.
6. Resignation. By execution of this letter agreement, you do hereby
resign as Chairman, Director and Chief Executive Officer of PalWeb and PPP
effective immediately. PalWeb and PPP hereby accept your resignation from such
positions.
7. Mutual Releases. You, your affiliates, Xxxxxxxx Trading Company,
L.C., and Onward, LLC, and PalWeb and PPP, as well as the directors of PalWeb
and their specifically-named affiliated entities, will execute and deliver the
Mutual Release Agreement attached hereto as Exhibit B.
If the foregoing accurately and completely sets forth the terms of
the agreement between you and PalWeb and PPP, please so indicate by signing and
returning one original of this letter.
Sincerely,
PALWEB CORPORATION
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
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Title: President
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PLASTIC PALLET PRODUCTION, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
-------------------------------------
Title: President
-------------------------------------
Enclosures
Accepted and agreed:
/s/ Xxxx X. Xxxxxx
------------------------------------
XXXX X. XXXXXX
Date: January 13, 2003
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Exhibit A
NON-EXCLUSIVE DISTRIBUTION AGREEMENT
THIS NON-EXCLUSIVE DISTRIBUTION AGREEMENT ("Agreement") is made and
entered into this 10th day of January, 2003, by and between Plastic Pallet
Production, Inc., a Texas corporation (the "Company"), and Xxxx X. Xxxxxx
("Xxxxxx").
RECITALS
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WHEREAS, the Company has determined Kruger's services as a
non-exclusive distributor of the Company's plastic pallets and other products
(the "Products") will be of great value to the Company, and accordingly, the
Company desires to enter into this Agreement with Kruger as set forth herein in
order to secure such services; and
WHEREAS, Kruger desires to act as a non-exclusive distributor for
the Company of its Products on the terms set forth herein.
NOW, THEREFORE, for and in consideration of the above premises and
the mutual agreements hereinafter set forth, Kruger and the Company agree as
follows:
1. Appointment and Relation of Distributor. The Company hereby
appoints Kruger as a non-exclusive distributor of the Company's Products. From
time to time, Kruger shall act as a purchaser of the Company's Products for the
purpose of resale and is not the Company's agent or employee for any purpose
whatsoever.
2. Distributor's Duties. In connection with any efforts undertaken
by Kruger to sell the Company's Products, Kruger shall:
(a) coordinate his marketing activities with the marketing
personnel of the Company or such other personnel as
directed by the Company's Board,
(b) diligently observe all policies and decisions communicated
by the Board and/or marketing personnel, and
(c) timely prepare and forward to the Board and/or marketing
personnel all reports and accountings as may be requested.
3. Company's Duties. To facilitate any efforts undertaken by Kruger
to sell the Company's Products, the Company shall:
(a) provide Kruger with such technical support as appropriate
in order for Kruger to perform under this Agreement, and
(b) use reasonable efforts to manufacture sufficient
quantities of Products to fill orders received by Kruger
for the purchase of the Company's Products subject to the
Company's then-existing orders from third parties.
4. Prices and Discounts. Upon all of Kruger's purchases of the
Company's Products hereunder, Kruger's cost shall be the Company's F.O.B. price
at the Company's plant in Dallas, Texas, less the greatest discounts or
concessions made to any of the Company's other distributors for similar kinds
and quantities of Products. Such pricing shall be applied so that Product prices
charged to Kruger are no greater than the most favorable standard wholesale
pricing terms afforded to any distributor of similar kinds and quantities of the
Company's Products.
5. Terms and Billing. Payment terms will be net thirty (30) days
after the invoice date. Invoices shall be issued to Kruger in increments equal
to and on the date of actual shipments.
6. Termination. This Agreement may be terminated by either party
upon thirty (30) days written notice to the other party. This Agreement may be
terminated by the Company for Cause immediately and without notice. For purposes
of this Section 6, "Cause" shall mean conduct amounting to (i) fraud, dishonesty
or breach of fiduciary duty against the Company, (ii) willful misconduct,
repeated refusal to follow the reasonable directions of the Company or violation
of law in the course of performance under the Agreement, (iii) a material breach
or violation of the terms of this Agreement, or (iv) nonpayment of amounts owed
the Company to be paid timely in accordance with Section 5. Upon termination of
this Agreement, Kruger shall diligently assist the Company in transitioning all
matters and work for which he was responsible as the Company shall direct.
7. Non-Exclusivity. The Agreement grants Kruger the non-exclusive
right to sell the Company's Products; provided, however, that any sales of
Products made during the term hereof, or within one year following the
termination of this Agreement, by the Company or by its other distributors to
customers introduced to the Company by Kruger shall be deemed sales made through
Kruger as distributor of the Products so sold. Upon receipt by the Company of
payment for purchases by such a customer, the Company shall pay to Kruger a sum
which will compensate Kruger for the profit that he would have made had the sale
been effected as an actual sale of the Products to Kruger under the terms of
this Agreement followed by a resale of the Products by Kruger to the customer.
