EXHIBIT 10.1
PROMISSORY NOTE, SECURITY AGREEMENT AND PLEDGE
$1,050,000.00 Houston, Texas
December 29, 1995
FOR VALUE RECEIVED, NORTH AMERICAN TECHNOLOGIES GROUP, INC., a Delaware
corporation ("NATK"), and GAIA TECHNOLOGIES, INC., a Texas corporation ("Sub;"
together with NATK, "Maker"), jointly and severally promise to pay to the order
of GAIA HOLDINGS, INC., a Delaware corporation ("Payee"), in Houston, Texas, or
at such other place in the United States of America as Payee may designate in
writing, the aggregate principal sum of ONE MILLION FIFTY THOUSAND AND NO/100
DOLLARS ($1,050,000.00), in lawful money of the United States of America,
together with interest on the unpaid principal balance thereof, until the unpaid
principal balance shall be paid in full at the per annum rate of interest equal
to the lesser of (x) twelve percent (12.00%) or (y) the highest lawful, non-
usurious rate of interest then permitted under Texas law; provided, however,
that after maturity, whether maturity is brought about by acceleration as
described in this Note or otherwise, the rate of interest shall be the highest
lawful, non-usurious rate of interest then permitted under Texas law. Interest
shall be calculated on the basis of a 360-day year, consisting of 12 months of
30 days each.
This Note is the "90-Day Note," as defined in that certain Asset Purchase
Agreement, dated as of the date of this Note, by and among NATK, Sub, Gaia
Holdings, Thor Ventures, L.C., a Texas limited liability company, and Thor
Industries, Inc., a Texas corporation (the "Asset Purchase Agreement").
Capitalized terms used herein and not otherwise defined have the meanings given
them in the Asset Purchase Agreement.
1. Accrued and unpaid interest on this Note shall be due and payable on
each of January 31, 1996, and February 29, 1996. The entire outstanding and
unpaid principal amount of this Note, together with all unpaid interest and
other amounts due with respect to this Note, shall be due and payable in full on
March 28, 1996. Notwithstanding the foregoing, in the event that after the date
hereof, Maker (or either of them) receives cash from the issuance of new shares
of its capital stock (whether common or preferred), the sale of treasury shares
or the sale of any debt (other than from the sale of any debt security to the
extent the proceeds thereof are used to promptly purchase one or more specific,
identifiable capital assets) or other equity security of Maker (or either of
them), then Maker shall promptly apply an amount equal to 75% of such cash so
received and pay such amount to Payee to the extent of any outstanding
obligations (including principal, interest or any other amount) on this Note,
whether or not the same are then due. Notwithstanding anything in this Note to
the contrary, Maker may prepay all or a portion of this Note at any time without
premium or penalty.
2. In the event that any payment hereunder is due on a day other than a
business day, such payment shall instead be due and payable on the next
succeeding business day. As used herein, the term "business day" means any day
other than either a Federal holiday or a day during which state or federally-
chartered banks located in Xxxxxx County, Texas, are required by law to be
closed.
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3. To the extent of any partial payment or any partial prepayment
hereunder, amounts received shall first be applied to accrued and unpaid
interest, and the remainder, if any, shall then be applied to the payment of
outstanding principal.
4. In the event that there is a failure to pay when due any interest or
principal hereunder and such failure shall continue unremedied for a period of
seven (7) days after receipt of written notice of such failure to pay, then
Payee, without the necessity of further demand or presentment, may accelerate
and declare in a writing delivered to Maker the entire principal balance of this
Note then due and payable, together with any accrued interest thereon, and may
exercise any other remedy or remedies then available to it hereunder or under
law.
5. Maker hereby waives presentment for payment, demand, notice of protect,
and protest of this Note, as well as all other notices relating to this Note,
except as described in the immediately preceding paragraph. Payee shall not by
any act of omission or commission be deemed to waive any right or remedy
hereunder or under law, except such waiver as shall be in writing and signed by
Payee, and then only to the extent specifically set forth therein; a waiver as
to one event shall not be a bar to or waiver of any other right or remedy as to
a subsequent event.
