Document:

exv10w1

 

Exhibit 10.1

EQUIPMENT LEASE

WITH OPTION TO PURCHASE

     THIS LEASE AGREEMENT made and entered into this ___day of March, 2006, by and between LINDEN
BLACK and BEVERLY BLACK, herein referred to as Lessor(s) of First Party(ies) and BARRY SCHWARTZ and
LISA SCHWARTZ, herein referred to as Lessee(s) or Second Party (ies);

     WITNESSETH:

     1. The Lessor does hereby rent and lease to the Lessee all of the equipment as listed on
Exhibit “A”, attached hereto and incorporated herein by reference. Said equipment is located in
Warehouse B at 5002 South 169 Highway, St. Joseph, Missouri 64507, which the Lessee has rented.

     2. This Lease Agreement is on the following terms and conditions:

     A. TERM: This Lease shall be for a period of Thirty-seven (37) months beginning on the 8th
day of March, 2006 and ending on the 7th day of March, 2009.

     B. RENT: The monthly rent for the first 36 months is Five Thousand Five Hundred Fifty Dollars
($5,550.00) per month, which the Lessee agrees and covenants to pay in advance without demand on
the 8th day of March, 2006 and on the 8th day of each and every succeeding month thereafter during
the term of this Lease; and the rent for the 37th month, or the last month of this Lease, shall be
Two Thousand Five Hundred Fifty Dollars ($2,550.00). Shall pay first and last month rent in amount
of $11,100.00.

     C. LATE CHARGE: It is understood that each monthly rent payment is due of the 8th day of the
month, as hereinabove provided, and any monthly payment that is not made and received by the Lessor
within Ten (10) days after the same is due shall bear a later charge of Five (5) percent of the
amount of said delinquent payment which the Lessee agrees and covenants to pay.

     D. [Paragraph Deleted]

     E. This Lease Agreement is on the following terms and conditions:

     (1) The Lessor shall be responsible for an pay the taxes on the said equipment during the term
of this lease.

     (2) The Lessee accepts the said equipment in its present condition and the Lessee shall be
responsible for an pay for any maintenance and/or repairs to the
equipment at Lessee’s expense.
The Lessee shall keep the equipment in good condition.

     (3) The Lessee shall use the equipment for the operation of its packaging business.

     (4) [Paragraph deleted]

 

 

     (5) The Lessee shall not use the equipment, or permit the use thereof, in whole or in part in
any manner or for any purposes prohibited by law or ordinance.

     (6) The Lessor shall not be liable for damage to any property or injury to person at any time
in the operation of the equipment; the Lessee shall protect and indemnify the Lessor from any claim
or lawsuit for injury to person or property that might be caused or claimed to be caused by or in
connection with the said equipment. The Lessee shall carry and provide at their expense public
liability insurance in the amount of at least $2,000,000.00 that will protect it and the Lessor
from any claim and/or lawsuit for personal injury or property damage that might arise from or by
use of the equipment.

     (7) Also, the Lessee shall carry insurance against fire and other hazards that will protect
both the Lessor and the Lessee in an amount of not less than $500,000.00.

     (8) Possession of the equipment shall be delivered to the Lessee as of March 8, 2006.

     (9) If the Lessee should default in the payment of rent or vacate or abandon the equipment, or
if the Lessee should become the subject of any proceeding under the U.S. Bankruptcy Act, of any
creditors’ proceeding in the state courts or sustain a levy or attachment of property to satisfy a
creditor’s judgment, then any such event shall be deemed a material breach of this Lease, entitling
the Lessor to terminate this Lease. The Lessor shall further have the right to terminate this
Lease if the Lessee should continue in the breach of any other agreement in this Lease and does not
remedy such default within five (5) days after the mailing of written notice from Lessor demanding
compliance. No waiver or toleration of any breach or default shall constitute a waiver as to any
such future breach or conduct.

     If the monthly rental or any part thereof shall not be paid for ten (10) days after becoming due
and payable, whether formally demanded or not, or if this lease is terminated as above provided by
the Lessor, then it shall be lawful for the Lessor or their agent to re-enter at any time
thereafter upon the premises where the equipment is located; but without prejudice to the right of
action of the Lessor in respect of any breach of the covenants of the Lessee herein contained.