8. Severability. The parties agree that each of the provisions
included in this Agreement is separate, distinct, and severable from the other
provisions of hereof, and that the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of any other provision
of this Agreement. Further, if any provision of this Agreement is ruled invalid
or unenforceable by a court of competent jurisdiction because of a conflict
between the provision and any applicable law or public policy, the provision
shall be redrawn to make the provision consistent with and valid and enforceable
under the law or public policy.
9. Assignment. This Agreement and the rights and obligations of the
parties hereunder may not be assigned by either party hereto without the prior
written consent of the other party hereto. Notwithstanding the foregoing, this
Agreement shall be binding on and inure to the benefit of the Company's
successors.
10. Notices. Except as otherwise specifically provided herein, any
notice required or permitted to be given by, or to, either party pursuant to
this Agreement shall be given in writing, and shall be personally delivered, or
mailed by certified mail, return receipt requested, or provided by electronic
transmission with a copy sent contemporaneously by certified mail, return
receipt requested, at the address set forth below or at such other address as
either party shall designate by written notice to the other given in accordance
with this Section. Any notice complying with this Section shall be effective
immediately upon personal delivery or electronic transmission, or, if mailed
only, on the third business day after mailing.
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11. Waiver. The waiver by either party hereto of any breach of this
Agreement by the other party hereto shall not be effective unless in writing,
and no such waiver shall operate or be construed as the waiver of the same or
another breach on a subsequent occasion.
12. Independent Contractor. It is expressly understood that Kruger
is an independent contractor and that he is not an officer or employee of the
Company. The actual performance of all day-to-day work by Kruger hereunder shall
be under the control and direction of Kruger. The Company, being interested in
the result to be obtained, shall at all times have access to the sales
information of Kruger for the purposes of observing the performance hereunder by
Bosh.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oklahoma. The parties agree that
jurisdiction and venue for any matter arising out of or pertaining to this
Agreement shall be proper only in the state courts located in Tulsa County,
Oklahoma, or in any federal courts having jurisdiction over the parties and
subject matter of such matter to be resolved, and the parties hereby consent to
such venue and jurisdiction.
14. Beneficiary. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors, heirs, executors, administrators
and permitted assigns.
15. Entire Agreement. This Agreement constitutes the entire
agreement of the parties on the subject matter stated in the Agreement. No
amendment or modification of this Agreement shall be valid or binding upon the
Company or Kruger unless made in writing and signed by both parties. All prior
understandings and agreements relating to the subject matter of this Agreement
are hereby expressly terminated.
IN WITNESS WHEREOF, Kruger and the Company have executed and
delivered this Agreement as of the date first above written.
PLASTIC PALLET PRODUCTION, INC.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
By: /s/Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
-------------------------------------
Title: President
-------------------------------------
XXXX X. XXXXXX
0000 X. XxXxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
/s/ Xxxx X. Xxxxxx
--------------------------------------------
Xxxx X. Xxxxxx
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EXHIBIT B
MUTUAL RELEASE AGREEMENT
------------------------
THIS MUTUAL RELEASE AGREEMENT ("Agreement") is made and entered into
as of this 10th day of January, 2003, by and among XXXX X. XXXXXX, PACECO
FINANCIAL SERVICES, INC., PACE PLASTIC PALLETS, INC., XXXXXXXX TRADING COMPANY,
LC, ONWARD, LLC, PALWEB CORPORATION, PLASTIC PALLET PRODUCTION, INC., XXXXXX X.
XXXXXX, YORKTOWN MANAGEMENT & FINANCIAL SERVICES, L.L.C., WESTGATE INVESTMENTS,
L.P., WESTGATE CAPITAL COMPANY, L.L.C., XXXX X. XXXXXX, XXXXX X. XXXXXXXX, GME
GROUP, XXXXXXX X. XXXXX, XXXXXXX X. XXXXXXXXX and PP FINANCIAL, INC. (each of
the foregoing being referred to herein as a "Party" and being collectively
referred to herein as the "Parties"). This Agreement shall be effective as of
the date that each Party has executed the Agreement or counterparts thereof.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Letter Agreement dated as of the
date hereof, Xxxx X. Xxxxxx ("PAK") has agreed to make a loan or loans to PalWeb
Corporation ("Palweb") and its wholly-owned subsidiary, Plastic Pallet
Production, Inc. ("PPP"), in the aggregate amount of $7,000,000 (such loan or
loans collectively referred to herein as the "Loan");
WHEREAS, it is a condition precedent to the obligations of PAK to
make the Loan that each Party hereto shall have executed and delivered this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises, releases
and undertakings hereinafter set out, and for other good and valuable
consideration, the receipt and sufficiency of which are mutually acknowledged,
each Party hereby agrees as follows:
1. Definitions
For purposes of this Agreement, the term "Claims" shall
include, without limitation, any previously or presently existing or
subsequently arising assertion, allegation, claim, demand, right, debt, request
for indemnification, request for payment, request for reimbursement, cause of
action, liability, loss, damage (including without limitation consequential
damages such as lost profits), deficiency, remedy, judgment, lien, penalty,
cost, expense, attorneys fees, interest, right to indemnification, suit and
proceeding of every kind, at law or in equity, regardless of whether any of the
foregoing are asserted or unasserted, now known or hereafter discovered,
foreseeable or unforeseeable, matured or unmatured, or accrued, contingent or
potential, and regardless of whether any of the foregoing have resulted now or
could result in the future in the commencement of a lawsuit, the filing of a
claim, or a legal proceeding of whatsoever kind, and regardless of whether any
of the foregoing have resulted now or could result in the future in a final and
unappealable order, ruling or judgment.
