EXHIBIT 10.12
PROMISSORY NOTE AND SECURITY AGREEMENT
THIS PROMISSORY NOTE AND SECURITY AGREEMENT (the "Agreement" or "Note")
is made this _____ day of May, 1998 by and between XXXXX X. XXXXXXX, a North
Carolina resident ("Borrower") and THE PRIMA GROUP INTERNATIONAL, INC., a
corporation organized under the laws of State of Delaware ("Lender" or
"Company").
WITNESSETH
WHEREAS Lender has agreed to lend to Borrower the principal amount of
$600,000 in order to retire certain indebtedness to Miojusti Investments BV; and
WHEREAS to induce Lender to provide the loan, Borrower has agreed to
grant Lender a security interest in certain collateral;
NOW THEREFORE, based upon the premises and the mutual promises and
covenants set forth herein, the parties agree as follows:
1. Loan. FOR VALUE RECEIVED, the undersigned Borrower promises to pay
Lender or order at 000 X. Xxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx
Xxxxxxxx or such other place as the holder of this Note may designate, the
principal sum of SIX HUNDRED THOUSAND DOLLARS ($600,000), or so much as has been
advanced hereunder with interest thereon accruing from the date hereof at an
annual rate of six percent (6%).
2. Terms. Interest only shall be payable in eight (8) annual
installments on the anniversary date hereof in each year, beginning in 1999,
with the principal and accrued interest, together with all unpaid sums under
this Note being payable on the anniversary date in 2006. In the event that any
installment of interest and principal shall not have been paid on or before its
respective due date, and shall remain delinquent for more than fifteen (15)
days thereafter, then the Lender may charge a penalty of four percent (4%) on
said late installment. In the event that the due date for any installment
is not a business day, the payment required for such date shall be made on
the first preceding business day.
All payments of principal and interest shall be made in lawful money of
the United States which shall be the legal tender in payment of all debts,
public and private, at the time of payment.
This Note may be prepaid in whole or in part without penalty or
premium. Partial prepayments shall be applied first to principal and then to
accrued and unpaid interest.
This Note is secured by a security interest in the Collateral as herein
defined.
3. Security Interest. Borrower hereby hypothecates and grants a
security interest to Lender in his 60,000 shares of common stock of The PRIMA
Group International, Inc. (the "Collateral"). Borrower agrees to do all acts
necessary to give Lender "control" of the Collateral, as that term is defined by
the Uniform Commercial Code in Section 8-106, including but not limited to
delivering the Collateral stock certificate(s) to Lender and endorsing such
certificate(s) to Lender or in blank or having such certificates registered in
the name of Lender.
4. Title. Borrower represents and warrants that he has title to the
Collateral, and that he is not prohibited by contract, judgment or decree from
entering into this Agreement, granting the security interest created by this
Agreement and performing his obligations under this Agreement.
5. UCC Financing Statements. Borrower agrees to execute at any
reasonable time and from time to time such other documents or instruments,
including financing statements under the Uniform Commercial Code, necessary or
appropriate to perfect and to continue in force the security interest created by
this Agreement.
6. Default and Remedies.
(a) The following events shall constitute a default under this
Agreement:
(i) Failure to pay the installments under this
Agreement when due; and
(ii) A breach of the representations, warranties
or covenants of this Agreement after failure
by Borrower to cure the same within fifteen
(15) days of receipt by Borrower of notice
from or on behalf of Lender identifying the
breach.
(b) Upon the occurrence of a default, Lender shall have the
right to take possession of the Collateral and to apply the Collateral against
the outstanding indebtedness and to take any other actions or remedies provided
to a secured party or permitted under the Uniform Commercial Code.
7. Waivers. All parties to this Agreement, including the undersigned
and any sureties, endorsers or guarantors, hereby waive presentment for payment,
demand, protest, notice of dishonor, notice of acceleration of maturity, and all
defenses on the ground of extension of time for payment hereof, and agree to
continue and remain bound for the payment of principal, interest and all other
sums payable hereunder, notwithstanding any change or changes by way of release,
surrender, exchange, or substitution of any security for this Note or by way of
any extension of extensions of time for the payment of principal; and all such
parties waive all and every kind of notice of such change or changes and agree
that the same may be made without notice to or consent of any of them. The
rights and remedies of the holder as provided herein shall be cumulative and
concurrent and may be pursued singularly, successively or together at the sole
discretion of the holder, and may be exercised as often as occasion therefor
shall occur,
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and the failure to exercise any such right or remedy shall in no event be
construed as a waiver or release of the same.
8. Forgiveness of Indebtedness. The remaining outstanding
indebtedness under this Agreement will be cancelled if:
(a) Borrower's employment is terminated by Lender without
cause or Borrower's employment agreement is not renewed by Lender;
(b) Substantially all of the assets or stock of Lender are
sold (including a merger where Lender is not the surviving eneity) for a per
share consideration greater than or equal to 130% of the offering price of
Lender's common stock in the initial public offering ("IPO");
(c) Lender receives gross proceeds of $30 million or more from
a follow-on public offering of equity or debt securities;
(d) There is a 100% increase as of the end of any fiscal year
in Lender's stockholders' equity or market capitalization, based upon public
float, as compared to those results at the end of the month in which the IPO is
consummated; or
(e) There is a 100% increase as of the end of any fiscal year
in the Company's total revenues or net income as compared to those results for
the year ended December 31, 1997.
9. Miscellaneous.
(a) Maximum Interest. Nothing herein contained, nor any
transaction related hereto, shall be construed or so operate as to require the
undersigned, or any party liable for payment of this Note, to pay interest at a
greater rate than the maximum allowed by applicable law. Should any interest or
other charges paid or payable by the undersigned, or any party liable for the
payment of the Note, in connection herewith, result in the computation or
earning of interest in excess of the maximum allowed by applicable law, then any
and all such excess paid shall be automatically credited against and in
reduction of the balance due under this Note, and the portion of said excess
which exceeds the balance due under this Note shall be paid by the then holder
hereof to the undersigned and parties liable for the payment of this Note.
(b) Attorneys' Fees. In addition to all amounts due under this
Note, the undersigned agrees to pay reasonable attorneys' fees actually incurred
at the usual hourly rate of such attorneys when and if this Note is placed in
the hands of an attorney for collection after default.
(c) Governing Law. This Note shall be governed by, and shall
be interpreted, construed and enforced in accordance with, the laws of the State
of North Carolina.
IN WITNESS WHEREOF, the undersigned has executed this Note under seal,
this the day and year first above written.
_______________________________(Seal)
Xxxxx X. Xxxxxxx
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