-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HhpWqHXqCIP9LZJGT0a4ncMcDt7OqjT2v4uqg5lw/k75PoqMkpwigfvnOI2mmG14 DW82XYI60/kptZ8cmX37Dw== 0000912057-01-000058.txt : 20010122 0000912057-01-000058.hdr.sgml : 20010122 ACCESSION NUMBER: 0000912057-01-000058 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001220 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PALWEB CORP CENTRAL INDEX KEY: 0001088413 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 751984048 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-26331 FILM NUMBER: 1500618 BUSINESS ADDRESS: STREET 1: 1607 W COMMERCE ST CITY: DALLAS STATE: TX ZIP: 75208 BUSINESS PHONE: 2146988330 MAIL ADDRESS: STREET 1: 1607 W. COMMERCE ST CITY: DALLAS STATE: TX ZIP: 75208 8-K 1 a2034296z8-k.txt 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): DECEMBER 20, 2000 PALWEB CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 000-26331 75-1984048 (State or other jurisdiction (Commission File No.) (I.R.S. Employer of incorporation) Identification No.) 1607 WEST COMMERCE STREET, DALLAS, TEXAS 75208 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (214) 698-8330 Former name or former address, if changed since last report: NOT APPLICABLE ITEM 5. OTHER EVENTS On December 20, 2000, Paceco Financial Services, Inc. ("PFS"), an indirect wholly owned subsidiary of PalWeb Corporation ("PalWeb"), sent a Second Supplemental Notice to Investment Certificate Holders of Paceco Financial Services, Inc. dated December 20, 2000, (the "Second Supplemental Notice"), stating that PFS had amended its plan for redeeming PFS's outstanding passbook savings and time certificates (the "Certificates") as described in the Notice to Depositors of Paceco Financial Services, Inc. dated October 10, 2000, which was attached as Exhibit 99.1 to PalWeb's Form 10-QSB filed on October 16, 2000 (the "Initial Notice"), and the Supplemental Notice to Investment Certificate Holders of Paceco Financial Services, Inc. dated November 3, 2000, which was attached as Exhibit 99.1 to PalWeb's Form 8-K filed on November 3, 2000 (the "First Supplemental Notice"). The Initial Notice, the First Supplemental Notice and the Second Supplemental Notice constitute the plan for redeeming the Certificates and are referred to herein as the "Plan." In general, the Plan provides a method for redeeming the Certificates through the transfer of 43,500,000 shares of PalWeb common stock owned by PFS ("PFS Shares") to an independent trustee and the sale of the PalWeb Shares by the trustee on or before December 31, 2004 either through open market or private sales or by exercise of an option to put the shares to Paul Kruger, the Company's chairman, Chief Executive Officer and principal shareholder, with the net sales proceeds being used to redeem the Certificates. The PFS Shares constitute 17.94% of PalWeb's 242,528,244 shares of outstanding common stock, including the PFS Shares. Because PFS had sufficient other assets to meet its obligations under the terms of the Plan in December 2000, no sales of PFS Shares or exercise of the put was necessary in 2000. The next required payment to holders of Certificates under the terms of the Plan is in December 2001. Reference is made to the Second Supplemental Notice filed as Exhibit 99.1 hereto for a complete description of the modifications and terms of the Plan. As a result of implementation of the Plan, the independent trustee has the power to sell and to vote the PFS Shares to the extent provided in the Plan. The Plan provides that the trustee is obligated to sell the PFS Shares in the market or in private transactions to the extent the net sales price will provide sufficient funds to pay PFS depositors the amounts required under the Plan. PalWeb estimates that the net sales price must be at least $0.12 per share for the trustee to be obligated to sell PFS Shares rather than to exercise the put to Paul Kruger. If the market price of the PalWeb common stock reaches this level, it is possible that sales by the trustee would occur and these sales may have an adverse effect on the market price of PalWeb common stock. Prior to the implementation of the Plan, the PFS Shares could not be voted because they were beneficially owned by an indirect wholly owned subsidiary of PalWeb. As a result of the transfer of the PFS Shares to the independent trustee, the PFS Shares are eligible to be voted in all matters submitted to the PalWeb shareholders for a vote and reduce the percentage beneficial ownership of all other PalWeb shareholders proportionately. After considering such 2 dilution, Mr. Kruger's beneficial ownership based on a Schedule 13D filed with the Securities and Exchange Commission is 31.7%. Based on Mr. Kruger's ownership as of December 20, 2000 and assuming no other changes in shares outstanding or ownership of PalWeb common stock by Paul Kruger, if the put option is exercised in full, Mr. Kruger would acquire all of the PFS Shares and his beneficial ownership of PalWeb common stock would increase to 49.67% of the shares outstanding. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS The following exhibits are filed herewith: EXHIBIT NO. DESCRIPTION - ----------- ----------- 99.1 Second Supplemental Notice to Investment Certificate Holders of Paceco Financial Services, Inc. 99.2 Put Agreement by and among Paul A. Kruger, Bill J. English as Trustee and Paceco Financial Services, Inc. dated December 20, 2000 99.3 Trust Agreement between Paceco Financial Services, Inc. and Bill J. English dated December 20, 2000 99.4 Letter from the State of Oklahoma Department of Securities dated December 15, 2000 re: Paceco Financial Services, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PALWEB CORPORATION By: /s/ Paul A. Kruger ---------------------------------- Date: January 2, 2001 Paul A. Kruger Chairman of the Board and President 3 EX-99.1 2 a2034296zex-99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 SECOND SUPPLEMENTAL NOTICE TO INVESTMENT CERTIFICATE HOLDERS OF PACECO FINANCIAL SERVICES, INC. DECEMBER 20, 2000 Paceco Financial Services, Inc. (the "Company") has amended its plan for redeeming the Company's outstanding passbook savings and time certificates (the "Certificates") as described in the initial notice dated October 10, 2000 and the Supplemental Notice dated November 3, 2000 (the "Plan"). The Plan provides a means by which the shares of PalWeb Corporation common stock ("PalWeb Shares") held by the Company can be "put" to Mr. Paul Kruger (the "Put"). Mr. Kruger has agreed to purchase the PalWeb Shares, if the Put is exercised, at prices sufficient to fully redeem the outstanding principal balances plus accrued interest to the date of redemptions in the Certificate Holders' accounts over approximately a four year period ending December 31, 2004. The objective of the Plan is to return to Certificate Holders 100% of their accounts as early as possible. The PalWeb Shares will be placed in a trust (the "Trust") with an independent Trustee whose duty will be to dispose of the PalWeb Shares on the most favorable terms available and distribute net proceeds to the Certificate Holders. To provide greater assurance of the return of 100% of Certificate Holders' principal and accrued interest by December 31, 2004, Mr. Paul Kruger will grant the Trustee a Put which the Trustee can exercise in December of each year 2001 through 2004 to require Mr. Kruger to pay into the Trust for the benefit of Certificate Holders up to 20% of account balances*, in exchange for a corresponding