     In the event of the termination of this Lease at any time prior to the exercise by them of the said
property, then it is fully understood by the Lessee that all sums paid hereunder, including the
first and last month rent shall be considered as rent for the said property, and none of the said
sums shall be refundable to the Lessee.

     (10) Lessor shall have the right to enter the premises where the equipment is located for the
purpose of inspection upon giving the Lessee twenty-four hours notice prior to any such inspection.

     (11) [Paragraph deleted]

2

 

OPTION TO PURCHASE

     3. In consideration of the sum of One and No/Hundredths Dollars ($1.00) paid by Second Party
(Lessee) at the time of the execution of this Agreement, the receipt of which is hereby
acknowledged by the First Party (Lessor) and as a part of the consideration for this Agreement, the
First Party does hereby give and grant to the Second Party the exclusive right, privilege and
option to purchase the equipment described herein for the total price and sum of Two Hundred Two
Thousand Three Hundred Fifty Dollars ($202,350.00).

     If the Second Party exercises this option, they shall be given credit towards the said
purchase price the total amount of the rent that they have paid under the foregoing Lease
Agreement. Said option may be exercised at any time while the Second Party is leasing the said
equipment under this lease prior to February 8, 2009 by the Second Party giving to the First Party
notice in writing that they desire to exercise this option, provided the above mentioned lease has
not been canceled or terminated. If said option is exercised the obligation of the Second Party to
pay the monthly rental, as provided herein, shall continue until said purchase and sale is
completed, then upon completion of the purchase and sale by the payment of the total purchase
moneys and the delivery of the Bill of Sale, the obligation to pay rent shall cease.

     Also, if the said option is exercised and the sale completed, taxes for the year in which the
sale is completed shall be prorated between the parties as of the date of closing the sale. If
this option is exercised, then the sale shall be completed within Thirty (30) days after the option
is exercised, and the sale shall be closed at such place and time as the parties may mutually
agree.

     6. In the event that the option hereinabove granted to the Second Party (Lessee) is not
exercised by the Second Party or if the option is exercised and the sale of the property to the
Second Party is not completed, due to some failure on the part of the Second Party then, it is
fully understood by the parties that the First Party (Lessor) shall retain all of the rental
payments made to them under the provisions of the lease, as above provided.

     7. It is further agreed between the parties that if this option is exercised that the Second
Party agrees to take the said property in its condition as of the time the option is exercised; and
the First Party shall not be obligated to make any repairs to the said property.

     8. Neither this Option to purchase nor the foregoing Equipment Lease may be assigned to any
other person or party without the written consent of the First Parties.

     9. This Agreement shall be binding upon the executors, administrators, heirs, successors and
assigns of the respective parties hereto.

     All rental payments to the Lessor shall be made at:

     _________________________________________________________________

     Also, any Notice required to be sent to the Lessor or First Par-

     Any notice to be sent to the Lessee shall be made at ___________________________________.

3

 

     IN WITNESS WHEREOF, the said parties have hereunto set their hands and seals the day and year
first above written.

EXECUTED IN DUPLICATE

	 	 	 	 	 
	/s/ Beverly Black

	 	 	 	/s/ Linden Black         3/8/06
	 

	 	 	 	 
	Beverly Black

	 	(Lessors)
	 	Linden Black
	 
	 

	 	(First Parties)	 	 
	(signature unavailable)

	 	 	 	/s/ Barry Schwartz
	 

	 	 	 	 
	Lisa Schwartz

	 	 	 	Barry Schwartz
	 

	 	(Lessees)	 	 
	 
	 

	 	(Second Parties)	 	 

4

 

LIST OF EQUIPMENT

Lift, Stand and Hopper:

     Young Industries Super Sack Unloader with electric 2 ton hoist

Vibrating Conveyor:

     Link-Belt Vibrating Conveyor (FMC) H9393

Lift Conveyor:

     Smalley Mfg. Co. (included in complete Ilapak system)

Scale/Bagger:

     Used Ilapak VT400S Complete line

Checkweigher:

     Used Yamato CM03L-PO-CE30 LIS9409-1

Metal Detector:

     Used lock MET 9 Metal Detector 80133

Cartoner:

     Langen Continuous Motion Model B-1AL with Rebuilt Nordson Glue Systemexv10w2

 

Exhibit 10.2

SUBSCRIPTION AGREEMENT

All American Pet Company Inc.

