-----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, Plg9KhetL1sU9lOwrQnmoIOhFjpigK4tax8TQGb+dbXM8oWLmH0DvS6d89pwI7XJ v6n9JJRAm7Z4nuC4AAvi8A== 0000889812-96-000781.txt : 19960701 0000889812-96-000781.hdr.sgml : 19960701 ACCESSION NUMBER: 0000889812-96-000781 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 19960628 SROS: AMEX SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KLEER VU INDUSTRIES INC/DE/ CENTRAL INDEX KEY: 0000719729 STANDARD INDUSTRIAL CLASSIFICATION: BLANKBOOKS, LOOSELEAF BINDERS & BOOKBINDING & RELATED WORK [2780] IRS NUMBER: 135671924 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-40303 FILM NUMBER: 96587584 BUSINESS ADDRESS: STREET 1: 921 W ARTESIA BLVD CITY: COMPTON STATE: CA ZIP: 90220 BUSINESS PHONE: 3106039330 MAIL ADDRESS: STREET 1: 921 WEST ARTESIA BOULEVARD CITY: COMPTON STATE: CA ZIP: 90220 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MICROTEL INTERNATIONAL INC CENTRAL INDEX KEY: 0000854852 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 770226211 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2040 FORTUNE DR STREET 2: STE 102 CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4084358520 MAIL ADDRESS: STREET 1: 2040 FORTUNE DRIVE STREET 2: STE 102 CITY: SAN JOSE STATE: CA ZIP: 95131 FORMER COMPANY: FORMER CONFORMED NAME: CXR CORP DATE OF NAME CHANGE: 19920703 SC 13D 1 STATEMENT OF BENEFICIAL OWNERSHIP SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. )(1) Kleer-Vu Industries, Inc. ---------------------------------------------------- (Name of issuer) Common Stock ---------------------------------------------------- (Title of class of securities) 498494 ---------------------------------------------------- (CUSIP number) Mr. Barry Reifler, CFO MicroTel International, Inc. 2040 Fortune Drive, San Jose, California 95131 (408) 435-8520 ---------------------------------------------------- (Name, address and telephone number of person authorized to receive notices and communications) June 20, 1996 ------------------------------------------------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement /X/. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 5 Pages) - ---------- (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 13D Page __ of __ Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS MicroTel International, Inc. S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS EIN #77-0226211 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /X/ - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES 641,944 BENEFICIALLY -------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH REPORTING PERSON -------------------------------------------------------- WITH 9 SOLE DISPOSITIVE POWER -------------------------------------------------------- 10 SHARED DISPOSITIVE POWER - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 641,944 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 17.7% which includes 2,725,020 shares of Common Stock and 900,000 shares** - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! ** of preferred stock which votes as one class with the Company stock. Item 1. Security and Issuer. This statement relates to the Common Stock, par value $.010 per share ("Common Stock") issued by Kleer-Vu Industries, Inc., a Delaware Corporation (the "Company"), whose principal executive offices are located at 921 West Artesia Boulevard, Compton California, 90220. Item 2. Identity and Background. This statement is filed by MicroTel International, Inc., a corporation formed under the laws of Delaware having a business 2040 Fortune Drive, San Jose California 95131 (the "Reporting Person"). The Directors and Executive Officers of the Reporting Person are Mr. Henry A. Mourad, President and Director, Mr. Jack Talon, Director, Daniel Dror, Chief Executive Officer, Chairman of the Board and Director, William Lewisham, Director, Jacque Moisset, Vice President and Barry Reifler, Vice President, Secretary and Treasurer (collectively the "Directors and Executive Officers"). All Directors and Executive Officers maintain a business address at 2040 Fortune Drive, San Jose California 95131 and are citizens of the United States. The Reporting Person, or the Directors and Executive Officers have not, during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order in jointing future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws. Item 3. Source and Amount of Funds or other Consideration. The voting rights (and thus beneficial ownership) relating to 641,944 shares of Common Stock enured to the Reporting Person pursuant to a default of a security interest on a promissory note assigned for the benefit of the Reporting Person made by the Issuer in the original amount of $1,444,445. The Reporting Person will own the 641,944 shares of Common Stock upon foreclosure on the security interest. Item 4. Purpose of Transaction. The purpose of the foreclosure on the Common Stock is for investment. The Reporting Person may make purchases of Common Stock from time to time and may acquire or dispose of any or all of shares of Common Stock held by it at any time. The Reporting Person has no plans or proposals which relate to, or could result in any of the matters referred to in Paragraphs (b) through (j), of Item 4 of Schedule 13D. The Reporting Person may review or 3 reconsider his position with respect to the Issuer or to formulate plans or proposals with respect to any such matters, but has no present intention of doing so. Item 5. Interest in Securities of the Issuer. As of the date hereof, the Reporting Person beneficially owns an aggregate of 641,944 shares of Common Stock as a result of having the voting rights of such shares, constituting approximately 23.5% of the Issuer's Common Stock, or 17.7% of the total voting shares outstanding, which shares include 2,725,020 shares of Common Stock and 900,000 shares of preferred stock at May 12, 1996. The Preferred Stock votes as one class with the Common Stock. The Reporting Person has sole voting power with respect to all the shares of Common Stock which this statement relates. The Reporting Person has not effected any transactions in shares of the Common Stock in the past 60 days except for the acquisition of the option. Subject to the Reporting Person's right to foreclose on such shares, no person other than Hardee and Mr. Hardee, the record owners of the 641,944 shares of Common Stock, has the right to receive or the power to direct receipt of dividends or the proceeds of sale of the shares of Common Stock. Upon foreclosure, such rights will rest with the Reporting person only. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. On September 29, 1993, Hardee Capital Partners, L.P. ("Hardee") executed and delivered two secured non-interest bearing promissory notes in the principal amount of $805,555 and $1,444,445 (the "Notes") payable to Elk International Corporation Limited ("Elk"). The Notes were due and payable in full on December 31, 1995. The Notes were delivered as partial consideration for the purchase of certain shares of Common Stock of the Issuer from Elk, and are secured pursuant to security and pledge agreements executed on September 29, 1993 (the "Security Agreements"), and by the personal guarantee of David W. Hardee, individually. On November 8, 1994, the $1,444,445 Note and the collateral with respect to such Note (641,944 shares of the Issuer's Common Stock), were assigned to MicroTel International Inc. (the "Reporting Person"). In December 1995, the Reporting Person agreed to extend the maturity of the $1,444,455 Note to December 15, 1996 in consideration for the payment by Hardee of $358,300. Hardee did not pay $8,300 of such amount as agreed, therefore, Hardee defaulted on the obligation to the Reporting Person. A notice of default was given to Hardee and the default was not cured. Under 4 the terms of the Security Agreement, upon default, the Reporting Person has the immediate right to vote all shares subject to such agreement, in addition to its rights of foreclosure with respect to all of such shares. It is the position of the Reporting Person that the Security Agreement, securing the $1,444,445 Note, covers 641,944 shares representing 23.6% of the Issuer's outstanding Common Stock and that the Reporting Person has the sole right to vote such shares. As of the date hereof, the Reporting Person has not commenced foreclosure proceedings with respect to such shares of Common Stock. It is the Reporting Person's position that the above described default by Hardee could result in a change of control of the Issuer. There are no other contracts, arrangements, understandings or relationships with the Reporting Person or any other person with respect to the securities of the Issuer, including but not limited to transfer or voting of any other securities, finders' fees, joint ventures, loan or option arrangements, puts or calls, guaranties of profits, divisions of profits or loss or the giving or withholding of proxies, except as otherwise disclosed herein. Item 7. Materials to be filed as Exhibits. 10.1. Letter Agreement dated September 29, 1993 between Hee Poong Park and Hardee Capital Partners ("Purchasers") and Elk International Corporation Ltd. ("Elk") Whereby Elk agrees to sell an aggregate of 250,000 shares of Common Stock of Kleer-Vu Industries, Inc. for an aggregate of $3,611,110 consisting of $2,000,000 cash and $1,611,110 in the form of promissory notes ("Notes"). 10.2. Secured non-interest bearing Promissory Note, dated September 29, 1993 in the principal amount of $805,000 made by Hee Poong Park for the benefit of Elk. 10.3. Secured non-interest bearing Promissory Note, dated September 29, 1993 in the principal amount of $805,000 made by Hardee Capital Partners, Ltd. for the benefit of Elk. 10.4. Security and Pledge Agreement, dated September 29, 1993 by Elk as pledgee and Hee Pong Park as pledgor. 10.5. Security and Pledge Agreement, dated September 29, 1993 by Elk as pledgee and Hardee Capital Partners, Ltd. as pledgor. 10.6. Escrow Agreement dated September 29, 1993 by and between Elk, Hee Poong Park, Hardee Capital Partners, L.P. and City 5 National bank as Escrow Agent. 10.7. Release Agreement dated September 29, 1993 between Hardee Capital Partners, L.P., David W. Hardee, Hee Pong Park, Kleer-Vu Industries, Inc., Elk and Daniel Dror. 10.8. Guarantee Agreement dated September 29, 1993 by David Hardee as guarantor in favor of Elk, guaranteeing the an $805,555 promissory note made by Hardee Capital Partners to Elk. 10.9. Guarantee Agreement dated January 3, 1994 by David Hardee as guarantor in favor of Elk, guaranteeing the a promissory note dated January 3, 1994, in the principal amount of $1,444,445 made by Hardee Capital Partners to Elk. 10.10 Secured Non-Recourse Non-Interest Bearing Promissory Note, dated January 3, 1994 in the principal amount of $1,444,445 made by Hardee Capital Partners, Ltd. for the benefit of Elk. 10.11 Security and Pledge Agreement, dated January 3, 1994 by Elk as pledgee and Hardee Capital Partners, Ltd. as pledgor. 10.12 Security and Pledge Agreement, dated January 3, 1994 by Elk as pledgee and Hee Poong Park as pledgor. 10.13 Amended Restated and Consolidated Secured Promissory Note dated January 12, 1996 made by Hee Pong Park for the benefit of Elk in the principal amount of $2,700,000. 10.14 Letter Agreement dated April 19, 1996, amending the letter agreement dated January 12, 1996, between Hee Poong Park and Elk. 10.15 Notice of Default from Elk to Hee Poong Park and Hardee Capital Partners, L.P. dated May 30, 1996. 6 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. DATE: June 27, 1996 MICROTEL INTERNATIONAL, INC. /s/ Daniel Dror -------------------------------- BY: Daniel Dror 7 EX-10.1 2 LETTER AGREEMENT September 29, 1993 Elk International Corporation, Ltd. PO Box N-3247 Nassau, Bahamas Gentlemen: This letter sets forth our agreement pursuant to which Hee Poong Park ("Park") and Hardee Capital Partners, L.P., a Texas limited partnership ("Hardee", and together with Park the "Purchasers") hereby agree to purchase at the times hereinafter described from Elk International Corporation, Ltd. ("Elk") an aggregate of 450,000 shares of common stock, $.10 par value (the "Common Shares or Shares") of Kleer-Vu Industries, Inc., a Delaware Corporation, ("KVI" or the "Company"), which Common Shares are not registered under the Securities Act of 1933 as amended (the "Act"), and to change the employment status of Daniel Dror ("Dror") with KVI, on the terms and conditions set forth below: 1. As soon as practicable after the execution of this Agreement (the "First Closing"), Elk agrees to sell and Purchasers agree to buy 250,000 Common Shares (which are not subject to any vesting requirements) (112,500 shares to Park and 137,500 shares to Hardee), for consideration of $3,611,110 payable as follows: (1) $2,000,000 cash, payable by personal checks, $1,000,000 of which shall be paid by Park and $1,000,000 of which shall be paid by Hardee. (2) $1,611,110 to be paid by Park and Hardee in the form of a promissory note to be executed by each of them at the First Closing in the amount of $805,555 per note in the forms of Exhibits A and B hereto with the following terms and conditions: Elk International Corporation, Ltd. Page 2 Interest Rate: Zero Payment Terms: No principal payment due until December 31, 1995 when Notes will be due and payable in full Security: Promissory Notes shall be secured by Shares being purchased hereunder by each of the Purchasers and any Common Shares acquired after the First Closing from KVI by Park, Hardee or their affiliates (other than KVI) 2. On the Second Closing (as hereinafter defined) Elk agrees to sell and Purchasers agree to buy the 200,000 Common Shares (87,500 shares to Park and 112,500 shares to Hardee) not purchased at the First Closing, for consideration of $2,888,890 payable as follows: (1) $2,888,890 to be paid by Park and Hardee in the form of a promissory note to be executed by each of them at the Second Closing in the amount of $1,444,445 per note in the form of Exhibits A and B hereto, with the terms and conditions as described above. The parties agree that except for the restriction on the Shares provided herein and the documents contemplated hereby, Elk shall have all right, title and interest to the 200,000 Common Shares until such Shares are acquired at the Second Closing by Purchasers. 3. Effective at the First Closing, the STOCKHOLDER AGREEMENT dated April 30, 1993 between Dror, Elk, Park and KVI (the "Stockholder Agreement") shall be rescinded and of no further force or effect. 4. Effective at the First Closing, the Employment Agreement dated as of May 4, 1993 by and between KVI, Kleer-Vu Plastics Corporation, a Delaware corporation, PAS Industries, a California corporation and Dror shall be terminated and superseded in its entirety by a Consulting Agreement in the Elk International Corporation, Ltd. Page 3 form of the agreement between KVI and Daniel Dror Company, Inc. ("DCC") attached hereto as Exhibit C-1, which agreement shall provide for an initial consulting fee of $230,500 and for an annual consulting fee of $150,000, payable monthly in advance, for three years from the First Closing Date (as hereinafter defined) and 50,000 Common Shares of KVI (to be equitably adjusted in the event of any stock dividends or stock splits prior to the issuance of such Shares) to be issued at no additional cost to DCC in the following amounts: a. 15,000 Common Shares to be issued December 31, 1994 b. 20,000 Common Shares to be issued December 30, 1995 c. 15,000 Common Shares to be issued on the third anniversary of the First Closing Date and a Consulting Agreement in the form of the agreement between KVI and Dror attached hereto as Exhibit C-2, which agreement shall provide for an annual consulting fee of $90,000, payable monthly in advance, for three years from the First Closing Date. KVI shall have the right to offset any amounts due under the Consulting Agreement against the promissory note in the principal amount of $75,000 made by Dror in favor of KVI, the principal and interest on which is $80,351.31 as of the date hereof. 5. Effective at the First Closing, Dror shall resign as a director and officer of KVI and all its subsidiaries and Dror shall cause Mr. William Lewisham to similarly resign with all outstanding options owned by them to remain intact in accordance with their terms. The indemnification obligations of KVI and its subsidiaries existing on the date hereof in favor of Dror and Mr. Lewisham shall also remain intact. 6. The parties hereto agree to execute mutual general releases at the First Closing in favor of the others and their respective affiliates in the form of Exhibit D hereto. Except as set forth in paragraph 4 above, the parties further agree that no party shall have the right of offset for breaches of any of the agreements contemplated hereby. Elk International Corporation, Ltd. Page 4 7. (a) Each of the Purchasers understands that all reports by the Company under the Securities Act of 1934, as amended, since January 1, 1988, plus any and all documents, instruments, records and books pertaining to the Company and this investment have been made available to them and their attorney(s), accountant(s) or investment advisor(s). They have had the opportunity to ask questions of, and receive answers from the Company concerning the business of the Company, and have had the opportunity to obtain additional information in order to permit them to evaluate the merits and risks of acquiring the Shares. (b) Each of the Purchasers further represents that they are acquiring the Shares for investment for their own account and not with a view to resell or otherwise distribute the Shares in a manner that would violate the Act, subject to the disposition of Shares being within their control at all times. (c) Each of the Purchasers also further understands that investment in the Shares involves a very high degree of risk and that they may lose their entire investment therein. (d) Each of the Purchasers also understands that the Shares issued to them will bear the following legend: "This certificate and the shares of stock represented hereby have not been registered with the Securities Act of 1933 and may not be transferred, reoffered and sold unless registered or unless an exemption from registration is available." (e) In the absence of an effective registration statement under the Act covering the Shares, the Purchasers shall not offer, sell, transfer or otherwise dispose of any of the Shares without either first obtaining an opinion of counsel that the disposition may be made without registration of the Shares in question under the Act, or first obtaining a letter from the Division of Corporation Finance of the Securities and Exchange Commission (the "Commission") to the effect that it will recommend no action to the Commission if any of the Shares to be disposed of are so disposed of without registration. Elk International Corporation, Ltd. Page 5 8. Elk represents and warrants as follows: (a) Elk is a corporation duly organized, validly existing and in good standing under the laws of the Bahamas; (b) This Agreement is duly authorized and executed and constitutes the binding obligations of Elk enforceable against Elk in accordance with its terms; and (c) Elk has good and marketable title to the Shares and owns the Shares free and clear of any liens, encumbrances and pledges whatsoever, except restrictions as to transferability pursuant to the provisions of Rule 144 promulgated under the Act. There are no outstanding options, warrants, agreements, understanding or arrangements relating to the Shares other than certain vesting requirements with respect to some of the Shares to be delivered at the Second Closing. KVI hereby waives any and all vesting requirements with respect to the Shares to be delivered at the Second Closing, effective as of the Second Closing. Upon the Closings, the Purchasers will acquire good and marketable title to the Shares to be acquired hereunder, free and clear of any liens, encumbrances and pledges whatsoever, except restrictions as to transferability pursuant to the provisions of Rule 144 promulgated under the Act. 9. The First Closing of the transactions contemplated hereby shall occur at the Los Angeles offices of Skadden, Arps, Slate, Meagher & Flom on September 28, 1993 or as soon thereafter as practicable (the "First Closing Date"). At the First Closing the following documents shall be executed and delivered by the parties thereto: (a) 250,000 Common Shares, duly endorsed for transfer or with stock powers executed in blank, 112,500 shares to be delivered to Park and 137,500 shares to be delivered to Hardee. (b) Personal checks payable to the order of Elk International Corporation, Ltd. or its designee in the aggregate amount of Elk International Corporation, Ltd. Page 6 $2,000,000, $1,000,000 of which shall be payable by each of the Purchasers. (c) A full recourse promissory note in the amount of $805,555 executed by Park payable to the order of Elk International Corporation, Ltd. in the form of Exhibit A-1 hereto, together with a Pledge and Security Agreement in the form of Exhibit A-2 hereto. (d) A non-recourse promissory note in the amount of $805,555 executed by Hardee, which note shall be guaranteed by David W. Hardee, payable to the order of Elk International Corporation, Ltd. in the form of Exhibit B-1 hereto, together with a Pledge and Security Agreement in the form of Exhibit B-2 hereto and the guaranty by David W. Hardee in the form of Exhibit B-3 hereto. (e) The Consulting Agreement between KVI and Dror dated as of the Closing Date in the form of Exhibit C hereto. (f) Mutual Releases in the form of Exhibit D hereto. (g) The resignations of Dror and William Lewisham as directors of KVI and all of its subsidiaries and of Dror as an officer of KVI and all of its subsidiaries, effective as of the Closing Date, in the forms of Exhibit E-1 and E-2 hereto. (h) A Termination Letter acknowledging termination of all obligations under the Stockholder's Agreement and the Stock Purchase Option Agreement in the form of Exhibit F hereto. 