percentage of the PalWeb Shares. Any exercise of the Put to Mr. Kruger, Mr. Kruger's payment into the Trust and the resulting distribution to Certificate Holders will occur in December of each calendar year 2001 through 2004. By "up to 20%", the Company means the difference between annual distributions to Certificate Holders from sources other than Mr. Kruger and 20% of account balances. Certificate Holders will receive a distribution in December, 2000, equal to 20% of their account balances and no less than 20% per year in each of the succeeding four years. In each of the years, if the Company's resources are not adequate to distribute to Certificate Holders at least 20% of their account balances, then the Trustee will exercise the Put to Mr. Kruger. The Put to Mr. Kruger is intended to be exercised if other resources are inadequate. If the Trustee can sell the PalWeb Shares in the market for as much or more than could be realized from the Put to Mr. Kruger (20% of account balances in December, 2000, and in each succeeding calendar year), or if the Company has other sources of income with which to pay Certificate Holders 20% or more of the account balances annually, or if some combination of sales of the PalWeb Shares and Paceco income from other sources are sufficient to return at least 20% of the Holders' account balances annually, the PalWeb Shares would not be Put to Mr. Kruger. If, on the other hand, such other sources are not adequate to return at least 20% of account balances annually, then the Trustee will exercise the Put to Mr. Kruger. Under the Plan, the outstanding time certificates will continue to accrue interest at the time certificate rate until maturity. At maturity, the rate will be adjusted to the then current passbook rate. The passbook rate will be set from time to time by the Company at its discretion. The current passbook rate is 2.75% per year. Generally, the passbook rate will be comparable to Oklahoma bank savings account rates. Interest will not be compounded. The Put to Mr. Kruger will cover both principal and accrued interest, but all distributions to Certificate Holders will be applied first to principal. THE PUT IS SUBJECT TO THE CONDITION THAT THERE SHALL BE NO LITIGATION THAT IN ANY WAY, DIRECTLY OR INDIRECTLY, RELATES TO THE PASSBOOK ACCOUNTS AND TIME CERTIFICATES OFFERED AND SOLD BY PACECO, EXCEPT LITIGATION TO ENFORCE THE PUT, AGAINST MR. KRUGER, THE COMPANY OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR AFFILIATES BY OR FOR THE BENEFIT OF CERTIFICATE HOLDERS OR THEIR ASSIGNEES OR AGENTS INCLUDING, BUT NOT LIMITED TO, ACTIONS BASED ON THE COMPANY'S ADOPTION OR IMPLEMENTATION OF THE PLAN TO REDEEM CERTIFICATES DESCRIBED HEREIN. EXAMPLES OF SUCH LITIGATION WOULD BE ACTIONS BASED ON THE SUSPENSION OF WITHDRAWALS FROM CERTIFICATE HOLDERS' ACCOUNTS AND ACTIONS ALLEGING VIOLATIONS OF SECURITIES LAWS. IN ADDITION, AN INVOLUNTARY BANKRUPTCY OF THE COMPANY WILL RELEASE MR. KRUGER FROM THE PUT OBLIGATION. SHOULD ANY SUCH LITIGATION BE COMMENCED, MR. KRUGER WILL BE RELEASED FROM HIS OBLIGATION UNDER THE PUT EFFECTIVE AS OF THE COMMENCEMENT OF THE LITIGATION, UNLESS SUCH LITIGATION IS DISMISSED WITHIN 30 DAYS AFTER NOTICE TO THE TRUSTEE OF THE LITIGATION. LITIGATION BY MR. BRETT WIMBERLEY OR AFFILIATES OF MR. KRUGER WILL NOT RELEASE THE PUT. The Put Agreement contains an extension of certain statutes of limitations to March 15, 2002. A statute of limitations operates to bar a claim if the claim is not acted on by filing an action in court within a stated period of time after the claim rose. The Company and Mr. Kruger have agreed that if any claim a Certificate Holder may have against the Company or Mr. Kruger arising out of a purchase of an investment certificate would be barred by a statute of limitations running during the period of November 3, 2000 through March 15, 2002, the Company and Mr. Kruger will extend such statute to March 15, 2002. As a result of the extension, such claim would not be barred until after March 15, 2002. Any Certificate Holder who has a question about this extension of the statute of limitations should consult his or her legal counsel or call the Company at (405) 360-5047. This Notice is not intended as legal advice, nor is it a complete explanation of statutes of limitations. Steve Owens, a Certificate Holder, has agreed to serve as an independent Advisory Director to the Company and to PalWeb Corporation, subject to his review of final documents and terms of the Plan. As an Advisory Director, Mr. Owens will receive notice of all Board meetings. He will be entitled to attend Board meetings and participate in discussions, but will not vote as a Director. Mr. Owens' role will be advisory only. The Company has applied for a $5 million life insurance policy on the life of Mr. Kruger. The Trustee of the Trust created to hold the PalWeb Shares for the benefit of Certificate Holders will be named as the beneficiary of the life insurance policy. The Company will continue the policy in force until the earlier of the receipt by Certificate Holders of all of their investment plus 2 interest or December 31, 2004. In the event of Mr. Kruger's death, the proceeds of the life insurance would be distributed to Certificate Holders to the extent of their account balances (principal plus accrued interest) and the remainder would be distributed to the estate of Mr. Kruger. The Company has agreed with the Department of Securities of the State of Oklahoma (the "Department") that it will maintain its books and records and the books and records of its subsidiary, Pace Properties, L.L.C., until December 31, 2006. The Department has issued a "no action" letter to the Company signifying that the Department has examined terms of the redemption of Certificate Holders' investments and that the Department will take no action against the Company or its officers, directors, shareholders, employees and agents if the Plan is implemented as proposed and all Certificate Holders receive their full account balances of principal and accrued interest by December 31, 2004. Notwithstanding the Put, the Company acknowledges its obligation to Certificate Holders and will endeavor to distribute amounts equal to Certificate Holders' principal and accrued interest to them as early as possible. As a result of the Put agreed to by Mr. Kruger, the term of the Trust will be extended to the earlier of, (i) the full redemption of all Certificate Holders' accounts, or (ii) December 31, 2004, or as soon thereafter as the Trustee can distribute the Trust assets. Any PalWeb Shares remaining in the Trust will be distributed to the Company, unless Mr. Kruger defaults and Certificates have not been fully redeemed, in which case the PalWeb Shares, in the discretion of the Trustee, can be distributed pro rata to Certificate Holders or sold by the Trustee and the proceeds distributed to the Certificate Holders. Cash will be distributed in lieu of fractional shares. Distributions to Certificate Holders will be made pro rata in the same proportion that each Certificate Holder's Account Balance bears to the total Balance of Deposits at the time of each distribution. While the PalWeb Shares are held by the Trustee, the Trustee may exercise the voting rights pertaining to the PalWeb Shares. The Trust Agreement requires that the Trustee vote the PalWeb Shares in proportion to the votes of all other shares that are voted, unless such vote, in the Trustee's judgment, would adversely affect the rights of Certificate Holders. In that case, the Trustee may vote the PalWeb Shares as the Trustee deems to be in the best interest of Certificate Holders. Mr. Bill English has been designated the Trustee of the Trust. Mr. English may be contacted at (405) 321-0314. There is a risk that the combination of the sale of specific assets, sale of PalWeb Shares, the Company's cash flow from operations and Mr. Kruger's financial ability to honor the Put will not be adequate to fully return all amounts due to Certificate Holders. Questions concerning this Notice may be directed to Mark Kidd of the Company at (405)360-5047. The Company's Duncan office has been closed and its new mailing address is 2500 South McGee, Suite 147, Norman, OK 73072. Copies of the Put Agreement and Trust Agreement are available to Certificate Holders on request. 