16501 Ventura Blvd, Suite 514

Encino, California 91436

Gentlemen and Ladies:

     The undersigned desires to invest All American Pet Company Inc. (the “Company”) on the terms
and conditions described in this Subscription Agreement (this “Subscription Agreement”) and the
Company’s Confidential Private Placement Memorandum dated December 22, 2005 (the “Memorandum”).
Pursuant to the terms described in the Memorandum and in this Subscription Agreement, the Company
is offering (the “Offering”) up to 3,000,000 shares of common stock, par value $0.001 per share
(the “Common Stock”), as more fully described in the Memorandum.

1. Subscription

     Subject to and in accordance with the terms and conditions of this Subscription Agreement, the
undersigned hereby offers to purchase
           shares of Common Stock. The undersigned hereby
delivers to the Company the full purchase price of $                               (the
“Purchase Price”) for the
subscription for the Common Stock in the form of a check or wire transfer to the Escrow Agent. It
is understood by the undersigned that the Company reserves the right in its sole discretion to
reject all or any part of any subscription. After completion of the Offering, the undersigned will
be notified promptly by the Company whether the undersigned’s subscription has been accepted. If
the subscription is not accepted in whole or in part, the Purchase Price or a portion thereof
representing the part of the subscription that is not accepted shall be remitted to the
undersigned, without interest.

2. Representations and Warranties of the Undersigned

     The undersigned hereby represents and warrants to, and agrees with, the Company as follows:

	 	(i)	 	the undersigned can bear the economic risk of losing the undersigned’s entire
investment;
	 
	 	(ii)	 	the undersigned is acquiring the Common Stock for the
undersigned’s own account and not with a view to, or for resale in connection
with, a distribution of the Common Stock, in violation of the Securities Act of
1933, as amended (the “1933 Act”);
	 
	 	(iii)	 	the undersigned’s overall commitments to investments that are
not readily marketable is not disproportionate to the undersigned’s net worth
and the undersigned’s investment in the Common Stock will not cause such
overall commitments to become excessive;
	 
	 	(iv)	 	the undersigned’s financial condition is such that the
undersigned is under no present or contemplated future need to dispose of any
portion of the Common Stock to satisfy any existing or contemplated
undertaking, need or indebtedness;
	 
	 	(v)	 	the undersigned has adequate means of providing for the
undersigned’s current needs and personal contingencies and has no need for
liquidity in the undersigned’s investment in the Common Stock; and
	 
	 	(vi)	 	the undersigned has sufficient knowledge and experience in
business and financial matters to evaluate, and has evaluated, the merits and
risks of this investment.

     (b) The address set forth below on the signature page of this Subscription Agreement is the
undersigned’s true and correct principal office, and the undersigned has no present intention of
relocating its principal office to any other state or jurisdiction.

 

 

     (c) The undersigned is an “accredited investor” as that term is defined in Rule 501 of
Regulation D, as promulgated under the 1933 Act because the undersigned meets one of the following
criteria (if the undersigned is not an “accredited investor”, place an “X” in the following
blank:                     ):

	 	(i)	 	An individual with a net worth, individually or jointly with
the undersigned’s spouse, of $1,000,000; or
	 
	 	(ii)	 	An individual with income in excess of $200,000 in each of the
two most recent years, or joint income with the undersigned’s spouse in excess
of $300,000 in each of those years, and the undersigned has a reasonable
expectation of reaching the same income level in the current year; or
	 
	 	(iii)	 	An individual who is an officer or director of the Company; or
	 
	 	(iv)	 	A corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000; or
	 
	 	(v)	 	A trust with total assets in excess of $5,000,000 not formed
for the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D, as promulgated under the 1933 Act; or
	 
	 	(vi)	 	An entity in which all of the equity owners are accredited
investors; or
	 
	 	(vii)	 	A bank as defined in section 3(a)(2) of the Act, or a savings
and loan association or other institution as defined in section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; a broker or
dealer registered pursuant to section 15 of the Securities Exchange Act of
1934; an insurance company as defined in section 2(a)(13) of the Act; an
investment company registered under the Investment Company Act of 1940 or a
business development company as defined in section 2(a)(48) of that Act; a
Small Business Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment Act
of 1958; a plan established and maintained by a state, its political
subdivisions, or an agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets
in excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors; or

 

 

	 	(viii)	 	A private business development company as defined in section 202(a)(22) of
the Investment Advisers Act of 1940.