10. The Second Closing (the "Second Closing") of the transactions contemplated hereby shall occur at the Los Angeles offices of Skadden, Arps, Slate, Meagher & Flom on January 3, 1994 or such earlier date designated by Purchasers on not less than 5 days written notice to Elk (the First Closing and Second Closing together referred to herein as the "Closings"). At the Second Elk International Corporation, Ltd. Page 7 Closing the following documents shall be executed and delivered by the parties thereto: (a) 200,000 Common Shares, duly endorsed for transfer with stock powers executed in blank, 87,500 shares to be delivered to Park and 112,500 shares to be delivered to Hardee. (b) A full recourse promissory note in the amount of $1,444,445 executed by Park payable to the order of Elk International Corporation, Ltd. in the form of Exhibit A-1 hereto, together with a Pledge and Security Agreement in the form of Exhibit A-2 hereto. (c) A non-recourse promissory note in the amount of $1,444,445 executed by Hardee, which note shall be guaranteed by David W. Hardee, payable to the order of Elk International Corporation, Ltd. in the form of Exhibit B-1 hereto, together with a Pledge and Security Agreement in the form of Exhibit B-2 hereto and the guaranty by David W. Hardee in the form of Exhibit B-3 hereto. 11. If and to the extent that the number of issued shares of KVI common stock shall be increased or reduced by a change in par value, split-up, reclassification, distribution of a dividend payable in shares, or the like, the number of Shares subject to the Second Closing shall be proportionately adjusted, and the Shares to be purchased hereunder at the Second Closing shall include all of such Shares as so modified. 12. Prior to the Second Closing, Elk shall not take any action which will result in any sale, assignment, transfer, disposition, pledge, lien, security interest, encumbrance, charge or other imposition upon the Shares to be purchased at the Second Closing nor will Elk take any action which will prevent the transfer of such Shares on the terms and conditions set forth herein. Promptly following the execution of this Agreement, Elk shall place such Shares in escrow pending the Second Closing pursuant to an escrow agreement reasonably satisfactory to Elk and the Purchasers. Elk International Corporation, Ltd. Page 8 13. The stock certificates representing the Shares to be purchased at the Second Closing shall bear the following legend in addition to any other legends contained thereon with respect to restrictions as to transferability pursuant to the Act: "The Shares represented by this certificate are the subject of an Agreement to purchase these Shares between Elk International Corporation Limited and Hee Poong Park, Hardee Capital Partners, L.P. and certain other parties. A copy of the Agreement is on file with the Secretary of Kleer-Vu Industries, Inc. These Shares shall not be encumbered, pledged, hypothecated, sold or transferred in any; way except in accordance with and pursuant to the terms of the Agreement. 14. KVI shall reimburse Park and Hardee for each of their reasonable out-of-pocket expenses incurred in connection with the negotiation of this Agreement, including attorneys fees. Except as provided above, each party hereto shall bear his own costs and expenses in negotiating this Agreement. 15. This Agreement may be exercised in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 16. The parties acknowledge that it would be impossible to fix money damages for violations of this Agreement and that such violations of this Agreement and that such violations will cause irreparable injury for which adequate remedy at law is not available and, therefore, this Agreement must be enforced by specific performance or injunctive relief. The parties hereto agree that any party may, in its sole discretion, apply to any court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extend permitted by applicable law, each party waives any objection or defense to the imposition of such relief. Nothing herein shall be construed to prohibit any party from bringing any action for damages in addition to an action for specific performance or an injunction for a breach of this Agreement. Elk International Corporation, Ltd. Page 9 17. This Agreement is being delivered in the State of California and shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of such State. 18. The parties hereby irrevocably submit to and accept generally and unconditionally the jurisdiction of any California State or United States Federal Court sitting in Los Angeles, California over any action or proceeding arising out of or relating to this Agreement, and each of the parties hereby irrevocably agrees that all claims in respect to such action or proceeding may be heard and determined in such California State or Federal Court. Each party hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. Each party irrevocably consents to the service of any and all process in any such action or proceeding by the delivery or mailing of copies of such process by certified or registered mail to the address specified in this Agreement. Each party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. Nothing in this paragraph shall affect the right of any party to serve legal process in any other manner permitted by law or affect the right of any party to bring any action or proceedings against any other party in the Courts of other jurisdictions. 19. In the event any provisions of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provisions hereof or entitle any party to seek rescission of this Agreement. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. Elk International Corporation, Ltd. Page 10 If the foregoing correctly reflects our agreement, please so indicate by signing and returning the enclosed copy of this letter at your earliest convenience. Very truly yours, /s/Hee Poong Park ----------------- Hee Poong Park /s/David W. Hardee ------------------ David W. Hardee HARDEE CAPITAL PARTNERS, L.P. By: /s/David W. Hardee -------------------------------- David W. Hardee, General Partner Agreed to and accepted: ELK INTERNATIONAL CORPORATION LTD. By: /s/Elkana Faiwuszewicz - --------------------------- Title: President /s/Daniel Dror - --------------------------- Daniel Dror KLEER-VU INDUSTRIES, INC. By: /s/[ILLEGIBLE] - --------------------------- Title: EX-10.2 3 SECURED NON-INTEREST BEARING PROMISSORY NOTE SECURED NON-INTEREST BEARING PROMISSORY NOTE $805,555 Los Angeles, California September 29, 1993 FOR VALUE RECEIVED, Hee Poong Park ("Maker") promises to pay to the order of Elk International Corporation, Ltd. ("Holder") at 2415 S. Sierra Drive, Compton, California 90220, or such other place as Holder may from time to time designate, the principal sum of Eight Hundred Five Thousand Five Hundred Fifty Five Dollars ($805,555). 1. The unpaid principal balance hereof shall be due and payable on December 31, 1995. 2. This Note shall not bear interest. 3. This Note may be prepaid in whole or in part at any time without premium or penalty on or with respect to the amounts prepaid. Maker shall have no right to reborrow any such prepaid amounts. 4. An event of default hereunder shall occur if an Event of Default (as defined in the Security and Pledge Agreement between Maker and Holder dated as of the date hereof (the "Security Agreement")) shall have occurred. If such an Event of Default occurs and is continuing, the Holder, at its option, may declare all sums due hereunder immediately due and payable without notice or demand. 5. No delay on the part of the Holder or the exercise of any power or right under this Note shall operate as a waiver of such power or right or preclude other or further exercise thereof or the exercise of any other power or right. The Maker hereby waives diligence, presentment, demand for payment, notice of dishonor or acceleration, protest and notice of protest, and any and all other notices or demands in connection with delivery, acceptance, performance, default or enforcement of this Note. 6. If any principal payment due hereunder is not paid as and when due or if any Event of Default occurs hereunder, Maker promises to pay all costs of enforcement and collection, including, but not limited to, reasonable attorneys' fees and disbursements, whether or not such enforcement and collection includes the filing of a lawsuit. 7. This Note is secured by the Security Agreement. 8. Amounts owing under this Note shall not be subject to set off of any obligations of Holder owing to Maker. 9. This Note shall be governed by and construed in accordance with the laws of the State of California without regard to conflicts of laws and principles thereof. IN WITNESS WHEREOF, the undersigned has executed this Note on the day and year first above written. /s/Hee Poong Park ----------------- Hee Poong Park 2 EX-10.3 4 SECURED NON-RECOURSE NON-INTEREST BEARING PROMISSORY NOTE SECURED NON-RECOURSE NON-INTEREST BEARING PROMISSORY NOTE $805,555 Los Angeles, California September 29, 1993 FOR VALUE RECEIVED, Hardee Capital Partners, Ltd. ("Maker") promises to pay to Elk International Corporation, Ltd. ("Holder") at 2415 S. Sierra Drive, Compton, California 90220, or such other place as Holder may from time to time designate, the principal sum of Eight Hundred Five Thousand Five Hundred Fifty Five Dollars ($805,555). 1. The unpaid principal balance hereof shall be due and payable on December 31, 1995. 2. This Note shall not bear interest. 3. This Note may be prepaid in whole or in part at any time without premium or penalty on or with respect to the amounts prepaid. Maker shall have no right to reborrow any such prepaid amounts. 4. An event of default hereunder shall occur if an Event of Default (as defined in the Security and Pledge Agreement between Maker and Holder dated as of the date hereof (the "Security Agreement")) shall have occurred. If such an Event of Default occurs and is continuing, the Holder, at its option, may declare all sums due hereunder immediately due and payable without notice or demand. 5. No delay on the part of the Holder or the exercise of any power or right under this Note shall operate as a waiver of such power or right or preclude other or further exercise thereof or the exercise of any other power or right. The Maker hereby waives diligence, presentment, demand for payment, notice of dishonor or acceleration, protest and notice of protest, and any and all other notices or demands in connection with delivery, acceptance, performance, default or enforcement of this Note. 6. If any principal payment due hereunder is not paid as and when due or if any Event of Default occurs hereunder, Maker promises to pay all costs of enforcement and collection, including, but not limited to, reasonable attorneys' fees and disbursements, whether or not such enforcement and collection includes the filing of a lawsuit. 7. This Note is secured by the Security Agreement. 8. Amounts owing under this Note shall not be subject to set off of any obligations of Holder owing to Maker. 9. Notwithstanding anything herein or in the Security Agreement to the contrary, it is understood and agreed that this Note is intended to evidence a non-recourse obligation of Maker, and Holder's sole recourse in the event of a default hereunder or thereunder is against the Collateral (as defined in the Security Agreement) and the Guaranty executed by David W. Hardee in favor of Holder dated as of the date hereof. 10. This Note shall be governed by and construed in accordance with the laws of the State of California without regard to conflicts of laws and principles thereof. IN WITNESS WHEREOF, the undersigned has executed this Note on the day and year first above written. HARDEE CAPITAL PARTNERS, L.P. By:/s/ David W. Hardee ---------------------- David W. Hardee Its General Partner 2 EX-10.4 5 SECURITY AND PLEDGE AGREEMENT SECURITY AND PLEDGE AGREEMENT This Security and Pledge Agreement (the "Agreement") is made and entered into as of September 29, 1993 by and between Elk International Corporation, Ltd. ("Pledgee"), and Hee Poong Park ("Pledgor"). WHEREAS, Pledgor has agreed to purchase, and Pledgee has agreed to sell, the Pledged Securities (as defined below); and WHEREAS, as part of the consideration for such purchase, Pledgor has executed that certain promissory note in the principal amount of $805,555 in favor of Pledgee dated as of the date hereof (the "Note"); and WHEREAS, Pledgor has agreed to enter into this Agreement as additional consideration for acceptance by Pledgee of the Note. NOW, THEREFORE, based upon the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Grant of Security Interest in Collateral. Pledgor hereby grants to Pledgee, as security for all present and future obligations and liabilities of all kinds of Pledgor to Pledgee under the Note and this Agreement (collectively referred to as the "Obligations"), a first priority security interest in the following described property (collectively referred to as the "Collateral"): (a) the following shares (the "Pledged Shares") of Kleer-Vu Industries, Inc., a Delaware corporation (the "Company"), as more fully described in Schedule 1 hereto, and the certificates representing the Pledged Shares and all of Pledgor's rights and privileges with respect thereto, together with stock powers executed in blank: 112,500 shares of common stock, $.10 par value, of the Company (the "Common Stock"). (b) all shares of Common Stock acquired from the Company by Pledgor or its affiliates (other than the Company) after the date hereof together with the 87,500 shares of Common Stock to be acquired by Pledgor from Pledgee on or before January 3, 1994 (the "Additional Securities"). (c) the products, proceeds and accessions of the Pledged Shares and/or the Additional Securities, including, without limitation, cash and stock dividends and additional property at any time and from time to time receivable or which may be received by Pledgee or Pledgor, or otherwise distributed or paid to Pledgee or Pledgor, in respect of or in exchange for any or all of such Pledged Securities and/or Additional Securities (the "Proceeds"). 2. Pledgor's Obligations. At any time and from time to time, upon request of Pledgee, Pledgor shall give, execute and file and/or record any notice, financing statement, continuation statement, instrument, document or agreement that Pledgee shall consider necessary or desirable to create, preserve, continue, perfect or validate any security interest granted hereunder or which Pledgee may consider necessary or desirable to exercise or enforce its rights hereunder with respect to such security interest including, without limitation, assignment of such registration rights as Pledgor may have relating to the Collateral. 3. Pledgor's Covenants. (a) Pledgor agrees hereafter not to encumber or grant a security interest in or a lien or other encumbrance on the Collateral. (b) Pledgor agrees not to dispose of any of the Collateral except in accordance with the terms of this Agreement. (c) Pledgor agrees to: (i) pay promptly the Obligations secured hereby when due; (ii) indemnify Pledgee against all loss, claims, demands and liabilities of every kind arising from the Collateral and the transactions and other agreements and undertakings contemplated hereby; (iii) pay all expenses, including reasonable attorneys' fees, incurred by Pledgee in the preservation, realization, enforcement and exercise of its rights, powers and remedies hereunder; (iv) execute and deliver such documents as Pledgee deems necessary to create, perfect and continue the security interest contemplated hereby; and (v) give Pledgee notice of any litigation filed or claim asserted against Pledgor relating to or potentially affecting the Collateral. (d) Pledgor agrees: (i) if requested by Pledgee, to receive and collect the Proceeds, in trust and as the property of Pledgee, and to immediately endorse as appropriate and deliver such Proceeds to City National Bank as Escrow Agent when requested by Pledgee in the exact form in which they are re- 2 ceived; (ii) not to commingle the Proceeds or collections thereunder with other property; and (iii) to keep complete and accurate records regarding all of the Proceeds. 4. Voting Rights. Pledgor shall have all voting rights with respect to the Collateral until an Event of Default (as defined below) has occurred, at which time Pledgee may exercise all such voting rights. Pledgor hereby grants to Pledgee an irrevocable proxy, effective upon the occurrence of an Event of Default and so long as such Event of Default shall continue, to vote the Pledged Securities in such manner and for such purposes as Pledgee shall, in its sole discretion, continue. Such proxy is coupled with an interest and shall continue in full force and effect until all of the Obligations shall be paid in full. 5. Events of Default; Remedies. (a) Each of the following shall constitute an event of default ("Event of Default") hereunder: (i) Pledgor shall fail to make any payment on the Obligations secured hereby as and when due; (ii) if Pledgor has materially breached any provisions of this Agreement; (iii) if a receiver or a trustee of all or any part of Pledgor's property shall be appointed; (iv) if any assignment for the benefits of Pledgor's creditors shall be made; (v) if a petition in bankruptcy shall be filed by or against Pledgor and not dismissed within 120 days; (vi) if any of the Collateral shall be attached or levied upon at any time pursuant to any court order or other legal process; (vii) liquidation or dissolution of Pledgor; and (vii) if Pledgor shall generally fail to pay debts as they become due. (b) Upon the occurrence of any Event of Default, and at any time as such Event of Default is continuing, Pledgee shall be entitled to exercise all the rights, powers and remedies for the protection and enforcement of its rights in respect of the Collateral. Upon the occurrence of any Event of Default, Pledgee may declare all obligations secured hereby immediately due and payable and may proceed to enforce payment of the same and exercise any and all of the rights and remedies provided by the Uniform Commercial Code of California, as well as all other rights and remedies possessed by Pledgee. Pledgee may, at Pledgee's option, sell, assign, and deliver all or any part of the Collateral at public or private sale, and may bid for and purchase all or any part of the Collateral so sold free from any right or equity of redemption. Pledgor consents to Pledgee's remedies stated herein. Pledgor waives diligence, presentment, demand for payment, notice of dishonor or acceleration, protest and notice 3 of protest. Pledgee will give Pledgor reasonable notice of the time and place of any public or private sale and the requirements of reasonable notice shall be met if such notice is mailed, postage prepaid, to the address of Pledgor as provided for in the notice provisions of this Agreement at least ten (10) days before the time of the sale or disposition. Pledgee may apply the proceeds of any sale or disposition of Collateral available for satisfaction of Pledgor's obligations hereunder and the expenses of sale in any order of preference that Pledgee, in Pledgee's sole discretion, determines. Pledgor shall remain liable for any deficiency. 