3 This Notice does not constitute legal or financial advice, and Certificate Holders are encouraged to consult their personal advisors. - --------------------- * The 20% per year beginning in December, 2000, is based on December, 2000 account balances. The December, 2000 distribution will be made by the Company without resort to the Put. Under the Plan, in 2001, 25% of the 2001 account balances must be redeemed; in 2002, 33 1/3% of the 2002 account balances must be redeemed; in 2003, 50% of the 2003 account balances must be redeemed and in 2004, 100% of the 2004 account balances must be redeemed. 4 EX-99.2 3 a2034296zex-99_2.txt EXHIBIT 99.2 EXHIBIT 99.2 PUT AGREEMENT This Put Agreement ("Agreement") is made and entered into effective as of the 20th day of December, 2000, by and among Paul A. Kruger ("Kruger"), Bill J. English as Trustee (the "Trustee"), and Paceco Financial Services, Inc. (the "Company"), an Oklahoma corporation. WHEREAS, the Company has placed 43,500,000 shares of PalWeb Corporation common stock (the "PalWeb Shares") held by the Company into a trust (the "Trust) for the benefit of time certificate and passbook account holders ("Certificate Holders"); WHEREAS, the Trustee has been empowered to sell, convey or otherwise dispose of the PalWeb Shares pursuant to that certain Trust Agreement dated December 20, 2000 (the "Trust Agreement"); WHEREAS, Kruger desires to grant the Trustee a put (the "Put") which the Trustee can exercise if the combination of the Company's resources and any proceeds from the sale of PalWeb Shares by the Trustee are not adequate to distribute to Certificate Holders their entire account balances of principal and accrued interest ("Account Balances") by December 31, 2004, at the rate of approximately 20% of the Account Balances each year beginning in December, 2000, in accordance with this Agreement; WHEREAS, the Trustee desires to accept the Put and to exercise its rights under this Agreement for the purposes hereinafter specified; NOW THEREFORE, in consideration of mutual promises and benefits herein contained, the parties hereto agree as follows: CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANING ATTRIBUTED TO THEM IN THE TRUST AGREEMENT. 1. GRANT OF THE PUT. Kruger hereby grants to the Trustee the Put, which the Trustee shall exercise, subject to the terms and conditions hereinafter set forth, to require Kruger to pay into the Trust for the benefit of Certificate Holders each year through December 31, 2004, up to the percentage of Account Balances specified in Section 3 hereof, in exchange for a corresponding percentage of the PalWeb Shares. The number of shares corresponding to the percentage of Account Balances shall be based on the Disposition Price as that term is defined in the Trust Agreement. The Put will cover both principal and accrued interest, but all distributions to the Certificate Holders will be applied first to principal. 2. TERMS OF THE PUT. In the event that the Company's resources together with any proceeds from the sale of PalWeb Shares by the Trustee are not adequate to distribute to Certificate Holders by the first day of December of each year covered by this Agreement the percentage of Account Balances specified in Section 3 hereof, the Trustee shall exercise the Put. If the Company's resources are sufficient to distribute to Certificate Holders at least the percentage of Account Balances specified in Section 3 hereof, or if the Trustee can sell the PalWeb Shares in the market or in a private transaction and the net proceeds from such sale are equal to or in excess of the amount that could be realized from the Put to Kruger, then the Trustee may not exercise its rights under this Agreement and Kruger will be under no obligation to purchase PalWeb Shares for that year. 3. AMOUNT OF THE PUT. The amount of the Put and the corresponding percentage of the PalWeb Shares to be purchased by Kruger shall be the difference between the amount payable to Certificate Holders each year (20% of Account Balances outstanding on December 1, 2000; 25% of Account Balances outstanding on January 1, 2001; 33 1/3% of Account Balances outstanding on January 1, 2002; 50% of Account Balances outstanding on January 1, 2003; and 100% of Account Balances outstanding on January 1, 2004 or such other amount as shall cause the Account Balances to equal zero at December 31, 2004) and the amount distributed to Certificate Holders each year from sources other than the Put, as a percentage of the outstanding Account Balances. The number of shares corresponding to the percentage of Account Balances shall be based on the Disposition Price as that term is defined in the Trust Agreement. 4. EXERCISE (a) The Trustee may exercise the Put, pursuant to this Agreement, by providing written notice of exercise to Kruger on or before the first day of December, in any or all of the years covered by this Agreement. Such notice shall include the amount due from Kruger determined in accordance with this Agreement and the number of PalWeb Shares to be delivered to Kruger against payment of the amount due. The number of shares corresponding to the percentage of Account Balances shall be based on the Disposition Price as that term is defined in the Trust Agreement. At the request of Kruger, the Trustee and the Company shall provide Kruger an accounting for all Account Balances of the Certificate Holders as of the first day of January in the applicable year and an accounting of the distributions to Certificate Holders during the year from sources other than Kruger, including but not limited to, income from the Company, sales of PalWeb shares, and income from other investments by the Company or the Trustee. (b) If the Trustee fails to exercise the Put on or before the first business day of December of the applicable year, the Put will terminate for that year and Kruger will be under no obligation to purchase PalWeb shares that year. Failure to exercise the Trustee's rights in any one year will not effect the Trustee's ability to exercise its rights or Kruger's obligation to purchase the PalWeb shares in subsequent years covered by this Agreement. The number of shares corresponding to the percentage of Account Balances shall be based on the Disposition Price as that term is defined in the Trust Agreement. (c) Following notice of exercise, Kruger shall pay into the Trust the amount of the Put stated in the notice and the Trustee shall assign the corresponding percentage of the PalWeb Shares to Kruger, on or before the twentieth day of December of the applicable year and shall distribute the proceeds from exercise of the Put to Certificate Holders, pro rata. 2 5. RELEASE OF OBLIGATIONS. Kruger shall be released from any