Document:

f8k_charlestonex10iii.htm

    Exhibit 10.3

    ASSUMPTION
AGREEMENT

    
       

       

       

      
        
          
            	
                    DATE:

                  	
                    December
      23, 2009

                  
	 
      	 
      
	
                    BETWEEN:

                  	
                    Paneltech
      International, LLC (together, “Borrower”)

                  
	 
      	
                    2999
      John Stevens Way

                  
	 
      	
                    Hoquiam,
      WA 98550

                  
	 
      	 
      
	
                    AND:

                  	
                    Paneltech
      Products, Inc. (“Transferee”)

                  
	 
      	
                    2999
      John Stevens Way

                  
	 
      	
                    Hoquiam,
      WA 98550

                  
	 
      	 
      
	
                    AND:

                  	
                    ShoreBank
      Pacific (“Bank”)

                  
	 
      	
                    PO
      Box 400

                  
	 
      	
                    Ilwaco,
      WA 98624

                  
	 
      	 
      
	
                    LOAN
      NO.

                  	
                    100012003

                  

          

         

      

      RECITALS

       

      A.           Bank
is the holder of that certain Promissory Note dated January 19, 2001 (the
“Note”) in the original principal sum of $500,000, as amended and increased by
Change in Terms and currently in the amount of $1,500,000, made by Borrower in
favor of Bank.

       

      B.           Borrower
executed a Security Agreement dated January 19, 2001 (the “Security Agreement”),
by which Borrower granted to Bank a security interest in the personal property
of Borrower.

       

      C.           Borrower
also executed a Business Loan Agreement dated January 19, 2001, which has been
replaced by a Business Loan Agreement dated November 30, 2009 (the “Business
Loan Agreement”), reciting the terms and conditions under which certain loan or
loans were extended to Borrower by Bank as well as other Related Documents as
defined in the Business Loan Agreement.

       

      D.           Leroy
D. Nott, Scott D. Olmstead, Ronald H. Iff, Sorb Management Corporation, and L.D.
Nott Company (Collectively as “Guarantors”) have provided or will provide
Guaranties in favor of Bank, the form of which will be satisfactory to bank in
its sole discretion.

       

      E.           The
Security Agreement, the Business Loan Agreement, the Promisory Note, Guaranties
and the Related Documents, and any amendments thereto, together with this
Agreement, are collectively referred to as the “Loan Agreements”.

       

      F.           Transferee
and Borrower have entered into that certain Agreement and Plan of Merger by and
among Charleston Basics, Inc., Paneltech Products, Inc., and Paneltech
International, L.L.C. dated December 23, 2009 (the “Merger Agreement”) and
Borrower and Transferee have requested that Transferee be permitted to assume
the obligations under the Note and the Loan Agreements. Bank has agreed to
permit such an assumption in accordance with the terms of this
Agreement.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      G.           Borrower
and Guarantors hereby agree to remain liable for the obligations of the
Transferee and further agree that the personal property defined in the Security
Agreement will further secure the obligations of Borrower and Transferee under
this Agreement.

       

      WHEREFORE,
in consideration of the covenants contained herein and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Borrower, Transferee, and Bank agree as follows:

       

      AGREEMENT

       

      1.           Assumption. Transferee does
hereby assume and agree to punctually pay and perform all covenants and
obligations of the Note and the Loan Documents as though the Note and the Loan
Documents had originally been made, executed, and delivered by
Transferee.

       

      2.           Consent; Borrower’s Continued
Liability. Bank and Borrower consent to Transferee’s assumption of the
Note and the Loan Documents pursuant to the Merger Agreement and merger related
documents subject to confirmation by Transferee and Borrower of the following
clarifications, which if withheld would be considered an event of default: a)
the Bank has a valid lien on all assets of the Borrower and is senior to other
lien claimants except for as provided in the security agreement and the
lntercreditor Agreement with Anchor Bank; b) the bank has not received Audited
financial statements, c) the bank’s lien is not limited to ‘purchase money
security interest; d) the bank’s indebtedness is senior in security and right of
payment to any payments relating to equity or Preferred securities; e) the bank
does not waive or forbear upon any rights or remedies under the loan documents
in agreeing to this assumption; f) the Transferee also agrees to sign a security
agreement, in form satisfactory to Bank, where they grant interest in all
existing collateral and collateral subsequently acquired, and to assist with all
UCC filings required by Bank, and Transferree and Borrower hereby grant Bank
full power of attorney to execute any such document. All parties further agree
(a) that Transferee’s assumption shall not relieve Borrower from liability under
the Note and the Loan Documents, (b) that Borrower is jointly and severally
liable with Transferee under the Note and the Loan Documents until all
obligations arising thereunder have been fully performed, and (c) that
Borrower’s liability is primary with and not secondary to the liability of
Transferee. Borrower further agrees that the company assets shall continue to
secure Borrower’s obligations under the Agreement. Borrower further agrees to
execute documents as necessary to perfect Bank’s security interest.