6. Dividends. (a) So long as all of the Obligations shall be paid when due, Pledgor may receive and retain all regular cash dividends declared and paid on the Pledged Securities and/or the Additional Securities. If any of the Obligations are not paid when due, all regular cash dividends paid on the Pledged Securities and/or the Additional Securities shall be received and retained by Escrow Agent as part of the collateral. If Pledgor receives any such dividend while any Obligation which is due is unpaid, it shall hold such dividend in trust for the sole purpose of delivering it in kind to Escrow Agent to be added to the Collateral. (b) In the event that any other dividend (including, without limitation, a stock dividend) or any distribution shall be declared and paid or made on or in respect of any of the Pledged Securities and/or the Additional Securities or in the event that any shares, cash, obligations or other property shall be distributed upon or with respect to any of the Pledged Securities and/or the Additional Securities pursuant to a recapitalization or reclassification of the capital stock of an issuer of any such issuer, or pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or reorganization of any such issuer with or into another corporation, or otherwise, then the shares, cash, obligations or other property so paid or distributed shall be delivered by Pledgor to Escrow Agent forthwith upon its receipt thereof, to be held by Escrow Agent as additional Collateral hereunder, and all of such property (other than cash) shall constitute Pledged Securities and/or the Additional Securities for all purposes of this Pledge Agreement. 7. Unregistered Securities. If at the time of any sale of the Collateral in accordance with the terms of this Agreement the same or any part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act of 1933, as amended, or there is no exemption available 4 under such Act, then Pledgee, in its sole and absolute discretion, is authorized to sell such Collateral or such part thereof by private sale or sales in such manner and under such circumstances as Pledgee reasonably may deem necessary or advisable in order that such sale may legally be effected without registration. Pledgor agrees that private sales so made may be at prices and on other terms less favorable to the seller than if such Collateral were sold at public sale, and that Pledgee has no obligation to delay the sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral, even if such issuer would agree, to register such Collateral for public sale under such Act. Pledgor agrees that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. 8. No Waiver. Failure of Pledgee to exercise any right or remedy under this Agreement or any other agreement between Pledgee and Pledgor, or otherwise, or delay by Pledgee in exercising same, will not operate as a waiver thereof. No waiver by Pledgee will be effective unless and until it is in writing and signed by Pledgee. No waiver of any condition or performance will operate as a waiver of any subsequent condition or obligation. Pledgee shall have no obligation to resort to the Collateral or any other security which is or may become available to it. 9. Miscellaneous. (a) This Agreement, any amendments or replacement hereof, and the legality, validity and performance of the terms hereof, shall be governed by and enforced and construed in accordance with the laws of the State of California without regard to conflicts of laws and principles thereof. (b) This Agreement and the rights, powers and duties set forth herein shall be binding upon Pledgor, its employees, shareholders, agents, officers, directors, representatives and successors and shall inure to the benefit of the successors and assigns of Pledgee and, in the event of any transfer or assignment of rights by Pledgee, the rights and privileges herein conferred upon Pledgee shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This Agreement may not be transferred or assigned without written consent. (c) In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith 5 and shall be modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any applicable law shall not effect the validity or enforceability of any other provisions hereof. (d) Notices required or permitted to be given under this Agreement shall be in writing and may be delivered personally or sent to a party by airmail or first class mail, postage prepaid and addressed to such party at the address set forth below its signature, or to such other address furnished by notice given in accordance with this paragraph. Any such notice shall be deemed to have been given, (i) if sent by mail, five days after the date mailed, and (ii) if delivered personally, on the date of delivery. (e) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same document. (f) This Agreement and the security interest and pledge hereunder shall terminate upon the full and final performance of all Obligations of Pledgor and payment of all indebtedness secured hereby. At such time, Pledgee shall promptly reassign to Pledgor all of the Collateral hereunder which has not been sold, disposed of, retained or applied by Pledgee in accordance with the terms hereof. 6 IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above. ELK INTERNATIONAL CORPORATION, LTD. By: /s/ Elkana Faiwuszewicz --------------------------- Title: Address: P.O. Box N-3247 Nassau, Bahamas /s/ Hee Poong Park --------------------------- HEE-POONG PARK Address: 2415 S. Sierra Drive Compton, California 90220 7 SCHEDULE 1 Description of Pledged Shares Common Stock Certificate Number Number of Shares - ------------------ ---------------- NU 44462 112,500 8 [Form of front of Stock Certificate] 00044462 [Kleer-Vu logo] Number Shares ----------------- --------------- NU-44462 112,500 KLEER-VU INDUSTRIES, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE COMMON STOCK CUSIP 498494 20 2 SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT HEE POONG PARK ***112500******* is the owner of 2415 SOUTH SIERRA DRIVE ****112500****** COMPTON, CA 90220 *****112500***** ******112500**** *******112500*** **ONE HUNDRED TWELVE THOUSAND FIVE HUNDRED** Full Paid and Non-Assessable Shares of the COMMON Stock of the par value of $.10 each of KLEER-VU INDUSTRIES, INC. transferable on the books of the Corporation by the holder hereof, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented thereby are issued and shall be held [????????] of the provisions of the Certificate of Incorporation, and all Amendments thereto. This Certificate is not valid unless countersigned by the Transfer Agent and Registrar. IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed by the facsimile signatures of its duly authorized officers and a facsimile of its corporate seal to be hereunto fixed. Dated: DEC 30, 1993 /s/ Michael R. [ILLEGIBLE] /s/ [ILLEGIBLE] SECRETARY CHAIRMAN [SEAL] 006777517 THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. THIS CERTIFICATE REPRESENTS SHARES OF NEW COMMON STOCK [Form of back of Stock Certificate] The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM--as tenants in common UNIF GIFT MIN ACT-- Custodian TEN ENT--as tenants by the entireties (Cust) (Minor) JT TEN--as joint tenants with right of under Uniform Gifts to survivorship and not as tenants Minors Act. in common (State) Additional abbreviations may also be used though not in the above list. For value received,________ hereby sell, assign and transfer unto ______________________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE) ______________________________________________________________________________ ______________________________________________________________________________ _______________________________________________________________________ shares of the capital stock represented by the within Certificate; and do hereby irrevocably constitute and appoint __________________________ Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated _______________________ _______________________ Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever. THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. EX-10.5 6 SECURITY AND PLEDGE AGREEMENT SECURITY AND PLEDGE AGREEMENT This Security and Pledge Agreement (the "Agreement") is made and entered into as of September 29, 1993 by and between Elk International Corporation, Ltd. ("Pledgee") and Hardee Capital Partners, L.P. ("Pledgor"). WHEREAS, Pledgor has agreed to purchase, and Pledgee has agreed to sell, the Pledged Securities (as defined below); and WHEREAS, as part of the consideration for such purchase, Pledgor has executed that certain promissory note in the principal amount of $805,555 in favor of Pledgee dated as of the date hereof (the "Note"); and WHEREAS, Pledgor has agreed to enter into this Agreement as additional consideration for acceptance by Pledgee of the Note. NOW, THEREFORE, based upon the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Grant of Security Interest in Collateral. Pledgor hereby grants to Pledgee, as security for all present and future obligations and liabilities of all kinds of Pledgor to Pledgee under the Note and this Agreement (collectively referred to as the "Obligations"), a first priority security interest in the following described property (collectively referred to as the "Collateral"): (a) the following shares (the "Pledged Shares") of Kleer-Vu Industries, Inc., a Delaware corporation (the "Company"), as more fully described in Schedule I hereto, and the certificates representing the Pledged Shares and all of Pledgor's rights and privileges with respect thereto, together with stock powers executed in blank: 137,500 shares of common stock, $.10 par value, of the Company (the "Common Stock"). (b) all shares of Common Stock acquired by Pledgor from the Company or its affiliates (other than the Company) after the date hereof together with the 112,500 shares of Common Stock to be acquired by Pledgor from Pledgee on or before January 3, 1994 (the "Additional Securities"). (c) the products, proceeds and accessions of the Pledged Shares and/or the Additional Securities, including, without limitation, cash and stock dividends and additional property at any time and from time to time receivable or which may be received by Pledgee or Pledgor, or otherwise distributed or paid to Pledgee or Pledgor, in respect of or in exchange for any or all of such Pledged Securities and/or Additional Securities (the "Proceeds"). 2. Pledgor's Obligations. At any time and from time to time, upon request of Pledgee, Pledgor shall give, execute and file and/or record any notice, financing statement, continuation statement, instrument, document or agreement that Pledgee shall consider necessary or desirable to create, preserve, continue, perfect or validate any security interest granted hereunder or which Pledgee may consider necessary or desirable to exercise or enforce its rights hereunder with respect to such security interest including, without limitation, assignment of such registration rights as Pledgor may have relating to the Collateral. 3. Pledgor's Covenants. (a) Pledgor agrees hereafter not to encumber or grant a security interest in or a lien or other encumbrance on the Collateral. (b) Pledgor agrees not to dispose of any of the Collateral except in accordance with the terms of this Agreement. (c) Pledgor agrees to: (i) pay promptly the Obligations secured hereby when due; (ii) indemnify Pledgee against all loss, claims, demands and liabilities of every kind arising from the Collateral and the transactions and other agreements and undertakings contemplated hereby; (iii) pay all expenses, including reasonable attorneys' fees, incurred by Pledgee in the preservation, realization, enforcement and exercise of its rights, powers and remedies hereunder; (iv) execute and deliver such documents as Pledgee deems necessary to create, perfect and continue the security interest contemplated hereby; and (v) give Pledgee notice of any litigation field or claim asserted against Pledgor relating to or potentially affecting the Collateral. (d) Pledgor agrees: (i) if requested by Pledgee, to receive and collect the Proceeds, in trust and as the property of Pledgee, and to immediately endorse as appropriate and deliver such Proceeds to City National Bank as Escrow Agent when requested by Pledgee in the exact form in which they are re- 2 ceived; (ii) not to commingle the Proceeds or collections thereunder with other property; and (iii) to keep complete and accurate records regarding all of the Proceeds. 4. Voting Rights. Pledgor shall have all voting rights with respect to the Collateral until an Event of Default (as defined below) has occurred, at which time Pledgee may exercise all such voting rights. Pledgor hereby grants to Pledgee an irrevocable proxy, effective upon the occurrence of an Event of Default and so long as such Event of Default shall continue, to vote the Pledged Securities in such manner and for such purposes as Pledgee shall, in its sole discretion, determine. Such proxy is coupled with an interest and shall continue in full force and effect until all of the Obligations shall be paid in full. 5. Events of Default; Remedies. (a) Each of the following shall constitute an event of default ("Event of Default") hereunder: (i) if Pledgor shall fail to make any payment on the Obligations secured hereby as and when due; (ii) if Pledgor has materially breached any provisions of this Agreement; (iii) if a receiver or a trustee of all or any part of Pledgor's property shall be appointed; (iv) if any assignment for the benefits of Pledgor's creditors shall be made; (v) if a petition in bankruptcy shall be filed by or against Pledgor and not dismissed within 120 days; (vi) if any of the Collateral shall be attached or levied upon at any time pursuant to any court order or other legal process; (vii) liquidation or dissolution of Pledgor; and (vii) if Pledgor shall generally fail to pay debts as they become due. (b) Upon the occurrence of any Event of Default, and at any time as such Event of Default is continuing, Pledgee shall be entitled to exercise all the rights, powers and remedies for the protection and enforcement of its rights in respect of the Collateral. Upon the occurrence of any Event of Default, Pledgee may declare all obligations secured hereby immediately due and payable and may proceed to enforce payment of the same and exercise any and all of the rights and remedies provided by the Uniform Commercial Code of California, as well as all other rights and remedies possessed by Pledgee. Pledgee may, at Pledgee's option, sell, assign, and deliver all or any part of the Collateral at public or private sale, and may bid for and purchase all or any part of the Collateral so sold free from any right or equity of redemption. Pledgor consents to Pledgee's remedies stated herein. Pledgor waives diligence, presentment, demand for payment, notice of dishonor or acceleration, protest and notice 3 of protest. Pledgee will give Pledgor reasonable notice of the time and place of any public or private sale and the requirements of reasonable notice shall be met if such notice is mailed, postage prepaid, to the address of Pledgor as provided for in the notice provisions of this Agreement at least ten (10) days before the time of the sale or disposition. Pledgee may apply the proceeds of any sale or disposition of Collateral available for satisfaction of Pledgor's obligations hereunder and the expenses of sale in any order of preference that Pledgee, in Pledgee's sole discretion, determines. Pledgor shall remain liable for any deficiency. 6. Dividends. (a) So long as all of the Obligations shall be paid when due, Pledgor may receive and retain all regular cash dividends declared and paid on the Pledged Securities and/or the Additional Securities. If any of the Obligations are not paid when due, all regular cash dividends paid on the Pledged Securities and/or the Additional Securities shall be received and retained by Escrow Agent as part of the collateral. If Pledgor receives any such dividend while any Obligation which is due is unpaid, it shall hold such dividend in trust for the sole purpose of delivering it in kind to Escrow Agent to be added to the Collateral. (b) In the event that any other dividend (including, without limitation, a stock dividend) or any distribution shall be declared and paid or made on or in respect of any of the Pledged Securities and/or the Additional Securities or in the event that any shares, cash, obligations or other property shall be distributed upon or with respect to any of the Pledged Securities and/or the Additional Securities pursuant to a recapitalization or reclassification of the capital stock of an issuer of any such issuer, or pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or reorganization of any such issuer with or into another corporation, or otherwise, then the shares, cash, obligations or other property so paid or distributed shall be delivered by Pledgor to Escrow Agent forthwith upon its receipt thereof, to be held by Escrow Agent as additional Collateral hereunder, and all of such property (other than cash) shall constitute Pledged Securities and/or the Additional Securities for all purposes of this Pledge Agreement. 7. Unregistered Securities. If at the time of any sale of the Collateral in accordance with the terms of this Agreement the same or any part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act of 1933, as amended, or there is no exemption available 4 under such Act, then Pledgee, in its sole and absolute discretion, is authorized to sell such Collateral or such part thereof by private sale or sales in such manner and under such circumstances as Pledgee reasonably may deem necessary or advisable in order that such sale may legally be effected without registration. Pledgor agrees that private sales so made may be at prices and on other terms less favorable to the seller than if such Collateral were sold at public sale, and that Pledgee has no obligation to delay the sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral, even if such issuer would agree, to register such Collateral for public sale under such Act. Pledgor agrees that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. 8. No Waiver. Failure of Pledgee to exercise any right or remedy under this Agreement or any other agreement between Pledgee and Pledgor, or otherwise, or delay by Pledgee in exercising same, will not operate as a waiver thereof. No waiver by Pledgee will be effective unless and until it is in writing and signed by Pledgee. No waiver of any condition or performance will operate as a waiver of any subsequent condition or obligation. Pledgee shall have no obligation to resort to the Collateral or any other security which is or may become available to it. 9. Miscellaneous. (a) This Agreement, any amendments or replacement hereof, and the legality, validity and performance of the terms hereof, shall be governed by and enforced and construed in accordance with the laws of the State of California without regard to conflicts of laws and principles thereof. (b) This Agreement and the rights, powers and duties set forth herein shall be binding upon Pledgor, its employees, shareholders, agents, officers, directors, representatives and successors and shall inure to the benefit of the successors and assigns of Pledgee and, in the event of any transfer or assignment of rights by Pledgee, the rights and privileges herein conferred upon Pledgee shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This Agreement may not be transferred or assigned without written consent. (c) In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith 5 and shall be modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any applicable law shall not effect the validity or enforceability of any other provisions hereof. (d) Notices required or permitted to be given under this Agreement shall be in writing and may be delivered personally or sent to a party by airmail or first class mail, postage prepaid and addressed to such party at the address set forth below its signature, or to such other address furnished by notice given in accordance with this paragraph. Any such notice shall be deemed to have been given, (i) if sent by mail, five days after the date mailed, and (ii) if delivered personally, on the date of delivery. (e) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same document. (f) This Agreement and the security interest and pledge hereunder shall terminate upon the full and final performance of all Obligations of Pledgor and payment of all indebtedness secured hereby. At such time, Pledgee shall promptly reassign to Pledgor all of the Collateral hereunder which has not been sold, disposed of, retained or applied by Pledgee in accordance with the terms hereof. 