obligation under this Agreement if any litigation that in any way, directly or indirectly, relates to passbook accounts or time certificates of Paceco, except litigation to enforce this Agreement, is filed against Kruger, the Company or its officers, directors, employees, attorneys, agents or affiliates by or for the benefit of any of the Certificate Holders or their heirs, personal representatives, estates, trustees, successors, guardians, assignees or agents or anyone claiming by, through or under any of them, and such litigation is not dismissed within thirty (30) days of receipt of notice of such litigation by the Trustee. Additionally, Kruger shall be released from any obligation under this Agreement upon the issuance of an Order for Relief pursuant to a petition filed by or on behalf of any of the Certificate Holders or their heirs, personal representatives, estates, trustees, successors, guardians, assignees or agents or anyone claiming by, through or under any of them seeking the involuntary bankruptcy of the Company under the U.S. Bankruptcy Code. A lawsuit brought by Brett Wimberley or by a Certificate Holder that is an affiliate of Kruger, as hereinafter defined, shall not release Kruger from his obligations under this Agreement. Kruger's obligation under this Agreement shall not be released due to the PalWeb Shares having no value or having been cancelled. As used herein, an "affiliate of Kruger" is a person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with Kruger. 6. STATUTE OF LIMITATIONS. The Company and Kruger agree that if a cause of action or alleged cause of action by a Certificate Holder against the Company or Kruger arising out of the purchase of an investment certificate (whether a passbook account or time certificate) from the Company would be barred by a statute of limitations that would run during the period from November 3, 2000, to and including March 15, 2002, the Company and Kruger will extend the time within which such cause of action or alleged cause of action may be brought to March 15, 2002 by agreeing not to raise the statute of limitations as a defense in such action. This agreement to extend the statute of limitations shall survive the release of any other obligation under this Agreement including, but not limited to, a release pursuant to Section 5 above. To be considered to be brought timely under this Section 6, a petition or complaint setting forth such cause of action which otherwise would be barred must be filed in a court of competent jurisdiction on or before March 15, 2002. 7. EVENTS OF DEFAULT AND REMEDY. Any failure on the part of Kruger to comply with a material term of this Agreement, after Kruger's receipt of notice of default and the cure period, shall be considered an Event of Default. Upon Kruger's receipt of notice of default, Kruger shall have thirty (30) days to cure the default. After thirty (30) days following receipt of the notice of default if Kruger fails to cure the default, the Trustee shall have the right to bring suit to enforce the Put and to recover any amount then due under this Agreement. If the Trustee fails to bring suit within sixty (60) days of an Event of Default, then the Certificate Holders may sue to enforce the Put and to recover any amount then due under this Agreement. 3 8. TERM. The term of this Agreement shall be concurrent with the term of the Trust as provided for in the Trust Agreement. 9. NON-TRANSFERABILITY. The Put shall not be assigned, pledged, hypothecated, sold or otherwise transferred or encumbered by the Trustee. 10. NOTICES. Any notice or other communication hereunder shall be in writing and any such notice or communication shall be deemed duly given or made if delivered in person or by facsimile, or if mailed by registered or certified mail, return receipt requested, postage prepaid to the person to whom the notice is directed at the address or facsimile number shown below. If to Kruger: Paul A. Kruger Paceco Financial Services, Inc. 2500 S. McGee, Suite 147 Norman, OK 73072 Fax: (405)360-5354 If to the Trustee: Bill J. English 114 E. Main St. Norman, OK 73072 Fax: (405)321-0343 If to the Company: Paceco Financial Services, Inc. 2500 S. McGee, Suite 147 Norman, OK 73072 Fax: (405)360-5354 If to the Department: Oklahoma Department of Securities 120 N. Robinson, Suite 860 Oklahoma City, OK 73102 Fax: (405)280-7742 4 11. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Oklahoma. 12. ATTORNEY'S FEES AND COSTS. The successful party to any action brought to enforce or interpret this Agreement shall be reimbursed his or her costs and expenses related to such action, including a reasonable attorney's fee. 13. SUCCESSORS AND ASSIGNS. All of the provisions of this Agreement shall be binding upon and inure to the benefit of Kruger, the Company and the Trustee, and their respective heirs, assigns, successors, personal representatives and guardians. 14. COUNTERPARTS. This Agreement may be signed in counterparts. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 20th day of December, 2000. PAUL A. KRUGER: /s/ Paul A. Kruger ------------------------------------ Paul A. Kruger TRUSTEE: /s/ Bill J. English ------------------------------------ Bill J. English COMPANY: PACECO FINANCIAL SERVICES, INC. By: /s/ Mark Kidd --------------------------------- Mark Kidd, President 5 EX-99.3 4 a2034296zex-99_3.txt EXHIBIT 99.3 EXHIBIT 99.3 PACECO FINANCIAL SERVICES, INC. and BILL J. ENGLISH Trustee TRUST AGREEMENT Dated as of December 20, 2000 TABLE OF CONTENTS
Page ---- PARTIES 1 RECITALS OF THE COMPANY....................................................................................1 ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01 Definitions.................................................................1 ARTICLE II TERMS AND PURPOSE OF THE TRUST SECTION 2.01 Creation of Trust...........................................................3 SECTION 2.02 Creation of Fund............................................................3 SECTION 2.03 Powers......................................................................3 SECTION 2.04 Execution of Documents......................................................4 ARTICLE III APPOINTMENT, DUTIES AND POWERS OF TRUSTEE SECTION 3.01 Appointment.................................................................4 SECTION 3.02 Duties of the Trustee.......................................................4 a. Sale of PalWeb Shares.............................................................4 b. Exercise of the Put...............................................................5 c. Receipt and Investment of the Proceeds............................................5 d. Distribution of the Trust Assets..................................................5 e. Compliance with Securities Laws...................................................6 f. Insurance Policy..................................................................6 g. Voting PalWeb Shares..............................................................6 h. Reports...........................................................................6 i. Records...........................................................................6 SECTION 3.03 Powers of the Trustee.......................................................7 SECTION 3.04 Reliance on Trustee's Authority.............................................7 SECTION 3.05 Access......................................................................7 SECTION 3.06 Delegation of Powers........................................................7 