STOCK PURCHASE AGREEMENT

 

By

 

Freestone Resources, Inc. (“Buyer”)

 

And

 

Infinity Web Systems, Inc. 401K Profit Sharing Plan (“Seller”)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into effective as of
June 24, 2015 by and among Freestone Resources, Inc., a Nevada corporation
(“Buyer”), and Infinity Web Systems, Inc. 401K Profit Sharing Plan a profit
sharing plan, (“Seller”) (collectively “Parties” and individually “Party”), for
the purchase of the shares of common stock in C.C. Crawford Retreading Company,
Inc., a Texas corporation (d/b/a CTR) (“CTR”).

 

RECITALS

 

WHEREAS, CTR is a business located at 101 West Avenue D, Ennis, Texas, and is in
the business of selling, repairing, and disposing of tires; and

 

WHEREAS, the Seller owns one hundred percent (100%) of the issued and common
stock in CTR, par value ten dollars ($10.00) (the “CTR Shares”); and

 

WHEREAS, Buyer wishes to buy from Seller, and Seller wishes to sell to Buyer the
CTR Shares, subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree as
follows:

 

 

Article I.

 

SALE AND PURCHASE OF CTR

 

1.0       Sale and Purchase of CTR Shares; Consideration. The Seller hereby
agrees, subject to the terms and conditions of this Agreement, to sell, assign,
transfer and deliver to Buyer at the Closing (as hereinafter defined) free and
clear of all liens, claims, charges, limitations, agreements, restrictions and
encumbrances whatsoever, the CTR Shares for the consideration specified in
Section 1.1. The Seller hereby transfers all title over the CTR Shares to Buyer
at the time of Closing, which includes all rights and obligations connected to
the CTR Shares including but not limited to all rights to dividends, capital,
all voting rights and for avoidance of doubt any dividends which are due but not
yet paid will become due and paid to Buyer. The transfer is effective at the
execution of this Agreement and payment of the initial $500,000.00 and execution
of the Promissory Note and Security Documents defined in Section 1.5
(collectively, “Closing Documents”) and Default Stock Power defined in Section
1.2.

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1.1      Total Purchase Price for CTR Shares. The total purchase price for the
CTR Shares shall be one million and five hundred twenty thousand dollars
($1,520,000) plus the interest due under the terms of this Agreement (“Total
Purchase Price”), which shall be funded by Buyer based on the Payment Schedule
(as hereinafter defined) in Section 1.4 of this Agreement.

 

1.2      Closing. The closing of the sale and purchase of the CTR Shares to the
Buyer shall take place contemporaneously with the execution of this Agreement at
the offices of the Buyer (the “Closing”). At the Closing, (i) Seller shall
deliver to J. Ross Massengill, Attorney at Law, Massengill Schanfish, PLLC (the
“Designated Agent”) the CTR Shares and a stock power conveying ownership of the
CTR Shares to Buyer (“Stock Power”), and (ii) Buyer shall deliver to the
Designated Agent the cash purchase consideration by delivery of a cashier’s
check in the amount specified in Section 1.4 below, the Closing Documents, and
executed stock power by Buyer (“Default Stock Power”) only to be used if and
upon Default by Buyer and the return of the CTR Shares to Seller. The Designated
Agent shall remain the custodian of the CTR Shares, Stock Power, and Default
Stock Power until Seller delivers to the Designated Agent confirmation that the
Full Payment (as defined below) has been made to Seller, at which time the
Designated Agent will release the CTR Shares to the custody of the Buyer or upon
notification by Seller of a Default and demand for the return of the CTR Shares
to Seller as provided in Section 1.9(a) below. Upon receipt of the Full Payment,
Seller is required to notify the Designated Agent confirmation of the Full
Payment within fifteen (15) days.

 

1.3      Due Diligence Documents. Seller has delivered to Buyer per Buyer’s
request the due diligence documents and information including but not limited to
financial documents in Exhibit A and the schedule of due diligence documents in
Exhibit B which all documents were prepared by CTR Officers, the CTR CPA, and
the Seller’s third party administrator. To Seller’s knowledge, the documents and
all information contained therein are accurate, true and correct. Seller has
provided all information requested by Buyer.

 

1.4      Initial Payment; Payment Schedule. At the Closing, Buyer, and/or its
assigns, will deliver a cashier’s check to Seller in the amount of five hundred
thousand dollars ($500,000). The remaining balance of the Total Purchase Price
shall be one million twenty thousand dollars ($1,020,000) (the “Remaining
Balance”). The Remaining Balance will be paid over a term of four (4) years at a
fixed interest rate of twelve percent (12%) (“Fixed Interest Rate”), from the
Closing on the schedule set out herein, (“Payment Schedule”) for the Remaining
Balance, which includes the principle (“Principle”), and the interest amounts
owed based on the Fixed Interest Rate amortized over the four (4) year term
(“Interest”):

 

(i)      Payment Schedule. No payments will be required for the first eleven
(11) months following the Closing. In the twelfth (12) month, one (1) year of
Interest equaling one hundred twenty-two thousand four hundred dollars
($122,400.00) will be due. Starting the thirteenth (13) month and continuing
until the Principle is paid in full, monthly payments of Principle and accrued
Interest will be due on the first day of each month, as indicated by the
schedule attached hereto as Exhibit C.

 

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1.5   Closing Documents. Buyer shall deliver at closing the Promissory Note
representing the Remaining Balance (“Promissory Note”) and Deed of Trust and
UCC-1 Financing Statement (“Security Documents”), which are attached hereto as
Exhibit D.

 

1.6      Payments Made by Buyer. Starting in month thirteen (13), Buyer will
have five (5) days from the payment due dates specified in Section 1.4(i) in
order to deliver a cashier’s check or make a wire transfer to Seller’s account
in the amount of the Principle plus the Interest. If Buyer does not deliver a
check or wire in the amount and on the date due to Seller within thirty (30)
days from the payment due date, then Buyer will be in default (“Default”). Prior
to Default, Seller will notify Buyer of impending Default no later than fifteen
(15) days before the Default date occurs.

 

1.7     Advanced Payment of the Remaining Balance. In the event that Buyer pays
Seller the remaining Principle in full (“Full Payment”) at any time prior to the
last payment due date specified in Section 1.4(i) and Exhibit C, then the Buyer
shall incur no penalties; however, if Buyer pays the Full Payment at any time
prior to the seventh (7) month, then Buyer will owe six (6) months of Interest
only and will incur no other interest or penalty.

 

1.8      Event of Default. The following shall constitute a default event
(“Default Event”) hereunder and entitle Seller to the Remedies provided in
Section 1.9 below:

 

    (a)    the failure to make any payment in accordance with Section 1.6 of
this Agreement or the Promissory Note attached hereto;

    (b)    the breach of any and all restrictions or covenants under the Closing
Documents;

   (c)    the failure by Buyer at any time to maintain adequate and full
insurance coverage on the assets of CTR with Seller named as a loss payee;

    (d)    the removal of any assets of CTR while there is any balance
outstanding under the Promissory Note, unless the assets are upgraded and Buyer
provides notice of the upgrade to Seller via the change form attached to the
Note no less than fifteen (15) days in advance;

               (e)    the sale or transfer of any assets which act as security
for the Promissory Note except for (i) the sale or transfer of tire related
inventory in the normal course of CTR business or (ii) the asset is replaced
with upgraded assets required for the normal course of CTR business and Buyer
provides notice of the upgrade to Seller via the change form attached to the
Note no less than fifteen (15) days in advance.

 

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1.9     Seller Remedies. If a Default Event listed in Section 1.8(b) – (e)
occurs Seller must notify Buyer and allow Buyer thirty (30) days to cure the
Default Event (“Cure Period”). If the Default Event is not cured within the Cure
Period or the Default Event in Section 1.8(a) occurs then Buyer is in Default
and Seller may at its sole option exercise any or all of the following remedies:

 

    (a)    Seller will have the right, at its sole discretion, to request, in
writing, that the Designated Agent deliver the CTR Shares to the custody of the
Seller and pursue at Seller’s option any and all deficiency that might result
only after the Cure Period has expired or the Default Event in Section 1.8(a)
has occurred. Seller must notify Buyer of Seller’s request for the delivery of
the CTR Shares. Seller must provide proof of certified mailing of Buyer’s notice
of Default to the Designated Agent at the time of the request.

 

    (b)    Seller understands alterations to the property will be necessary for
the implementation of the business plan referenced in Section 2.0(j). Seller and
Buyer agree to discuss all improvements to the property and mutually agree upon
any CTR properties or facilities that will need to be returned to the original
condition at the time of the closing of this purchase. As Buyer is required to
notify Seller of changes to the property in Section 1.8(c)-(d), if Seller does
not state an objection to the improvement within fifteen (15) days of notice,
then that improvement will not be required to be reverted to the original
condition in the event of Default. Buyer will have sixty (60) days to revert the
property to the original condition in the event of Default. If the CTR property
and facilities are not returned to the original condition as of the time of
closing of this purchase, Seller may pursue any and all costs associated with
bringing the property and facilities back to the original condition. Any
contract between CTR and any Freestone affiliate will be automatically canceled
within the aforementioned sixty (60) day time period.

 

 

Article II.

 

REPRESENTATIONS AND WARRANTIES

 

2.0      Representations and Warranties of Buyer. Buyer represents and warrants
to and agrees to Seller, as follows:

 

    (a)    Organization; Power and Authority; Authorization; Subsidiaries. Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has full corporate power and authority to
execute and deliver this Agreement and to perform the Buyer’s obligations
hereunder and thereunder. Buyer has all requisite power and authority and all
authorizations, licenses and permits necessary to own, lease and operate its
properties and other assets, to conduct its businesses as presently conducted
and as proposed to be conducted. The execution, delivery and performance by
Buyer of this Agreement and has been duly and validly authorized by all
necessary corporate action.

 

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          (b)    Non-Contravention; Governmental Authorities and Consents. The
execution, delivery and performance of this Agreement does not and will not
violate, result in creation of a lien under, or cause a default or a breach of
any term or provision of (i) any statute or other law applicable to Buyer, (ii)
any rule or regulation of any governmental agency or authority applicable to
Buyer, (iii) any agreement, document or instrument to which Buyer is a party or
by which it is bound, (iv) any judgment, order or decree of any court or
governmental agency or authority applicable to Buyer or (v) the articles of
incorporation or bylaws of Buyer or any resolution of the Buyer’s Board of
Directors or shareholders. No consent, approval, or other authorization is
required on the part of any person, governmental authority or other entity in
connection with the execution, delivery and performance of this Agreement by the
Buyer.

 

   (c)     Litigation. There is no action, suit, mediation, arbitration, claim,
charge, grievance, complaint, proceeding, inquiry or investigation pending or,
to the knowledge of Buyer, threatened against or affecting Buyer or any of its
properties or assets in or before any court or other governmental authority or
before any mediator or arbitrator.

 

   (d)    No Undisclosed Liabilities. Buyer does not have any undisclosed
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on a balance sheet or in
notes thereto prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis, except for liabilities or
obligations (i) disclosed in Buyer’s financial statements, (ii) incurred in the
ordinary course of business and consistent with past practices since the date of
the latest Buyer balance sheet and (iii) that are not material in the aggregate
to Buyer. Buyer has filed its financial statements with the Securities and
Exchange Commission (“SEC”) pursuant to Section 13(d) or 15(d) of the Securities
Exchange Act of 1934, as amended.

  (e)    Bankruptcy Matters. Buyer is not subject to any voluntary case under
title 11 of the United States Code or any other bankruptcy, insolvency or
similar law of any state, federal, foreign or other jurisdiction, nor has any
Person commenced an involuntary case against or involving the Buyer under title
11 of the United States Code or any other bankruptcy, insolvency any similar law
of any state, federal, foreign or other jurisdiction.

       (f)    Investment Company. Buyer is not, and is not an Affiliate of, and
immediately following the Closing will not have become, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

 

         (g)    Fully Reporting Status. Buyer has complied with all requirements
of Rule 144(i)(2), including but not limited to the filing more than 12 months
ago of current “Form 10 information” with the SEC, so that Rule 144 is currently
available to holders of the Buyer’s Common Stock.

 

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(h)    Buyer is not using the Stock of CTR or any of the assets of CTR to obtain
the funds or to fund any portion of the funds payable to Seller.

 

 (i)     Buyer has conducted extensive due diligence on CTR, including but not
limited to, the information provided by Seller in the attached Exhibit A and
Exhibit B.

 

  (j)    Buyer has the technology, capital and expertise to execute on its
business plan and proforma that Buyer anticipates will generate the funds
necessary to pay the full purchase price and all accrued interest.

 

2.1         Representations and Warranties of Seller. Seller represents and
warrants and agrees to Buyer, as follows:

     (a)    Organization of the Seller. Seller is Infinity Web Systems, Inc.
401(k) Profit Sharing Plan and is duly organized, validly existing, and in good
standing under IRS Code Section 401 as affirmed in the letter of Retirement
Systems of California, Inc. in the form of Exhibit E attached hereto.

    (b)    Authorization of Transaction. Seller, through its Trustees, has full
capacity, power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Seller does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by this
Agreement. This Agreement constitutes the valid and legally binding obligation
of Seller, enforceable in accordance with its terms and conditions.

 

    (c)    Noncontravention. To Seller’s knowledge, neither the execution and
the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will in any material respect (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Seller or is subject or any provision of its Infinity Web Systems, Inc. 401(k)
Profit Sharing Plan agreement or organization documents, as applicable or (B)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Seller or is a party or by which any
of Seller's assets is subject, other than the disclosed loan with First State
Bank of Rice.

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   (d)   CTR’s Capitalization. CTR has authorized one hundred thousand (100,000)
shares of common stock, par value ten dollars ($10.00), of which one hundred
thousand (100,000) shares are validly issued and outstanding, and constitute the
CTR Shares. All of the CTR Shares have been duly authorized, are validly issued,
fully paid and non-assessable, and are owned of record beneficially by Seller,
free and clear of all encumbrances. Upon consummation of the transactions
contemplated herein, Buyer shall own all of the CTR Shares free and clear of all
encumbrances except for the liens created by this document and transaction.

 

(i)    All of the CTR Shares were issued in compliance with applicable laws.
None of the CTR Shares were issued in violation of any agreement, arrangement or
commitment to which Seller is a party or is subject to or in violation of any
preemptive or similar rights of any person.

 

(ii)    There are no outstanding or authorized options, warrants, convertible
securities, or other rights, agreements or commitments of any character relating
to the capital stock of CTR or obligating Seller to issue or sell any shares of
capital stock of, or any other interests in CTR. CTR does not have outstanding
or authorized any stock appreciation, phantom stock, profit participation or
similar rights. There are no voting trusts, stockholder agreements, proxies, or
other agreements or understandings in effect with respect to the voting or
transfer of any of the CTR Shares.

 

    (e)   Financial Statements of CTR. To Seller’s knowledge, complete copies of
CTR’s unaudited financial statements of the twelve (12) months ending December
31, 2014 (the “Unaudited Financial Statements”), as well as the profit and loss
statements for the twelve (12) months ended December 31, 2014 (“2014 Profit and
Loss Statement”), have been delivered to Buyer as part of Exhibit A.

 

   (f)    No Material Adverse Change. To Seller’s knowledge and in reliance upon
the affidavit of the CTR officer in Exhibit F attached hereto, since December
31, 2014, there has not been any material adverse change in the business,
condition, financial or otherwise, or results of operation of CTR taken as a
whole.

 

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  (g)  Undisclosed Liabilities. To Seller’s knowledge and in reliance upon the
affidavit of the CTR officer in Exhibit F, Seller has disclosed all the
liabilities associated with CTR to Buyer and CTR has no liabilities, obligations
or commitments of any nature whatsoever, asserted, known or unknown, absolute or
contingent, accrued, or unaccrued, matured or unmatured or otherwise
(“Liabilities”), except (a) those which are adequately reflected in Exhibit A.
There are no pending questions relating to, nor claims asserted for, Taxes or
assessments upon CTR nor has CTR been requested to give any waivers extending
the statutory period of limitation applicable to any federal, state or local
income tax return for any period. The Seller has previously disclosed that a
commission will be paid to Dirk Crawford, that is the full payment due by the
Seller under his employment agreement, of $140,000.00, which will be paid by the
Seller from the funds received at Closing.