6 IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above. ELK INTERNATIONAL CORPORATION, LTD. By: /s/Elkana Faiwuszewicz ----------------------- Title: Address: P.O. Box N-3247 Nassau, Bahamas HARDEE CAPITAL PARTNERS, L.P. By: /s/David W. Hardee ---------------------- David W. Hardee Its General Partner Address: 258 Amalfi Drive Santa Monica, CA 90402 7 SCHEDULE 1 Description of Pledged Shares Common Stock Certificate Number Number of Shares ------------------ ---------------- NU 44461 137,500 8 [Form of front of Stock Certificate] 00044461 [Kleer-Vu logo] Number Shares ----------------- --------------- NU-44461 **137500** KLEER-VU INDUSTRIES, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE COMMON STOCK CUSIP 498494 20 2 SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT HARDEE CAPITAL PARTNERS LP ***137500******* is the owner of 258 AMALFI DRIVE ****137500****** SANTA MONICA, CA 90402 *****137500***** ******137500**** *******137500*** **ONE HUNDRED THIRTY-SEVEN THOUSAND FIVE HUNDRED** Full Paid and Non-Assessable Shares of the COMMON Stock of the par value of $.10 each of KLEER-VU INDUSTRIES, INC. transferable on the books of the Corporation by the holder hereof, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented thereby are issued and shall be held [????????] of the provisions of the Certificate of Incorporation, and all Amendments thereto. This Certificate is not valid unless countersigned by the Transfer Agent and Registrar. IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed by the facsimile signatures of its duly authorized officers and a facsimile of its corporate seal to be hereunto fixed. Dated: DEC 30, 1993 /s/ Michael R. [ILLEGIBLE] /S/ [ILLEGIBLE] SECRETARY CHAIRMAN [SEAL] 006777517 THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. THIS CERTIFICATE REPRESENTS SHARES OF NEW COMMON STOCK EX-10.6 7 ESCROW AGREEMENT ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Agreement") dated as of September 29, 1993, is entered into by and among Elk International Corporation, Ltd. ("Elk"), Hardee Capital Partners, L.P. ("HCP"), Hee Poong Park ("Park") and City National Bank, as escrow agent ("Escrow Agent"). WHEREAS, the parties to this Agreement are parties to the letter agreement dated as of September 29, 1993 (the "Letter Agreement"). WHEREAS, pursuant to the Letter Agreement, the parties to this Agreement have agreed to open an escrow and to deposit certain stock certificate with the escrow agent. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Escrows. Upon receipt of the following certificates and notes, Escrow Agent shall hold the certificates and notes as follows: (a) Park Escrow. 112,500 shares of common stock, $.10 par value ("Common Shares"), of Kleer-Vu Industries, Inc. (the "Company") registered in the name of Park, and accompanying stock powers in blank. (b) HCP Escrow. 137,500 Common Shares registered in the name of HCP, and accompanying stock powers in blank. (c) Elk/P Escrow. 87,500 Common Shares registered in the name of Elk and accompanying stock powers executed in blank by Elk and a promissory note in the principal amount of $1,444,445 executed by Park in favor of Elk dated January 3, 1994 (the "Park Note") and stock powers executed in blank by Park relating to 87,500 Common Shares. (d) Elk/H Escrow. 112,500 Common Shares registered in the name of Elk and accompanying stock powers executed in blank by Elk and a promissory note in the principal amount of $1,444,445 executed by HCP in favor of Elk dated January 3, 1994 (the "HCP Note") and stock powers executed in blank by HCP relating to 112,500 Common Shares. 2. January Deliveries. On January 3, 1994: (a) Escrow Agent shall deliver the Park Note to Elk and submit the 87,500 Common Shares in the Elk/P Escrow in accordance with the provisions of paragraph 3. (b) Escrow Agent shall deliver the HCP Note to Elk and submit the 112,500 Common Shares in the Elk/H Escrow in accordance with the provisions of paragraph 3. 3. Reissuance of Stock Certificates. On January 3, 1994, or as soon thereafter as possible, Escrow Agent shall submit (a) the 87,500 Common Shares held in the Elk/P Escrow to Continental Stock Transfer & Trust Company, 2 Broadway, New York, New York 10004, transfer agent for the Company ("Transfer Agent"), together with the accompanying stock powers executed by Elk, to be reissued in the name of Park and returned to Escrow Agent, and (b) the 112,500 Common Shares held in the Elk/H Escrow to Transfer Agent, together with the accompanying stock powers executed by Elk, to be reissued in the name of HCP and returned to Escrow Agent. Escrow Agent shall have no obligation pursuant to this paragraph other than to submit to Transfer Agent the certificates and stock powers in the form delivered to Escrow Agent. 4. Deliveries. Escrow Agent shall make the following deliveries: (a) The 112,500 Common Shares held in the Park Escrow, and accompanying stock powers in blank: (i) to Park, 20 calendar days after written notice from Park to Escrow Agent and Elk (a copy of which notice Escrow Agent shall mail to Elk in accordance with the provisions of paragraph 6(a)) that Park has paid or otherwise satisfied in full the promissory note in the principal amount of $805,555 executed by Park in favor of Elk dated the date hereof (the "HPP Note") and the Park Note; or (ii) to Elk, 20 calendar days after written notice from Elk to Escrow Agent and Park (a copy of which notice Escrow Agent shall mail to Park in accordance with the provisions of paragraph 6(a)) that an Event of Default (as defined in the Security and Pledge Agreement between Park and Elk dated as of 2 the date hereof and/or dated as of January 3, 1994) has occurred and is continuing. (b) The 137,500 Common Shares held in the HCP Escrow, and accompanying stock powers in blank: (i) to HCP, 20 calendar days after written notice from HCP to Escrow Agent and Elk (a copy of which notice Escrow Agent shall mail to Elk in accordance with the provisions of paragraph 6(a)) that HCP has paid or otherwise satisfied in full the promissory note in the principal amount of $805,555 executed by HCP in favor of Elk dated the date hereof (the "Hardee Note") and the HCP Note; or (ii) to Elk, 20 calendar days after written notice from Elk to Escrow Agent and HCP (a copy of which notice Escrow Agent shall mail to HCP in accordance with the provisions of paragraph 6(a)) that an Event of Default (as defined in the Security and Pledge Agreement between HCP and Elk dated as of the date hereof and/or dated as of January 3, 1994) has occurred and is continuing. (c) The 87,500 Common Shares held in the Elk/P Escrow, and accompanying stock powers in blank: (i) to Park, 20 calendar days after written notice from Park to Escrow Agent and Elk (a copy of which notice Escrow Agent shall mail to Elk in accordance with the provisions of paragraph 6(a)) that Park has paid or otherwise satisfied in full the Park Note and the HPP Note; or (ii) to Elk, 20 calendar days after written notice from Elk to Escrow Agent and Park (a copy of which notice Escrow Agent shall mail to Park in accordance with the provisions of paragraph 6(a)) that an Event of Default (as defined in the Security and Pledge Agreement between Park and Elk dated as of January 3, 1994 and/or dated as of the date hereof) has occurred and is continuing. 3 (d) The 112,500 Common Shares held in the Elk/H Escrow, and accompanying stock powers in blank: (i) to HCP, 20 calendar days after written notice from HCP to Escrow Agent and Elk (a copy of which notice Escrow Agent shall mail to Elk in accordance with the provisions of paragraph 6(a)) that HCP has paid or otherwise satisfied in full the HCP Note and the Hardee Note; or (ii) to Elk, 20 calendar days after written notice from Elk to Escrow Agent and HCP (a copy of which notice Escrow Agent shall mail to HCP in accordance with the provisions of paragraph 6(a)) that an Event of Default (as defined in the Security and Pledge Agreement between Park and Elk dated as of January 3, 1994 and/or dated as of the date hereof) has occurred and is continuing. 5. Voting. (a) Until such time as the Common Shares held in the Park Escrow and the HCP Escrow are delivered in accordance with the provisions of this Agreement, Park and HCP, respectively, shall retain the right to vote such shares on any matter on which such shares are entitled to be voted, and shall be entitled to receive directly all dividends and other distributions declared and paid with respect thereto. Escrow Agent shall cooperate with Park and HCP to the extent necessary to allow Park and HCP, respectively, to exercise these rights. (b) Until January 3, 1994, Elk shall retain the right to vote the Common Shares held in the Elk/P Escrow and the Elk/H Escrow on any matter on which such shares are entitled to be voted, and shall be entitled to receive directly all cash dividends. Escrow Agent shall cooperate with Elk to the extent necessary to allow Elk to exercise these rights. If and to the extent that the number of Common Shares held in the Elk/P Escrow or the Elk/H Escrow shall be increased or reduced by a change in par value, split-up, reclassification, distribution of a dividend payable in shares, or the like, the number of Common Shares subject to the Elk/P Escrow and the Elk/H Escrow shall be proportionately adjusted. If Elk receives any dividend (other than a cash dividend) on the Common Shares held in the Elk/P Escrow or the Elk/H Escrow, Elk shall deliver it to the Escrow Agent with instructions to add it to the appropriate escrow. 4 (c) After January 3, 1994 and until such time as the Common Shares held in the Elk/P Escrow and the Elk/H Escrow are delivered in accordance with the provisions of this Agreement, Park and HCP, respectively, shall retain the right to vote such shares on any matter on which such shares are entitled to be voted, and shall be entitled to receive directly all dividends and other distributions declared and paid with respect thereto. Escrow Agent shall cooperate with Park and HCP to the extent necessary to allow Park and HCP, respectively, to exercise these rights. Notwithstanding the foregoing, any votes taken or dividends paid during the period such Common Shares are submitted to Transfer Agent in accordance with paragraph 3 shall not be the concern of Escrow Agent. 6. Notices. (a) All notices, demands or other communications hereunder, other than to the Escrow Agent shall be in writing and shall be deemed to have been duly given (i) if sent by United States mail, certified or registered, with return receipt requested, or (ii) if delivered in person: If to Elk, at Elk International Corporation, Ltd. P.O. Box N-3247 Nassau, Bahamas Attn: with a copy to: Patrick Strong, Esq. 3 River Way, Suite 1460 Houston, Texas 77056 If to HCP, at Hardee Capital Partners, L.P. 258 Amalfi Drive Santa Monica, California 90402 Attn: David W. Hardee 5 If to Park, at: Hee Poong Park 2415 S. Sierra Drive Compton, California 90220 or at such other address as may have been furnished by such person in writing to the other parties. Any such notice, demand or other communication shall be deemed to have been given, (i) if sent by mail, five days after the date mailed, and (ii) if delivered in person, on the date of delivery. (b) All notices and instructions to Escrow Agent must be in writing, refer to the number assigned to the Escrow, and be delivered personally or mailed, certified or registered mail, return receipt requested, addressed to City National Bank, Escrow Department, 400 North Roxbury Drive, 8th Floor, Beverly Hills, California 90210. All notices and instructions will be deemed given when received by Escrow Agent, as shown on a receipt therefor. 7. Escrow Agent. (a) City National Bank Escrow Instructions (the "General Provisions") attached hereto as Exhibit 1 are incorporated herein by reference. To the extent that there is a conflict between the provisions of this Agreement and the general Provisions, the General Provisions shall control. Without limiting the generality of the Letter Agreement, the Park Note, the HCP Note or any security and pledge agreement, nor shall Escrow Agent have any obligation to verify whether or not any default shall have occurred under the terms thereof. (b) Park and HCP shall each pay $1,250 to Escrow Agent by October 1, 1993 as Escrow Agent's fee. Unless other payment arrangements are agreed to by Escrow Agent in writing, Escrow Agent may withhold from any deliveries any unpaid fees. 8. This Agreement may only be amended in writing executed by the parties hereto effected by such amendment. 6 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. ELK INTERNATIONAL CORPORATION, LTD By: /s/Elkana Faiwuszewicz -------------------------- Its: President HARDEE CAPITAL PARTNERS, L.P. By: /s/David W. Hardee ---------------------- General Partner /s/Hee Poong Park ----------------- HEE POONG PARK CITY NATIONAL BANK, as Escrow Agent /s/[ILLEGIBLE] Vice President Escrow No.: 32891-SGB Exhibit 1 YOU ARE FURTHER INSTRUCTED AND IT IS AGREED AS FOLLOWS: 1. Investment and Disbursement of Funds. (a) Unless otherwise provided elsewhere in these instructions, or unless otherwise instructed by a party authorized to give such instructions, all monies deposited into the Escrow will be placed in an interest bearing City National Bank Money Market Investment Account. Interest will accrue beginning the next business day following the deposit, but will not be paid until Escrow Holder receives a signed, completed IRS Form W-9. In the event Escrow Holder does not receive a signed, completed Form W-9 by the earlier of (i) the close of the Escrow, or (ii) the last business day of the current calendar year, all accrued interest will be forfeited. (b) Under no circumstances will Escrow Holder be required to disburse any monies deposited into the Escrow until any check, draft or other instrument so deposited has been collected in good funds. 2. Exculpation. Escrow Holder will not be liable for: (a) The genuineness, sufficiency, correctness as to form, manner of execution or validity of any instrument deposited in the Escrow, nor the identity, authority or rights of any person executing the same; (b) Any failure by any party other than Escrow Holder to keep or comply with any of the provisions of these Escrow Instructions or any agreement, contract or other instrument referred to herein; (c) The failure of any party to transmit, or any delay in transmitting, any funds or other materials to be deposited into the Escrow to Escrow Holder; or (d) The occurrence or non-occurrence of any event outside of the Escrow, or Escrow Holder's failure to take any action with respect thereto unless Escrow Holder is notified in writing of such event by the party specified in these Escrow Instructions to give such notice. Escrow Holder's duties hereunder shall be limited to the safekeeping of monies, instruments or other documents received by Escrow Holder into the Escrow, and for the disposition of same in accordance with these Escrow Instructions and any further instructions pursuant to these Escrow Instructions. 3. Interpleader. In the event conflicting demands are made or notices served upon Escrow Holder with respect to the Escrow, Escrow Holder shall have the absolute right at its election to do either or both of the following: (a) Withhold and stop all further proceedings in, and performance of, this Escrow; or (b) File a suit in interpleader and obtain an order from the court requiring the parties to litigate their several claims and rights among themselves. In the event such interpleader suit is brought, Escrow Holder shall be fully released from any obligation to perform any further duties imposed upon it hereunder, and the parties shall pay Escrow Holder all costs, expenses and reasonable attorneys' fees expended or incurred by Escrow Holder, the amount thereof to be fixed and a judgment thereof to be rendered by the court in such suit. 4. Indemnity. The parties further agree to pay on demand, and to indemnify and hold Escrow Holder harmless from and against, all costs, damages, judgments, attorney's fees, expenses, obligations and liabilities of any kind or nature which, in good faith, Escrow Holder may incur or sustain in connection with or arising out of the Escrow, and Escrow Holder is hereby given a lien upon all the rights, titles and interest of the parties in monies and other property deposited in the Escrow, to protect Escrow Holder's rights and to indemnify and reimburse Escrow Holder under these Escrow Instructions. 5. Resignation of Escrow Holder. Escrow Holder may resign herefrom upon fourteen (14) days' written notice to the parties and shall thereupon be fully released from any obligation to perform any further duties imposed upon it hereunder. Escrow Holder will transfer all files and records relating to the Escrow to any successor escrow holder upon receipt of a copy of executed escrow instructions designating such successor. 6. Other. (a) Time is of the essence of these and all additional or changed instructions. (b) These Escrow Instructions may be executed in counterparts, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original, and said counterparts together shall constitute one and the same instrument. (c) These Escrow Instructions shall be governed by, and shall be construed according to, the laws of the State of California. Any litigation instituted by any party with respect to the Escrow or any act or omission of Escrow Holder shall, if Escrow Holder is made a party thereto, be instituted only in a court of appropriate jurisdiction in the County of Los Angeles, and each of the parties hereby consents to the jurisdiction of such court. (d) All liabilities and obligations of the parties hereto shall be joint and several, unless otherwise specified herein. 7. Instructions and Amendments. All notices and instructions to Escrow Holder must be in writing, refer to the number assigned to the Escrow shown on the reverse hereof and be delivered personally or mailed, certified or registered mail, return receipt requested, addressed to City National Bank, Escrow Department, 400 North Roxbury Drive, 8th Floor, Beverly Hills, California 90210. All such notices and instructions will be deemed given when received by Escrow Holder, as shown on a receipt therefor. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. ELK INTERNATIONAL CORPORATION, LTD By: /s/Elkana Faiwuszewicz -------------------------- Its: President HARDEE CAPITAL PARTNERS, L.P. By: /s/David W. Hardee ---------------------- General Partner /s/Hee Poong Park ----------------- HEE POONG PARK CITY NATIONAL BANK, as Escrow Agent ---------------------- Vice President Escrow No.: 32891-SGB [letterhead of Skadden, Arps, Slate, Neagher & Flom] December 28, 1993 Ms. Sue Behning City National Bank Escrow Department 400 North Roxbury Drive, 8th Floor Beverly Hills, California 90210 Re: Escrow No. 32891-SGB Dear Ms. Behning: Enclosed is the Amendment to Escrow Agreement (the "Amendment") executed by all of the parties (other than City National Bank) to the Escrow Agreement dated as of September 29, 1993 relating to Escrow No. 32891-SGB. Please execute and return one copy of the enclosed signature page to the Amendment. Also enclosed is a stock power executed by Elk International Corporation, Inc. contemplated by the Amendment. Please take the actions specified by the Amendment as soon as possible. Please call me at (213) 687-5266 if you have any questions. Very truly yours, /s/Ray Sandona Ray Sandona cc: H.P. Park David Hardee Daniel Dror Barry Reifler Patrick Strong Joseph Giunta AMENDMENT TO ESCROW AGREEMENT THIS AMENDMENT TO ESCROW AGREEMENT (this "Agreement") dated as of December 6, 1993, is entered into by and among Elk International Corporation, Ltd. ("Elk"), Hardee Capital Partners, L.P. ("HCP"), Hee Poong Park ("Park") and City National Bank as escrow agent ("Escrow Agent"). WHEREAS, the parties to this Agreement are parties to the Escrow Agreement dated as of September 29, 1993 (the "Escrow Agreement"). WHEREAS, Kleer-Vu Industries, Inc. (the "Company") has declared a 20% stock dividend (the "Stock Dividend") on its common stock, $.04 par value per share (the "Common Shares"), payable October 15, 1993 to holders of record on August 16, 1993. WHEREAS, the Escrow Agent has received the following certificates for Common Shares issued in the name of Elk in connection with the Stock Dividend (the "Dividend Shares"): Certificate No. Number of Shares --------------- ---------------- NU 44348 2,977 NU 44349 10,269 NU 44350 20,773 NU 44351 56,227 WHEREAS, the parties desire to instruct the Escrow Agent on the treatment of the Dividend Shares in accordance with the provisions of the Escrow Agreement and the letter agreement among Elk, HCP, Park and others dated September 29, 1993. NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows: 1. The Escrow Agent is hereby instructed to submit the Dividend Shares to the Transfer agent (as defined in the Escrow Agreement) with a stock power executed by Elk with instructions to reissue such shares in the following names and amounts (after such reissuance, the "Reissued Shares") and to return the Reissued Shares to the Escrow Agent: Name Number of Shares ---- ---------------- Park 22,500 HCP 27,500 Elk 17,500 Elk 22,500 Elk 246 2. Upon receipt by the Escrow Agent of the Reissued Shares, they shall be held as follows: a. the 22,500 Reissued Shares in the name of Park shall be held in accordance with the provisions of Section 1(a) of the Escrow Agreement, and all references in the Escrow Agreement to the 112,500 Common Shares described in Section 1(a) of the Escrow Agreement shall be deemed also to refer to such 22,500 Reissued Shares; b. the 27,500 Reissued Shares in the name of HCP shall be held in accordance with the provisions of Section 1(b) of the Escrow Agreement, and all references in the Escrow Agreement to the 137,500 Common Shares described in Section 1(b) of the Escrow Agreement shall be deemed also to refer to such 27,500 Reissued Shares; c. the 17,500 Reissued Shares in the name of Elk shall be held in accordance with the provisions of Section 1(c) of the Escrow Agreement, and all references in the Escrow Agreement to the 87,500 Common Shares described in Section 1(c) of the Escrow Agreement shall be deemed also to refer to such 17,500 Reissued Shares; d. the 22,500 Reissued Shares in the name of Elk shall be held in accordance with the provisions of Section 1(d) of the Escrow Agreement, and all references in the Escrow Agreement to the 112,500 Common Shares described in Section 1(d) of the Escrow Agreement shall be deemed also to refer to such 22,500 Reissued Shares; and e. the 246 Reissued Shares in the name of Elk shall be held in accordance with the provisions of Section 1(c) of the Es- 2 crow Agreement as part of the 87,500 Common Shares described therein. 3. This Agreement may be signed in one or more counterparts, each of which shall be deemed to be an original but all of which shall together constitute one and the same agreement. 3 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. ELK INTERNATIONAL CORPORA- TION, LTD. By:/s/ Elkana Faiwuszewicz -------------------------- President HARDEE CAPITAL PARTNERS, L.P. By: /s/David W. Hardee ---------------------- General Partner /s/Hee Poong Park ----------------- HEE POONG PARK CITY NATIONAL BANK, as Escrow Agent By: --------------------------- Sue Behning, Escrow Officer 4 STOCK POWER FOR VALUE RECEIVED, ELK INTERNATIONAL CORPORATION LTD., a Bahamas corporation, hereby sells, assigns and transfers unto Hee Poong Park 22,500 shares Hardee Capital Partners, L.P. 27,500 shares - ------------------------------------------------ Elk International Corporation Ltd. 17,500 shares Elk International Corporation Ltd. 22,500 shares - ------------------------------------------------ Elk International Corporation Ltd. 246 shares (_______) Shares of the Common Stock of Kleer-Vu Industries, Inc. standing in the name of Elk International Corporation Ltd. on the books of said Kleer-Vu Industries, Inc., represented by Certificate(s) No(s.) NN44348, NN44349, NN44350 and NN44351 herewith, and do hereby irrevocably constitute and appoint ___________________ attorney to transfer the said stock on the books of said Corporation with full power of substitution in the premises. Elk International Corporation, Ltd. Dated: By: /s/ Elkana Faiwuszewicz December 6, 1993 ---------------------------- President SIGNATURE GUARANTEED MEDALLION GUARANTEED PAINEWEBBER INC. [ILLEGIBLE] - -------------------- AUTHORIZED SIGNATURE X0002212 NYSE, INC. MEDALLION SIGNATURE PROGRAM 05501 [City National Bank letterhead] FAX TRANSMITTAL COVER SHEET DATE: 9/29/94 ESCROW #: 46830005 To: Rebekah FAX #: (713) 334-5090 PHONE #: ________________ FROM: TERRI GIZZO - (310) 550-5419 REGARDING: Elk/Hardee/Park ================================================================================ SPECIAL INSTRUCTIONS/COMMENTS: Copies of all Kleer-Vu Industries Stock Certificates in file: Elk Int'l 689 #NU44556 Hardee Capital Part 137,500 44461 Hee Pong Park 112,500 44462 Hardee Capital 22,500 44555 Hardee Capital 27,500 44554 Hardee Capital 112,500 44553 Hee Pong Park 17,500 44552 Hee Pong Park 22,500 44551 Hee Pong Park 87,500 44550 ================================================================================ _____ PLEASE REVIEW AND ADVISE _____ IF APPROVED, PLEASE PHOTOCOPY, SIGN AND RETURN VIA FAX, WITH HARD COPY TO TRUST DEPARTMENT VIA MAIL [ X ] RETAIN FOR YOUR RECORDS We are transmitting a total of 10 pages, including this sheet. Direct your inquiry regarding an unsuccessful transmission or illegible copy to Terri at (310) 550-5419. Rebekah--call me tomorrow if you need to--I'm leaving ill EX-10.7 8 RELEASE AGREEMENT RELEASE AGREEMENT This Release Agreement (this "Agreement") is entered into by and between Hardee Capital Partners, L.P., David W. Hardee, Hee Poong Park and Kleer-Vu Industries, Inc. (collectively, the "H/P/K Parties") and Elk International Corporation, Ltd. and Daniel Dror (collectively, the "E/D Parties") as of September 29, 1993. WHEREAS, the H/P/K Parties and E/D Parties are among the parties to that letter agreement dated September 29, 1993 (the "Letter Agreement"). WHEREAS, as part of the transactions contemplated by the Letter Agreement, and as additional consideration therefore, the H/P/K Parties and E/D Parties have agreed to enter into this Agreement. NOW, THEREFORE, based upon the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. General Release. As of the date of this Agreement, in consideration of the mutual general releases contained herein, the parties promise, agree and generally release as follows: (a) As of the date of this Agreement, except as to such rights or claims as may be created by this Agreement and the Letter Agreement and the transactions contemplated thereby, the H/P/K Parties hereby release, remise and forever discharge the E/D Parties and their respective parent entities, affiliates, subsidiaries, predecessors, assignors, successors, assignees, directors, officers, agents, partners, partnerships, stockholders and employees from any and all claims, demands, and cause or causes of action existing as of the date of this Agreement and arising out of, connected with, or relating or incidental to the dealings between the H/P/K Parties and E/D Parties prior to and including the date of this Agreement, including, without limitation, all matters relating to pending claims of the Resolution Trust Corporation and the Federal Insurance Deposit Corporation. (b) As of the date of this Agreement, except as to (i) such rights or claims as may be created by this Agreement and the Letter Agreement and the transactions contemplated thereby, the E/D Parties hereby release, remise and forever discharge the H/P/K Parties and their respective parent entities, affiliates, subsidiaries, predecessors, assignors, successors, assignees, directors, officers, agents, partners, partnerships, stockholders and employees from any and all claims, demands, and cause or causes of action existing as of the date of this Agreement and arising out of, connected with, or relating or incidental to the dealings between the H/P/K Parties and E/D parties prior to and including the date of this Agreement. 2. Section 1542. Each party to this Agreement specifically waives the benefit of the provisions of Section 1542 of the Civil Code of the State of California, as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." 3. Indemnification. (a) In addition to any other indemnification existing on the date hereof between the E/d Parties and Kleer-Vu Industries, Inc. (the "Company"), the Company shall indemnify and hold harmless the E/D Parties and their respective agents, representatives, employees, officers, directors, stockholders and affiliates (collectively, the "Indemnified Persons"), to the extent lawful, from and against all claims, liabilities, losses, damages and expenses related to or arising out of the transactions contemplated by the Letter Agreement, other than any claims, liabilities, losses, damages and expenses arising under or based upon willful misconduct or gross negligence. (b) If any action, suit or proceeding (a "Proceeding") shall be brought or asserted against any Indemnified Party for which indemnification shall be sought from the Company, such Indemnified Party shall promptly notify the Company thereof in writing. The Company shall have the right, exercisable by giving written notice to an Indemnified Person within 30 days after receipt of such written notice from the Indemnified Person, to assume, at its expense, the defense of any such Proceeding; provided, however, that an Indemnified Person shall have the right to employ separate counsel in any such Proceeding, and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person. If the Company assumes the defense of any Proceeding, the Company may compromise or settle such Pro- 2 ceeding without the Indemnified Persons' consent if there is no finding or admission of liability and the sole relief is monetary damages that are paid in full by the Company. The Company shall not be bound by or liable for any compromise or settlement of any Proceeding effected without its consent, which shall not be unreasonably withheld. 4. Representations and Warranties. Each of the parties to this Agreement represents and warrants to, and agrees with, each other party hereto, as follows: (a) Each party has received independent legal advice from its attorneys with respect to the advisability of executing this Agreement and with respect to the meaning of California Civil Code Section 1542. (b) No party (nor any officer, agent, employee, representative, or attorney of or for any party) has made any statement or representation to any other party regarding any fact relied upon in entering into this Agreement, and each party does not rely upon any statement, representation or promise of any other party (or of any officer, agent, employee, representative, or attorney for any other party), in executing this Agreement, except as expressly stated in this Agreement. (c) Each party to this Agreement has made such investigation of the facts pertaining to this Agreement, and of all the matters pertaining thereto, as it deems necessary. (d) Each party or responsible officer thereof has read this Agreement and understands the contents hereof. Each of the officers executing this Agreement on behalf of their respective corporations is empowered to do so and thereby binds such respective corporation. (e) In entering into this Agreement each party assumes the risk of any misrepresentation, concealment or mistake. If any party should subsequently discover that any fact relied upon by it in entering into this Agreement was untrue, or that any fact was concealed from it, or that its understanding of the facts or of the law was incorrect, such party shall not be entitled to any relief in connection therewith, including, without limiting the generality of the foregoing, any alleged right or claim to set aside or rescind this Agreement. This Agreement is intended to be and is final and binding between the parties hereto, regardless of any claims of misrepresentation, promise made without the intention 3 to perform, concealment of fact, mistake of fact or law, or of any other circumstance whatsoever. (f) Each party has not heretofore assigned, transferred, or granted, or purported to assign, transfer, or grant, any of the claims, demands, and cause or causes of action disposed of by this Agreement. (g) Each term of this Agreement is contractual and not merely a recital. (h) Each party is aware that it may hereafter discover claims or facts in addition to or different from those it now knows or believes to be true with respect to the matters related herein. Nevertheless, it is the intention of the parties to fully, finally and forever settle and release all such matters, and all claims relative thereto, that do now exist, may exist, or heretofore have existed between them. In furtherance of such intention, the releases given herein shall be and remain in effect as full and complete mutual releases of all such matters, notwithstanding the discovery or existence of any additional or different claims or facts relative thereto. (i) No party has entered into this Agreement under duress. (j) No party has been coerced to enter into this Agreement. 5. Notices. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been duly given (i) if sent by United States mail, certified or registered, with return receipt requested, or (ii) if delivered in person: If to Elk International Corporation, at Elk International Corporation, Ltd. P.O. Box N-3247 Nassau, Bahamas Attn: If to Daniel Dror, at 4000 Towerside Terrace #605 Miami, Florida 33138-2236 4 with a copy to: Patrick Strong, Esq. 3 River Way, Suite 1460 Houston, Texas 77056 If to the Company, at Kleer-Vu Industries, Inc. 2415 S. Sierra Drive Compton, California 90220 Attn: President If to Hardee Capital Partners, at Hardee Capital Partners, L.P. 258 Amalfi Drive Santa Monica, California 90402 Attn: David W. Hardee If to David Hardee, at 258 Amalfi Drive Santa Monica, California 90402 If to Hee Poong Park, at: Hee Pong Park 2415 S. Sierra Drive Compton, California 90220 or at such other address as may have been furnished by such person in writing to the other parties. Any such notice, demand or other communication shall be deemed to have been given, (i) if sent by United States mail, certified or registered, five days after the date mailed, and (ii) if delivered in person, on the date of delivery. 5 6. Miscellaneous. (a) This Agreement shall be deemed to have been executed and delivered within the State of California, and the rights and obligations of the parties hereto shall be construed and enforced in accordance with, and governed by, the laws of the State of California. (b) This Agreement is the entire Agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements and discussions. This Agreement may be amended only by an agreement in writing, signed by the parties hereto. (c) This Agreement is binding upon and shall inure to the benefit of the parties hereto, their respective agents, employees, representatives, officers, directors, divisions, subsidiaries, affiliates, assigns, heirs, successors in interest and shareholders. (d) Each party has cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party. (e) In the event of litigation relating to this Agreement, the prevailing party shall be entitled to attorneys' fees. (f) This Agreement may be executed in counterparts, and when each party has signed and delivered at least one such counterpart, each counterpart shall be deemed an original, and, when taken together with other signed counterparts, shall constitute one agreement, which shall be binding upon and effective as to all parties. 6 IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above. ELK INTERNATIONAL CORPORATION, LTD. By: /s/ Elkana Faiwuszewicz ------------------------- Title: President /s/ Daniel Dror ------------------------- DANIEL DROR HARDEE CAPITAL PARTNERS, L.P. By: /s/ Daniel W. Hardee ------------------------- Daniel W. Hardee Its General Partner /s/ David W. Hardee ------------------------- DAVID W. HARDEE /s/ Hee Poong Park ------------------------- HEE POONG PARK KLEER-VU INDUSTRIES, INC. By: /s/ [ILLEGIBLE] ---------------------- Title: 7 EX-10.8 9 GUARANTY AGREEMENT GUARANTY AGREEMENT THIS GUARANTY AGREEMENT (the "Agreement") is made and entered into as of September 29, 1993 by David W. Hardee ("Guarantor"), in favor of Elk International Corporation, Ltd. ("Elk"). WHEREAS, Hardee Capital Partners, L.P. ("HCP"), Elk and others are parties to that certain letter agreement dated September 29, 1993 (the "Letter Agreement"); WHEREAS, HCP is the maker on that certain promissory note in the principal amount of $805,555 in favor of Elk dated the date hereof (the "Note"); WHEREAS, pursuant to the Letter Agreement, Guarantor has agreed to execute this Agreement is favor of Elk. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, Guarantor hereby agrees for the benefit of Elk as follows: 1. Guaranty. Guarantor hereby unconditionally and irrevocably guarantees to Elk the timely payment and performance by HCP of all of its obligations at any time owing or outstanding pursuant to the Note (the "Guarantied Obligations"). 2. Nature of the Guaranty. The obligations of the Guarantor under this Guaranty shall be of a continuing nature, shall cover all of the Guarantied Obligations, and shall be irrevocable and unconditional, except as expressly provided herein. This Guaranty shall remain in effect until full payment and/or performance of all of the Guarantied Obligations. 3. Authorization to Deal with HCP. Elk shall have complete discretion, without giving notice to, making demand of, or obtaining the consent of, the Guarantor, to deal with HCP in such manner as Elk in its sole discretion shall decide. Accordingly, Guarantor hereby grants to Elk full authority in its sole discretion, whether before or after termination of this Guaranty, and without giving notice to, making demand of, or obtaining the consent of Guarantor, to do any or all of the following, without limiting the generality of the foregoing: (i) renew, extend, accelerate or otherwise modify or amend any term or condition of the Guarantied Obligations; (ii) settle, release, compromise or otherwise liquidate any portion of the Guarantied Obligations; (iii) accept partial payment of the Guarantied Obligations; or (iv) assign or transfer this Guaranty or any interest therein. No exercise or non-exercise by Elk of its rights, no dealing by Elk with HCP and no change, impairment or suspension of any right or remedy of Elk shall in any way affect any of Guarantor's duties or obligations hereunder or give Guarantor any recourse against Elk. 4. Demands for Payment. Demands by Elk for payment under this Guaranty may be made on any number of occasions. Each demand shall be in writing. No delay in or failure to make such demand shall deminish or in any way affect Guarantor's obligations under this Guaranty. 5. Agreements to Pay. All obligations payable by Guarantor hereunder shall be paid by Guarantor to Elk immediately upon demand, in lawful money of the United States, when such unsatisfied obligations are or become due. If a claim is made upon Elk at any time for repayment or recovery of any amount or amounts or other value received by Elk, from any source whatsoever, in payment of or on account of any of the Guarantied Obligations and Elk repays or otherwise becomes liable for all or any part of such claim by reason of the bankruptcy, insolvency or reorganization of HCP, Guarantor shall remain liable to Elk for the amount so repaid, or for which Elk otherwise is liable, to the same extent as if such amount or amounts never had been received by Elk notwithstanding any termination hereof. 