2. Mutual Waivers and Releases
2.1. Each Party does hereby waive, remise, release, acquit and
forever discharge each other Party hereto, and all of such Party's predecessors,
successors, affiliates, assigns and, as applicable, all of such Party's
shareholders, members, employees, officers, directors, managers, and agents of
whatsoever kind from any and all Claims that each Party may have against any one
or more of the other Parties arising from any relationship, action, event or
transaction of whatsoever kind arising out of or in any way relating to Palweb
or PPP, regardless of when such relationship, action, event or transaction
occurred or may have occurred, irrespective of whether such Party was acting in
an individual capacity or as a representative, officer, director, or shareholder
of any business or other organization; provided, however, that
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the foregoing mutual release and waiver shall not apply to any unpaid amounts
due and owing to or from a Party as reflected on the books and records of Palweb
or PPP or to any written agreements between a Party and Palweb or PPP of a
continuing nature. It is not the intent of the Parties to terminate or modify
the terms of existing contracts to which the Parties or any of them may be a
party.
2.2 It is the intent of each Party hereto that the foregoing
mutual releases and waivers secure to such Party and grant to all other Parties
complete peace from any and all Claims among, between or against the Parties. To
that end, the Parties hereby stipulate and agree that such mutual releases and
waivers shall be given the broadest possible interpretation, construction and
application to achieve the goals of this Agreement.
3. Representations and Warranties.
Each Party hereby represents, warrants and covenants to the other
Parties as follows:
3.1 Each Party has all right, power and authority to enter
into this Agreement and consummate the transactions described herein, and the
execution, delivery and performance of this Agreement by each Party will not
violate any statute, rule, judgment, order or restriction of any government,
governmental agency, or court to which any Party is subject and does not
conflict with, result in a breach of, constitute a default under or require any
notice under any agreement, contract or other document to which any Party is a
party or are bound. This Agreement constitutes a binding obligation of each
Party enforceable in accordance with its terms.
3.2 Each Party has had access to all information deemed
necessary by such Party to evaluate the merits and risks of entering into this
Agreement.
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3.3 There are no legal proceedings pending or threatened
against any Party, which, if adversely determined, could, in any respect,
prevent or impair the ability of the any Party to perform its obligations under
this Agreement.
4. No Admissions
The Parties each acknowledge and agree that the matters set
forth in this Agreement constitute the mutual release and waiver of any or all
Claims between or among the Parties, and that this Agreement is not an admission
or evidence of liability by any of them regarding any Claim.
5. Governing Law
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Oklahoma.
6. Binding Effect
This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their respective heirs, executors, administrators,
beneficiaries, affiliates, subsidiaries, related corporate entities, successors
and assigns.
7. Mutual Drafting and Negotiation
This Agreement is the product of mutual drafting and
negotiation by each Party hereto, and each such Party has had the opportunity to
consult counsel of such Party's choosing with regard to this Agreement. It is
the intent of each Party hereto that no provision be construed against or in
favor of any other Party hereto irrespective of whether such other Party
initially proposed or drafted such provision.
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8. Entire Agreement
This Agreement contains the entire agreement between and among
the Parties relating to the subject matter hereof. No representation, warranty,
covenant, obligation, promise, inducement or statement of intention has been
made by any Party hereto which is not expressed in this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the Parties
in multiple originals to be effective as of the date first written above.
XXXX X. XXXXXX
/s/ Xxxx X. Xxxxxx
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PACECO FINANCIAL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: CEO
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PACE PLASTIC PALLETS, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: President
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XXXXXXX TRADING COMPANY, LC
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: Manager
------------------------------------
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ONWARD, LLC
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: Manager
------------------------------------
PALWEB CORPORATION
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
------------------------------------
Title: President
------------------------------------
PLASTIC PALLET PRODUCTION, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------------
Title: President
------------------------------------
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
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YORKTOWN MANAGEMENT & SERVICES, L.L.C.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------------
Title: President
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WESTGATE INVESTMENTS, L.P.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
------------------------------------
Title: Member
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WESTGATE CAPITAL COMPANY, L.L.C.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------------
Title: Member
------------------------------------
XXXX X. XXXXXX
/s/ Xxxx X. Xxxxxx
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XXXXX X. XXXXXXXX
/s/ Xxxxx X. Xxxxxxxx
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GME GROUP
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
------------------------------------
Title: President and Principal
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XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
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XXXXXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
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PP FINANCIAL, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
------------------------------------
Title: CEO
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