  (h)   Legal Proceedings; Governmental Orders. To Seller’s knowledge and in
reliance upon the affidavit of the CTR officer in Exhibit F, there is no claim,
action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of
violation, proceeding, litigation, citation, summons, subpoena or investigation
of any nature, civil, criminal, administrative, regulatory or otherwise whether
at Law or in equity (“Actions”) are pending or, to Seller’s knowledge,
threatened or accrued (i) against or by CTR affecting any of its properties or
assets or (ii) against or by CTR that challenges or seeks to prevent, enjoin or
otherwise delay the transactions contemplated by this Agreement.

 (i)    Permit Compliance. To Seller’s knowledge and in reliance upon the
affidavit of the CTR officer in Exhibit F, CTR has complied, and is now
complying with all laws, environmental or otherwise, applicable to it or its
business, properties or assets. All permits, licenses, franchises, approvals,
authorizations, registrations, certifications, variances and similar rights
obtained, or required to be obtained from Ellis County, the City of Ennis, the
State of Texas, the United States of America, or any other agency that has
jurisdiction (collectively, the “Jurisdictions”) required for CTR to conduct its
business have been obtained by CTR (collectively, the “Permits”), and are valid
and in full force and effect. All fees and charges with respect to such Permits
as of the Closing have been paid in full, and none of the Permits have an
eminent expiration. All Permits are held by and duly authorized and issued to
CTR.

  (j)   Taxes. To Seller’s knowledge and in reliance upon the affidavit of the
CTR officer in Exhibit F, CTR has properly, accurately and timely filed all
material federal, state and local information and tax returns required to be
filed by CTR and to Seller’s knowledge has paid or made provisions for the
payment of all material taxes and other charges that have incurred or are due
prior to closing.

 

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   (k)    Environmental Matters. To Seller’s knowledge and in reliance upon the
affidavit of the CTR officer in Exhibit F, CTR is currently, and has been, in
compliance with all environmental federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, legal doctrine, order, directive, executive or administrative order,
judgment, decree, injunction, requirement, or agreement with any governmental
entity relating to the protection, preservation or restoration of the
environment (which includes, without limitation, air, water, vapor, surface
water, groundwater, drinking water supply, structures, soil, surface land,
subsurface land, plant and animal life or any other natural resource), or to
human health or safety, or relating to the exposure to or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Materials, in each case
as amended and as now or hereafter in effect. To Seller’s knowledge, CTR has not
received, either written or oral, any complaints, environmental or otherwise,
from individual citizens, businesses, representatives, or regulators within the
Jurisdictions. To Seller’s knowledge, based on the Phase One completed in
December, 2011 no real property currently or formerly owned, operated or leased
by CTR is listed on, or has been proposed for listing on, the Environmental
Protection Agency’s Comprehensive Environmental Response, Compensation and
Liability Information System. The Buyer is relying on the Phase One as issued on
April 2, 2015.

 

   (l)    Assets and Real Property of CTR. CTR has good and marketable title to
the property and all of the assets listed in the documents in Exhibit B attached
to this Agreement except as previously disclosed. The property and assets are
free and clear of any mortgages, liens, pledges, charges, encumbrances,
equities, claims, covenants, conditions or restrictions except as shown on the
financial records of CTR inspected by Buyer or disclosed herein and specifically
including any and all liens held by the First State Bank of Rice

  (m)    CTR Affiliates. CTR has no affiliates.

 

 

Article III.

 

INDEMNIFICATION

 

3.0    Indemnification by Buyer. Buyer shall defend, indemnify and hold Seller
and its Trustees (collectively, the “Seller’s Indemnified Parties”), harmless
from any and all Third Party Claims, as defined in Section 3.2, Actions, losses,
liabilities, damages, deficiencies, costs and expenses, including reasonable
attorneys’ fees and expenses of investigation and defense (hereinafter
individually, a “Loss” and collectively, “Losses”) resulting from (a) any
material breach or material inaccuracy of a representation or warranty of Buyer
contained in this Agreement, the Promissory Note, or the Security Documents; (b)
any failure by Buyer to perform or comply with any covenant applicable to it
contained in this Agreement; or (c) any action initiated that is in any way
related to the Buyer’s ownership or operation of CTR after the Closing. Buyer’s
indemnification obligations shall terminate upon the date of Buyer’s payment in
full of the Total Purchase Price. Buyer’s liability under this indemnification
provision shall be specifically limited to the amount Buyer has paid to the
Seller under this  

 

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Agreement as of the time the indemnification claim arose (“Buyer’s Liability
Limit”). To the extent Seller may have insurance coverage for the claim, Seller
will use its best efforts to seek to recover insurance proceeds. If Seller
receives notice from its insurer that the claim is denied, Seller will proceed
to exhaust the insurer’s appeals process. If, at the conclusion of the appeals
process, the claim is still denied the Seller will have no further obligation to
seek to recover insurance proceeds. If the claim is accepted, whether initially
or on appeal, the amount of the insurance proceeds determined to be due will
then be applied toward the claim. Any difference between the amount of the claim
and any insurance proceeds determined to be due applied toward the claim shall
be paid by Buyer, as limited to the aforementioned Buyer’s Liability Limit.

 

3.1    Indemnification of Seller. Seller shall defend, indemnify and hold Buyer
and its officers, directors, and affiliates (collectively, the “Buyer’s
Indemnified Parties”) harmless from any and all Third Party Claims and Losses
resulting from (a) any material breach or material inaccuracy of a
representation or warranty of Seller contained in this Agreement, the documents
identified in Exhibit A or Exhibit B; or (b) any failure by Seller to perform or
comply with any covenant applicable to it contained in this Agreement. Seller’s
liability under this indemnification provision shall be specifically limited to
the amount that Buyer has paid to the Seller under this Agreement as of the time
the claim arose (“Seller’s Liability Limit”). To the extent Buyer may have
insurance coverage for the claim, Buyer will use its best efforts to seek to
recover insurance proceeds. If Buyer receives notice from its insurer that the
claim is denied, Buyer will proceed to exhaust the insurer’s appeals process.
If, at the conclusion of the appeals process, the claim is still denied the
Buyer will have no further obligation to seek to recover insurance proceeds. If
the claim is accepted, whether initially or on appeal, the amount of the
insurance proceeds determined to be due will then be applied toward the claim.
Any difference between the amount of the claim and any insurance proceeds
determined to be due applied toward the claim shall be paid by Seller, as
limited to the aforementioned Seller’s Liability Limit. Seller’s indemnification
obligation shall terminate upon the earlier of either (i) the date two (2) years
from Closing; or (ii) the date of Buyer’s payment in full of the Total Purchase
Price.

 

3.2    Claim Processing.

 

(a) Promptly after the receipt of notice of the assertion, commencement or
proposed commencement of any action by an unaffiliated third party (such action,
a “Third Party Claim”) by any person entitled to indemnification pursuant to
this Article 3 (the “Indemnified Party”), such Indemnified Party shall, if a
claim with respect thereto is to be made against any party or parties obligated
to provide indemnification pursuant to this Section 3 (the “Indemnifying
Party”), give such Indemnifying Party written notice of such Third Party Claim
in reasonable detail in light of the circumstances then known to such
Indemnified Party; provided, that the failure of the Indemnified Party to
provide such notice shall not relieve the Indemnifying Party of its obligations
hereunder, except to the extent that such failure to give notice shall
materially prejudice any defense or claim available to the Indemnifying Party.

 

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(b)   A Third Party Claim cannot be brought by an affiliate to either Party,
including shareholders of either Party.

 

(c)   The Indemnifying Party shall be entitled to assume the defense of any
Third Party Claim with counsel reasonably satisfactory to the Indemnified Party,
at the Indemnifying Party’s sole expense; provided that the Indemnifying Party
shall not be entitled to assume or continue control of the defense of any Third
Party Claim if (i) the Third Party Claim relates to or arises in connection with
any criminal proceeding, action, indictment, allegation or investigation, (ii)
the Third Party Claim seeks an injunction or equitable relief against any
Indemnified Party, or (iii) the Indemnifying Party has failed to defend or is
failing to defend in good faith the Third Party Claim.

 

(d)   If the Indemnifying Party assumes the defense of any Third Party Claim,
(i) it shall not settle the Third Party Claim without the consent of the
Indemnified Party unless the settlement shall include (A) no admission of
liability on the part of any Indemnified Party and (B) an unconditional release
of each Indemnified Party, reasonably satisfactory to the Indemnified Party,
from all liability with respect to such Third Party Claim; (ii) subject to the
limitations set forth herein, it shall indemnify and hold the Indemnified Party
harmless from and against any and all Losses caused by or arising out of any
settlement or judgment of such claim and may not claim that it does not have an
indemnification obligation with respect thereto; and (iii) the Indemnified Party
shall have the right (but not the obligation) to participate in the defense of
such Third Party Claim and to employ, at its own expense, counsel separate from
counsel employed by the Indemnifying Party; provided, that the reasonable fees
and expenses of such counsel shall be at the expense of the Indemnifying Party
if the Indemnifying Party and the Indemnified Party are both named parties to
the proceedings and the Indemnified Party shall have received an opinion of
counsel that representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them; and
provided further, that the Indemnifying Party shall not be responsible for the
fees and expenses of more than one separate law firm.

 

(e)  The Indemnified Party shall not settle any Third Party Claim if the
Indemnifying Party shall have any obligation as a result of such settlement
(whether monetary or otherwise) unless such settlement is consented to in
writing by the Indemnifying Party, such consent not to be unreasonably withheld
or delayed.

 

   (f)   Any offset for payments of a Third Party Claim or the defense of a
Third Party Claim by an Indemnified Party shall be agreed upon by both Parties
or determined by the arbitrators in the Dispute Resolution process described in
Section 5.2.

 

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          (g)    If a Third Party Claim is made under Section 3.1 and Buyer has
a reasonable good faith belief the claim is valid and any award or settlement
will exceed ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000) then the
Buyer may, in its sole discretion, rescind this Agreement as follows: (i) Buyer
shall return the CTR Shares to Seller, (ii) Seller shall return all amounts paid
by Buyer under this Agreement and the Promissory Note; and (iii) Buyer shall, if
applicable, return the CTR property to its original condition in accordance with
Section 1.9(b). The rights afforded in this section are an exclusive remedy and
subject to the dispute resolution process described in Section 5.2.

 

Article IV.

 

CONFIDENTIALITY AND PUBLICITY

 

  4.0     Protection of Confidential Information. Each Party to this Agreement
acknowledges that it will have access to proprietary or confidential information
(“Confidential Information”) of the other Party, including, but not limited to,
trade secrets and proprietary information included in the terms of this
Agreement. Each Party will protect the Confidential Information of the other
Party in the same manner in which it protects its own Confidential Information
(but in any event will use no less than reasonable care), except as may be
specifically permitted hereunder.

 

  4.1       Exceptions to Confidential Treatment. The obligations of
confidentiality and non-use specified above will not apply to any information of
one Party which:

 

(a) was known by the other Party prior to the execution of this Agreement and
not obtained or derived, directly or indirectly, from such Party or its
affiliates, or if so obtained or derived, was lawfully obtained or derived and
is not held subject to any confidentiality or non-use obligations;

 

(b) is or becomes public or available to the general public otherwise than
through any act or default of the other Party; provided that no trade secret or
other item of Confidential Information shall be considered to be public or
available to the general public unless it becomes generally and publicly known
to persons having no obligation of confidentiality to the Parties, and provided
further that only such portion of a trade secret or other item of Confidential
Information that is so generally known shall be considered to be public or
available to the general public;

 

(c) is obtained or derived prior or subsequent to the date of this Agreement
from a third Party which is lawfully in possession of such information and does
not hold such information subject to any confidentiality or non-use obligations;

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(d) is independently developed by such Party without use of the other Party’s
Confidential Information, as so established by reasonable evidence presented by
such developing Party; or

 

(e) is required to be disclosed by one of the Parties pursuant to applicable law
or under a government or court order or to comply with the rules of the
Securities and Exchange Commission or any stock exchange, including NASDAQ or
OTC Markets.

 

   4.2    Breach of Confidentiality Obligations. Each Party to this Agreement
acknowledges and agrees that, in the event of a breach or threatened breach of
this Article IV, the other Party will have no adequate remedy in money or
damages and, accordingly, shall be entitled to seek preliminary, permanent and
other injunctive relief without having to post bond or prove irreparable injury.

 

   4.3    Publicity. Each Party to this Agreement agrees that it will not issue
any press release or make any other public announcement regarding the execution
or the terms of this Agreement, or regarding any relationship or transaction
between the Parties hereto, without the prior consent of the other Party, which
will not be unreasonably withheld. Notwithstanding the foregoing, this Section
4.3 shall not prevent Buyer from complying with its reporting obligations under
the Securities Exchange Act of 1934, as amended, and the rules of the Securities
and Exchange Commission thereunder, provided that Buyer shall give Seller a
reasonable opportunity to review and comment on any report that Buyer intends to
file thereunder to the extent such report refers to this Agreement or to Seller
or to any relationship or transaction between the Parties hereto.

 

 

Article V.

 

GENERAL

 

   5.0    Expenses. Except as otherwise expressly provided herein, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated herein shall be paid by the Party incurring
such costs and expenses, whether or not the Closing shall have occurred.

 

   5.1   Notices. All notices, requests, demands, claims and other
communications under or relating to this Agreement shall be in writing and shall
be delivered personally by hand delivery or national postal service, certified,
return receipt requested, postage prepaid, Federal Express or other
internationally-recognized receipted overnight courier service, or sent by a
confirmed (confirmation report printed) facsimile transmission or via email with
follow up copy sent by any of the aforesaid means (failure to send follow up
copy by other means shall be deemed failed delivery of notice), to the intended
Party at the address set forth below (unless notification of a change of address
is given in writing). Notice shall be deemed delivered upon the date of personal
delivery or facsimile transmission or email transmission or the date of delivery
as indicated by Federal Express or other internationally-recognized receipted
overnight courier service, or the date indicated on the return receipt from the
national postal service.

 

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If to Buyer: Freestone Resources, Inc.   325 North St. Paul St.   Suite 1350  
Dallas, Texas 75201   Attention: Clayton Carter   Fax: 214.880.4874   Email:
ccarter@freestoneresourcesinc.com         If to Seller Charles R. Cronin, Jr.,
Trustee   Infinity Web Systems, Inc. Plan   1912 Maya Pradera Lane   Moorpark,
CA 93021   Fax: 800-220-1667   Email: cronin879@gmail.com           Lindsey
Vinson   3712 W. Biddison St.   Fort Worth, TX 76109   Fax: 817-238-3044  
Email: lindseypvinson@gmail.com

 

   5.2    Dispute Resolution. In the event of any claim, conflict, controversy,
disagreement or dispute between the Parties arising out of, or related in any
way to, this Agreement (“Dispute”), and prior to serving notice of any material
breach, the Parties are required first to attempt resolution of such Dispute in
accordance with the escalation procedures set forth in this Section 5.2.

 

(a)   Direct Negotiation. The Parties shall attempt in good faith to resolve
within thirty (30) days any Dispute not resolved in the regular course of
business by informal negotiations between executives of the Parties having
direct responsibility within their respective organizations for the
administration of this Agreement upon written notice by one Party to the other
requesting such negotiation. All offers, promises, conduct and statements,
whether oral or written, made in the course of the negotiations by any of the
Parties, their agents, employees, experts and attorneys are confidential,
privileged and inadmissible for any purpose, including impeachment, in any
proceeding involving the Parties, provided that evidence that is otherwise
admissible or discoverable shall not be rendered inadmissible or
non-discoverable as a result of its use in the mediation.