6. Unenforceability of the Guarantied Obligations Against HCP. If for any reason whatsoever HCP has no legal existence or is under no legal obligation to discharge the Guaranteed Obligations (other than by reason of HCP's payment or satisfaction of all amounts due thereunder), or if the monies due under the Guaranteed Obligations cannot be recovered in full from HCP due to operation of law or for any other reason, this Guaranty shall nevertheless be binding on Guarantor to the same extent as if Guarantor at all times prior to demand by Elk for payment hereunder had been, and at the time of such demand was, the principal debtor on the Guaranteed Obligations. Notwithstanding anything to the contrary contained herein, Guarantor shall have the right to claim the benefit of any defense, set-off or counterclaim which may be asserted by or available to HCP against Elk other than the automatic stay provisions of Section 362 of the Bankruptcy Code or any provisions relating to HCP's discharge in bankruptcy. 2 7. Waivers. (a) Statute of Limitations. Guarantor waives and agrees not to exercise or take advantage of the defense of the statute of limitations in any action hereunder or for the collection or payment of any Guaranteed Obligation. If the maturity of any Guaranteed Obligation is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for purposes of this Guaranty, and without demand or notice to Guarantor. (b) Alternative Remedies, Contributions and Counterclaims. Guarantor hereby waives any right to require Elk to proceed against HCP, or to pursue any other remedy in Elk's power against HCP and further waives the right to have the property of HCP first applied to the discharge of the Guaranteed Obligations, it being agreed by Guarantor that this Guaranty is an absolute guarantee of payment and performance and not of collection, that failure of Elk to exercise any rights or remedies it may have against HCP shall in no way impair the obligation of this Guaranty, and that the liability of Guarantor hereunder is and shall be direct and unconditional. Elk may, in its sole discretion, exercise any right or remedy it may have against HCP without affecting or impairing in any manner the liability of Guarantor hereunder, except to the extent that the Guarantied Obligations are satisfied as a result thereof. Guarantor hereby waives any defense arising out of the absence, impairment or loss of any right of reimbursement, contribution or subrogation or any other right or remedy of Guarantor against HCP whether resulting from such election by Elk or otherwise. (c) Other Waivers. Guarantor hereby expressly waives the protection of, and any right to assert, in any action brought on this Guaranty or otherwise, Sections 2809, 2810, 2819, 2845, 2849, and 2850 of the California Civil Code; and any defense arising as a result of any election made by Elk under Section 9501(4) of the California Commercial Code. Guarantor waives any defenses arising as a result of any election made by Elk in any proceeding instituted under Title 11 of the United States Code (the "Bankruptcy Code"), under Section 1111(b)(2) of the Bankruptcy Code, and any defense based on any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code. None of the waivers granted in this Section 9(c) shall limit the generality of any other waiver granted in this Section 9(c), or limit any other waiver or right provided in this Agreement. All waivers by the Guarantor of rights, and all rights and remedies afforded Elk herein, and all other provisions of this Guaranty are expressly made subject to any applicable mandatory and unwaivable provi- 3 sions of law limiting, or imposing conditions upon, such waivers or the effectiveness thereof or any such rights and remedies. (d) No Subrogation. Until all of the obligations of the Guarantor with respect to the Guarantied Obligations have been performed, satisfied and discharged in full, Guarantor shall have no right of subrogation to the rights of Elk. (e) Notices. Guarantor hereby waives all presentments, demands for performance, notices of default and nonperformance by HCP, protests, notices of protest, notices of dishonor and notices of acceptance of this Guaranty and of the existence, creation or incurrence of new or additional indebtedness, notices of assignment or transfer of this Guaranty by Elk, and notices of every other kind and nature whatsoever, including those of any action or non-action on the part of HCP or Elk. 8. Miscellaneous. (a) Notices. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been duly given (i) if sent by United States mail, certified or registered, with return receipt requested, or (ii) if delivered in person: If to Elk, at Elk International Corporation, Ltd. P.O. Box N-3247 Nassau, Bahamas Attn: If to Guarantor, at David W. Hardee 258 Amalfi Drive Santa Monica, California 90402 or at such other address as may have been furnished by such person in writing to the other parties. Any such notice, demand or other communication shall be deemed to have been given, (i) if sent by mail, five days after the date mailed, and (ii) if delivered in person, on the date of delivery. 4 (b) Amendments and Waivers. Neither this Agreement nor any term hereto may be changed, waived, discharged or terminated orally or in writing, except that any term of this Agreement may be amended and the observance of any such term may be waived (either generally or in a particular instance and either retroactively or prospectively) with (but only with) the written consent of Elk, provided, however, that no such amendment or waiver shall extend to or affect any obligation not expressly waived or impair any right consequent therein. No delay or omission to exercise any right, power or remedy accruing to any party hereto shall impair any such right, power or remedy of such party nor shall be construed to be a waiver of any such right, power or remedy nor constitute any course of dealing or performance hereunder. (c) Remedies. Elk' rights and remedies under this Guaranty shall be cumulative and nonexclusive of any other rights and remedies which Elk may have under any other agreement, by operation of law or otherwise. (d) Severability. Should any Section or any part of a Section within this Agreement be rendered void, invalid or unenforceable by any court of law for any reason, such invalidity or unenforceability shall not void or render invalid or unenforceable any other Section or part of a Section in this Agreement. (e) Successors and Assigns. This Guaranty shall not be assignable by the Guarantor. This Guaranty shall be assignable by Elk and shall inure to the benefit of Elk and its successors and assigns. (f) Necessary Acts. Guarantor shall perform any further acts and execute and deliver any additional agreements, assignments, documents or instruments that may be reasonably necessary to carry out the provisions or to effectuate the purposes of this Guaranty. (g) Costs and Attorneys' Fees. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement, the prevailing party shall recover all of such party's costs, and reasonable attorneys' fees incurred in each and every such action, suit, or other proceeding, including any and all appeals or petitions therefrom. (h) Governing Law. The terms of this Agreement shall be governed by and construed in accordance with the laws of the state of California 5 applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflicts of laws. 6 IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed and delivered to Elk as of the date first written above. /s/ David W. Hardee ------------------- DAVID W. HARDEE AGREED AND ACCEPTED: ELK INTERNATIONAL CORPORATION, LTD. By: /s/Elkana Faiwuszewicz ----------------------- Its: 7 EX-10.9 10 GUARANTY AGREEMENT GUARANTY AGREEMENT THIS GUARANTY AGREEMENT (the "Agreement") is made and entered into as of January 3, 1994 by David W. Hardee ("Guarantor"), in favor of Elk International Corporation, Ltd. ("Elk"). WHEREAS, Hardee Capital Partners, L.P. ("HCP"), Elk and others are parties to that certain letter agreement dated September 29, 1993 (the "Letter Agreement"); WHEREAS, pursuant to the Letter Agreement, HCP has agreed to deliver to Elk a promissory note in the principal amount of $1,444,445 in favor of Elk dated the date hereof (the "Note"); WHEREAS, pursuant to the Letter Agreement, Guarantor has agreed to execute this Agreement in favor of Elk. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, Guarantor hereby agrees for the benefit of Elk as follows: 1. Guaranty. Guarantor hereby unconditionally and irrevocable guarantees to Elk the timely payment and performance by HCP of all of its obligations at any time owing or outstanding pursuant to the Note upon delivery thereof to Elk (the "Guarantied Obligations"). 2. Nature of the Guaranty. The obligations of the Guarantor under this Guaranty shall be of a continuing nature, shall cover all of the Guarantied Obligations, and shall be irrevocable and unconditional, except as expressly provided herein. This Guaranty shall remain in effect until full payment and/or performance of all of the Guarantied Obligations. 3. Authorization to Deal with HCP. Elk shall have complete discretion, without giving notice to, making demand of, or obtaining the consent of, the Guarantor, to deal with HCP in such manner as Elk in its sole discretion shall decide. Accordingly, Guarantor hereby grants to Elk full authority in its sole discretion, whether before or after termination of this Guaranty, and without giving notice to, making demand of, or obtaining the consent of Guarantor, to do any or all of the following, without limiting the generality of the foregoing: (i) renew, extend, accelerate or otherwise modify or amend any term or condition of the Guarantied Obligations; (ii) settle, release, compromise or otherwise liquidate any portion of the Guarantied Obligations; (ii) accept partial payment of the Guarantied Obligations; or (iv) assign or transfer this Guaranty or any interest therein. No exercise or non-exercise by Elk of its rights, no dealing by Elk with HCP and no change, impairment or suspension of any right or remedy of Elk shall in any way affect any of Guarantor's duties or obligations hereunder or give Guarantor any recourse against Elk. 4. Demands for Payment. Demands by Elk for payment under this Guaranty may be made on any number of occasions. Each demand shall be in writing. No delay in or failure to make such demand shall diminish or in any way affect Guarantor's obligations under this Guaranty. 5. Agreements to Pay. All obligations payable by Guarantor hereunder shall be paid by Guarantor to Elk immediately upon demand, in lawful money of the United States, when such unsatisfied obligations are or become due. If a claim is made upon Elk at any time for repayment or recovery of any amount or amounts or other value received by Elk, from any source whatsoever, in payment of or on account of any of the Guarantied Obligations and Elk repays or otherwise becomes liable for all or any part of such claim by reason of the bankruptcy, insolvency or reorganization of HCP, Guarantor shall remain liable to Elk for the amount so repaid, or for which Elk otherwise is liable, to the same extent as if such amount or amounts never had been received by Elk notwithstanding any termination hereof. 6. Unenforceability of the Guarantied Obligations Against HCP. If for any reason whatsoever HCP has no legal existence or is under no legal obligation to discharge the Guaranteed Obligations (other than by reason of HCP's payment or satisfaction of all amounts due thereunder), or if the monies due under the Guaranteed Obligations cannot be recovered in full from HCP due to operation of law or for any other reason, this Guaranty shall nevertheless be binding on Guarantor to the same extent as if Guarantor at all times prior to demand by Elk for payment hereunder had been, and at the time of such demand was, the principal debtor on the Guaranteed Obligations. Notwithstanding anything to the contrary contained herein, Guarantor shall have the right to claim the benefit of any defense, set-off or counterclaim which may be asserted by or available to HCP against Elk other than the automatic stay provisions of Section 362 of the Bankruptcy Code or any provisions relating to HCP's discharge in bankruptcy. 2 7. Waivers (a) Stature of Limitations. Guarantor waives and agrees not to exercise or take advantage of the defense of the statue of limitations in any action hereunder or for the collection or payment of any Guaranteed Obligation. If the maturity of any Guaranteed Obligation is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for purposes of this Guaranty, and without demand or notice to Guarantor. (b) Alternative Remedies, Contributions and Counterclaims. Guarantor hereby waives any rights to require Elk to proceed against HCP, or to pursue any other remedy in Elk's power against HCP and further waives the right to have the property of HCP first applied to the discharge of the Guaranteed Obligations, it being agreed by Guarantor that this Guaranty is an absolute guarantee of payment and performance and not of collection, that failure of Elk to exercise any rights or remedies it may have against HCP shall in no way impair the obligation of this Guaranty, and that the liability of Guarantor hereunder is and shall be direct and unconditional. Elk may, in its sole discretion, exercise any right or remedy it may have against HCP without affecting or impair in any manner the liability of Guarantor hereunder, except to the extent that the Guarantied Obligations are satisfied as a result thereof. Guarantor hereby waives any defense arising out of the absence, impairment or loss of any right of reimbursement, contribution or subrogation or any other right or remedy of Guarantor against HCP whether resulting from such election by Elk or otherwise. (c) Other Waivers. Guarantor hereby expressly waives the protection of, and any right to assert, in any action brought on this Guaranty or otherwise, Sections 2809, 2810, 2819, 2845, 2849, and 2850 of the California Civil Code; and any defense arising as a result of any election made by Elk under Section 9501(4) of the California Commercial Code. Guarantor waives any defenses arising as a result of any election made by Elk in any proceeding instituted under Title 11 of the United States Code (the "Bankruptcy Code"), under Section 1111(b)(2) of the Bankruptcy Code, and any defense based on any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code. None of the waivers granted in this Section 9(c) shall limit the generality of any other waiver granted in this Section 9(c), or limit any other waiver or right provided in this Agreement. All waivers by the Guarantor of rights, and all rights and remedies afforded Elk herein, and all other provisions of this Guaranty are expressly made subject to any applicable mandatory and unwaivable provi- 3 sions of law limiting, or imposing conditions upon, such waivers or the effectiveness thereof or any such rights and remedies. (d) No Subrogation. Until all of the obligations of the Guarantor with respect to the Guarantied Obligations have been performed, satisfied and discharged in full, Guarantor shall have no right of subrogation to the rights of Elk. (e) Notices. Guarantor hereby waives all presentments, demands for performance, notices of default and nonperformance by HCP, protests, notices of protest, notices of dishonor and notices of acceptance of this Guaranty and of the existence, creation or in currency of new or additional indebtedness, notices of assignment or transfer of this Guaranty by Elk, and notices of every other kind and nature whatsoever, including those of any action or non-action on the part of HCP or Elk. 8. Miscellaneous. (a) Notices. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been duly given (i) if sent by United States mail, certified or registered, with return receipt requested, or (ii) if delivered in person: If to Elk, at Elk International Corporation, Ltd. P.O. Box N-3247 Nassau, Bahamas Attn: If to Guarantor, at David W. Hardee 258 Amalfi Drive Santa Monica, California 90402 or at such other address as may have been furnished by such person in writing to the other parties. Any such notice, demand or other communication shall be deemed to have been given, (i) if sent by mail, five days after the date mailed, and (ii) if delivered in person, on the date of delivery. 4 (b) Amendments and Waivers. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated orally or in writing, except that any term of this Agreement may be amended and the observance of any such term may be waived (either generally or in a particular instance and either retroactively or prospectively) with (but only with) the written consent of Elk, provided, however, that no such amendment or waiver shall extend to or affect any obligation not expressly waived or impair any right consequent therein. No delay or omission to exercise any right, power or remedy accruing to any party hereto shall impair any such right, power or remedy of such party not shall be construed to be a waiver of any such right, power or remedy nor constitute any course of dealing or performance hereunder. (c) Remedies. Elk' rights and remedies under this Guaranty shall be cumulative and nonexclusive of any other rights and remedies which Elk may have under any other agreement, by operation of law or otherwise. (d) Severability. Should any Section or any part of a Section within this Agreement be rendered void, invalid or unenforceable by any court of law for any reason, such invalidity or unenforceability shall not void or render invalid or unenforceable any other Section or part of a Section in this Agreement. (e) Successors and Assigns. This Guaranty shall not be assignable by the Guarantor. This Guaranty shall be assignable by Elk and shall inure to the benefit of Elk and its successors and assigns. (f) Necessary Acts. Guarantor shall perform any further acts and execute and deliver any additional agreements, assignments, documents or instruments that may be reasonably necessary to carry out the provisions or to effectuate the purposes of this Guaranty. (g) Costs and Attorneys' Fees. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement, the prevailing party shall recover all of such party's costs, and reasonable attorneys' fees incurred in each and every such action, suit, or other proceeding, including any and all appeals or petitions therefrom. (h) Governing Law. The terms of this Agreement shall be governed by and construed in accordance with the laws of the state of California 5 applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflicts of laws. 6 IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed and delivered to Elk as of the date first written above. /s/ David W. Hardee ------------------- DAVID W. HARDEE AGREED AND ACCEPTED: ELK INTERNATIONAL CORPORATION, LTD. By: /s/ Elkana Faiwuszewicz ----------------------- Its: 7 EX-10.10 11 SECURED NON-RECOURSE NON-INTEREST BEARING PROMISSORY NOTE EXHIBIT A SECURED NON-RECOURSE NON-INTEREST BEARING PROMISSORY NOTE $1,444,445 Los Angeles, California January 3, 1994 FOR VALUE RECEIVED, Hardee Capital Partners, Ltd. ("Maker") promises to pay to Elk International Corporation, Ltd. ("Holder") at 2415 S. Sierra Drive, Compton, California 90220, or such other place as Holder may from time to time designate, the principal sum of One Million Four Hundred Forty Four Thousand Four Hundred Forty Five Dollars ($1,444,445). 1. The unpaid principal balance hereof shall be due and payable on December 31, 1995. 2. This Note shall not bear interest. 3. This Note may be prepaid in whole or in part at any time without premium or penalty on or with respect to the amounts prepaid. Maker shall have no right to reborrow any such prepaid amounts. 4. An event of default hereunder shall occur if an Event of Default (as defined in the Security and Pledge Agreement between Maker and Holder dated as of the date hereof (the "Security Agreement")) shall have occurred. If such an Event of Default occurs and is continuing, the Holder, at its option, may declare all sums due hereunder immediately due and payable without notice or demand. 