SECTION 3.07 Administrative Support......................................................7 SECTION 3.08 Bonds.......................................................................7 ARTICLE IV PROTECTIONS AFFORDED TO THE TRUSTEE SECTION 4.01 Limitation of Liability............................................................7 SECTION 4.02 No Third Party Beneficiary.........................................................8 ARTICLE V REVOCATION AND MODIFICATION SECTION 5.01 Modification................................................................8 i SECTION 5.02 Termination of the Trust...........................................................8 ARTICLE VI CERTIFICATE HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 6.01 Certificate Holders' Lists..................................................8 SECTION 6.02 Communication to Certificate Holders........................................8 SECTION 6.03 Reports by Trustee..........................................................9 SECTION 6.04 Reports by Company..........................................................9 ARTICLE VII MISCELLANEOUS SECTION 7.01 Resignation, Death or Removal of a Trustee..................................9 SECTION 7.02 Successors and Assigns......................................................9 SECTION 7.03 Notices....................................................................10 SECTION 7.04 Savings Clause.............................................................10 SECTION 7.05 Articles and Section Headings..............................................10 SECTION 7.06 Acceptance of Trust........................................................10 SECTION 7.07 Limitation of Liability....................................................10 SECTION 7.08 Governing Law..............................................................11
ii TRUST AGREEMENT This TRUST AGREEMENT, is entered into as of December 20, 2000, between PACECO FINANCIAL SERVICES, INC., a corporation duly organized and existing under the laws of the State of Oklahoma (herein called the "Company") and Bill J. English (herein called the "Trustee"). WITNESSETH THAT: WHEREAS, the Company has developed a plan (the "Plan") for the sale of certain assets of the Company to facilitate the redemption or partial redemption of investment certificates ("Certificates"); WHEREAS, the Plan provides for the creation of a Trust to sell certain assets of the Company and to distribute the proceeds to the Certificate Holders in accordance with the terms of this Agreement and the Plan; WHEREAS, the Plan provides for and requires the appointment of the Trustee to sell those certain assets of the Company and to distribute the proceeds to the Certificate Holders in accordance with the terms of this Agreement and the Plan; NOW THEREFORE, the Company and the Trustee do hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01 DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) the terms defined in the introductory provisions of this Agreement shall have the meanings so ascribed to them throughout this Agreement; (c) the words "herein", "hereof", and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; (d) the term "Account Balance" shall mean on any given date the balance of Deposits plus accrued interest in a Certificate Holder's account. (e) the term "Administration Costs" shall mean the fee of the Trustee and all costs incurred by or on behalf of the Trustee in the administration of the Trust; (f) the term "Agreement" shall mean this Trust Agreement; (g) the term "Balance of Deposits" shall mean on any given date the outstanding balance of all the Deposits plus accrued interest; (h) the term "Bank-Quality Investments" shall mean investments in which a federally insured bank may invest deposits; (i) the term "Certificate Holders" shall mean the persons who hold one or more Certificates; (j) the term "Certificates" shall mean the investment certificates issued by the Company consisting of both passbook savings and time certificates; (k) the term "Department" shall mean The Oklahoma Department of Securities; (l) the term "Deposits" shall mean the passbook savings and time certificate accounts of the Company; (m) the term "Designated Trust Assets" shall mean (i) the 43,500,000 shares of PalWeb Corporation common stock transferred by the Company to the Trustee pursuant to this Agreement and any other securities or other property received in exchange for, or as a distribution or dividend on, such shares, as in the case of a merger, consolidation, stock dividend, stock split or other similar transaction (the "PalWeb Shares"), and (ii) the life insurance policy on the life of Paul A. Kruger in the face amount of $5,000,000 with Jefferson Pilot Financial Insurance Company (the "Insurance Policy"); (n) the term "Disposition Price" shall mean the Balance of Deposits on any given date divided by the number of PalWeb Shares held by the Trustee on that date; (o) the term "Effective Date" shall mean the date of this Agreement; (p) the term "pro rata" when used in the Agreement to describe distributions to Certificate Holders shall mean in the proportion that each Certificate Holder's Account Balance bears to the total of the Balance of Deposits at the time of the distribution. (q) the term "Proceeds" shall mean the consideration for any sale, assignment, or conveyance of the PalWeb Shares plus any death benefit under the Insurance Policy; (r) the term "Put" shall have that meaning set forth in the Put Agreement; 2 (s) the term "Put Agreement" shall mean that certain agreement dated December 20, 2000, whereby Paul Kruger granted the Trustee the Put. (t) the term "Selling Costs" shall mean all selling commissions, finders fees and other costs and expenses reasonably incurred in connection with the sale of the PalWeb Shares; (u) the term "Trust" shall mean the trust created by this Agreement; (v) the term "Trust Fund" shall mean the fund created by this Agreement; (w) the term "Trust Fund Liabilities" shall mean the liabilities incurred by the Trust during the term of the Trust; ARTICLE II TERMS AND PURPOSE OF THE TRUST Section 2.01 CREATION OF TRUST AND BENEFICIARIES. The Company hereby transfers, assigns and conveys to the Trustee, the PalWeb Shares and, when issued, will transfer the Insurance Policy, to be held by such Trustee for the uses and purposes and on the terms and conditions set forth herein. The beneficiaries of the Trust shall be the Certificate Holders to the extent of the Balance of Deposits, the Company to the extent the Proceeds of the PalWeb Shares exceed the Balance of Deposits, and in the event of the death of Paul A. Kruger, the Estate of Paul A. Kruger to the extent the Proceeds of the Insurance Policy exceed the Balance of Deposits. Section 2.02 CREATION OF FUND. The Company on behalf of the Trustee hereby creates the Trust Fund to consist of the Designated Trust Assets to be held, managed, sold and distributed by the Trustee for the purposes and on the terms and conditions set forth herein. Section 2.03 POWERS. The Company does hereby irrevocably grant, convey and transfer to the Trustee the sole power and authority in accordance with the terms hereof to convey, sell, transfer or otherwise dispose of any or all of the Designated Trust Assets and to distribute all Proceeds and other cash to the Certificate Holders, together with interest, if any, as provided herein. Sale of the PalWeb Shares shall be made in a manner reasonably calculated under the then existing circumstances to maximize the Proceeds within the period necessary to timely fund the redemption of the Deposits. The Company shall execute such other documents as the Trustee deems necessary to effectuate the respective grant of powers hereunder. The Trustee shall also have such further powers as are set forth herein in Articles 3 and 4, respectively and the power to bring suit to enforce this Agreement and the Put Agreement. 