 

 

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(b)   Mediation. (i) If the Parties are unable to resolve a Dispute in the
manner provided in Section 5.2 (b), the Parties shall initiate mediation. The
Parties shall attempt to reach agreement on a mediator within fifteen (15) days
after the expiration of the Initial Negotiation Period. If the Parties do not
reach agreement on a mediator within that period, either Party may request that
the American Arbitration Association (“AAA”) appoint a mediator as provided in
its mediation rules. The Parties shall cooperate with AAA and with one another
in selecting a mediator from AAA’s panel of neutral third Parties and in
promptly scheduling the mediation proceedings. The Parties covenant that they
will participate in the mediation in good faith and that they will share equally
in its costs. All offers, promises, conduct and statements, whether oral or
written, made in the course of the mediation by any of the Parties, their
agents, employees, experts and attorneys and by the mediator or any AAA
employees are confidential, privileged and inadmissible for any purpose,
including impeachment, in any proceeding involving the Parties, provided that
evidence that is otherwise admissible or discoverable shall not be rendered
inadmissible or non-discoverable as a result of its use in the mediation. The
Parties agree to engage in at least one “cooling off period” of twenty-four (24)
hours between mediation sessions prior to ending the mediation process. If the
Dispute is not resolved within thirty (30) days from the date of the submission
of the Dispute to mediation (or such later date as the Parties may mutually
agree in writing), either Party may submit the dispute to Arbitration as
provided for in subsection (d) below by providing to the other Party a written
request for arbitration as contemplated by paragraph (d)(2) below and the Rules.

 

(c)   Arbitration. Any Dispute that is not resolved via mediation as set forth
in subsection (b) above shall be exclusively and definitively resolved through
final and binding arbitration, it being the intention of the Parties that this
is a broad form arbitration agreement designed to encompass all possible
disputes.

 

(i) Rules. The arbitration shall be conducted in accordance with the commercial
arbitration rules (as then in effect) of the AAA (the “Rules”).

 

(ii) Number of Arbitrators. The arbitration shall be conducted by three (3)
arbitrators, unless both Parties to the dispute agree to a sole arbitrator
within thirty (30) calendar days after the filing of the arbitration. For
greater certainty, for purposes of this section, the filing of the arbitration
means the date on which the claimant’s written request for arbitration is
received by the other Parties to the dispute.

 

(iii) Method of Appointment of the Arbitrators.

 

(1) If the arbitration is to be conducted by a sole arbitrator, then the
arbitrator will be jointly selected by the Parties. If the Parties fail to agree
on the arbitrator within thirty (30) calendar days after the filing of the
arbitration, or fail to agree to extend this deadline, then the AAA shall
appoint the arbitrator.

 

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(2) If the arbitration is to be conducted by three arbitrators, each Party shall
appoint one arbitrator from a list of AAA-approved arbitrators within thirty
(30) calendar days of the filing of the arbitration, and the two arbitrators so
appointed shall select the presiding arbitrator within thirty (30) calendar days
after the latter of the two arbitrators has been appointed by the Parties. If a
Party fails to appoint its Party-appointed arbitrator or if the two
Party-appointed arbitrators cannot reach an agreement on the presiding
arbitrator within the applicable time period, then the AAA shall appoint the
remainder of the three arbitrators not yet appointed.

 

(iv) Place of Arbitration. Unless otherwise agreed by the Parties, the place of
arbitration shall be Dallas, Texas.

 

(v) Governing Law. The arbitration will be conducted pursuant to the procedural
and substantive laws of the State of Texas.

 

(vi) Language. The arbitration proceedings shall be conducted in the English
language and the arbitrator(s) shall be fluent in the English language.

 

(vii) Entry of Judgment. The award of the arbitral tribunal shall be final and
binding. Judgment on the award of the arbitral tribunal maybe entered and
enforced by any court of competent jurisdiction.

 

(viii) Notice. All notices required for any arbitration proceeding shall be
deemed properly given if sent in accordance with Section 5.1.

 

(ix) Qualifications and Conduct of the Arbitrators. All arbitrators shall be and
remain at all times wholly impartial, and, once appointed, no arbitrator shall
have any ex parte communications with any of the Parties concerning the
arbitration or the underlying dispute other than communications directly
concerning the selection of the presiding arbitrator, where applicable.

 

(x) Interim Measures. Either Party may apply to a court for interim measures (i)
prior to the constitution of the arbitral tribunal (and thereafter as necessary
to enforce the arbitral tribunal’s rulings) or (ii) in the absence of the
jurisdiction of the arbitral tribunal to rule on interim measures in a given
jurisdiction. The Parties agree that seeking and obtaining such interim measures
shall not waive the right to arbitration. The arbitrators (or in an emergency
the presiding arbitrator acting alone in the event one or more of the other
arbitrators is unable to be involved in a timely fashion) may grant interim
measures including injunctions, attachments and conservation orders in
appropriate circumstances, which measures may be immediately enforced by court
order. Hearings on requests for interim measures may be held in person, by
telephone, by video conference or by other means that permit the Parties to
present evidence and arguments.

 

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(xi) Costs and Attorneys’ Fees. The arbitral tribunal is authorized to award
costs and attorneys’ fees and to allocate them between the Parties. The costs of
the arbitration proceedings, including attorneys’ fees, shall be borne in the
manner determined by the arbitral tribunal.

 

(xii) Interest. The award shall include interest, as determined by the arbitral
tribunal, from the date of any default or other breach of this Agreement until
the arbitral award is paid in full. Interest shall be awarded at a rate equal to
the most recently available consensus prime rate as published in The Wall Street
Journal plus two percent (2%), not to exceed the highest rate allowed by law.

 

(xiii) Currency of Award. The arbitral award shall be made and payable in United
States dollars, free of any tax or other deduction.

 

(xiv) Exemplary Damages. The Parties waive their rights to claim or recover, and
the arbitral tribunal shall not award, any punitive, multiple, or other
exemplary damages (whether statutory or common law), except to the extent such
damages have been awarded to a third Party and are subject to allocation between
or among the Parties to the dispute.

 

(xv) Waiver of Challenge to Decision or Award. To the extent permitted by law,
any right to appeal or challenge any arbitral decision or award, or to oppose
enforcement of any such decision or award before a court or any governmental
authority, is hereby waived by the Parties, except with respect to the limited
grounds for modification or non-enforcement provided by any applicable
arbitration statute or treaty.

 

(xvi) Confidentiality. All negotiations, mediation, and arbitration relating to
a Dispute (including a settlement resulting from negotiation or mediation, an
arbitral award, documents exchanged or produced during a mediation or
arbitration proceeding, and memorials, briefs or other documents prepared for
the arbitration) are confidential and may not be disclosed by the Parties, their
employees, officers, directors, affiliates, counsel, consultants, and expert
witnesses, except to the extent necessary to enforce this section or any
arbitration award, to enforce other rights of a Party, or as required by law;
provided, however, that breach of this confidentiality provision shall not void
any settlement or award.

 

5.3    Assignment. This Agreement and the other agreements entered into by the
Parties in connection herewith will be binding on the Parties hereto and their
respective heirs, estates, guardians, executors, administrators, successors and
assigns; provided, however, other than the Parties and their respective heirs,
estates, guardians, executors, administrators, successors and assigns, nothing
in this Agreement express or implied, is intended to confer upon any other
Person any rights, remedies, obligations or liabilities of any nature whatsoever
under or by reason of this Agreement. This Agreement may only be assigned with
the approval and consent of Seller. Seller agrees not to withhold such consent
if: (i) the assignee is Dynamis Energy, LLC, an Idaho limited liability company
(“Dynamis”), or an affiliate of the Buyer jointly owned by Dynamis, (ii) such
assignee agrees in writing to assume the obligations of this Agreement and the
Closing Documents; and (iii) the assignee provides suitable guarantees of the
Buyer's obligations of this Agreement and the Closing Documents to the
reasonable satisfaction of the Seller.

 

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5.4    Independent Parties. The Parties shall at all times be independent
Parties. Neither Party is an employee, joint venture, agent or partner of the
other; neither Party is authorized to assume or create any obligations or
liabilities, express or implied, on behalf of or in the name of the other.

 

5.5    Survival. The Agreement in its entirety will survive the Closing until
the final payment made under the Payment Schedule in Article 1 and Exhibit C.

 

5.6    Severability. If any term of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, then (a) such
provision will be interpreted, construed or reformed to the extent reasonably
required to render the same valid, enforceable and consistent with the original
intent underlying such provision; (b) such provision will remain in effect to
the extent it is not invalid or unenforceable; and (c) the remainder of this
Agreement shall remain in full force and effect and shall in no way be
invalidated.

 

5.7    Waiver. A delay or failure in enforcing any right or remedy afforded
hereunder or by law shall not prejudice or operate to waive that right or remedy
or any other right or remedy for a future breach of this Agreement, whether of a
like or different character.

 

5.8    Governing Law. This Agreement, including any Exhibits attached hereto,
shall be construed in accordance with the substantive and procedural laws of the
United States and the State of Texas applicable to agreements executed and
wholly performed therein, without regard to rules or principles of conflict of
laws that might require the application of the laws of any other jurisdiction.

 

5.9    Entire Agreement. This Agreement, including any Exhibits attached hereto,
sets forth the entire agreement between the Parties and supersedes all
contracts, proposals or agreements, whether oral or in writing, and all
negotiations, discussions and conversations, between the Parties with respect to
the subject matter contained in this Agreement. Any policies, agreements or
understandings made between the Parties relating to the subject matter of this
Agreement and not explicitly set forth in this Agreement are void and
unenforceable. This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each Party hereto.

 

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5.10   Counterparts. This Agreement may be executed in counterparts, each of
which shall be considered an original hereof but all of which together shall
constitute one agreement. It is the express intent of the Parties to be bound by
the exchange of signatures on this Agreement via electronic transmissions or
original signatures.

 

 

 

SIGNATURE PAGE TO FOLLOW

 

 

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IN WITNESS WHEREOF, each of the Parties hereto, intending to be legally bound,
has executed this Agreement as of the date first set forth above.

 

 

Buyer:

Freestone Resources, Inc.

 

 

By: __/s/ Clayton Carter____________

Clayton Carter, President and CEO

 

 

Seller:

Infinity Web Systems, Inc. 401K Profit Sharing Plan

 

 

By: _/s/ Charles R. Conin, Jr.________

Charles R. Cronin, Jr., as Trustee

 

 

 

By: _/s/ Sheryl L. Cronin____________

Sheryl L. Cronin, as Trustee

 

 

 

 

 

 

 

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EXHIBIT A

 

 

 

 

 

 

 

 

 

 

 

 

INDEPENDENT ACCOUNTANT’S COMPILATION REPORT

 

 

March 16, 2015

 

To the Board of Directors of

C. C. Crawford Retreading Co., Inc.

Ennis, TX

 

We have compiled the accompanying statement of assets, liabilities, and
stockholder's equity-income tax basis of C. C. Crawford Retreading Co., Inc. (a
corporation) as of December 31, 2014 and the related statement of revenues and
expenses-income tax basis for the twelve months then ended. We have not audited
or reviewed the accompanying financial statements and, accordingly, do not
express an opinion or provide any assurance about whether the financial
statements are in accordance with the income tax basis of accounting.

 

Management is responsible for the preparation and fair presentation of the
financial statements in accordance with the income tax basis of accounting and
for designing, implementing, and maintaining internal control relevant to the
preparation and fair presentation of the financial statements.

 

Our responsibility is to conduct the compilation in accordance with Statements
on Standards for Accounting and Review Services issued by the American Institute
of Certified Public Accountants. The objective of a compilation is to assist
management in presenting financial information in the form of financial
statements without undertaking to obtain or provide any assurance that there are
no material modifications that should be made to the financial statements.

 

Management has elected to omit substantially all of the disclosures ordinarily
included in financial statements prepared in accordance with the income tax
basis of accounting. If the omitted disclosures were included in the financial
statements, they might influence the user's conclusions about the corporation's
assets, liabilities, equity, revenues, and expenses. Accordingly, the financial
statements are not designed for those who are not informed about such matters.

 

 

 

Yeldell, Wilson & Co., P.C.

Certified Public Accountants

 

 

 

 

 

C.C. Crawford Retreading Co. Inc.

STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY – INCOME TAX BASIS

As of December 31, 2014

ASSETS

CURRENT ASSETS     First State Bank Operating $          32,076.63   First State
Bank Payroll 3,066.74   Petty Cash 600.00   Accounts Receivable – Trade
99,927.00   Employee Advances 1,902.34   Inventory- Chunk Crum Rubber 44,874.44
  Inventory- Peel Crum Rubber 13,157.58   Regular Inventory         74,900.00
    Total Current Assets      270,504.73     PROPERTY AND EQUIPMENT     Land
104,611.45   Building 75,494.69   New Building Construction 421,051.00   Tools
and Equipment 488,853.38   Automotive Equipment 258,575.44   Building 75,892.06
  Leasehold Improvements 27,316.00     Less:  Accumulated Depreciation
     (905,625.76)       Net Property and Equipment 546,168.26     OTHER ASSETS  
  Deposits 80.00   Acquisition Cost 41,951.66   Financing 103,836.41   Loan Fees
4,003.75   Financing 2013 28,343.67     Less:  Accumulated Amortization
       (70,855.00)       Total Other Assets        107,360.49    
          TOTAL ASSETS $      924,033.48    

 

 

 

 

 

C.C. Crawford Retreading Co. Inc.

STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY – INCOME TAX BASIS

As of December 31, 2014

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES     Accounts Payable 45,224.49   Payroll Taxes Payable
110.24   Sales Tax Payable 2,610.09   Notes Payable-Current Portion
          49,957.64     Total Current Liabilities 97,900.46     LONG-TERM
LIABILITIES     Notes Payable – 2011 Dodge Ram 11,214.11   Notes Payable FSB
155,608.70   Notes – Current Portion          (49,957.64)     Total Long-Term
Liabilities          116,865.17            Total Liabilities 214,765.63    
STOCKHOLDERS’ EQUITY     Capital Stock 10,000.00   Additional Paid in Capital
432,184.02   Net Income (39,082.06)   Retained Earnings          306,165.89
    Total Stockholders’ Equity          709,267.85    

TOTAL LIABILITIES AND

STOCKHOLDERS’ EQUITY

 

$ 924,033.48

 

 

 

 

 

C.C. Crawford Retreading Co. Inc.

STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY – INCOME TAX BASIS

As of December 31, 2014

 

For the One Month and Twelve Months

Ended December 31, 2014

 

  Current % Year to Date % Revenue           Used Tire Sales
$              8,100.00 10.59 $          312,284.26 24.99   Repair Sales
26,031.50 34.04 438,959.40 35.13   Tire Disposal Sales 38,888.25 50.85
441,122.75 35.30   Scrap Recovery Sales 3,450.00 4.51 55,545.00 4.45   Crum
Sales                    0.00 0.00           1,608.26 0.13     Total Revenue
76,469.75 100.00 1,249,519.67 100.00           Cost Products: Shop        
  Tire Purchase 1,600.00 2.09 20,525.70 1.64   Repair Materials 901.16 1.18
34,772.81 2.78   Inventory Changes         (1,750.00) (2.29)         18,953.10
1.52     Total Cost Products: Shop 751.16 0.98 74,251.61 5.94           Shop
Cost           Shop Salaries and Commissions 7,591.88 9.93 97,629.13 7.81   Shop
Fuel and Oil (16.50) (0.02) 504.27 0.04   Shop Miscellaneous Expense 832.21 1.09
14,946.93 1.20   Shop Uniforms and Towels 278.29 0.36 2,851.28 0.23   Shop
Employee Insurance               231.59 0.30            2,742.15 0.22     Total
Shop Cost 8,917.47 11.66 118,673.76 9.50           Disposal Cost        
  Disposal Salaries and Comm. 11,805.21 15.44 114,751.73 9.18   Disposal Fuel
and Oil 785.50 1.03 10,831.47 0.87   Disposal Waste Service 2,696.10 3.53
9,825.88 0.79   Disposal Miscellaneous Expense 1,243.35 1.63 9,307.48 0.74
  Disposal Uniforms and Towels 19.20 0.03 172.60 0.01   Disposal Employee
Insurance               233.43 0.31             2,604.33 0.21     Total Disposal
Cost 16,782.79 21.95 147,493.49 11.80           Crum Rubber Cost                
  Sales Cost           Sales Salaries and Commission 12,507.08 16.36 156,323.44
12.51   Sales Fuel and Oil 632.99 0.83 11,833.40 0.95   Sales Car Allowance and
Repair 0.00 0.00 1,570.63 0.13   Sales Travel and Expense 52.30 0.07 1,765.15
0.14   Sales Entertainment 329.58 0.43 2,634.93 0.21   Sales Miscellaneous
Expense 403.95 0.53 13,105.36 1.05   Sales Employee Insurance
           2,015.26 2.64           25,730.60 2.06     Total Sales Cost 15,941.16
20.85 212,963.51 17.04

 

 

 

 

 

C.C. Crawford Retreading Co. Inc.