5. No delay on the part of the Holder or the exercise of any power or right under this Note shall operate as a waiver of such power or right or preclude other or further exercise thereof or the exercise of any other power or right. The Maker hereby waives diligence, presentment, demand for payment, notice of dishonor or acceleration, protest and notice of protest, and any and all other notices or demands in connection with delivery, acceptance, performance, default or enforcement of this Note. 6. If any principal payment due hereunder is not paid as and when due or if any Event of Default occurs hereunder, Maker promises to pay all costs of enforcement and collection, including, but not limited to, reasonable attorneys' fees and disbursements, whether or not such enforcement and collection includes the filing of a lawsuit. 7. This Note is secured by the Security Agreement. 8. Amounts owing under this Note shall not be subject to set off of any obligations of Holder owing to Maker. 9. Notwithstanding anything herein or in the Security Agreement to the contrary, it is understood and agreed that this Note is intended to evidence a non-recourse obligation of Maker, and Holder's sole recourse in the event of a default hereunder or thereunder is against the Collateral (as defined in the Security Agreement) and the Guaranty executed by David W. Hardee in favor of Holder dated as of the date hereof. 10. This Note shall be governed by and construed in accordance with the laws of the State of California without regard to conflicts of laws and principles thereof. IN WITNESS WHEREOF, the undersigned has executed this Note on the day and year first above written. HARDEE CAPITAL PARTNERS, L.P. By: /s/ David W. Hardee ----------------------- David W. Hardee Its General Partner 2 EX-10.11 12 SECURITY AND PLEDGE AGREEMENT EXHIBIT A SECURITY AND PLEDGE AGREEMENT This Security and Pledge Agreement (the "Agreement") is made and entered into as of January 3, 1994 by and between Elk International Corporation, Ltd. ("Pledgee"), and Hardee Capital Partners, L.P. ("Pledgor"). WHEREAS, Pledgor has agreed to purchase, and Pledgee has agreed to sell, the Pledged Securities (as defined below); and WHEREAS, as part of the consideration for such purchase, Pledgor has agreed to deliver to Pledgee a promissory note in the principal amount of $1,444,445 in favor of Pledgee dated as of the date hereof (the "Note"); and WHEREAS, Pledgor has agreed to enter into this Agreement as additional consideration for acceptance by Pledgee of the Note. NOW, THEREFORE, based upon the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Grant of Security Interest in Collateral. Pledgor hereby grants to Pledgee, upon delivery of the Note to Pledgee, as security for all present and future obligations and liabilities of all kinds of Pledgor to Pledgee under the Note and this Agreement (collectively referred to as the "Obligations"), a first priority security interest in the following described property (collectively referred to as the "Collateral"): (a) the following shares (the "Pledged Shares") of Kleer-Vu Industries, Inc., a Delaware corporation (the "Company"), as more fully described in Schedule 1 hereto, and the certificates representing the Pledged Shares and all of Pledgor's rights and privileges with respect thereto, together with stock powers executed is blank: 112,500 shares of common stock, $.10 par value, of the Company (the "Common Stock"). (b) all shares of Common Stock acquired from the Company by Pledgor or its affiliates (other than the Company) after the date hereof together with the 137,500 shares of Common Stock previously acquired by Pledgor from Pledgee (the "Additional Securities"). (c) the products, proceeds and accessions of the Pledged Shares and/or the Additional Securities, including, without limitation, cash and stock dividends and additional property at any time and from time to time receivable or which may be received by Pledgee or Pledgor, or otherwise distributed or paid in Pledgee or Pledgor, in respect of or in exchange for any or all of such Pledged Securities and/or Additional Securities (the "Proceeds"). 2. Pledgor's Obligations. At any time and from time to time, upon request of Pledgee, Pledgor shall give, execute and file and/or record any notice, financing statement, continuation statement, instrument, document or agreement that Pledgee shall consider necessary or desirable to create, preserve, continue, perfect or validate any security interest granted hereunder or which Pledgee may consider necessary or desirable to exercise or enforce its rights hereunder with respect to such security interest including, without limitation, assignment of such registration rights as Pledgor may have relating to the Collateral. 3. Pledgor's Covenants. (a) Pledgor agrees hereafter not to encumber or grant a security interest in or a lien or other encumbrance on the Collateral. (b) Pledgor agrees not to dispense of any of the Collateral except in accordance with the terms of this Agreement. (c) Pledgor agrees to: (i) pay promptly the Obligations secured hereby when due; (ii) indemnify Pledgee against all loss, claims, demands and liabilities of every kind arising from the Collateral and the transactions and other agreements and undertakings contemplated hereby; (iii) pay all expenses, including reasonable attorneys' fees, incurred by Pledgee in the preservation, realization, enforcement and exercise of its rights, powers and remedies hereunder; (iv) execute and deliver such documents as Pledgee deems necessary to create, perfect and continue the security interest contemplated hereby; and (v) give Pledgee notice of any litigation filed or claim asserted against Pledgor relating to or potentially affecting the Collateral. 2 (d) Pledgor agrees: (i) if requested by Pledgee, to receive and collect the Proceeds, in trust and as the property of Pledgee, and to immediately endorse as appropriate and deliver stock Proceeds to City National Bank as Escrow Agent when requested by Pledgee in the exact form in which they are received; (ii) not to commingle the Proceeds or collections thereunder with other property; and (iii) to keep complete and accurate records regarding all of the Proceeds. 4. Voting Rights. Pledgor shall have all voting rights with respect to the Collateral until an Event of Default (as defined below) has occurred, at which time Pledgee may exercise all such voting rights. Pledge hereby grants to Pledgee an irrevocable proxy, effective upon the occurrence of an Event of Default and so long as such Event of Default shall continue, to vote the Pledged Securities in such manner and for such purposes as Pledgee shall, in its sole discretion, determine. Such proxy is coupled with an interest and shall continue in full force and effect until all of the Obligations shall be paid in full. 5. Events of Default; Remedies. (a) Each of the following shall constitute an event of default ("Event of Default") hereunder: (i) if Pledgor shall fail to make any payment on the Obligations secured hereby as and when due; (ii) if Pledgor has materially breached any provisions of this Agreement; (iii) if a receiver or a trustee of all or any part of Pledgor's property shall be appointed; (iv) if any assignment for the benefits of Pledgor's creditors shall be made; (v) if a petition in bankruptcy shall be filed by or against Pledgor and not dismissed within 120 days; (vi) if any of the Collateral shall be attached or levied upon at any time pursuant to any court order or other legal process; (vii) liquidation or dissolution of Pledgor; and (vii) if Pledgor shall generally fail to pay debts as they become due. (b) Upon the occurrence of any Event of Default, and at any time as such Event of Default is continuing, Pledgee shall be entitled to exercise all the rights, powers and remedies for the protection and enforcement of its rights in respect of the Collateral. Upon the occurrence of any Event of Default, Pledgee may declare all obligations secured hereby immediately due and payable and may proceed to enforce payment of the same and exercise any and all of the rights and remedies provided by the Uniform Commercial Code of California, as well as all other rights and remedies possessed by Pledgee. Pledgee may, as Pledgee's option, sell, assign, and deliver all or any part of the 3 Collateral at public or private sale, and may bid for and purchase all or any part of the Collateral so sold free from any right or equity of redemption. Pledgor consents to Pledgee's remedies stated herein. Pledgor waives diligence, presentment, demand for payment, notice of dishonor or acceleration, protest and notice of protest. Pledgee will give Pledgor reasonable notice of the time and place of any public or private sale and the requirements of reasonable notice shall be met if such notice is mailed, postage prepaid, to the address of Pledgor as provided for in the notice provisions of this Agreement at least ten (10) days before the time of the sale or disposition. Pledgee may apply the proceeds of any sale or disposition of Collateral available for satisfaction of Pledgor's obligations hereunder and the expenses of sale in any order of preference that Pledgee, in Pledgee's sole discretion, determines. Pledgor shall remain liable for any deficiency. 6. Dividends. (a) So long as all of the Obligations shall be paid when due, Pledgor may receive and retain all regular cash dividends declared and paid on the Pledged Securities and/or the Additional Securities. If any of the Obligations are not paid when due, all regular cash dividends paid on the Pledged Securities and/or the Additional Securities shall be received and retained by Escrow Agent as part of the collateral. If Pledgor receives any such dividend while any Obligation which is due is unpaid, it shall hold such dividend in trust for the sole purpose of delivering it in kind to Escrow Agent to be added to the Collateral. (b) In the event that any other dividend (including, without limitation, a stock dividend) or any distribution shall be declared and paid or made on or in respect of any of the Pledged Securities and/or the Additional Securities or in the event that any shares, cash, obligations or other property shall be distributed upon or with respect to any of the Pledged Securities and/or the Additional Securities pursuant to a recapitalization or reclassification of the capital stock of an issuer of any such issuer, or pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or reorganization of any such issuer with or into another corporation, or otherwise, then the shares, cash, obligations or other property so paid or distributed shall be delivered by Pledgor to Escrow Agent forthwith upon its receipt thereof, to be held by Escrow Agent as additional Collateral hereunder, and all of such property (other than cash) shall constitute Pledged Securities and/or the Additional Securities for all purposes of this Pledge Agreement. 4 7. Unregistered Securities. If at the time of any sale of the Collateral in accordance with the terms of this Agreement the same or any part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act of 1933, as amended, or there is no exemption available under such Act, then Pledgee, in its sole and absolute discretion, is authorized to sell such Collateral or such part thereof by private sale or sales in such manner and under such circumstances as Pledgee reasonably may deem necessary or advisable in order that such sale may legally be effected without registration. Pledgor agrees that private sales so made may be at prices and on other terms less favorable to the seller than if such Collateral were sold at public sale, and that Pledgee has no obligation to delay the sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral, even if such issuer would agree, to register such Collateral for public sale under such Act. Pledgor agrees that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. 8. No Waiver. Failure of Pledgee to exercise any right or remedy under this Agreement or any other agreement between Pledgee and Pledgor, or otherwise, or delay by Pledgee in exercising same, will not operate as a waiver thereof. No waiver by Pledgee will be effective unless and until it is in writing and signed by Pledgee. No waiver of any condition or performance will operate as a waiver of any subsequent condition or obligation. Pledgee shall have no obligation to resort to the Collateral or any other security which is or may become available to it. 9. Miscellaneous. (a) This Agreement, any amendments or replacement hereof, and the legality, validity and performance of the terms hereof, shall be governed by and enforced and construed in accordance with the laws of the State of California without regard to conflicts of laws and principles thereof. (b) This Agreement and the rights, powers and duties set forth herein shall be binding upon Pledgor, its employees, shareholders, agents, officers, directors, representatives and successors and shall inure to the benefit of the successors and assigns of Pledgee and, in the event of any transfer or assignment of rights by Pledgee, the rights and privileges herein conferred upon Pledgee shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This Agreement may not be transferred or assigned without written consent. 5 (c) In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any applicable law shall not effect the validity or enforceability of any other provisions hereof. (d) Notices required or permitted to be given under this Agreement shall be in writing and may be delivered personally or sent to a party by airmail or first class mail, postage prepaid and addressed to such party at the address set forth below its signature, or to such other address furnished by notice given in accordance with this paragraph. Any such notice shall be deemed to have been given, (i) if sent by mail, five days after the date mailed, and (ii) if delivered personally, on the date of delivery. (e) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same document. (f) This Agreement and the security interest and pledge hereunder shall terminate upon the full and final performance of all Obligations of Pledgor and payment of all indebtedness accrued hereby. At such time, Pledgee shall promptly reassign to Pledgor all of the Collateral hereunder which has not been sold, disposed of, retained or supplied by Pledgee in accordance with the terms hereof. 6 IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above. ELK INTERNATIONAL, LTD. CORPORATION By: /s/ Elkana Faiwuszewicz -------------------------- Title: Address: P.O. Box N-3247 Nassau Bahamas HARDEE CAPITAL PARTNERS, L.P. By:/s/ David W. Hardee -------------------------- David W. Hardee Its General Partner: Address: 258 Amalifi Drive Santa Monica, CA 90402 7 SCHEDULE I Description of Pledged Shares Common Stock Certificate Number Number of Shares - ------------------ ---------------- 8 EX-10.12 13 SECURITY AND PLEDGE AGREEMENT SECURITY AND PLEDGE AGREEMENT This Security and Pledge Agreement (the "Agreement") is made and entered into as of January 3, 1994 by and between Elk International Corporation, Ltd. ("Pledgee"), and Hee Poong Park ("Pledgor"). WHEREAS, Pledgor has agreed to purchase, and Pledgee has agreed to sell, the Pledged Securities (as defined below); and WHEREAS, as part of the consideration for such purchase, Pledgor has agreed to deliver to Pledgee a promissory note in the principal amount of $1,444,445 in favor of Pledgee dated as of the date hereof (the "Note"); and WHEREAS, Pledgor has agreed to enter into this Agreement as additional consideration for acceptance by Pledgee of the Note. NOW, THEREFORE, based upon the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Grant of Security Interest in Collateral. Pledgor hereby grants to Pledgee, upon delivery of the Note to Pledgee, as security for all present and future obligations and liabilities of all kinds of Pledgor to Pledgee under the Note and this Agreement (collectively referred to as the "Obligations"), a first priority security interest in the following described property (collectively referred to as the "Collateral"): (a) the following shares (the "Pledged Shares") of Kleer-Vu Industries, Inc., a Delaware corporation (the "Company"), as more fully described in Schedule I hereto, and the certificates representing the Pledged Shares and all of Pledgor's rights and privileges with respect thereto, together with stock powers executed in blank: 87,500 shares of common stock, $.10 par value, of the Company (the "Common Stock"). (b) all shares of Common Stock acquired by Pledgor from the Company or its affiliates (other than the Company) after the date hereof together with the 112,500 shares of Common Stock previously acquired by Pledgor from the Pledgee (the "Additional Securities"). (c) the products, proceeds and accessions of the Pledged Shares and/or the Additional Securities, including, without limitation, cash and stock dividends and additional property at any time and from time to time receivable or which may be received by Pledgee or Pledgor, or otherwise distributed or paid to Pledgee or Pledgor, in respect of or in exchange for any or all of such Pledged Securities and/or Additional Securities (the "Proceeds"). 2. Pledgor's Obligations. At any time and from time to time, upon request of Pledgee, Pledgor shall give, execute and file and/or record any notice, financing statement, continuation statement, instrument, document or agreement that Pledgee shall consider necessary or desirable to create, preserve, continue, perfect or validate any security interest and granted hereunder or which Pledgee may consider necessary or desirable to exercise or enforce its rights hereunder with respect to such security interest including, without limitation, assignment of such registration rights as Pledgor may have relating to the Collateral. 3. Pledgor's Covenants. (a) Pledgor agrees hereafter not to encumber or grant a security interest in or a lieu or other encumbrance on the Collateral. (b) Pledgor agrees not to dispose of any of the Collateral except in accordance with the terms of this Agreement. (c) Pledgor agrees to: (i) pay promptly the Obligations secured hereby when due; (ii) indemnify Pledgee against all loss, claims, demands and liabilities of every kind arising from the Collateral and the transactions and other agreements and undertakings contemplated hereby; (iii) pay all expenses, including reasonable attorneys' fees, incurred by Pledgee in the preservation, realization, enforcement and exercise of its rights, powers and remedies hereunder; (iv) execute and deliver such documents as Pledgee deems necessary to create, perfect and continue the security interest contemplated hereby; and (v) give Pledgee notice of any litigation filed or claim asserted against Pledgor relating to or potentially affecting the Collateral. 2 (d) Pledgor agrees: (i) if requested by Pledgee, to receive and collect the Proceeds, in trust and as the property of Pledgee, and to immediately endorse as appropriate and deliver such Proceeds to City National Bank as Escrow Agent when requested by Pledgee in the exact form in which they are received: (ii) not to commingle the Proceeds or collections thereunder with other property; and (iii) to keep complete and accurate records regarding all of the Proceeds. 