       

      3.           Representations and
Warranties. Borrower and Transferee represent and warrant (a) that the
Note and Loan Documents are legal, binding, valid and enforceable obligations of
Borrower and Transferee and are in full force and effect, and (b) that there are
no existing claims, defenses, personal or otherwise, or rights of setoff
whatsoever available to Borrower or Transferee with respect to the Note and Loan
Documents. Borrower and Transferee agree to execute, at Bank’s request, any
documents reasonably required by Bank to evidence and carry out this
Agreement.

       

      4.           Notice. Transferee is entitled
to the same notice as Borrower. Notice to Transferee shall be directed to
Transferee’s address stated above. Notice to Borrower shall be directed to the
address stated above. A party may change the address to which notice is directed
in the manner provided in the Note and the Loan Agreements.

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      5.           Binding Effect of Agreement.
This Agreement is binding on the heirs, executors, administrators, successors,
and assigns of the parties.

       

      6.           Incorporation of Recitals. The
Recitals are incorporated herein as part of this Agreement.

       

      7.           Entire Agreement. The parties
declare and represent that no promise, inducement, or agreement not expressed in
the Loan Documents has been made between them, and that the Loan Documents
contain the entire agreement between them. The Loan Documents cannot be modified
except by a writing signed by all the parties.

       

      8.           Effective Date. This Agreement
shall be deemed to have taken effect on the date first written
above.

       

      IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed.

       

      ACKNOWLEDGED
AND AGREED TO:

       

      
        	 
      	 
      	 	 
      
	 
      	 
      	 	 
      
	
                BANK:

              	
                
                  /s/
      Randell Leach

                

              	 	 
      
	 
      	
                Shorebank
      Pacific

              	 	 
      
	 
      	 
      	 	 
      
	
                BORROWER:

              	
                
                  /s/
      Leroy D. Nott

                

              	 	 
      
	 
      	
                Paneltech
      International, L.L.C.

              	 	 
      
	 
      	 
      	 	 
      
	
                TRANSFEREE:

              	
                
                  /s/
      Leroy D. Nott

                

              	 	 
      
	 
      	
                Paneltech
      Products, Inc.

              	 	 
      
	 
      	 
      	 	 
      
	
                GUARANTORS:

              	
                
                  /s/
      Leroy D. Nott

                

              	 	
                
                  /s/
      Scott D. Olmstead

                

              
	 
      	
                Leroy
      D. Nott

              	 	
                Scott
      D. Olmstead

              
	 
      	 
      	 	 
      
	 
      	
                
                  /s/
      Ronald H. Iff

                

              	 	
                
                  /s/
      Scott D. Olmstead

                

              
	 
      	
                Ronald
      H. Iff

              	 	
                Sorb
      Management Corporation

              
	 
      	 
      	 	 
      
	 
      	
                
                  /s/
      Leroy D. Nott

                

              	 	 
      
	 
      	
                L.D.
      Nott Company

              	 	 
      

      

      

      
3f8k_charlestonex10iv.htm

    Paneltech
International, L.L.C.

    

    Promissory
Note

    

    

    December
18,
2009                                                                                                                     $206,347.20

     

    Paneltech
International, L.L.C., a Washington limited liability company (together with its
successors and assigns, the “Issuer”), for value received, hereby promises to
pay to the order of the L.D. Nott Company, a Washington corporation having an
address of 114 First Avenue, Aberdeen, WA  98520 (together with its
successors, transferees and assigns, the “Noteholder”) the principal sum of Two
Hundred Six Thousand Three Hundred Forty-Seven Dollars and Twenty Cents
($206,347.20) (the “Note Amount”), together with any applicable interest thereon
as provided in this promissory note (this “Note”).

     

    1.  Interest.  Beginning
on March 23, 2010, the outstanding Note Amount on this Note shall bear
non-compounded simple interest at a rate equal to twelve percent (12%) per annum
(“Interest”).  On March 23, 2010 and on the same date every month for the
next eleven months immediately thereafter, or until any outstanding Note Amount
together with accrued but unpaid Interest has been paid in full, the Issuer
shall pay to Noteholder, together with any accrued but unpaid Interest, an
amount equal to one-twelfth (1/12th) of the unpaid Note Amount on March 23,
2010, plus accrued but unpaid Interest. 