STATEMENT OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY – INCOME TAX BASIS

As of December 31, 2014

 

For the One Month and Twelve Months

Ended December 31, 2014

Driver and Truck Cost           Truck Salaries and Commission 5,503.40 7.20
108,034.97 8.65   Truck Fuel and Oil 5,105.55 6.68 91,935.75 7.36   Truck Travel
and Expense 0.00 0.00 2,757.17 0.22   Truck Miscellaneous Expense 4,562.39 5.97
61,361.34 4.91   Drivers Uniforms 30.00 0.04 186.00 0.01   Drivers Employee
Insurance                 1,272.72 1.66            18,413.55 1.47     Total
Driver and Truck Cost 16,474.06 21.54 282,688.78 22.62           Office Cost    
      Office Salaries and Commission 5,627.93 7.36 71,945.18 5.76   Office
Miscellaneous Expense 1,529.23 2.00 4,285.71 0.34   Office Employee Insurance
                2,074.22 2.71            27,959.33 2.24     Total Office Cost
9,231.38 12.07 104,109.22 8.34           Administrative Cost           Utilities
2,039.87 2.67 36,166.74 2.89   Telephone 309.92 0.41 4,048.77 0.32   Waste
Handling 170.02 0.22 2,044.14 0.16   Advertising 2,264.65 2.96 2,264.65 0.18
  Freight and Postage 196.00 0.26 1,349.30 0.11   Discounts (13.12) (0.02)
(154.88) (0.01)   Taxes and Licenses 26,333.06 34.44 33,623.30 2.69   Retirement
Expense 469.54 0.61 5,759.95 0.46   Payroll Taxes 2,580.25 3.37 42,028.88 3.366
  Vehicle Insurance 0.00 0.00 6,767.59 0.54   Property and Liabilities Insurance
2,200.25 2.88 53,789.45 4.30   Bad Debt Expense 0.00 0.00 248.21 0.02   Dues and
Subscriptions 0.00 0.00 250.00 0.02   Entertainment 4,000.00 5.23 4,000.00 0.32
  Miscellaneous Expense 305.14 0.40 33,518.16 2.68   Legal and Accounting 425.00
0.56 8,613.00 0.69   Insurance- Workers’ Comp 916.00 1.20 16,684.71 1.34   Bank
Charges and Fees 2.00 0.00 586.08 0.05   Penalties                      0.00
0.00                511.80 0.04     Total Administrative Cost 42,198.58 55.18
252,098.85 20.18           Officer Cost           Bank Fees 0.00 0.00 311.88
0.02   Officer Insurance                     0.00 0.00              1,361.40
0.11     Total Officer Cost                     0.00 0.00             1,673.28
0.13           Other Income (Expense)           Miscellaneous
                     0.00 0.00              (304.69) (0.02)     Total Other
Income (Expense)                      0.00 0.00              (304.69) (0.02)

 

 

        Income (Loss) Before           Federal Income Tax, Interest        
  Depreciation and Amortization (33,826.85) (44.24) 55,790.86 4.46          
Depreciation (13,450.12) (17.59) (50,147.00) (4.01) Amortization (2,654.00)
(3.47) (31,848.00) (2.55) Interest (854.32) (1.12) (12,844.92) (1.03) Federal
Income Tax            1,422.12 1.86                       0.00 0.00          
      Net Income (Loss) $    (49,363.17) (64.55) $       (39,082.06) (3.13)

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT B

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT B

CTR DUE DILIGENCE SCHEDULE

CATEGORIES

·     Ellis County Insurance Documents 2015 renewal

·     First State Bank Loan Documentation

·     CTR Payroll

·     CTR Permits

·     CTR Corporate Documents and Contracts

·     CTR Real Estate Data

·     TCEQ Tire Manifests (2011-2015)

·     CTR Appraisals ( 2011- 2015) and 2011 Phase One

·     CTR Equipment Assets (Attached as Exhibit B-1)

·     2004 McKay contract, appraisal and Phase One

 

The Categories are further defined in the list of documents that is attached as
Exhibit B-2

 

 

 

 

 

 

 

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[image_015.jpg]

 

 

 

 

 

Exhibit B-1 Equipment Listing

 

Tire repair equipment including Re-Build Lodi D-98, Akron De-lugger and parts
#929007TF-8, Champion Air compressor #2-ADL-4TG, Welder Ser. #LF241S60Y, CTR
Chopper #1, Ingersol Ram Air CompressorM#7100, Ser. #3041090, Unlimited
Resources Splitter, Unlimited Resources Wheel Crusher TC-350, Screen, Standard
Green Conveyor CASRSA47, HRA-12 Ser. #DM005931, Champion Air Compressor Ser.
#R70A13888, Seven Tire Stands, Big Rubber Extruder M902C Ser. #004, Boiler
Williams Davis w/ water softener Ser. #9284, Paint Booth Spray System, small
tools and equipment including skiving motors and drills. Office equipment
including 5 desks, 5 chairs, 5 computers, 4 printers, safe, 7 file cabinets, 3
tables, 3 credenza, small refrigerator and small microwave. Transportation
equipment including 2000 Freightliner P-12/3/01 VIN 1HTSCAAM4TH311723 Dump
Truck, Trailer 1980 Great Dane VIN M24180, Trailer 1996 Sure Pull VIN
1J9DG3626TJ143145, Trailer 1994 Fontaine VIN 4LF2E4829R3560544, Trailer 1995
Fontaine VIN 13N248302S1566466, Trailer 2008 Stream Trailer VIN
5GVFU16228W001768 and Pick-up 2004 Dodge Ram VIN 1D7HA18N54S675817. Wiggins M
#6000, 1989 Manitou M#T1002TC-D Ser. #LT10020145, IR Forklift M RT-706G Ser. #
151135 SHG, and Clark M CMP25 Ser. #0529-9586. Shredder and related equipment
including Granutech Model 160H Roto Grind Ser. #H059801, Abco Conveyor SB-200
Ser. #200-43, and Rice/Lake electric scale #4x4 HPLD-5K Ser. #CA2

 

 

 

 

 

 

 

  

EXHIBIT C

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT C to SPA (Loan Schedule v.CC June 23)

 

 

PmtNo.  Payment Date  Beginning Balance  Scheduled Payment  Extra Payment  Total
Payment  Principal  Interest  Ending Balance  1    7/23/2015  $1,020,000.00  
$—     $—     $—     $(10,200.00)  $—     $1,030,200.00   2    8/23/2015 
$1,030,200.00   $—     $—     $—     $(10,200.00)  $—     $1,040,400.00   3  
 9/23/2015  $1,040,400.00   $—     $—     $—     $(10,200.00)  $—    
$1,050,600.00   4    10/23/2015  $1,050,600.00   $—     $—     $—    
$(10,200.00)  $—     $1,060,800.00   5    11/23/2015  $1,060,800.00   $—    
$—     $—     $(10,200.00)  $—     $1,071,000.00   6    12/23/2015 
$1,071,000.00   $—     $—     $—     $(10,200.00)  $—     $1,081,200.00   7  
 1/23/2016  $1,081,200.00   $—     $—     $—     $(10,200.00)  $—    
$1,091,400.00   8    2/23/2016  $1,091,400.00   $—     $—     $—    
$(10,200.00)  $—     $1,101,600.00   9    3/23/2016  $1,101,600.00   $—    
$—     $—     $(10,200.00)  $—     $1,111,800.00   10    4/23/2016 
$1,111,800.00   $—     $—     $—     $(10,200.00)  $—     $1,122,000.00   11  
 5/23/2016  $1,122,000.00   $—     $—     $—     $(10,200.00)  $—    
$1,132,200.00   12    6/23/2016  $1,132,200.00   $—     $122,400.00  
$122,400.00   $(10,200.00)  $—     $1,020,000.00   13    7/23/2016 
$1,020,000.00   $34,991.29   $—     $34,991.29   $27,167.29   $10,224.00  
$995,232.71   14    8/23/2016  $995,232.71   $34,991.29   $—     $34,991.29  
$25,038.96   $9,952.33   $970,193.76   15    9/23/2016  $970,193.76  
$34,991.29   $—     $34,991.29   $25,289.35   $9,701.94   $944,904.41   16  
 10/23/2016  $944,904.41   $34,991.29   $—     $34,991.29   $25,542.24  
$9,449.04   $919,362.17   17    11/23/2016  $919,362.17   $34,991.29   $—    
$34,991.29   $25,797.66   $9,193.62   $893,564.50   18    12/23/2016 
$893,564.50   $34,991.29   $—     $34,991.29   $26,055.64   $8,935.65  
$867,508.86 

 

 

 

 

 

EXHIBIT C to SPA (Loan Schedule v.CC June 23)

 

 

 19    1/23/2017  $867,508.86   $34,991.29   $—     $34,991.29   $26,055.64  
$8,675.09   $841,192.66   20    2/23/2017  $841,192.66   $34,991.29   $—    
$34,991.29   $26,573.36   $8,411.93   $814,613.31   21    3/23/2017 
$814,613.31   $34,991.29   $—     $34,991.29   $26,845.15   $8,146.13  
$787,768.15   22    4/23/2017  $787,768.15   $34,991.29   $—     $34,991.29  
$27,113.60   $7,877.68   $760,654.55   23    5/23/2017  $760,654.55  
$34,991.29   $—     $34,991.29   $27,384.74   $7,606.55   $733,269.81   24  
 6/23/2017  $733,269.81   $34,991.29   $—     $34,991.29   $27,658.59  
$7,332.70   $705,611.22   25    7/23/2017  $705,611.22   $33,214.31   $—    
$33,214.31   $26,158.47   $7,055.84   $679,425.98   26    8/23/2017 
$679,425.98   $33,214.31   $—     $33,214.31   $26,420.05   $6,794.26  
$653,005.93   27    9/23/2017  $653,005.93   $33,214.31   $—     $33,214.31  
$26,684.25   $6,530.06   $626,321.68   28    10/23/2017  $626,321.68  
$33,214.31   $—     $33,214.31   $26,951.09   $6,263.22   $599,370.59   29  
 11/23/2017  $599,370.59   $33,214.31   $—     $33,214.31   $27,220.60  
$5,993.71   $572,149.98   30    12/23/2017  $572,149.98   $33,214.31   $—    
$33,214.31   $27,492.81   $5,721.50   $544,657.17   31    1/23/2018 
$544,657.17   $33,214.31   $—     $33,214.31   $27,767.74   $5,446.57  
$516,889.43   32    2/23/2018  $516,889.43   $33,214.31   $—     $33,214.31  
$28,045.42   $5,168.89   $488,844.02   33    3/23/2018  $488,844.02  
$33,214.31   $—     $33,214.31   $28,325.87   $4,888.44   $460,518.15   34  
 4/23/2018  $460,518.15   $33,214.31   $—     $33,214.31   $28,609.13  
$4,605.18   $431,909.02   35    5/23/2018  $431,909.02   $33,214.31   $—    
$33,214.31   $28,895.22   $4,319.09   $403,013.80   36    6/23/2018 
$403,013.80   $33,214.31   $—     $33,214.31   $29,184.17   $4,030.14  
$373,829.63   37    7/23/2018  $373,829.63   $33,214.31   $—     $33,214.31  
$29,476.01   $3,738.30   $344,353.62 

 

 

 

 

 

EXHIBIT C to SPA (Loan Schedule v.CC June 23)

 

 

 38    8/23/2018  $344,353.62   $33,214.31   $—     $33,214.31   $29,770.77  
$3,443.54   $314,582.84   39    9/23/2018  $314,582.84   $33,214.31   $—    
$33,214.31   $30,068.48   $3,145.83   $284,514.36   40    10/23/2018 
$284,514.36   $33,214.31   $—     $33,214.31   $30,369.17   $2,845.14  
$254,145.20   41    11/23/2018  $254,145.20   $33,214.31   $—     $33,214.31  
$30,672.86   $2,541.45   $223,472.34   42    12/23/2018  $223,472.34  
$33,214.31   $—     $33,214.31   $30,979.59   $2,234.72   $192,492.75   43  
 1/23/2019  $192,492.75   $33,214.31   $—     $33,214.31   $31,289.38  
$1,924.93   $161,203.37   44    2/23/2019  $161,203.37   $33,214.31   $—    
$33,214.31   $31,602.28   $1,612.03   $129,601.09   45    3/23/2019 
$129,601.09   $33,214.31   $—     $33,214.31   $31,918.30   $1,296.01  
$97,682.79   46    4/23/2019  $97,682.79   $33,214.31   $—     $33,214.31  
$32,237.48   $976.83   $65,445.31   47    5/23/2019  $65,445.31   $33,214.31  
$—     $33,214.31   $32,559.86   $654.45   $32,885.46   48    6/23/2019 
$32,885.46   $33,214.31   $—     $32,885.46   $32,556.60   $328.85   $—   

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT D

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$1,020,000.00 June 24, 2015

 

SECURED PROMISSORY NOTE

 

Section 1.      The Principal. AS HEREINAFTER STATED, for value received,
Freestone Resources, Inc., (“Maker”) promises to pay to Infinity Web Systems,
Inc. 401K Profit Sharing Plan (herein called “Lender”) at 1912 Maya Pradera
Lane, Moorpark, CA 93021, or any other place that the Holder of the Secured
Promissory Note (“Holder”) may designate in writing, the sum of ONE MILLION
TWENTY THOUSAND DOLLARS ($1,020,000) in legal and lawful money of the United
States of America, or the then outstanding principal amount hereof, together
with interest on any principal amounts remaining unpaid hereunder from date
hereof until maturity at the rate of twelve percent (12.00%) per annum until the
Secured Promissory Note (the “Note”) is paid in full.

Section 2.      Interest. Interest charges will be calculated on amounts
outstanding hereunder for actual days said amounts are outstanding on the basis
of a 365 day year for the actual number of days elapsed. At each payment date
and at maturity date interest then payable shall be calculated from the
beginning date on the unpaid amount of Note outstanding from time to time to
such date at the annual rate of interest over the elapsed term of the Note,
provided that (1) any interest previously paid shall be deducted from the
interest then payable, and (2) the total interest plus fees and charges paid to
Lender or Holder payable through such date shall not exceed the maximum amount
of interest Lender or Holder lawfully may charge on this Note from the beginning
date to such date. Unpaid and past due amount of Note, principal and interest,
shall bear interest at THE MAXIMUM LAWFUL RATE OF INTEREST PER ANNUM.

Section 3.      Payment. This Note together with interest due therein, is
payable as follows: (1) On or before June 23, 2016 one year of accrued interest
of ONE HUNDRED TWENTY-TWO THOUSAND FOUR HUNDRED DOLLARS ($122,400.000) shall be
due and payable and (2) thereafter, beginning on June 23, 2016, and continuing
thereafter on the first (1st) day of each month, twelve regular monthly
installments of principal and interest of THIRTY-FOUR THOUSAND NINE HUNDRED
NINETY-ONE DOLLARS AND TWENTY-NINE CENTS ($34,991.29), followed by twenty four
regular monthly installments of principal and interest of THIRTY-THREE THOUSAND
TWO HUNDRED FOURTEEN DOLLARS AND THIRTY-ONE CENTS ($33,214.31) each shall be
made with the total principal and all accrued interest fully paid and amortized
over the remaining thirty six (36) months continuing regularly and monthly
thereafter until June 23, 2019 at which time, principal and interest then
remaining unpaid, shall be then due and payable; interest being calculated on
the unpaid principal to the date of each installment paid and the payment made
credited first to the discharge of the interest accrued and the balance to the
reduction of the principal.