     (d) The undersigned confirms that all documents, records and books pertaining to an investment
in the Common Stock that have been requested by the undersigned have been made available or
delivered to the undersigned. Without limiting the foregoing, the undersigned has received and
reviewed the Memorandum and any other documents included with the Memorandum, and the undersigned
has had the opportunity to discuss the acquisition of the Common Stock with the Company. The
undersigned has obtained or been given access to all information concerning the Company that the
undersigned has requested. As a result of its review of the Company, including the review of the
materials provided to the undersigned, the undersigned understands, among other things, the
following: (a) the Company has limited financial resources; (b) the Company is a new entity, which
just began operations this year; (c) the Company has no assets; and (d) the Company has not
concurrently, and may not in the future, receive additional investment funds. The undersigned
further represents that the undersigned is cognizant of the operations, financial condition and
capitalization of the Company, is cognizant of the intended use of proceeds from this financing,
has read and understood all risk factors in the Memorandum, and has available full information
concerning the Company’s affairs to evaluate the merits and risks of an investment in the Common
Stock.

     (e) The undersigned has had the opportunity to ask questions of, and receive answers from, the
Company concerning the terms of an investment in the Common Stock and to receive additional
information necessary to verify the accuracy of the information delivered to the undersigned.

     (f) The undersigned understands that the issuance of the Common Stock has not been registered
under the 1933 Act or any state securities laws in reliance on an exemption for private offerings
and no U.S. federal or state agency has made any finding or determination as to the fairness of
this investment or any recommendation or endorsement of the offering of the Common Stock.

     (g) The undersigned acknowledges that, in making the decision to purchase the Common Stock, it
has relied solely upon independent investigations made by it.

     (h) The undersigned has the full right, power and authority to enter into this Subscription
Agreement and to carry out and consummate the transactions herein. This Subscription Agreement
constitutes the legal, valid and binding obligation of the undersigned.

     (i) The undersigned represents that an investment in the Common Stock is a suitable investment
for the undersigned.

 

 

     (j) The undersigned acknowledges and is aware that the following legend will be imprinted on
the certificate(s) representing the Common Stock:

	 	 	 	 	 
	 

	 	“THE SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND ARE ‘RESTRICTED SECURITIES’ AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY THROUGH REASONABLE
MEANS AS DETERMINED BY THE COMPANY, INCLUDING AN OPINION OF SELLER’S COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY.”
	 	 

     (k) The undersigned acknowledges and is aware of the following, in addition to other
information included in the information provided to the undersigned:

	 	(i)	 	The Common Stock constitutes a speculative investment and
involve a high degree of risk of loss by the undersigned of the undersigned’s
total investment.
	 
	 	(ii)	 	There are substantial restrictions on the transferability of
the Common Stock.

     (l) The undersigned understands and agrees that the Company is relying upon the accuracy,
completeness, and truth of the undersigned’s representations, warranties, agreements, and
certifications contained in this Subscription Agreement, in determining the undersigned’s
suitability as an investor in the Company and in establishing compliance with federal and state
securities laws. The undersigned understands that any incomplete, inaccurate, or untruthful
response, or the breach of the undersigned’s representations, warranties, agreements, or
certifications may result in the undersigned or the Company, or both, being in violation of federal
or state securities laws, and any person, including the Company, who suffers damage as a result may
have a claim against the undersigned for damages. The undersigned also acknowledges that the
undersigned is indemnifying the Company and others for any such losses in accordance with Section 3
of this Subscription Agreement.

     The foregoing representations and warranties are true and accurate in all material respects as
of the date hereof and shall survive the delivery of the subscription amount and the completed
Subscription Agreement.

3. Indemnification

     Both the Company and the undersigned acknowledge and understand the meaning and legal
consequences of the representations, warranties, agreements, and certifications contained above,
and the Company and the undersigned hereby agree to indemnify and hold harmless the other party
(including, without limitation, its respective managers, officers, directors, representatives and
agents) from and against any and all loss, damage, or liability due to or arising out of a breach
of any representation, warranty, agreement, or certification, or the inaccuracy of any statement,
of the Company or the undersigned, as the case may be, contained in this Subscription Agreement or
any other document submitted by the Company or the undersigned in connection with the undersigned’s
subscription for the Common Stock. The foregoing notwithstanding, nothing in this Subscription
Agreement, including the representations, warranties, agreements and certifications contained
above, shall be deemed to constitute a waiver of any rights that the undersigned may have under the
1933 Act and other federal and state securities laws.