3 Section 2.04 EXECUTION OF DOCUMENTS. The Company shall execute such documents (including, without limitation, powers of attorney and of appointment) and shall perform such other and additional acts as may be necessary and appropriate to evidence and confirm the powers and interests transferred and granted to the Trustee herein. ARTICLE III APPOINTMENT, DUTIES AND POWERS OF TRUSTEE Section 3.01 APPOINTMENT. Bill J. English is hereby designated as Trustee to serve from and after the date of this Agreement until it resigns or is discharged and a successor Trustee is appointed, all as set forth herein. Section 3.02 DUTIES OF THE TRUSTEE. The Trustee shall have the duties, (a) to sell, transfer or otherwise dispose of the Designated Trust Assets in such manner and at such time or times and at such price or prices as will redeem all of the outstanding Deposits, including principal and accrued interest, plus Administration Costs and Selling Costs, such sale to be conducted in either a public or private transaction; (b) to exercise the Put according to the terms of the Put Agreement (c) to receive, hold and temporarily reinvest the Proceeds of such Designated Trust Assets in Bank-Quality Investments, if and to the extent the Trustee deems temporary investments to be an efficient use of funds while accumulating enough Proceeds to make a distribution to Certificate Holders; (d) to pay all expenses incurred in connection with the administration of the Trust Fund; and (e) to distribute the Proceeds of the Designated Trust Assets to the Certificate Holders, all as set forth herein. a. SALE OF PALWEB SHARES. Commencing on the Effective Date, the Trustee shall be obligated to sell or otherwise dispose of the PalWeb Shares if and when the PalWeb Shares attain a market value equal to or in excess of the Disposition Price per share plus Administration Costs and Selling Costs. The Trustee will be obligated to sell the PalWeb Shares, as and to the extent the market can absorb the PalWeb Shares in either a public or private transaction, and distribute the net Proceeds of the PalWeb Shares to the Certificate Holders pursuant to the provisions of this Agreement. The Trustee may temporarily reinvest such Proceeds as authorized by Section 3.02(c) below. The parties acknowledge that the market for PalWeb Corporation common stock may not be sufficient to absorb the entire number of such shares held by the Trustee in a single transaction. Therefore, the Trustee shall exercise its discretion as to the timing and amounts of the PalWeb Shares to be sold. All Administration Costs and Selling Costs shall be paid from the Trust Fund. The Trustee is prohibited from selling or otherwise disposing of the PalWeb Shares, except as expressly provided in this Agreement, at a market value less than the Disposition Price per share plus Administration Costs and Selling Costs. If the Trustee is able to sell the PalWeb Shares in a private transaction at a price in excess of the Disposition Price, all Proceeds net of Administration Costs and Selling Costs will be distributed pursuant to Section 3.02(d) below. 4 b. EXERCISE OF THE PUT. The Trustee is authorized and directed to exercise its rights under the Put Agreement according to the terms and conditions of the Put Agreement. c. RECEIPT AND TEMPORARY INVESTMENT OF THE PROCEEDS. The Trustee shall collect and receive all Proceeds from the Designated Trust Assets and shall be empowered in its discretion to invest and reinvest such Proceeds in Bank-Quality Investments, if and to the extent the Trustee deems temporary investments to be an efficient use of funds while accumulating enough Proceeds to make a distribution to Certificate Holders. d. DISTRIBUTION OF THE TRUST ASSETS. (1) In the event of the death of Paul A. Kruger, the Proceeds of the Insurance Policy, net of all Administration Costs then owing or reasonably anticipated to be incurred in the foreseeable future, shall be distributed pro rata to Certificate Holders to the extent of the Balance of Deposits. Any such net Proceeds in excess of the Balance of Deposits shall be distributed to the estate of Paul A. Kruger or such other person or entity as Paul A. Kruger shall designate in writing to the Trustee. (2) At such time as the PalWeb Shares are sold pursuant to Section 3.02(a) above, the Trustee shall be authorized to distribute the Proceeds of such sale net of Administration Costs and Selling Costs to the Certificate Holders pursuant to the provisions of this Agreement. If the Trustee exercises its rights under the Put Agreement pursuant to Section 3.02(b) above, the Trustee shall distribute the Proceeds of the Put according to the terms of the Put Agreement. The parties acknowledge that the market for PalWeb Corporation common stock may not be sufficient to absorb the entire number of such shares held by the Trustee in a single transaction. Upon distribution of the Proceeds in full redemption of all of the Certificate Holders' accounts, including payment of all accrued interest, and payment of or provision for all costs, expenses and liabilities of the Trust, the balance of the PalWeb Shares or Proceeds thereof, if any, shall be distributed to the Company, its successor, or its designee. (3) If Paul A. Kruger is released from his obligations under the Put Agreement pursuant to Section 5 of that Agreement, then the Trustee shall either, (i) distribute any remaining PalWeb Shares to the Certificate Holders pro rata after making provision for Administration and any Selling Costs, or (ii) sell the PalWeb Shares in either a public or private transaction at a price that may be less than the Disposition Price per share and distribute the Proceeds of such sale, net of Administration and any Selling Costs, to the Certificate Holders pro rata. Any distribution made pursuant to this paragraph shall reduce the Balance of Deposits accordingly. The Trustee, in its discretion, may value the PalWeb Shares at their most recent closing bid price in the event there is an established trading market for the PalWeb Shares and, otherwise, based on appraisal by a qualified independent appraiser. (4) If a judgment is entered against Paul A. Kruger on the basis of a determination that an Event of Default has occurred under Section 7 of the Put Agreement, and any appeal has been exhausted, then the Trustee shall either, (1) distribute any remaining PalWeb Shares, in the same proportion that the judgment amount bears to the total Balance of 5 Deposits, to the Certificate Holders pro rata, after making provision for Administration and any Selling Costs, or (ii) sell such proportionate amount of PalWeb Shares in either a public or private transaction at a price that may be less than the Disposition Price per share and distribute the Proceeds of such sale, net of Administration and any Selling Costs, to the Certificate Holders pro rata. Any distribution made pursuant to this paragraph shall reduce the Balance of Deposits accordingly. The Trustee, in his discretion, may value the PalWeb Shares as provided in paragraph d.