If the Holder has not received the full amount of any scheduled payment by the
end of five (5) calendar days after the date it is due, Maker will pay a late
charge (“Late Fee”) to the Holder. The amount of the Late Fee shall be five
percent (5%) of Maker's overdue payment of principal and interest. Maker will
pay this late charge promptly, but only once on each late payment. If the
payment is not made within thirty (30) days from the date specified, Maker shall
be in default. Holder and/or Lender agree(s) to notify Maker in writing no later
than fifteen (15) days prior to default when a Late Fee has been incurred.

 

 

 

Section 4.      Prepayment. Maker reserves the right to prepay this Note in any
amount at any time prior to maturity without penalty. However, at the Lender's
or Holder's option, all voluntary prepayments shall be applied to future
installments in inverse order of maturity.

Section 5.      Governing Law. This Note shall be governed by and construed in
accordance with Texas law and applicable federal law. The parties hereto intend
to conform strictly to the applicable usury laws. In no event, whether by reason
of demand for payment, prepayment, acceleration of the maturity hereof or
otherwise, shall the interest contracted for, charged or received by Lender or
any Holder of this Note hereunder or otherwise exceed the maximum amount
permissible under applicable law. If from any circumstance whatsoever interest
would otherwise be payable to Lender or any Holder of this Note in excess of the
maximum lawful amount, the interest payable to Lender or any Holder of this Note
shall be reduced automatically to the maximum amount permitted by applicable
law. If Lender or any Holder of this Note shall ever receive anything of value
deemed interest under applicable law which would apart from this provision be in
excess of the maximum lawful amount, an amount equal to any amount which would
have been excessive interest shall be applied to the reduction of the principal
amount owing hereunder in the inverse order of its maturity and not to the
payment of interest, or if such amount which would have been excessive interest
exceeds the unpaid balance of principal hereof, such excess shall be refunded to
Maker. All interest paid or agreed to be paid to Lender or any Holder of this
Note shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term (including any renewal or
extension) of such indebtedness so that the amount of interest on account of
such indebtedness does not exceed the maximum permitted by applicable law. The
provisions of this paragraph shall control all existing and future agreements
between Maker, Lender and/or any Holder of this Note.

Section 6.      Collateral. Payment hereof is secured by one hundred percent
(100%) of the common stock of C.C. Crawford Retreading Company, Inc. being
purchased by Maker hereunder and including all common or preferred stock or
equity instrument of any kind or manner, including but not limited to stock,
warrants, options and convertible note, issued by C. C. Crawford Retreading
Company, Inc. (the “CTR shares”) after the date of this Note as specified in the
Stock Purchase Agreement (the “SPA”) signed on this same date. The CTR shares
being purchased hereunder have been delivered to the Designated Agent under the
SPA and will remain in the Agent’s possession until payment in full of the Note
and notification by Lender or Holder to return the CTR shares to Maker. The
Maker shall not authorize or vote its shares in favor of any action that would
cause any dilution of the CTR Shares through any common or preferred stock or
equity instrument of any kind or manner, including but not limited to stock,
warrants, options or convertible note, to be issued by C. C. Crawford Retreading
Company, Inc.

Payment hereof is secured by a Second Deed of Trust, Security Agreement and
Financing Statement of even date herewith executed by the Maker hereof to
Massengill Schanfish, PLLC, Trustee, a copy of which is attached hereto as
Appendix A (the “Deed of Trust”), secured by the real estate described in said
Deed of Trust.

 

 

 

 

The Note is further secured by Maker’s grant of a security interest, secondary
to the security interest of First State Bank of Rice, in the following:
Refurbished Model Ml 60H (l 50HP) Roto-Grind Shredder complete with the
following design features and specifications: Infeed opening: 63"x79"; feed
hopper (standard); l50HP hydraulic drive motor; 150HPelectric hydraulic power
supply; 20" diameter solid steel rotor; 30 mm alloy steel wear-resistant
cutters; Bolt-on cutter blade holders; 20HP hydraulic power supply for deed ram
(integral to 150HP HPU); discharge screen (5/8" - 3/4"); variable ram speed
control (amperage load proportional); control/MCC Panel; operations/maintenance
manuals (2) and all after acquired equipment all as more fully described in the
UCC-1 Financing Statement, attached Appendix B hereto which is based on Exhibit
B-1 to the SPA.

Section 7. Default. The Maker shall be in default under the terms of this Note
upon the occurrence of any of the following events at the option of the Holder,
after the Maker’s failure to remedy within thirty (30) days of the event
occurring: 1) failure to pay, within five (5) days of the due date, the
principal or interest on this Note or any installment; and 2) the occurrence of,
and Maker’s failure to cure, any Default Event (as defined in the SPA).

Section 8. Recourse. Failure to pay any part of principal and interest of this
Note when due, or in the performance of any obligation in any instrument
securing or collateral to this Note, shall authorize the Lender or any Holder of
this Note to declare the whole of the same due and payable and said Lender or
any Holder of this Note may proceed to enforce payment of the same and exercise
any and all the rights and remedies provided by the laws of the State of Texas
as well as all other rights and remedies possessed by the Lender pursuant to the
terms of the SPA.

If this Note is placed in an attorney's hands for collection or collected by a
suit or through a bankruptcy, or probate, or any other court, either before or
after maturity, then in any of said events, the Maker agrees to pay to the
Lender or any Holder of this Note the reasonable costs of collection, expenses,
and attorneys' fees paid or incurred in connection with the collection or
enforcement of this Note, whether or not suit is filed, and the costs of any
suit and any attorneys' fees adjudged by a court in any action to enforce
payment of this Note or any part of it.

Section 9. Miscellaneous. Any modification or amendment to this Note must be set
forth in writing and executed by Maker and Lender and/or Holder. Each maker,
surety and endorser of this note expressly waives all notices, demands for
payment, presentations for payment, notice of intention to accelerate the
maturity, protest and notice of protest, as to this note and as to each, every
and all installments hereof.

Section 10. Termination and Release. Upon receipt of Full Payment (as defined in
the SPA), the liens against the collateral described herein shall automatically
terminate. At the request of Maker, Holder shall execute and deliver to Maker
such documents as Maker shall reasonably request to evidence such termination.

Freestone Resources, Inc.

 

_/s/ Clayton Carter______

 

By: Clayton Carter

Its: President

 

 

 

AFTER RECORDING RETURN TO:

Charles R. Cronin,Jr. Trustee

Infinity Web Systems, Inc. Plan

1912 Maya Pradera Lane

Moorpark, CA 93021

 

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.

 

DEED OF TRUST, SECURITY AGREEMENT AND FINANCING STATEMENT (WITH ASSIGNMENT OF
RENTALS)

 

Date: June 24, 2015

Grantors (whether one or more): c. c. CRAWFORD RETREADING COMPANY, INC., a Texas
Corporation Texas corporation

Grantors' Mailing Address: 101 Ave. D, Ennis, Texas 75119

Trustee: J. Ross Massengill, Massengill Schanfish, PLLC

Trustee' s Mailing Address: ___________________________________

Beneficiary: Infinity Web Systems, Inc. 401K Profit Sharing Plan

Beneficiary's Mailing Address: 1912 Maya Pradera Lane, Moorpark, CA 93021

Note:

Date: June 24, 2015

Amount:One Million Twenty Thousand AND N0/100 DOLLARS ($1,020,000.00)

Maker:Freestone Resources, Inc.

Payee:Infinity Web Systems, Inc. 401K Profit Sharing Plan

Final Maturity Date: June 23, 2019

 

Property (including any improvements):

 

 

 

BEING a tract or parcel of land situated in the City of Ennis, Ellis County,
Texas and being part of the John Hamilton Survey Abstract 448, and also being
part of Block C, of Southwest Industrial Park, an addition to the City of Ennis
as recorded in Volume 3 Page 128, now known as Cabinet A, Slide 600 of the Map
Records of Ellis County, and being more particularly described as these three
parcels:

 

1.      A 3.553 acre parcel legally described as Tract 7 C in the Southwest
Industrial Park, in the City of Ennis, Ellis County, Texas, also identified as
tax account 161945. This parcel has a street address of 101 W. Avenue D, Ennis,
Texas 75119 and is located at the south corner of West Avenue D and Oak Grove
Road.

2.      A 3.578 acre parcel legally described as Tract 1 C in the Southwest
Industrial Park, in the City of Ennis, Ellis County, Texas, also identified as
tax account 161944. This parcel has a street address of Jack McKay Blvd., Ennis,
Texas, 75119 and is located at the east corner of West Avenue D and Jack McKay
Blvd.

3.      A 3.01 acre parcel legally described as Part A Tract 1A in the Jack
McKay Industrial Park, in the City of Ennis, Texas, also identified as tax
account 161256. This Parcel has a street address of Jack McKay Blvd., Ennis,
Texas, 75119 and is located at the east corner of Oak Grove Road and Jack McKay
Blvd.

 

All as more fully described in the attached Exhibit A.

 

For value received and to secure payment of the note, Grantors convey to Trustee
in trust the property and all rights, titles, interest, estates, reversions and
remainders owned and to be owned by Grantors in and to the above described
premises and in and to the properties covered; all buildings and improvements
now or hereafter located on the lands herein described or mentioned; all rights,
title and interest now owned or hereafter acquired by Grantors in and to all
easements, streets, parking areas and rights-of-way of every kind and nature
adjoining the said lands and all public or private utility connections there to
and all appurtenances, servitude, rights, ways, privileges and prescriptions
thereunto; all goods, including equipment, machinery and other personal property
presently owned or hereafter acquired by Grantors, which are or are to become
fixtures in or on the above described real estate and which are necessary or
convenient for the operation of any building or buildings now or contemplated to
be hereafter located on said lands, including without limitation, all rights,
titles and interests of Grantors in and to any such goods and personal property
even if already subject to any prior lien or security interest; all rights,
titles and interests of Grantors in and to all timber to be cut from the real
estate covered hereby, all minerals in, under, and upon, produced and to be
produced from said real estate, and without limitation of the foregoing, any and
all rights, rents, revenues, benefits, leases, contracts, accounts, general
intangibles, money, instruments, documents, tenements, hereditament and
appurtenances appertaining to, generated from, arising out of or belonging to
the above-described properties or any part thereof (all of the aforesaid being
hereinafter sometimes called the "mortgaged property").

 

To have and to hold the mortgaged property unto Trustee, his successors in this
trust and his assigns, forever, and Grantors do hereby bind Grantors, their
respective heirs, legal representatives, successors and assigns, to warrant and
forever defend the mortgaged property unto Trustee, his successors and assigns,
forever, against the claim or claims of all persons whomsoever claiming or to
claim the same, or any part thereof.

 

This conveyance is made in trust, however, to secure and enforce the payment of
the promissory note(s) herein described of even date herewith, executed by
Grantors payable to the order of Beneficiary, such note providing in effect,
that if certain defaults occur, for the payment of the unpaid principal thereof
and payment of all attorney’s fees and other expenses of collection under
certain circumstances, and to secure the performance of all covenants and
agreements of Grantors herein.

 

This Deed of Trust shall secure, in addition to the Note, all funds hereafter
advanced by Beneficiary to or for the benefit of Grantors, as contemplated by
any covenant or provision herein contained or for any other purpose, and all
other indebtedness, of whatever kind or character, owing or which may hereafter
become owing by Grantors to Beneficiary, whether such indebtedness is direct or
indirect, primary or secondary, fixed or contingent, or arises out of or is
evidenced by note, deed of trust, open account, overdraft, endorsement, surety
agreement, guaranty, otherwise, it being contemplated that Grantors may
hereafter become indebted to Beneficiary in further sum or sums (all of the
aforesaid, including all amounts payable under the Note, being hereafter
sometimes called "said indebtedness"). Said indebtedness shall be payable at the
above stated address of Beneficiary or to such other place as Beneficiary may
hereafter direct in writing; and, unless otherwise provided in the instrument
evidencing said indebtedness, shall bear interest at the same rate per annum as
the Note bears, from date of accrual of said indebtedness until paid. In
addition, any and all attorney's fees and expenses of collection payable under
the terms of the Note shall be and constitute a part of said indebtedness
secured hereby. This Deed of Trust shall also secure all renewals, are
arrangements and extensions of any said indebtedness.

 

 

 

 

In order to better secure payment of said indebtedness, and to secure
performance of Grantors’ covenants and agreements set forth herein, Grantors do
hereby jointly and severally covenant and agree with Beneficiary and with
Trustee as follows:

 

(1) Grantors shall pay all of said indebtedness, together with the interest and
other appurtenant charges thereon, when the same shall become due, in accordance
with the terms of the Note and all other instruments evidencing said
indebtedness or evidencing any renewals, rearrangements or extensions of the
same, or any part thereof.

 

(2) Grantors represent and warrant that they have in their own right good and
indefeasible title in fee simple to the above described land, that the mortgaged
property is free from encumbrance superior to the liens and security interests
hereby erected, except as to the superior lien of First State Bank of Rice as
referenced in the Note and accompanying Stock Purchase Agreement, and unless
otherwise herein provided, and that Grantors have full right and authority to
make this conveyance. Grantors agree to maintain and preserve their legal
existence and all related rights, franchises and privileges. Grantors shall at
all times comply with and perform all obligations under any applicable laws,
statues, regulations or ordinances relating to the mortgaged property and
Grantors use and operation thereof.

 

(3) Grantors shall keep all buildings and other property covered by this Deed of
Trust insured against fire and lightning with extended coverage and against such
other risks as Beneficiary may require all in amounts shall be at least equal to
the lesser of either the indebtedness or 100% of full insurable value, such
insurance to be written in form and with companies acceptable to Beneficiary
pursuant to the Texas standard mortgagee clause, without contribution, and shall
deliver the policies of insurance to Beneficiary promptly as issued. Such
policies shall provide, by way of riders, endorsements or otherwise that the
insurance provided thereby shall not be terminated, reduced or otherwise limited
regardless of any breach of the representations and agreements set forth therein
and that no such policy shall be canceled, endorsed or amended to any extent
unless the issuer thereof shall have first given Beneficiary at least 30 days'
prior written notice. In case Grantors fail to furnish such policies,
Beneficiary at its option may procure such insurance at Grantors' expense. All
renewal and substitute policies of insurance shall be delivered to the office of
Beneficiary, premiums paid, at least ten (10) days before termination of the
insurance protection replaced by such renewal or substituted policies. In case
of loss, Beneficiary, at its option, shall be entitled to receive and retain the
proceeds of the insurance policies, applying the, same toward payment of said
indebtedness as Beneficiary shall see fit, or at Beneficiary's option,
Beneficiary may pay the same over wholly or in part to Grantors for the repair
of said building or buildings, or for the erection of a new building or
buildings in their place, or for any other purpose satisfactory to Beneficiary,
but Beneficiary shall not be obligated to see to proper application of any
amount paid over to Grantors. If Beneficiary elects to allow payment of all or
part of such proceeds to Grantors, such insurance proceeds payable to them are
sufficient to pay the costs of repair and restoration of the mortgaged property,
they shall promptly commence and carry out the repair, replacement, restoration
and rebuilding of any and all of the mortgaged property damaged or destroyed by
fire or other casualty so as to return same, to the extent practicable, to its
condition immediately prior to such damage to or destruct ion thereof. Grantors
shall not permit or carry on any activities within or relating to the mortgaged
property that is prohibited by the terms of any insurance policy covering any
part of the mortgaged property or which permits cancellation of or increase in
the premium payable for any insurance policy covering any part of the mortgaged
property. In the event of a foreclosure of this Deed of Trust, the purchaser of
the mortgaged property shall succeed to all the rights of Grantors, including
any right to unearned premiums, in and to all policies of insurance assigned and
delivered to Beneficiary pursuant to the provisions of this Deed of Trust.
Regardless of the types or amounts of insurance required and approved by
Beneficiary, Grantors shall assign and deliver to Beneficiary all policies of
insurance that insure against any loss or damage to the mortgaged property, as
collateral and further security for the payment of said indebtedness . Grantors
shall also obtain and maintain in force and effect such liability and other
insurance policies and protection as Beneficiary may from time to time specify.
All premiums on insurance policies shall be paid in the manner provided under
paragraph (36) hereof, if not paid in such manner, by Grantor making payment,
when due, directly to the insurance carrier.