 

 

4. Miscellaneous

     (a) This Subscription Agreement may be executed in one or more counterparts all of which taken
together shall constitute a single instrument.

     (b) This Subscription Agreement shall be governed and construed as binding upon the parties
hereto, and their respective successors, and no other person shall have any right or obligation
hereunder. This subscription shall be irrevocable, and may not be assigned by the undersigned.
Subject to the foregoing, this Subscription Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives, successors and assigns of
the undersigned.

     (c) This Subscription Agreement (the “Agreement”) constitutes the entire agreement between the
undersigned and the Company with respect to the subject matter of the Agreement and supersedes all
prior and contemporaneous agreements between the undersigned and the Company with respect to the
subject matter of the Agreement.

     (d) This Subscription Agreement will be construed and enforced in accordance with and governed
by the laws of the State of California, except for matters arising under the 1933 Act, without
reference to principles of conflicts of law.

     With such full understandings and acknowledgements, the undersigned does hereby affirm the
undersigned’s subscription to the purchase of the Common Stock being offered by the Company as
described herein and in the Memorandum. The undersigned does further acknowledge the undersigned’s
understandings of all the terms and provisions of this Subscription Agreement and, upon acceptance
of this Subscription Agreement by the Company, agrees to be bound by all the terms and conditions
of this Subscription Agreement.

[Signature page follows]

 

 

SIGNATURE PAGE

The undersigned MUST deliver one copy each of this Subscription Agreement to the PLACEMENT AGENT
and ESCROW AGENT.

	 	 	 	 	 
	 

	 	PLACEMENT AGENT
	 	ESCROW AGENT
	 

	 	Kevin DePrimio
	 	David Kagel, Esq.
	 

	 	West Park Capital, Inc.
	 	David Kagel Law
	 

	 	1900 Avenue of the Stars, Suite 310
	 	1801 Century Park East, Suite 2500
	 

	 	Los Angeles, CA 90067
	 	Los Angeles, CA 90067

If sending check, please submit to ESCROW AGENT as listed above along with subscription documents.

If sending wire, please send subscription documents to PLACEMENT AGENT and ESCROW AGENT and use the
following Wiring Instructions:

Preferred Bank

1801 Century Park East

Los Angeles, CA 90067

FBO: David L. Kagel Client Trust Account

Account No.: 004-602560

ABA No.: 122042205

Please complete the following:

	 	 	 	 	 	 	 
	Date:

	 	 

	 	 
	 	 
	 
	 	 	 	 	 	 

	 	 	 	 	 
	 

Exact Name in Which Title is to be Held

	 	 
	 	 
	 
	 	 	 	 

	 	 	 	 	 
	 

Signature

	 	 

Signature of Co-Owner
	 	 
	 
	 	 	 	 
	 

Print Name

	 	 

Print Name of Co-Owner	 	 
	 
	 	 	 	 
	 

Social Security Number or Tax

	 	 

Social Security Number or Tax	 	 
	 
	 	 	 	 

 

Address

 

 

City, State, Postal or Zip Code, Country

	 	 	 	 	 	 	 	 	 
	STATE OF

	 	 

	 	 	)	 	 	 
	 

	 	 	 	 	)	 	 	ss.
	COUNTY OF

	 	 

	 	 	)	 	 	 

     On this            day of                     , 200    , before me personally appeared              
                 , who
being duly sworn by me, acknowledged that (s)he executed the foregoing instrument for the uses and
purposes therein stated.

     My commission expires:                              

 

 

	 	 	 	 	 
	 

Notary Public

	 	 

Address
	 	 

     * If the Securities are to be held in joint tenancy or as tenants in common, both persons
must sign above and please indicate the manner in which the Securities are to be held:

	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	Tenants in Common
	 	 

	 	Joint Tenants

     This subscription is accepted by All American Pet Company, Inc. on this            day of
                    , 200    .

	 	 	 	 	 
	 

	 	ALL AMERICAN PET COMPANY, INC.

	 
	 

	 	By:
	 	 

	 

	 	Name:
	 	 

	 

	 	Title:

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