(3), above. e. COMPLIANCE WITH SECURITIES LAWS. Any sale or distribution of the PalWeb Shares pursuant to this Agreement or the Put Agreement shall be subject to compliance with all applicable state and federal securities laws. f. INSURANCE POLICY. The payment of premiums on the Insurance Policy shall be funded by the Company. At such time as the Account Balances are reduced to zero, the Trustee shall so notify Paul A. Kruger and request instructions regarding the disposition of the Insurance Policy. The Trustee shall dispose of the Insurance Policy in accordance with such instructions. If no instructions are received within 45 days following such notice, the Trustee shall terminate the Insurance Policy. g. VOTING PALWEB SHARES. Upon any vote or consent to action of the stockholders of PalWeb Corporation the Trustee shall vote the PalWeb Shares in accordance with, and in proportion to, the total votes cast by all other stockholders, unless, in the judgment of the Trustee, such vote of the PalWeb Shares would have an adverse affect on the rights of Certificate Holders. In that event, the Trustee shall vote the shares as the Trustee reasonably believes to be in the best interest of Certificate Holders. h. REPORTS. The Trustee shall report to the Company and to the Department within ten (10) days after a distribution to the Certificate Holders the following information: the beginning principal amount(s), accrued interest, distributions made, balances owing to each Certificate Holder, and Administrative and Selling Costs paid. i. RECORDS. The Trustee shall maintain accurate books and records concerning the Designated Trust Assets. The Company shall be responsible for providing the Trustee a complete and accurate list of Certificate Holders which shall include names and mailing addresses of Certificate Holders, the principal amount and accrued interest of each Depositor's account, as of the date to be agreed upon between the Company and the Trustee, and the annual interest rate applicable to each account. From and after the Trustee's receipt of such information, the Trustee shall keep a record of the Certificate Holders' accounts showing the beginning principal and accrued interest, distributions made and balances owing. All distributions by the Trustee will be applied first to principal. The records maintained by the Trustee shall be available for inspection and copying by the Company and the Department at any time and from time to time during normal business hours. All such records shall be delivered to the Company upon Termination of the Trust. All records as to the Deposits, accrual of interest, distributions to Certificate Holders and Disposition Price per share will be 6 maintained by the Company. Such records shall be available for inspection by the Department or the Trustee at any time and from time to time during normal business hours. Section 3.03 POWERS OF THE TRUSTEE. The Trustee shall have such powers as are necessary to the proper performance of its duties as set forth herein. Nothing contained herein shall obligate the Trustee to take any action which it reasonably believes may subject itself or the Trust Fund to any liability unless it is indemnified to its satisfaction against the consequences of taking such action. Section 3.04 RELIANCE ON THE TRUSTEE'S AUTHORITY. No entity dealing with the Trustee with reference to the Designated Trust Assets or the Trust Fund, if acting in good faith, shall be required to ascertain the authority of the Trustee nor to see to the performance by the Trustee of any of the provisions hereof, nor be responsible in any way for the proper application of funds or properties paid or delivered to the Trustee, but if acting in good faith, may deal with the Trustee as though the Trustee were the unconditional owner of the Designated Trust Assets. Section 3.05 ACCESS. The Trustee shall permit the duly authorized representatives of the Company and the Department to have access to the books and records pertaining to the Designated Trust Assets, the Trust Fund and all instruments and documents related thereto as often as may be reasonably requested. Section 3.06 DELEGATION OF POWERS. The Trustee shall be entitled to delegate such authority to its employees and agents as the Trustee shall reasonably deem necessary to perform its duties under this Agreement. Section 3.07 ADMINISTRATIVE SUPPORT. Nothing contained herein shall prevent the Trustee from relying upon the Company for general or specific administrative support including, but not limited to, printing, bulk mail, check processing, and accounting. Section 3.08 BONDS. Unless required by the Department or other applicable law, the Trustee shall serve during the duration of the Trust without a fidelity bond. ARTICLE IV PROTECTIONS AFFORDED TO THE TRUSTEE Section 4.01 LIMITATION OF LIABILITY. The Trustee nor any of its respective employees or agents shall have any liability for the payment of the Trust Fund Liabilities or for any error of judgment made in good faith other than as a result of gross negligence or willful misconduct or for any act or omission of any of its employees or agents unless such entity acted with gross negligence or willful misconduct in the selection or retention of such employee or agent. The Trustee shall not be liable for any action taken or omitted in good faith and believed by it to be authorized within the respective discretion or rights or powers conferred upon it by this 7 Agreement. In performing its duties hereunder, the Trustee may consult with counsel selected by it who may be counsel for the Company, at the expense of the Trust Fund, and shall have no liability for any action taken upon the advice of such counsel. None of the provisions of this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights and powers. The Trustee may rely without inquiry upon any writing delivered to it hereunder which it believes in good faith to be genuine and to have been given by a proper entity. Section 4.02 NO THIRD PARTY BENEFICIARY. This Agreement is entered into for the sole and exclusive benefit of the Company, the Trustee, the Certificate Holders and the Department, and other than the Department and the successors, designees, and assigns of the foregoing, no other entities or persons shall have any rights hereunder. ARTICLE V REVOCATION AND MODIFICATION Section 5.01 MODIFICATION. This Agreement may be amended or modified in any respect and at any time by an instrument or documents in writing signed by the Company and the Trustee with notice to the Department. Section 5.02 TERMINATION OF THE TRUST. The Trust shall terminate (a) upon the date thirty days after the date upon which (i) all Designated Trust Assets shall have been disposed of in accordance with the terms hereof, (ii) all Proceeds shall have been distributed to Certificate Holders up to the Balance of Deposits, (iii) all other liabilities of the Trust shall have been paid, and (iv) all other cash shall have been distributed to the Company, its successor, or designee; or (b) December 31, 2004, or as soon thereafter as the Trustee can distribute the Designated Trust Assets, unless extended by a vote of a majority in interest of the Certificate Holders at a meeting called for that purpose. ARTICLE VI CERTIFICATE HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 6.01 CERTIFICATE HOLDERS' LISTS. The Company shall maintain a complete and accurate list of the Certificate Holders which shall include names and mailing addresses of the Certificate Holders and the principal amount, accrued interest, and amounts