 

 

 

(4) Grantor shall pay all taxes and assessments against the mortgaged property,
including, without limitation, all taxes in lieu of ad valorem taxes, as the
same become due and payable. In the event of the passage after date of this Deed
of Trust of any law not now in force for the taxation of mortgages, deeds of
trust, or indebtedness secured thereby, for State or local purposes, or the
manner of the operation of any such taxes so as to affect the interest of
Beneficiary, then in such event, Grantors shall bear and pay the full amount of
such taxes. If Grantors fail to pay any such taxes and assessments, including,
without limitation, taxes in lieu of ad valorem taxes and taxes against this
Deed of Trust or said indebtedness secured hereby, Beneficiary may pay the same,
together with all costs and penalties thereon, at Grantors' expense; provided,
however, that if for any reason payment by Grantors of any such new or
additional taxes would be unlawful or if the payment thereof would constitute
usury or render said indebtedness wholly or partially usurious under any of the
terms or provisions of the Note or this Deed of Trust, or otherwise, Beneficiary
may, at is option, declare said indebtedness due and payable with any
indebtedness unlawful or usurious deducted in which event Grantors shall
concurrently therewith pay to Beneficiary the remaining lawful and nonusurious
portion or balance of said taxes.

 

(5) All judgments, decrees and awards or payment for injury or damage to the
mortgaged property, and all awards pursuant to proceedings for condemnation
thereof, including interest thereon, are hereby assigned in their entirety to
Beneficiary, who shall apply the same first to reimbursement of all costs and
expenses incurred by Beneficiary in connection with such condemnation proceeding
and the balance shall be applied to said indebtedness in such manner as it may
elect; and Beneficiary is hereby authorized, in the name of Grantors, to execute
and deliver valid acquittances for, and to appeal from, any such award, judgment
or decree. If Beneficiary elects to allowed portion of the proceeds of any
condemnation proceeding to be paid to Grantors to be used in rebuilding,
restoration or repair of the mortgaged property, then the disbursement of such
proceeds shall be on such terms and subject to such conditions as Beneficiary
may specify. Grantors shall promptly notify Beneficiary of the institution or
threatened institution of any proceeding for the condemnation of any of the
mortgaged property. Beneficiary shall have the right to participate in any such
condemnation proceeding.

 

(6) If while this trust is in force, the title of Trustee to the mortgaged
property, or any part thereof, shall be endangered or shall be attacked directly
or indirectly, Grantors hereby authorize Beneficiary, at Grantors' expense,
shall take all necessary and proper steps to the defense of said title,
including the employment of counsel, the prosecution or defense of litigation,
and the compromise or discharge of claims made against said title.

 

(7) All costs and expenses incurred in performing and complying with Grantors'
covenants set forth herein shall be borne solely by Grantors. If, in pursuance
of any covenant herein contained, Beneficiary shall pay cut any money chargeable
to Grantors, or subject to reimbursement by Grantors under the terms of this
Deed of Trust, Grantors shall repay the same to Beneficiary immediately at the
place where the Note or other indebtedness hereby secured is payable, together
with interest thereon at the maximum lawful rate of interest permitted by
applicable state law to be charged to and paid by Grantors from and after the
date of Beneficiary's making such payment. The sum of each such payment shall be
added to the indebtedness hereby secured and thereafter shall form a part of the
same; and it shall be secured by this Deed of trust and by subrogation to all
the rights of the person, corporation, or body politic receiving such payment.

 

(8) Grantors shall keep every part of the mortgaged property in first-class
condition and presenting a first-class appearance, make promptly all repairs,
renewals and replacements necessary to such end, prevent waste to any part of
the mortgaged property, and do promptly all also necessary to such end; and
Grantors shall discharge all claims for labor performed and material furnished
therefor, and shall not suffer any lien of mechanics or materialmen therefor to
attach to any part of the mortgaged property. Grantors shall guard every part of
the mortgaged property from removal, destruction and damage, and shall not do or
suffer to be done any act whereby the value of any part of the mortgaged
property may be lessened. No building or other property now or hereafter covered
by the lien of this Deed of Trust shall be removed, demolished or materially
altered or enlarged, nor shall any new building be constructed, without the
prior written consent of Beneficiary. Grantors shall not initiate, join in, or
consent to any change in any private restrictive covenants, zoning ordinances or
other public or private restrictions limiting or defining the uses that may be
made of the mortgaged property or any part thereof without the prior written
consent of Beneficiary. Beneficiary and its agents or representatives shall have
access to the mortgaged property at all reasonable times in order to inspect
same and verify Grantors' compliance with their duties and obligations under
this document.

 

 

 

 

(9) Grantors shall not grant any easement or right-of-way whatsoever with
respect to any of the mortgaged property without the joinder therein of
Beneficiary, or rent or lease any of the mortgaged property for any purpose
whatsoever for a longer period than three (3) years without the prior written
consent of Beneficiary.

 

(10) In the event the ownership of the mortgaged property or any part thereof
becomes vested in a person other than Grantors, Beneficiary may, without notice
to Grantors and without waiving Beneficiary's rights under paragraph (29), deal
with such successor or successors in interest with reference to this Deed of
Trust and to said indebtedness in the same manner as with Grantors, without in
any way vitiating or discharging Grantors' liability hereunder or upon said
indebtedness. No sale of the mortgaged property and no forbearance on the part
of Beneficiary, and no extension of the time for the payment of said
indebtedness, given by Beneficiary, shall operate to release, discharge, modify,
change or effect, either in whole or in part, any original liability of Grantors
or t ha liability of the guarantors or sureties of Grantors or of any other
party liable for payment of said indebtedness or any part thereof.

 

(11) In the event Grantors shall default in the prompt payment, when due, of
said indebtedness secured hereby, or any part thereof, or fail to keep and
perform any of the covenants or agreements contained herein or in any other
document securing payment of the indebtedness secured hereby or in the event
Grantors or any person liable for said indebtedness, or any part thereof, files
a voluntary petition in bankruptcy or for corporate reorganization makes an
assignment for the benefit of any creditor, or is adjudicated a bankrupt or
insolvent, or if the mortgaged property or any property owned by a person liable
for said indebtedness is placed under control or in the custody of any court
receiver or if the Grantors abandon any of the mortgaged property, then, in any
such event, Beneficiary may declare the entire unpaid indebtedness secured
hereby immediately due and payable (GRANTORS SPECIFICALLY WAIVE THE REQUIREMENT
FOR PRESENTMENT, DEMAND FOR PAYMENT, AND NOTICE OF INTENT TO ACCELERATE
MATURITY) except to the extent otherwise provided in the Note.

 

(12) All the covenants and agreements of Grantors set forth herein shall survive
the execution and delivery of this document and shall continually in force until
the indebtedness is paid in full. Accordingly, if Grantors shall perform
faithfully each and 11 of the covenants and agreements herein contained, then,
and then only, this conveyance shall become null and void and shall be released
in due form, upon Grantors' written request and at Grantors' expense. Otherwise,
it shall remain in full force and effect. No release of this conveyance or the
lien thereof shall be valid unless executed by Beneficiary.

 

(13) If Grantors shall fail to perform faithfully any covenant or agreement
herein contained, Grantors hereby authorize and empower Trustee, and each and
all of his successors in this trust, at the request of Beneficiary, at any time
when Grantors shall be in default in the performance of any such covenant or
agreement, to sell the mortgaged property at public venue to the highest bidder,
for cash, at the door of the County Courthouse of the county of Texas in which
the mortgaged property or any part thereof is situated, as herein described,
between the hours of 10:00 a.m. and 4:00 p.m. of the first Tuesday of any month,
after advertising the time, place and terms of said sale, and the mortgaged
property to be sold, and mailing and filing notices as required by Section
51.002, Texas Property Code, as then amended and if such property is in more
than one county, one such notice of sale shall be posted at the Court house door
of and a copy filed in each county in which part of such property is situated
and such property may be sold at the court house door of any one of such
counties, and the notice so posted shall designate in which county such property
shall be sold. In addition to such posting of notice, the holder of the
indebtedness hereby secured shall serve notice as required by Section 51.002,
Texas Property Codes then amended on Grantors and on each other debt or, if any,
obligated to pay the indebtedness hereby secured according to records of such
holder. The affidavit of any person having knowledge of the facts to the effect
that such service was completed shall be prima facie evidence of the fact of
service. Grantors agree that no notice of any sale other than to the address of
Grantors set out herein shall be required, and agree that such address shall be
changed only by depositing notice of such change, enclosed in postpaid wrapper,
in a post office or official depository under the care and custody of the United
States Postal Service, certified mail postage prepaid, return receipt requested,
addressed to Beneficiary at the address for Beneficiary set out herein (or to
such other address as Beneficiary may have designated by notice given as above
provided to Grantors and such other debtors), any such notice of change of
address of Grantors or other debtors shall be effective upon receipt by
Beneficiary. Any change of address of Beneficiary shall be effective three (3)
business days after deposit thereof in the above described manner in the care
and custody of the United States Postal Service. Grantors do hereby authorize
and empower Trustee, and each and all of the successors in this trust, to sell
the mortgaged property, or any interest or estate in the mortgaged property
together or in lots or parcels, as such Trustee shall deem expedient, and to
execute and deliver to the purchaser or purchasers of the mortgaged property,
good and sufficient deed or deeds of conveyance thereof and bills of sale with
covenants of general warranty binding on Grantors and Grantors’ respective
heirs, legal representatives, successors and assigns. Trustee making such sale
shall receive the proceeds thereof and shall apply the same as follows: (i) he
shall pay the reasonable expense of executing this trust, including a commission
to himself of five percent (5%) of the gross proceeds of the sale; (ii) after
paying such expenses, he shall pay so far as may be possible the indebtedness
hereby secured, discharging first that portion of said indebtedness arising
under the covenant s or agreements herein contained and not evidenced by the
Note; (iii) he shall pay the residue, if any, to Grantors, their respective
heirs, legal representatives, successors or assigns, Payment of the purchase
price to Trustee shall satisfy the obligation of the purchaser at such sale
therefore, and he shall not be bound to look after the application thereof.

 

 

 

(14) Beneficiary in any event is hereby authorized to appoint a substitute
trustee, or a successor trustee, to act instead of the trustee named herein
without other formality than the designation in writing of a substitute or
successor trustee; and the authority hereby conferred shall extend to the
appointment of other successor and substitute trustees successively until the
indebtedness here by secured has been paid in full, or until said property is
sold hereunder, and each substitute and successor trustee shall succeed to all
of the rights and powers of the original trustee named herein. Such appointment
may be executed by any authorized agent of Beneficiary; and if Beneficiary be a
corporation and such appointment be executed in its behalf by any officer of
such corporation, such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without proof of any action by
the board of directors or any superior officer of the corporation, Grantors,
severally, hereby ratify and confirm any and all acts that Trustee, or his
successor or successors in this trust, shall do lawfully by virtue hereof.
Grantors hereby agree, on behalf of Grantors and Grantors' respective heirs,
legal representatives, successors and assigns, that the recitals contained in
any deed or deeds or other instrument executed in due from by any Trustee or
substitute trustee, acting under the provisions of this instrument, shall be
prima facie evidence of the facts recited, and that it shall not be necessary to
prove in any court, otherwise that by such recitals, the existence of the facts
essential to authorize the execution and delivery of such deed or deeds or other
instrument and the passing of title thereby, and all prerequisites and
requirements of any sale or sales shall be conclusively presumed to have been
performed, and all persons subsequently dealing with the mortgaged property
purported to be conveyed by such deed or deeds or other instrument, including
without limitation, the purchaser or purchasers thereof, shall be fully
protected in relying upon the truthfulness of such recitals.

 

(15) The purchaser at any trustee's or foreclosure sale hereunder may disaffirm
any easement granted, or rental or lease contract made, in violation of any
provision of this Deed of Trust, unless consented to in writing by Beneficiary,
and may take immediate possession of the mortgaged property free from, and
despite the terms of, such grant of easement and rental or lease contract.

 

(16) Beneficiary may bid and being the highest bidder therefor, become the
purchaser of any or all of the mortgaged property at any trustee's or
foreclosure sale hereunder and shall have the right to credit the amount of the
bid upon the amount of the indebtedness owing to Beneficiary, in lieu of cash
payment.

 

(17) Grantors hereby authorize Beneficiary, if and whenever it shall desire, to
demand and receive, in Grantors' right, all sums that may become due under any
and each oil, gas, mineral or other lease, rental contract and easement contract
pertaining to all or any part of the mortgaged property, and when received to
apply the same on said indebtedness. No demand for, and no receipt of
application of, any such sum shall be deemed to minimize, subordinate or affect
in any way the lien, security interest or right s hereunder of Beneficiary, or
any rights of a Purchaser of the mortgaged property at a trustee's or
foreclosures hereunder, as against the person from whom such sum was demanded or
received, or his legal representatives, successors or assigns, or anyone
claiming under such lease, rent al or easement contract.

 

(18) Any part of the mortgaged property may be released by Beneficiary without
affecting the lien, security interest and right s hereof against the remainder.
The lien, security interest and rights hereby granted shall not affect or be
affected by any other security taken for the said indebtedness or any part
thereof. The taking of additional security, or the extension or renewal of said
indebtedness or any part thereof, shall at no time release or impair the lien,
security interest and rights granted hereby, or affect the liability of any
endorser, guarantor or surety, or improve the right of any junior lienholder;
and this Deed of Trust, as well as any instrument given to secure any renewal or
extension of said indebtedness, or any part hereof, shall be and remain first
and prior lien and security interest on all of the mortgaged property not
expressly released, until the said indebtedness is completely paid.

 

 

 

 

(19) To further secure said indebtedness, Grantors hereby grant a security
interest to Beneficiary in and to all personal property hereinabove described
(all of such personal property and the proceeds thereof being herein called the
"collateral", but the mention of proceeds of collateral herein shall not be
construed as an authorization for the sale or surrender by Grantors of
collateral and collateral as used in this Deed of Trust shall be included in the
term "mortgaged property" when used herein). This document shall constitute a
SECURITY AGREEMENT as well as a mortgage and deed of trust. The following
applies with respect to collateral:

 

(A) In addition to and cumulative of any other remedies granted in this Deed of
Trust to Beneficiary, Beneficiary may, upon default hereunder, proceed under
Chapter 9 of the Texas Business and Commerce Code as now adopted and existing
and as it may hereafter be amended or succeeded (hereinafter called "Uniform
Commercial Code") as to all or any part of the collateral and shall have and may
exercise with respect to all or any part of the collateral all of the rights,
remedies and powers of a secured part under the Uniform Commercial Code,
including, without limitation, the right and power to repossess, retain and to
sell at public or private sale or sales, or otherwise dispose of, lease or
utilize the collateral or any part thereof and to dispose of the proceeds in any
manner authorized or permitted under the applicable provisions of the Uniform
Commercial Code, and to apply the proceeds thereof toward payment of
Beneficiary's reasonable attorneys' fees and other expenses and costs of
pursuing, searching for receiving, taking, keeping, storing, advertising, and
selling the collateral thereby incurred by Beneficiary, and toward payment of
said indebtedness in such order and manner as Beneficiary may elect consistent
with the provisions of the Uniform Commercial Code Nothing in this paragraph
shall be construed to impair or limit any other right or power to which
Beneficiary may be entitled at law or in equity.

 

(B) Among the rights of Beneficiary upon default and acceleration of the
indebtedness pursuant to the provisions hereof, and without limitation,
Beneficiary shall have the right (but not the obligation), without being deemed
guilty of trespass and without liability for damage thereby occasioned, (i) to
enter upon any premises where said collateral may be situated and take
possession of the collateral, or render it unusable or dispose of the collateral
on Grantors' premises, and Grantors agree not to resist or to interfere, and
(ii) to take any action deemed necessary or appropriate or desirable by
Beneficiary at Beneficiary's option and in its discretion, to repair, refurbish
or otherwise prepare the collateral for sale, lease or other use or disposition
as herein authorized. Beneficiary may at Beneficiary's discretion require
Grantors to assemble the collateral and make it available to Beneficiary at a
place designated by Beneficiary that is reasonably convenient to both parties.