     

    2.  Distribution.  This
Note is being issued in consideration of certain membership distributions that
were owed by the Issuer to the Noteholder.

     

    3.  Prepayment.  The
Issuer may at its option, at any time or from time to time, prepay this Note
(and accrued Interest), in whole or in part, without premium or penalty. Any
such optional prepayment shall be applied to reduce the unpaid Note Amount
monthly installments, in direct order of maturity.

     

    4.  Issuer
Register.  The Issuer shall keep a register at its principal
place of business (the “Register”) in which it shall enter the Noteholder’s name
and address as set forth above. For the purpose of paying principal and any
interest on this Note, the Issuer shall be entitled to rely on the name and
address in the Register.

     

    5.  Transfer.  This
Note is neither assignable nor transferable by the Noteholder without the
Issuer’s prior written consent.

     

    6.  No
Waiver.  No failure by the Noteholder to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.  The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.

     

    7.  Acceleration.  In
case one or more of the following events (“Events of Default”) (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be
continuing:

     

    (a)  failure
by the Issuer to pay all or any part of the Note Amount within ten (10) business
days after the same shall become due and payable; or

     

    (b)  failure
by the Issuer to pay all or any part of the interest on this Note within ten
(10) business days after the same shall become due and payable; or

     

    (c)  the
Issuer becomes the subject of any voluntary bankruptcy, insolvency or similar
proceeding, or any involuntary bankruptcy, insolvency or similar proceeding not
stayed or dismissed within sixty (60) days of filing,

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    then:  (i)
except in the case of an Event of Default specified in Section 7(c) hereof, the
Noteholder, by notice in writing to the Issuer, may declare the aggregate Note
Amount to be due and payable immediately, and upon any such declaration the same
shall become immediately due and payable and (ii) if an Event of Default
specified in Section 7(c) occurs, the Note Amount shall become and be
immediately due and payable without any declaration or other act on the part of
the Noteholder.

     

    8.  No
Action.  The Issuer shall not by any action, including, without
limitation, amending its certificate of formation through any reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, winding up, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Note, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such actions as may be reasonably
necessary or appropriate to protect the rights of the Noteholder against
impairment.

     

    9.  Costs;
Expenses.  Should the Noteholder initiate an action to enforce
the provisions of this Note, then the prevailing party in such action, as
determined by the court, agency, tribunal or other body with jurisdiction over
the action, shall be reimbursed its reasonable fees and out-of-pocket expenses
of counsel in connection with such action.

     

    10.  Amendment.  This
Note may only be amended by a written instrument or instruments executed by both
the Issuer and the Noteholder.

     

    11.  Waivers.  The
Issuer hereby waives any requirements of demand, presentment for payment, notice
of dishonor, notice of protest and protest.

     

    12.  Governing Law;
Forum.  This agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the state of New York without
reference to the choice of laws provisions thereof.  Any action, suit
or proceeding initiated by any party hereto against any other party hereto under
or in connection with this Note shall be brought in any state or federal court
in the State of New York. Each party hereto submits itself to the exclusive
jurisdiction of any such court, waives any claims of forum non conveniens and
agrees that service of process may be effected on it by the means by which
notices are to be given pursuant to this Note.

     

    13.  Notices.  All
notices (including other communications required or permitted) under this Note
must be in writing and must be delivered (a) in person, (b) by registered or
certified mail, postage prepaid, return receipt requested, (c) by a generally
recognized courier or messenger service that provides written acknowledgment of
receipt by the addressee or (d) by facsimile or other generally accepted means
of electronic transmission with a verification of delivery.  Notices
are deemed delivered when actually delivered to the address for
notices.  Notices to the Noteholder must be given to its last known
address appearing on the Register and notices to the Issuer must be given at its
principal place of business. Any party may furnish, from time to time, other
addresses for notices to it.

     

    [Signature
Page Follows]

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, Issuer has caused this Note to be executed by its officer
thereunto duly authorized as of the date first above written.

    

    

    
      	 
      	
              PANELTECH
      INTERNATIONAL, L.L.C.

            	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	/s/ 
      Leroy Nott	 
      
	 
      	 
      	
              Name:

            	
              Leroy
      Nott

            	 
      
	 
      	 
      	
              Title:

            	
              President

            	 
      

    

    

    
      
         

      

      
        3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}]]