owing in each Certificate Holders' account. Section 6.02 COMMUNICATION TO CERTIFICATE HOLDERS. Upon written request by a Certificate Holder, the Trustee may, in its discretion, make available any and all information regarding the Trust or Designated Trust Assets. Neither the Company nor the Trustee nor any 8 agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Certificate Holders, regardless of the source from which such information was derived, and the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under this Section. Section 6.03 REPORTS BY TRUSTEE. The Trustee shall provide such reports as required by Section 3.02(h) herein. In addition, the Trustee shall report to each Certificate Holder within ten (10) days of a distribution the following information with respect to his or her account: the beginning principal amount(s), accrued interest, distributions made, and balance owing. Section 6.04 REPORTS BY COMPANY. The Company shall file with the Trustee, within 15 days after the Company is required to file the same with the Department, copies of any annual reports and information, documents and other reports (or copies of such portions of any of the foregoing as the Department may from time to time prescribe) which the Company may be required to file with the Department. ARTICLE VII MISCELLANEOUS Section 7.01 RESIGNATION, DEATH OR REMOVAL OF A TRUSTEE. The Trustee may (a) resign at any time upon thirty (30) days prior written notice to the Company and the Department; (b) be removed upon the vote of a majority in interest of the Certificate Holders at a meeting called for that purpose; or (c) be removed by an order of the Department. The Trustee shall be replaced by (a) a vote of a majority in interest of the Certificate Holders if the Trustee dies, resigns or is removed by a vote of the Certificate Holders; or (b) the Department if the Trustee is removed by the Department. Any successor Trustee must be independent of the Company and its affiliates. No successor Trustee hereunder in any event shall have any liability or responsibility for the acts or omissions of any of his predecessors. Every successor Trustee appointed pursuant hereto shall execute, acknowledge and deliver to his predecessor and to the Company an instrument in writing accepting such appointment hereunder, and thereupon such successor Trustee without any further act, deed or conveyance shall become fully vested with all of the estates, properties, rights, titles, powers, trusts, duties and obligations of his predecessor. Should any document or instrument in writing from the prior Trustee be required more fully and certainly to vest in such successor Trustee the estates, properties, rights, titles, powers, trusts, duties and obligations hereby vested herein, any and all such documents or instruments shall, on request of the successor Trustee, be executed acknowledged and delivered by the respective predecessor Trustee, his executor or administrator. Section 7.02 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon each of the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties. 9 Section 7.03 NOTICES. All notices provided for herein shall be in writing and shall be deemed given when served personally, when mailed to the entity at its address as shown below, or when received by facsimile transmission at the telephone number shown below, or at such other address or telephone number as any such entity shall designate in a written notice served on each other entity. If to the Company: Paceco Financial Services, Inc. 2500 S. McGee, Suite 147 Norman, OK 73072 Fax: (405) 360-5354 If to the Trustee: Bill J. English 114 E. Main St. Norman, OK 73072 Fax: (405) 321-0343 If to the Department: Oklahoma Department of Securities 120 N. Robinson, Suite 860 Oklahoma City, OK 73102 Fax: (405) 280-7742 Section 7.04 SAVINGS CLAUSE. In the event any clause, provision or provisions hereof proves to be or is judged to be invalid for any reason, such invalid or void clause, provision or provisions shall not affect the whole of this Agreement, but the balance of the provisions hereof shall remain operative and shall be carried into effect insofar as legally possible. Section 7.05 ARTICLES AND SECTION HEADINGS. Article and section headings herein are for convenience of reference only and shall not affect the meaning or interpretation of any provisions hereof. Section 7.06 ACCEPTANCE OF TRUST. The Trustee hereby accepts the trust imposed on him by this Agreement. Section 7.07 LIMITATION OF LIABILITY. The Company shall not be liable for actions of the respective Trustees pursuant to this Agreement. 10 Section 7.08 GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Oklahoma. EXECUTED, the day and year first above written. COMPANY: PACECO FINANCIAL SERVICES, INC. By: /s/ Mark Kidd ---------------------------- President TRUSTEE: /s/ Bill J. English ---------------------------- Bill J. English 11 EX-99.4 5 a2034296zex-99_4.txt EXHIBIT 99.4 EXHIBIT 99.4 IRVING L. FAUGHT FRANK KEATING GOVENOR [Seal of the State of Oklahoma] STATE OF OKLAHOMA DEPARTMENT OF SECURITIES December 15, 2000 D. Joe Rockett Andrews Davis Legg Bixler Milsten & Price 500 West Main, Suite 500 Oklahoma City, OK 73102-2275 Re: Paceco Financial Services, Inc. ODS File NA-2021920 Dear Mr. Rocket: You have requested that the Administrator of the Oklahoma Department of Securities (the "Department") issue a no-action position regarding activities of Paceco Financial Services, Inc. ("Paceco") in the state of Oklahoma. We incorporate herein the following documents by reference to the extent each document was not subsequently amended or superseded: 1. The Notice of Depositors [of Paceco] dated October 10, 2000; 2. Your initial request for a no action letter dated October 26, 2000; 3. The Supplemental Notice to Investment Certificate Holders of Paceco Financial Services, Inc., dated November 3, 2000; 4. Your amended request for a no action letter dated December 14, 2000; 5. The final Put Agreement as filed with the Department of December 15, 2000; 6. The final Trust Agreement as filed with the Department on December 15, 2000; 7. The Second Supplemental Notice to Investment Certificate Holders of Paceco Financial Services, Inc., as filed with the Department on December 15, 2000; Such incorporated information constitutes the plan of Paceco for redeeming its outstanding passbook savings and time certificates (the "Plan"). Based upon the information thus incorporated, the Department will not take action against Paceco, or its officers, directors, shareholders, employees and agents so long as the Plan is implemented as proposed and all certificate holders have received payment of their outstanding principal balances plus accrued interest by December 31, 2004. In rendering this position, the Department did not conduct an independent investigation to determine the accuracy or completeness of the information provided in the request. Different facts or conditions from those represented might require a different response. This expresses the Department's position on enforcement action only and does not purport to express legal conclusions on the issues presented. This position is furnished solely for the benefit and use of the persons described herein. Should you have any questions or comments, please contact the undersigned. Respectfully, Iriving L. Faught Administrator /s/ Z. Faye Martin Morton ---------------------------------- by: Z. Faye Martin Morton Registrations Counsel ZFMM: 2 -----END PRIVACY-ENHANCED MESSAGE-----