 

(C) Beneficiary shall give Grantors notice, by certified mail, postage prepaid,
of the time and place of any public sale of any of the collateral or of the time
which any private sale or other intended disposition thereof is to be made by
sending notice to Grantors at the addresses of Grantors set out herein at least
five (5) days before the time of the sale or other disposition, which provisions
for notice Grantors and Beneficiary agree are reasonable; provided, however,
that nothing herein shall preclude Beneficiary from proceeding as to both real
and personal property in accordance with Beneficiary's rights and remedies in
respect to real property as provided in the Uniform Commercial Code, and without
any notice to Grantors except for the notices provided for in paragraph (13)
hereof.

 

 

(D) To the extent such may now or hereafter be permitted under Texas law,
Beneficiary is authorized to execute and file financing statements and
continuation statements under the Uniform Commercial Code with respect to the
collateral without joinder of Grantors in such execution or filing. Grantors
shall execute and deliver to Beneficiary such financing statements, continuation
statements and other documents relating to the collateral as Beneficiary may
reasonably request from time to time to preserve and maintain the priority of
the security interest created by this Deed of Trust and shall pay to the
Beneficiary on demand any expenses and attorneys' fees incurred by Beneficiary
in connection with the preparation, execution, and filing of this Deed of Trust
and of any financing statements, continuation statements, partial releases,
termination statements or other documents necessary or desirable to continue or
confirm Beneficiary’s security interest or any modification thereof. This
document, and any carbon, photographic or other reproduction of this document
may be filed by Beneficiary and shall be sufficient as a financing statement.
All or part of the collateral is or is to become fixtures on the real estate
constituting a portion of the mortgaged property, but this statement shall not
impair or limit the effectiveness of this document as a security agreement or
financing for other purposes, and this Deed of Trust shall constitute a fixture
financing statement, and, as such, shall be filed for record in the real estate
records of the county in which the land covered hereby is located. Grantors
shall not change Grantors' name without the prior express written consent of
Beneficiary. The name of the record owner of the land covered hereby is the
party or parties herein as Grantors.

 

 

 

(E) Unless otherwise disclosed to Beneficiary as herein provided, Grantors agree
that, except for the security interest granted hereby in the collateral,
Grantors are the owners of the collateral free of any adverse claim, security
interest or encumbrance, and Grantors shall defend the collateral against all
claims and demands of any person at any time claiming the same or any interest
therein. Grantors have not heretofore signed any financing statement and no
financing statement signed by Grantors is now on file in any public office
except those statements, true and correct copies of which have been delivered to
Beneficiary. So long as any amount remains unpaid on said indebtedness, Grantors
shall not execute and there shall not be filed in any public office any such
financing statement or statements affecting the collateral other than financing
statements in favor of Beneficiary hereunder.

 

(F) The security interest granted herein shall not be construed or deemed to
constitute Beneficiary or Trustee as a trustee or mortgagee in possession of the
mortgaged property so as to obligate Beneficiary or Trustee to lease the
mortgaged property or attempt to do the same, or to take any action, incur any
expenses or perform or discharge any obligation, duty or liability with respect
to the mortgaged property or any part thereof or otherwise.

 

(20) In addition to and cumulative of any other remedies granted in the Deed of
Trust, the real property, improvements, personal property, leases, rents and
other collateral or security comprising the mortgaged property may be sold in
one or more public sales pursuant to Texas Property Code §51.002 and the Texas
UCC. Beneficiary shall be entitled to foreclose its security interests against
the personal property in accordance with any other rights and remedies
Beneficiary may have as a secured party under the Texas UCC. Provided, however,
unless Beneficiary notifies Grantors to the contrary, Grantors agree that
Beneficiary and Trustee shall proceed under Texas UCC §9.604 (relating to a
security agreement covering both real and person.al property), and title to all
of the Property shall be conveyed to the purchaser at such public sale,
including without limitation the real property, improvements, personal property,
leases, rents, and other collateral or security comprising the mortgaged
property. Grantors agree that notice of sale of the mortgaged property provided
in this paragraph and pursuant to Texas Property Code §51.002 is and shall
constitute commercially reasonable notice of the sale of the mortgaged property.

 

(21) The invalidity, or unenforceability in particular circumstances, of any
provision of this Deed of Trust shall not extend beyond such provision or such
circumstances and no other provision of this instrument shall be affected
thereby. It is the intention of the parties hereto to comply with the usual laws
of the State of Texas; accordingly, it is agreed that notwithstanding any
provisions to the contrary in the Note or any instrument evidencing said
indebtedness; in this Deed of Trust or in any of the documents or instruments
securing payment of said indebtedness or otherwise relating thereto that in no
event shall the Note or such documents require the payment or permit the
collection of interest in excess of the maximum amount permitted by such laws.
If any such excess of interest is contracted for, charged or received, under the
Note or any instrument evidencing said indebtedness, under this Deed of Trust or
under the terms of any other documents securing payment of said indebtedness or
otherwise relating thereto, or in the event the maturity of any of said
indebtedness is accelerated in whole or in part, or in the event that all or
part of the principal or interest of said indebtedness shall be prepaid, so that
under any of such circumstances, the amount of interest contracted for charged
or received, under the Note or any instrument evidencing said indebtedness,
under this Deed of Trust or under any of the instruments securing payment of
said indebtedness or otherwise relating thereto, on the amount of principal
actually outstanding from time to time under the Note and other instruments
evidencing said indebtedness, shall exceed the maximum amount of interest
permitted by the usury laws of the State of Texas, then in any such event (a)the
provisions of this paragraph shall govern and control, (b)neither Grantors nor
any other person or entity now or hereafter liable for the payment of the Note
or any instrument evidencing said indebtedness shall be obligated to pay the
amount of such interest to the extent that is in excess of the maximum amount of
interest permitted by the usury laws of the State of Texas any such excess that
may have been collected shall be either applied as a credit against the then
unpaid principal amount hereof or refunded to Grantors, at the holder's option,
and (c) the effective rate of interest shall be automatically reduced to the
maximum lawful contract rate allowed under the usury laws of the State of Texas
as now or hereafter construed by the courts having jurisdiction thereof. It is
further agreed that without limitation of the foregoing, all calculations of the
rate of interest contracted for, charged or received under the Note, or any
instrument evidencing said indebtedness, under this Deed of Trust or under such
other documents that are made for the purpose of determining whether such rate
exceeds the maximum lawful contract rate, shall be made, to the extent permitted
by the laws of the State of Texas, by amortizing, prorating, allocating and
spreading in equal parts during the period of the full stated term of the loans
evidenced by the Note or the instruments evidencing said indebtedness, all
interest at any time contracted for, charged or received from Grantors or
otherwise by the holder or holders hereof in connection with such loans.

 

 

 

(22) Grantors, or Grantors' respective heirs, legal representatives, successors
or assigns, shall not have or assert, and do hereby waive, any right, under any
statute or rule of law pertaining to the marshaling of assets, a sale in inverse
order of alienation, the exemption of homestead, the administration of estates
of decedents, or other matter whatsoever, to defeat, reduce or affect the lien,
security interest and rights of Beneficiary, under the terms of this Deed of
Trust, to a sale of the mortgaged property for the collection of said
indebtedness (without any prior or different resort for collection), or the
right of Beneficiary, under the terms of this Deed of Trust, to the payment of
said indebtedness out of the proceeds of sale of the mortgaged property in
preference to every other person and claimant (only reasonable expenses as
aforesaid being first deducted).

 

(23) It is agreed that if default be made in the payment of any installment of
the Note or other indebtedness secured by this Deed of Trust, or in the
observance or performance of any covenant or agreement of Grantors contained or
referred to herein, the holder of said indebtedness or any part thereof under
which such default occurs shall have the option after the giving of any notice
required by the Note, if any, to proceed with foreclosure in satisfaction of
such item either through the courts or by directing Trustee or his successors in
trust to proceed as if under a full foreclosure, conducting the sale as herein
provided, and without declaring the whole indebtedness due, and provided that if
sale is made because of default of an installment, or a part of an installment,
such sale may be made subject to the unmatured part of the Note or other
indebtedness secured by this Deed of Trust; and it is agreed that such sale, if
so made, shall not in any manner affect the unmatured portion of said
indebtedness, but as to such unmatured portion of said indebtedness, this Deed
of Trust shall remain in full force and effect just as though no sale had been
made under the provisions of this paragraph. It is further agreed that several
sales may be made hereunder without exhausting the right of sale for any
unmatured portion of said indebtedness, it being the intention of the parties
hereto to provide for a foreclosure and sale of the security for any matured
portion of said indebtedness without exhausting the power to foreclose and to
sell the security for any other portion of said indebtedness whether matured at
the time or subsequently maturing. It is agreed that an assignee holding any
installment or part of any installment of the Note or other indebtedness secured
hereby shall have the same powers as are hereby conferred on the holder of said
indebtedness to proceed with foreclosure on a matured installment or
installments, and also to require Trustee or successors in trust to sell the
mortgaged property or any part hereof; but if an assignee forecloses or causes a
sale to be made to satisfy any installment, part of an installment, or
installments, then such foreclosure of sale shall be made subject to all of the
terms and provisions hereof with respect to the unmatured part of the Note and
other indebtedness secured hereby owned by the then holder of such indebtedness.

 

(24) It is expressly agreed that (i) no waiver of any default on the part of
Grantors or breach of any of the provisions of this Deed of Trust shall be
considered a waiver of any other or subsequent d e fault or breach, and no delay
or omission in exercising or enforcing the rights and powers herein granted
shall be construed as a waiver of such rights and powers, and likewise no
exercise or enforcement of any rights or powers hereunder shall be held to
exhaust such rights and powers, and every such right and power may be exercised
from time to time; (ii) any failure by Beneficiary to insist upon the strict
performance by Grantors of any of the terms and provision hereof shall not be
deemed to be a waiver of any of the terms and provisions hereof, and Beneficiary
not withstanding any such failure, shall have the right thereafter to insist
upon the strict performance by Grantors of any and all of the terms and
previsions of this Deed of Trust; (iii) neither Grantors nor any other person
now or hereafter obligated for the payment of the whole or any part of said
indebtedness shall be relieved of such obligation by reason of the failure of
Beneficiary or Trustee to comply with any request of Grantors, or of any other
person so obligated, to take act ion to foreclose this Deed of Trust or
otherwise enforce any of the provisions of this Deed of Trust or any obligations
secured by this Deed of Trust, or by reason of the subordination in whole or in
part by Beneficiary of the lien, security interest or rights evidenced hereby,
or by reason of any agreement or stipulation with any subsequent owner or owners
of the mortgaged property extending the time of payment or modifying the terms
of said indebtedness or this Deed of Trust without first having obtained the
consent of Grantors of such other person, and, in the latter event, Grantors and
all such persons shall continue liable to make such payments according to the
terms of any such agreement of extension or modification unless expressly
released and discharged in writing by Beneficiary: (iv) regardless of
consideration, and without the necessity for any notice to or consent by the
holder of any subordinate lien or security interest on the mortgaged property,
Beneficiary may release the obligation of anyone at any time liable for any of
said indebtedness or any part of the security held for said indebtedness and may
extend the time of payment or otherwise modify the terms of said indebtedness
and of this Deed of Trust without, as to the security or the remainder thereof,
in anywise impairing or affecting the lien or security interest of this Deed of
Trust or the priority of such lien or security interest, security for the
payment of said indebtedness as it may be so extended or modified, over any
subordinate lien or security interest; (v) the holder of any subordinate lien or
security interest shall have no right to terminate any le se affecting the
mortgaged property whether or not such lease be subordinate to this Deed of
Trust; and (vi) Beneficiary may resort for the payment of said indebtedness to
any security therefor held by Beneficiary in such order and manner as
Beneficiary may elect.

 

 

 

(25) In the event that there be a Trustee's sale hereunder, and, if at the time
of such sale, Grantors, or their heirs, legal representative, successors or
assigns, are occupying the mortgaged property so sold, each and all shall
immediately become tenant of the purchaser at such sale, which tenancy shall be
a tenancy from day to day, terminable at the will of either tenant or landlord,
at a reasonable rental per day based upon the value of said property, such
rental to be due daily to the purchaser. An action of forcible detainer and/or
any other legal proceedings shall lie if the tenant shall hold over after a
demand in writing for possession of said property; and this agreement and
Trustee's deed shall constitute a lease and agreement under which the tenant’s
possession, each and all arose and continued.

 

(26) In the event any portion of said indebtedness is not, for any reason
whatsoever, secured by this Deed of Trust on the mortgaged property, the full
amount of all payments made on said indebtedness shall first be applied to such
unsecured portion of said indebtedness until the same has been fully paid.

 

(27) Notwithstanding anything to the contrary herein contained, Grantors have
GRANTED, BARGAINED, ASSIGNED, TRANSFERRED, SET OVER, SOLD and CONVEYED, and by
these presents does GRANT, BARGAIN, ASSIGN, TRANSFER, SET OVER, SELL and CONVEY,
all existing or future leases or rental agreements (hereinafter referred to as
“Leases”) and all existing or future rents, royalties, income and profits
(hereinafter referred to as "Rents" of the mortgaged property unto Beneficiary;
TO HAVE AND TO HOLD the Leases and the Rents unto Beneficiary, forever, and
Grantors do hereby bind themselves, their heirs, executors, administrators,
successors, and assigns to warrant and forever defend the title to the Leases
and the Rents unto Beneficiary against every person whomsoever lawfully claiming
or to claim the same or any part thereof. Grantors and Beneficiary intend this
assignment to be absolute, unconditional and presently effective, and not an
assignment for additional security only. Beneficiary hereby grants to Grantors a
limited license (the “License”) to exercise and enjoy all the rights and
benefits of the landlord or lessor of the Leases and the Rents, including
without limitation, the right to collect, demand, sue for attach, levy, recover,
and receive the Rents, as and when, but not before, they become due and payable,
and to give proper receipts, releases, and acquittances therefor. Grantors
hereby agree to receive all Rents and hold the same as a trust fund to be
applied, and to apply the Rents so collected, first to the payment of the
Indebtedness, next to the payment of the taxes and assessments on the Property
and the insurance premiums required by the terms of the Loan Documents and then
to the costs of maintaining, repairing and operating the Property pursuant to
the requirements of the Loan Documents and the Leases. Thereafter, Grantors may
use the balance of the Rents collected in any manner not inconsistent with the
Loan Documents. Upon the occurrence of an Event of Default Beneficiary shall
have the complete right, power and authority hereunder then or thereafter to
terminate the License and then and thereafter, without taking possession of the
Property in Grantors' name to collect, demand sue for, attach levy, recover and
receive the Rents and to give proper receipts, releases and acquittances
therefor, and after deducting all reasonably incurred costs and expenses of
operation and collection, including reasonable attorney’s fees, to apply the net
proceeds thereof in reduction or repayment of the Indebtedness in such order of
priority as Beneficiary may determine in its sole discretion. Upon Beneficiary's
termination of the License, and without regard to the adequacy of the security,
with or without any action or proceeding through any person or by any agent,
Beneficiary may and shall have the complete right power and authority hereunder,
then or thereafter, to answer upon, the possession of, manage and operate the
Property, or any part thereof; to make, modify enforce, cancel or accept
surrender of any Lease; to remove and evict any tenant or lessee under any of
the Leases; to increase or decrease the Rents; and to decorate, clean and repair
and otherwise do any act or incur any cost or expense which Beneficiary may deem
reasonably necessary to protect the status and value of the Property. Grantors
shall (i) submit the Leases to Beneficiary for approval prior to the execution
thereof, (ii) perform and comply with any and all representations, warranties,
covenants, and agreements expressed as binding upon the landlord or lessor under
any Lease,(iii) maintain each of the Leases in full force and effect during the
term thereof (iv) appear in and defend any action or proceeding in any manner
connected with any of the Leases, and (v) deliver to Beneficiary copies of the
Leases and such further information, and execute and deliver to Beneficiary such
further assurances and assignments with respect to the Leases, as Beneficiary
may from time to time request. Without Beneficiary’s prior written consent,
Grantors shall not (i) do or knowingly permit to be done anything to impair the
value of any of the Leases, (ii) except for security or similar deposits,
collect any of the Rent more than one month in advance of the time when the same
becomes due under the terms of any Lease, (iii) discount any future accruing
Rents, (iv) amend modify, or, terminate any of the Leases or (v) assign or grant
a security interest in or to any of the Leases or the Rents.