4. Voting Rights. Pledgor shall have all voting rights with respect to the Collateral until an Event of Default (as defined below) has occurred, at which time Pledgee may exercise all such voting rights. Pledgor hereby grants to Pledgee an irrevocable proxy, effective upon the occurrence of an Event of Default and so long as such Event of Default shall continue, to vote the Pledged Securities in such manner and for such purposes as Pledgee shall, in its sole discretion, determine. Such proxy is coupled with an interest and shall continue in full force and effect until all of the Obligations shall be paid in full. 5. Events of Default; Remedies. (a) Each of the following shall constitute an event of default ("Event of Default") hereunder: (i) if Pledgor shall fail to make any payment on the Obligations secured hereby as and when due; (ii) if Pledgor has materially breached any provisions of this Agreement; (iii) if a receiver or a trustee of all or any part of Pledgor's property shall be appointed; (iv) if any assignment for the benefits of Pledgor's creditors shall be made; (v) if a petition in bankruptcy shall be filed by or against Pledgor and not dismissed within 120 days; (vi) if any of the Collateral shall be attached or levied upon at any time pursuant to any court order or other legal process; (vii) liquidation or dissolution of Pledgor; and (vii) if Pledgor shall generally fail to pay debts as they become due. (b) Upon the occurrence of any Event of Default, and at any time as such Event of Default is continuing, Pledgee shall be entitled to exercise all the rights, powers and remedies for the protection and enforcement of its rights in respect of the Collateral. Upon the occurrence of any Event of Default, Pledgee may declare all obligations secured hereby immediately due and payable and may proceed to enforce payment of the same and exercise any and all of the rights and remedies provided by the Uniform Commercial Code of California, as well as all other rights and remedies possessed by Pledgee. Pledgee may, at Pledgee's option, sell, assign, and deliver all or any part of the 3 Collateral at public or private sale, and may bid for and purchase all or any part of the Collateral so sold free from any right or equity of redemption. Pledgor consents to Pledgee's remedies stated herein. Pledgor waives diligence, presentment, demand for payment, notice of dishonor or acceleration, protest and notice of protest. Pledgee will give Pledgor reasonable notice of the time and place of any public or private sale and the requirements of reasonable notice shall be met if such notice is mailed, postage prepaid, to the address of Pledgor as provided for in the notice provisions of this Agreement at least ten (10) days before the time of the sale or disposition. Pledgee may apply the proceeds of any sale or disposition of Collateral available for satisfaction of Pledgor's obligations hereunder and the expenses of sale in any order of preference that Pledgee, in Pledgee's sole discretion, determines. Pledgor shall remain liable for any deficiency. 6. Dividends. (a) So long as all of the Obligations shall be paid when due, Pledgor may receive and retain all regular cash dividends declared and paid on the Pledged Securities and/or the Additional Securities. If any of the Obligations are not paid when due, all regular cash dividends paid on the Pledged Securities and/or the Additional Securities shall be received and retained by Escrow Agent as part of the collateral. If Pledgor receives any such dividend while any Obligation which is due is unpaid, it shall hold such dividend in trust for the sole purpose of delivering it in kind to Escrow Agent to be added to the Collateral. (b) In the event that any other dividend (including, without limitation, a stock dividend) or any distribution shall be declared and paid or made on or in respect of any of the Pledged Securities and/or the Additional Securities or in the event that any shares, cash, obligations or other property shall be distributed upon or with respect to any of the Pledged Securities and/or the Additional Securities pursuant to a recapitalization or reclassification of the capital stock of an issuer of any such issuer, or pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or reorganization of any such issuer with or into another corporation, or otherwise, then the shares, cash, obligations or other property so paid or distributed shall be delivered by Pledgor to Escrow Agent forthwith upon its receipt thereof, to be held by Escrow Agent as additional Collateral hereunder, and all of such property (other than cash) shall constitute Pledged Securities and/or the Additional Securities for all purposes of this Pledge Agreement. 4 7. Unregistered Securities. If at the time of any sale of the Collateral in accordance with the terms of this Agreement the same or any part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act of 1933, as amended, or there is no exemption available under such Act, then Pledgee, in its sole and absolute discretion, is authorized to sell such Collateral or such part thereof by private sale or sales in such manner and under such circumstances as Pledgee reasonably may deem necessary or advisable in order that such sale may legally be effected without registration. Pledgor agrees that private sales so made may be at prices and on other terms less favorable to the seller than if such Collateral were sold at public sale, and that Pledgee has no obligation to delay the sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral, even if sch issuer would agree, to register such Collateral for public sale under such Act. Pledgor agrees that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. 8. No Waiver. Failure of Pledgee to exercise any right or remedy under this Agreement or any other agreement between Pledgee and Pledgor, or otherwise, or delay by Pledgee in exercising same, will not operate as a waiver thereof. No waiver by Pledgee will be effective unless and until it is in writing and signed by Pledgee. No waiver of any condition or performance will operate as a waiver of any subsequent condition or obligation. Pledgee shall have no obligation to resort to the Collateral or any other security which is or may become available to it. 9. Miscellaneous. (a) This Agreement, any amendments or replacement hereof, and the legality, validity and performance of the terms hereof, shall be governed by and enforced and construed in accordance with the laws of the State of California without regard to conflicts of laws and principles thereof. (b) This Agreement and the rights, powers and duties set forth herein shall be binding upon Pledgor, its employees, shareholders, agents, officers, directors, representatives and successors and shall inure to the benefit of the successors and assigns of Pledgee and, in the event of any transfer or assignment of rights by Pledgee, the rights and privileges herein conferred upon Pledgee shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This Agreement may not be transferred or assigned without written consent. 5 (c) In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative as to the extent that it may conflict therewith and shall be modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any applicable law shall not effect the validity or enforceability of any other provision hereof. (d) Notices required or permitted to be given under this Agreement shall be in writing and may be delivered personally or sent to a party by airmail or first class mail, postage prepaid and addressed to such party at the address set forth below its signature, or to such other address furnished by notice given in accordance with this paragraph. Any such notice shall be deemed to have been given, (i) if sent by mail, five days after the date mailed, and (ii) if delivered personally, on the date of delivery. (e) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same document. (f) This Agreement and the security interest and pledge hereunder shall terminate upon the full and final performance of all Obligations of Pledgor and payment of all indebtedness secured hereby. At such time, Pledgee shall promptly reassign to Pledgor all of the Collateral hereunder which has not been sold, disposed of, retained or applied by Pledgee in accordance with the terms hereof. 6 IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date above. ELK INTERNATIONAL CORPORATION, LTD. By: /s/ Elkana Faiwuszewicz --------------------------- Title: Address: P.O. Box N-3247 Nassau, Bahamas /s/ Hee Poong Park ------------------------- HEE POONG PARK Address: 2415 S. Sierra Drive Compton, California 90220 7 SCHEDULE 1 Description of Pledged Shares Common Stock Certificate Number Number of Shares ------------------ ---------------- NU44463 73,849 NU44462 112,500 8 [Form of front of Stock Certificate] 00044463 [Kleer-Vu logo] Number Shares ----------------- --------------- NU-44463 **73,849** KLEER-VU INDUSTRIES, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE COMMON STOCK CUSIP 498494 20 2 SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT ELK INTERNATIONAL ***73849******** is the owner of CORPORATION LIMITED ****73849******* P.O. BOX N-3247 *****73849****** NASSAU ******73849***** BAHAMAS *******73849**** **SEVENTY-THREE THOUSAND EIGHT HUNDRED FORTY-NINE** Full Paid and Non-Assessable Shares of the COMMON Stock of the par value of $.10 each of KLEER-VU INDUSTRIES, INC. transferable on the books of the Corporation by the holder hereof, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented thereby are issued and shall be held [????????] of the provisions of the Certificate of Incorporation, and all Amendments thereto. This Certificate is not valid unless countersigned by the Transfer Agent and Registrar. IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed by the facsimile signatures of its duly authorized officers and a facsimile of its corporate seal to be hereunto fixed. Dated: DEC 30, 1993 /s/ Michael R. [ILLEGIBLE] /S/ [ILLEGIBLE] SECRETARY CHAIRMAN [SEAL] 006777517 THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. THIS CERTIFICATE REPRESENTS SHARES OF NEW COMMON STOCK [Form of front of Stock Certificate] 00044462 [Kleer-Vu logo] Number Shares ----------------- --------------- NU-44462 **112500** KLEER-VU INDUSTRIES, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE COMMON STOCK CUSIP 498494 20 2 SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT HEE POONG PARK ***112500******* is the owner of 2415 SOUTH SIERRA DRIVE ****112500****** COMPTON, CA 90220 *****112500***** ******112500**** *******112500*** **ONE HUNDRED TWELVE THOUSAND FIVE HUNDRED** Full Paid and Non-Assessable Shares of the COMMON Stock of the par value of $.10 each of KLEER-VU INDUSTRIES, INC. transferable on the books of the Corporation by the holder hereof, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented thereby are issued and shall be held [????????] of the provisions of the Certificate of Incorporation, and all Amendments thereto. This Certificate is not valid unless countersigned by the Transfer Agent and Registrar. IN WITNESS WHEREOF the Corporation has caused this Certificate to be signed by the facsimile signatures of its duly authorized officers and a facsimile of its corporate seal to be hereunto fixed. Dated: DEC 30, 1993 /s/ Michael R. [ILLEGIBLE] /S/ [ILLEGIBLE] SECRETARY CHAIRMAN [SEAL] 006777517 THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT. THIS CERTIFICATE REPRESENTS SHARES OF NEW COMMON STOCK EX-10.13 14 AMENDED, RESTATED AND CONSOLIDATED SECURED PROMISSORY NOTE EXHIBIT A AMENDED, RESTATED AND CONSOLIDATED SECURED PROMISSORY NOTE $2,700,000 Los Angeles, California January 12, 1996 WHEREAS, Hee Poong Park (the "Maker") and the Elk International Corporation Limited, a Bahamian corporation (the "Holder"), have agreed to amend, restate and consolidate the Maker's $805,555 Secured Non-Interest Bearing Promissory Note to the Holder dated September 29, 1993 (the "1993 Note"), a copy of which is annexed hereto as Exhibit "A" and the Maker's $1,444,445 Secured Non-interest Bearing Promissory Note to the Holder dated January 3, 1994 (the "January 1994 Note"), a copy of which is annexed hereto as Exhibit "B". WHEREAS, the Maker executed and delivered the 1993 Note and 1994 Note to Elk in connection with the purchase by the Maker of an aggregate of 200,000 Common Shares, $.10 per value per share, of Kleer-Vu Industries, Inc., a Delaware corporation. WHEREAS, the 1993 Note and the 1994 Note shall be amended, restated, consolidated and superseded in all respects by this Amended, Restated and Consolidated Secured Promissory Note (the "Note"). This Note memorializes and supersedes the same obligations previously set forth in the 1993 Note and 1994 Note. The 1993 Note and 1994 Note are hereby amended and restated in their entirety and consolidated as follows: FOR VALUE RECEIVED, Maker promises to pay to the order of the Holder at 2415 S. Sierra Drive, Compton, California 90220, or such other place as Holder may from time to time designate, the principal sum of Two Million Seven Hundred Thousand Dollars ($2,700,000). 1. The Note is payable as follows: (a) $100,000 on or before January 29, 1996 (by check delivered by Park to Elk on the date hereof, which will be deposited by Elk on January 27, 1996 to clear on or before January 29, 1996); (b) $100,000 on March 30, 1996; (c) $100,000 on June 30, 1996; (d) $150,000 on September 30, 1996; and (e) $2,250,000 on December 15, 1996. 2. This Note shall not bear interest. 3. This Note may be prepaid in whole without premium or penalty. 4. Maker shall have no right to reborrow any prepaid amounts. 5. An event of default hereunder shall occur if an Event of Default (as defined in (a) the Security and Pledge Agreement between the Maker and the Holder dated as of September 29, 1993, as amended on the date hereof, and (b) the Security and Pledge Agreement between the Maker and the Holder dated January 3, 1994, as amended on the date hereof, (collectively, the "Security Agreement") shall have occurred. 6. If such an Event of Default occurs and is continuing, the Holder, at its option, may declare all sums due hereunder immediately due and payable without notice or demand. 7. No delay on the part of the Holder or the exercise of any power or right under this Note shall operate as a waiver of such power or right or preclude other or further exercise thereof or the exercise of any other power or right. The Maker hereby waives diligence, presentment, demand for payment, notice of dishonor or acceleration, protest and notice of protest, and any and all other notices or demands in connection with delivery, acceptance, performance, default or enforcement of this Note. 8. If any principal, interest or additional payment due hereunder is not paid as and when due or if any Event of Default occurs hereunder, Maker promises to pay all costs of enforcement and collection, including, but not limited to, reasonable attorneys' fees and disbursements, whether or not such enforcement and collection includes the filing of a lawsuit. 9. This Note is secured by the Security Agreement, and 250,000 Preferred Shares of Kleer-Vu Industries, Inc. 10. Amounts owing under this Note shall not be subject to set off of any obligations of Holder owing to Maker. 11. This Note shall take effect as of the date hereof, which effectiveness is subject to the Holder delivering to the Maker for cancellation the 1993 Note and the 1994 Note. 2 12. This Note shall be governed by and construed in accordance with the laws of the State of California without regard to conflicts of law and principles thereof. IN WITNESS WHEREOF, the undersigned has executed this Note on the day and year first above written. /s/ HEE POONG PARK ---------------------------- HEE POONG PARK CONSENTED TO: ELK INTERNATIONAL CORPORATION LIMITED By:/s/Elkana Faiwuszewicz ---------------------------------- Elkana Faiwuszewicz, President 3 EX-10.14 15 LETTER AGREEMENT April 19, 1996 Elk International Corporation Limited P.O. Box N-3247 Nassau Bahamas Gentlemen: This amends the Letter Agreement dated January 12, 1996 between Hee Poong Park ("Park") and Elk International Corporation Limited ("Elk") (the "January Letter Agreement"), and the Promissory Note and Agreements referenced therein. 1. The $100,000 payable by Park to Elk pursuant to Park's $2,700,000 Amended, Restated and Consolidated Security Promissory Note dated January 12, 1996 (the "Note") to Elk on March 30, 1996, pursuant to paragraph 1(b) of the Note which payment is referred to in paragraph 1(b) of the January Letter Agreement, was not paid on March 30, 1996, and the January Letter Agreement and the Note are hereby amended as follows: (a) Park has paid $30,000 to Elk prior to the date hereof, receipt of which Elk acknowledges. (b) Park shall pay to Elk the remaining $70,000 in the following installments on the following dates: (i) $15,000 on April 30, 1996; (ii) $20,000 on May 15, 1996; (iii) $35,000 on May 30, 1996. The foregoing payments shall be made in lieu of the $100,000 payment which was due on March 30, 1996 and Park's default in failing to pay such $100,000 on March 30, 1996 is hereby waived by Elk. 2. Park will take the following actions on June 30, 1996: (a) In the event the closing price of the Common Shares of Kleer-Vu Industries, Inc. ("Kleer-Vu") on the American Stock Exchange ("AMEX") on Friday, June 28, 1996 (June 30, 1996 is a Sunday) is $3.00 or less, (i) Park shall make a payment reduction on the Note (which has a balance of $2,570,000 as of the date hereof) of One Million Dollars ($1,000,000), alternatively, (ii) Park shall deliver, by no later than July 3, 1996, stock certificates representing 450,000 Kleer-Vu Preferred Shares (the "Preferred Shares") in his name, with stock powers executed in blank into escrow with Messrs. Arter and Hadden, as escrow agent (the "Escrow Agent"), which Preferred Shares shall be held in escrow in accordance with the terms of that certain escrow agreement amount Elk, Park, Hardee Capital Partners, MicroTel International, Inc., Kleer-Vu and the Escrow Agent dated March 25, 1996 as additional security for Park's timely payment and performance under the January Letter Agreement, the Park Note and related agreements, all as amended hereby (collectively, the "Amended Agreement"). (b) If the closing price of Kleer-Vu's common shares on the AMEX on June 28, 1996 is greater than $3.00 per share, (i) Park shall make a payment reduction on June 30, 1996 of $500,000, or in the alternative (ii) Park shall deliver the 450,000 Preferred Shares into escrow with the Escrow Agent as described in paragraph 2. 3. In the event Park defaults under the terms of the Amended Agreement, Park shall grant Elk an irrevocable proxy to Elk to vote all his common shares and Preferred Shares which constitute security for Park's obligations to Elk under the Amended Agreement, which irrevocable proxy Park acknowledges is coupled with an interest. Such proxy shall continue in effect until (i) Park has satisfied all his obligations to Elk under the Amended Agreement or (ii) the Park common shares and/or Preferred Shares have been disposed of by Elk or Park. Notwithstanding the foregoing, Elk shall be able to pursue all of its rights and remedies available to it under the Amended Agreement in the event of such default by Park. 4. Other than provided herein, the terms of the January Letter Agreement, the Note and related agreements shall remain in full force and effect. 5. This Letter Agreement shall become effective only when executed and delivered by all parties. Facsimile signatures hereon shall be deemed to be original signatures. Very truly yours, /s/Hee Poong Park -------------------- HEE POONG PARK ACCEPTED AND AGREED: ELK INTERNATIONAL CORPORATION LIMITED By:/s/ Elkana Faiwuszewicz - -------------------------- Elkana Faiwuszewicz EX-10.15 16 NOTICE OF DEFAULT EXH.10.15 [LOGO] Elk International Corporation Limited P.O. BOX N-3247 NASSAU, BAHAMAS AREA CODE 809 TEL. (32)2-8571 May 30, 1996 VIA FAX (714) 252-0961 RANDOLF W. KATZ ARTER & HADDEN JAMBOREE CENTER 5 PARK PLAZA, STE. 1000 IRVINE, CA 92714 RE: ESCROW AGREEMENT DATED MARCH 25, 1996 BY AND AMONG ELK INTERNATIONAL CORPORATION LIMITED ("ELK"), MICROTEL INTERNATIONAL, INC. ("MICROTEL"), HEE POONG PARK ("PARK"), HARDEE CAPITAL PARTNERS, L.P. ("HCP"), AND ARTER & HADDEN, AS ESCROW AGENT Dear Randy: Please be advised that PARK and HCP are in default of payments to ELK of certain promissory notes secured by Kleer-Vu Industries, Inc. shares of stock. Said defaults have continued for a period in excess of 21 days and have not been cured. Accordingly, as per above described escrow agreement, and without waiving any and all rights or interest of ELK in any and all relevant promissory notes or security and pledge agreements as amended from time to time in favor of ELK, you are hereby instructed to give a 7 day notice to PARK, HCP, and David W. Hardee, guarantor that in 12 days (no later than June 11, 1996) you will deliver the escrowed shares to ELK as per terms of the escrow agreement, c/o Rebekah Laird, 601 Hanson Rd., Kemah, TX 77565. Very truly yours, /s/ Elkana Faiwuszewicz - ----------------------- Elkana Faiwuszewicz President cc: Bill King, Attorney at Law -----END PRIVACY-ENHANCED MESSAGE-----