 

 

 

(28) This Assignment shall not be deemed or construed to constitute Beneficiary
as a "mortgagee in possession” of the Property, to obligate Beneficiary to lease
the Property or attempt to do same, or to take any action, incur any expense or
perform or discharge any obligation, duty or liability whatsoever under any of
the Leases or otherwise. So long as any part of the Indebtedness remains unpaid,
the fee and leasehold estates to the Property shall not merge but rather shall
remain separate and distinct, notwithstanding the union of such estates either
in Grantors’ Beneficiary, any tenant or Lessee, or any third party purchase or
otherwise. Grantors shall indemnify and hold harmless Beneficiary and Trustee
from and against any and all liability, loss, cost, damage, or Expense which
Beneficiary or Trustee may incur under or by reason of this assignment, or for
any action taken by Beneficiary and/or Trustee hereunder, or by reason of or in
defense of any and all claims and demands whatsoever which may be asserted
against Beneficiary and/or Trustee arising out of the Leases or with respect to
the Rents regardless of whether the claims or causes of action of whatever
nature re founded in whole or in part upon the negligence (either act or
omission) of Beneficiary or Trustee. In the event Beneficiary and/or Trustee
incurs any such liability, loss, cost, damages or expense, the amount thereof
together with all reasonable attorneys' fees shall be payable by Grantors to
Beneficiary and/or Trustee immediately, without demand, and shall be deemed a
part of the Indebtedness. The Rents shall be deemed earned over the entire
period to which they relate, without regard to when the Rents are paid or
uncollected. Upon the sale of the Property pursuant to the Loan Documents, by
foreclosure or otherwise, any of the Rent s which are properly allocable to a
period of time following such sale shall be conveyed to the purchaser at such
sale, and Grantors shall pay the amount thereof immediately upon demand
therefor. Upon payment in full of the Indebtedness, and performance of all
obligations secured by the Loan Documents, this assignment shall terminate and
be of no further force and effect, and all rights, titles, and interests
conveyed pursuant to this assignment shall become vested in Grantors without the
necessity of any further act or requirement by Grantors, Trustee, or
Beneficiary.

 

(29) To the extent that proceeds of the Note are used to pay any prior
indebtedness secured by the outstanding lien, security interest, charge or prior
encumbrance against the mortgaged property, such proceeds have been advanced by
Beneficiary a t Grantors' request; and Beneficiary shall be subrogated to any
and all rights, powers, equities, liens and security interests owned or granted
by any owner or holder of such prior indebtedness, irrespective or whet her said
security interests, lien, charges or encumbrances are released of record.

 

(30) It shall be a default hereunder if the mortgaged property, or any part
thereof, or any interest therein, (other than items of personalty which have
become obsolete or worn beyond practical use and which have been replaced by
adequate substitutes having a value equal to or greater than the replaced items
when new) shall become vested in any party other than Grantors, whether by
operation of law or otherwise, without the prior written consent of Beneficiary,
which consent may be withheld at Beneficiary's sole option and discretion. If
Beneficiary should give its prior written consent to any sale or conveyance of
the mortgaged property, Grantors will not sell all or any portion of the
mortgaged property unless the purchaser, as a part of the consideration, shall,
at the option of Beneficiary, either (a) expressly agree to assume the payment
of the indebtedness hereby secured or (b) expressly agree that the title and
rights of such purchaser are and shall remain unconditionally subject to all of
the terms of this Deed of Trust for the complete fulfillment of all obligations
of the Grantors of this Deed of Trust hereunder, and unless also, the deed shall
expressly set forth such agreement of the purchaser; neither will Grantors grant
any easement, create any subdivision or plat nor create any restrictive covenant
whatsoever with respect to any of the mortgaged property without the joinder
herein of Beneficiary, or rent or lease any of the mort gaged property for any
purpose whatsoever for a period longer than three (3) years without the prior
written consent of Beneficiary, which consent may be withheld at Beneficiary's
sole option and discretion. With respect to any Grantors that is a corporation,
partnership or entity other than an individual, it shall constitute a default
hereunder if there is a change in ownership of more than fifty (50%) percent of
the ownership of such entity.

 

 

 

(31) Any consent by Beneficiary to the transfer of title to the mortgaged
property may be predicated upon any terms, conditions, and covenants deemed
advisable or necessary in the sole discretion of Beneficiary, including but not
limited to the right to change the interest rate, date of maturity and monthly
payments and shall be conditioned upon receipt of a fee not exceeding one
percent (1%) of the original principal sum of the Note, subject to the
provisions of paragraph (24) hereof, if applicable.

 

(32) Grantors shall, upon request of Beneficiary, deliver to Beneficiary within
sixty (60) days after the end of each calendar year, then current annual
statements and financial information applicable to such calendar year,
specifically including but not limited to operating statements and balance sheet
itemizing the income and expenses of Grantors and the mortgaged property and
financial statements of Grantors (and each of them all in detail satisfactory to
Beneficiary and pr0pared by independent auditors or accountants. In addition,
Grantors shall from time to time upon request of Beneficiary deliver to
Beneficiary (promptly after preparation and/or receipt of same) copies of any
and all other financial information or report s related to Grantors, their
assets, liabilities or operations, whether audited or unaudited.

 

(33) Grantors covenant that (a) no toxic or hazardous substances, including,
without limitation, asbestos and the group of organic compound known as
polychlorinated biphenyls, shall be generated, treated, stored, or disposed of,
or otherwise deposited in or located on the mortgaged property, including,
without limitation, the surface and subsurface waters of the mortgaged property,
(b) no activity shall be undertaken on the mortgaged property which would cause
(i) the mortgaged property to become a hazardous waste treatment, storage, or
disposal facility within the meaning of, or otherwise bring the mortgaged
property within the ambit of, the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901, et seq., as amended, or any similar state law
or local ordinance or other environmental law, (ii) a release or threatened
release of a hazardous substance from or to the mortgaged property within the
meaning of, or otherwise bring the mortgaged property within the ambit of, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980

) ,

 ("CERCLA”) 11 42 U.S.C Section 9601-9657, as amended, or any similar state law
or local ordinance or any other environmental law, or (iii) the discharge of
pollutants or effluents into any water source or system, or the discharge into
the air of any emissions, which would require a permit under the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251, et seq., or the Clean Air Act, 42
U.S.C., Section 74 01, et seq., or any similar state law or local ordinance or
any other environmental law c) there shall be no substance or conditions in or
on the mortgaged property which may support a claim or cause or action under
RCRA, CERCLA, or any other federal, state, or local environmental statutes,
regulations ordinances, or other environmental regulations, requirements, and d)
there shall be no underground storage tanks located on the mortgaged property.
As used in this Article VI, the terms "hazardous substance" and "release" shall
have the meanings specified in CERCLA and the terms "solid waste" and "disposal"
(or "disposed") shall have the meanings specified in RCRA; provided, in the
event either CERCLA OR RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the effective
date of such amendment, and provided further, to the extent that the laws of the
State of Texas establish a meaning for such terms which is broader than that
specified in either CERCLA or RCRA, such broader meanings shall apply. Grantors
warrant and represents to Beneficiary that (a) the mortgaged property and
Grantors are not in violation of or subject to any existing, pending, or, to
Grantors' knowledge, threatened investigation or inquiry by any governmental
authority and are not subject to any remedial obligations under RCRA, CERCLA, or
any other federal, state, or local environmental statute, regulation, or
ordinance, and (b) Grantors have taken all steps necessary to determine, and has
determined, that no hazardous substances or solid wastes have been disposed of
or otherwise released on or to the mortgaged property. Grantors agree to
indemnify and to hold Beneficiary harmless from and against, and to reimburse
Beneficiary with respect to, any and all claims, demands, causes of action,
loss, damage, liabilities, costs and expenses (including attorneys' fees and
court costs) of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Beneficiary at any time or from time
to time by reason or arising out of any violation of CERCLA, RCRA, or any other
federal, state, or local environmental statute, regulation, or ordinance
(including, without limitation, all claims, demands, loss, damage, liabilities,
costs, and expenses in connection with the presence on the mortgaged property or
release from or to the mortgaged property of hazardous substances or solid
wastes disposed of or otherwise released, regardless of whether or not the act,
omission, event, or circumstances constituted a violation of applicable law at
the time of existence or occurrence.

 

(34) In the event that Grantors abandon the mortgage property, Beneficiary is
granted the right to take possession of the mortgage property, to remove and
evict any trespasser or person occupying same, and to clean, repair and
otherwise do any act or incur any cost or expenses which Beneficiary may deem
reasonably necessary to protect the status and value of the mortgage property.
In the event that Beneficiary exercises this right to take possession of the
mortgage property, such action shall not be deemed or construed to constitute
Beneficiary as a "mortgagee in possession" of the property. The term "abandon”
as used in this Deed of Trust shall mean to leave any main structure or
improvement, whet her residential or commercial, vacant and unoccupied by either
Grantors or Grantors' tenants for a period of five (5) days without giving
8eneficiary prior written notice of the reason for the vacancy and the
precautions taken by Grantors to protect and preserve the mortgage property.

 

(35) In the event Beneficiary shall elect to invoke any of the rights or
remedies provided for herein, but shall thereafter determine to withdraw or
discontinue same for any reason, it shall have the unqualified right to do so,
whereupon all parties shall be automatically restored and returned to their
respective positions regarding the indebtedness and this document as shall have
existed prior to the invocation of Beneficiary's rights hereunder and the
rights, powers and remedies of Beneficiary hereunder shall be and remain in full
force and effect.

 

(36) Grantors agree that they shall execute and deliver such other and further
documents, and do and perform such other act s as ma y be reasonably necessary
and proper to carry out the intention of the parties as herein expressed and to
effect the purposes of this document and the loan transaction referred to
herein. Without limitation of the foregoing, Grantors agree to execute and
deliver such documents as may be necessary to cause the liens and security
interests granted hereby to cover and apply to any property placed in, on or
about the mortgaged property in addition to, or replacement or substitute for
any of the mortgaged property.

 

(37) The covenants herein contained shall inure to the benefit of Beneficiary
and Trustee, their heirs, legal representatives, successors and assigns and
shall be binding upon the respective heirs, legal representatives, successors
and assigns of Grantors, but nothing in this paragraph shall constitute an
authorization for Grantors to sell or in any way dispose of the mortgaged
property or any part thereof if otherwise prohibited by any of the terms hereof.

 

(38) Wherever used in this document, unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, the words
"Deed of Trust" shall mean this Deed of Trust and Security Agreement and any
supplement or supplement s hereto; the word "Grantors" shall mean "Grantors,
their respective heirs, legal representatives, successors and assigns, and/or
any subsequent owner or owners of the mortgaged property"; the word
"Beneficiary" shall mean "Beneficiary or any subsequent lawful holder or holders
of the Note or other indebtedness secured hereby"; the word “Note" shall mean
"Note secured by this Deed of Trust and any renewals, extensions and
rearrangement thereof"; the word “person” shall mean "an individual,
corporation, trust, partnership or unincorporated association"; and the pronouns
of any gender shall include the other genders; and either singular or plural
shall include the other.

 

 

 

 

 

(39) THIS DEED OF TRUST IS ALSO BEING FILED AS A "MORTGAGE" AND "FINANCING
STATEMENT" under the Uniform Commercial Code. Executed this 24 day of June,
2015.

C.C. CRAWFORD RETREADING COMPANY, INC., a Texas corporation

By: /s/ Clayton Carter

 

 

 

 

 

Acknowledgement

STATE OF TEXAS

COUNTY OF DALLAS

 

This instrument was acknowledged before me on the 24_day of June, 2015 by,
Director of C.C. Crawford Retreading Company, Inc. a Texas corporation.

 

 

/s/ Christen Fox

                                                                                            _______________________________________________________________

 

Notary Public for the State of Texas

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT E

 

 

 

 

 

 

 

 

 

 

 

June 22, 2015

 

 

 

To Whom It May Concern

 

 

Re: Infinity Web Systems, Inc. 401(k) Profit Sharing Plan

 

 

As the Third Party Administrator, I can verify that the above named Plan is
Qualified and in good standing with all relevant governing agencies.

 

The named Trustees of the Plan are Charles R. Cronin, Jr. and Sheryl Cronin. As
Trustees, they have full discretion and authority with regard to the investment
of the Trust Fund. Under the terms of the Plan Document, they (as Trustees) are
empowered to invest, consistent with and subject to, Applicable Law any part or
all of the Trust Fund with a variety of investment options they deem
appropriate.

 

 

Sincerely,

 

/s/ Michael Gossard

 

Michael Gossard, CPC

 

Director of Administration

 

 

 

 

 

EXHIBIT F

 

 

 

 

 

 

 

 

 

 

 

AFFIDAVIT

STATE OF TEXAS

COUNTY OF ELLIS

BEFORE ME, the undersigned authority on this day appeared DIRK CRAWFORD, who
after being by me duly sworn, on oath deposes and says:

1.My name is Dirk Crawford.

2.I am over the age of 18 and am a resident of the State of Texas. I have
personal knowledge of the facts herein and if called as a witness could testify
competently thereto.

3.I am the President of C. C. Crawford Retreading Company, Inc. (“CTR”), a Texas
corporation. I have been in this position for 15 years.

4.CTR is located at 101 West Avenue D, Ennis, Texas.

5.To the best of my knowledge, all permits and government licenses necessary to
operate CTR at this location are valid and active.

6.To the best of my knowledge, all permits and government licenses necessary to
transport and store tires are valid and active.

7.To the best of my knowledge, CTR has not received any notification of health
or safety code violations within the past two years.

8.To the best of my knowledge, CTR has not received any notifications of
environmental violations within the past two years.

9.To the best of my knowledge, CTR has no pending or threatened governmental or
administrative proceedings or investigations, including environmental matters.

10.To the best of my knowledge, there is no claim, action, cause of action,
demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding,
litigation, citation, summons, subpoena or investigation of any nature, civil,
criminal, administrative, regulatory or otherwise whether at Law or in equity,
threatened against or by CTR affecting any of its properties or assets or
against or by CTR.

11.To the best of my knowledge, CTR has properly and accurately completed and
duly filed in correct form all material federal, state, and local information
and tax returns required to be filed by it and have duly paid, or made
provisions for the payment, of all material taxes and other charges which have
been incurred or are due or claimed to be due from it.

12.As of the date of this signing, no commission, bonus, special contractual
fees, or any other fees are owed or due to CTR employees, CTR representatives,
or agents of CTR other than payments due to me of $210,000 and those commissions
due in the normal course of business to CTR employees as part of their monthly
pay packages.

13.To the best of my knowledge, all of the financial statements provided to
Freestone by CTR are true and correct copies and an accurate portrayal of CTR’s
financial standing.

 

 

 

 

 

Further the affiant sayeth naught.

/s/ Dirk Crawford___________

Dirk Crawford, President

C.C. Crawford Retreading Company, Inc.

 

 

 

STATE OF TEXAS

COUNTY OF ELLIS

 

The instrument was acknowledged before me on 22 day of June, 2015 by Dirk
Crawford, President of C.C. Crawford Retreading Company, Inc., a Texas
corporation, on behalf of said corporation.

 

__________/s/ Judy Harris_________

Notary Public, State of Texas

 

 

 

 

EXHIBIT G

 

 

 

 

 

CTR Asset Modification of Change Request #_______

Date________________

  

  Existing at time of closing Replacement

 

Type:

   

 

Model:

   

 

Function:

   

 

Rating/Capacity:

   

 

Location:

   

 

Serial Number:

   

 

Exterior/Interior:

   

 

 

 

  New Replacement

 

New Installation or Replacement

   

 

  

Reason for
change:_____________________________________________________________________

 

Permit
Required:______________________________________________________________________

Note if stays or is removed YES NO

 

Removal Required

   

 

 

For Freestone For IWSI Plan

 

____________________________ _________

 

____________________________ _________

Signature                                               Date
Signature                                               Date    

 

Name: ___________________________

 

Name: ___________________________

   

 

Title: ____________________________

 

Title: ____________________________