6. (a) Sub hereby grants to Payee (sometimes referred to herein as
"Secured Party") a first priority security interest in, and a first lien on, and
agrees that Secured Party shall have and continue to have a first priority
security interest in, and a first lien on, all of the assets of Sub, including
without limitation the "Purchased Assets," as such term is defined in the Asset
Purchase Agreement, whether currently owned or hereafter acquired (including
without limitation all proceeds therefrom) (the "Collateral").
(b) The security interest and lien granted pursuant to Section 6(a) hereof
shall serve to secure all indebtedness, liabilities or other sums owed or to
become owing hereunder.
(c) Maker authorizes the Secured Party to file, in jurisdictions where
this authorization will be given effect, any financing statement or other
document or instrument of any kind evidencing the security interest and/or lien
granted hereunder, and at the request of Secured Party, from time to time, Maker
will join the Secured Party in executing one or more of such financing
statements and other documents or instruments in form and substance satisfactory
to Secured Party.
(d) Until all obligations of Maker hereunder are satisfied in full, Maker:
(i) shall keep the Collateral free from any and all superior or equal adverse
claims, pledges, mortgages, liens, charges, security interests and encumbrances,
(ii) shall not sell or grant to any other party any ownership or other interest
in any of the Collateral, except as expressly permitted by this Note, the Asset
Purchase Agreement or the Crosstie Purchase Option Agreement, and (iii) shall
not move any equipment constituting any portion of the Collateral to another
location without the prior written consent thereto of Secured Party (other than
to a location currently owned or leased by Maker, or such other location in
Texas as Maker may lease or purchase during the term hereof so long as Maker
shall have notified Payee ten (10) days in advance of such other location),
which may be granted in the sole and absolute discretion of Secured Party.
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(iii) Maker shall immediately notify Secured Party of any transfer,
pledge, claim, lien, charge or encumbrance arising in connection with any
Collateral about which such party has actual knowledge.
(iv) Maker will pay in a timely manner all taxes and other amounts due
or to become due with respect to the Collateral on or after the date hereof and
will pay to Secured Party all expenses and expenditures including reasonable
attorney's fees and expenses incurred or paid by the Secured Party in exercising
or protecting the interests, rights and remedies of Secured Party hereunder with
respect to the Collateral. Maker shall, at Maker's own expense, defend the
Secured Party's right, title and interest in and to the Collateral against the
claims of any person, firm, corporation or other entity.
(vi) Maker shall, at its own expense, pay to Secured Party all
expenses and expenditures including reasonable attorney's fees and expenses
incurred or paid by the Secured Party in exercising or protecting the interests,
rights and remedies of Secured Party hereunder with respect to any of the
Collateral and shall defend the Secured Party's right, title and interest in and
to all of the against the claims of any person, firm, corporation or other
entity.
The obligations of each of Sub and NATK in this Note shall be deemed joint and
several obligations of Sub and NATK.
(f) The term "default," as used in this instrument, shall mean and include
any of the following: (i) a failure to pay when due any interest (if any) or
principal hereunder and such failure shall continue unremedied for a period of
seven (7) days after receipt of written notice of such failure to pay, or the
failure to pay when due any payment of principal or interest in accordance with
the terms hereof, or (ii) the failure of Maker to perform in a timely manner any
other obligation or agreement of such party under this instrument, which failure
under this clause (ii) shall continue unremedied for a period of fifteen (15)
days after receipt of written notice of such failure.
(g) In addition to any other right or remedy granted hereunder or under
law upon the occurrence of a default hereunder, the Secured Party may, upon 15
days' written notice to Maker, but without the necessity of further demand or
presentment, exercise with reference to the Collateral any and all of the rights
and remedies of a secured party under the laws of the State of Texas applicable
to the Collateral and, without limitation, any other right or remedy granted
hereunder (all of which rights and remedies shall be cumulative), including
without limitation the right and power to forthwith realize upon the Collateral
or any part thereof, and may forthwith sell or otherwise dispose of and deliver
the Collateral, or any part thereof or interest therein, at a public or private
sale or sales, at any location in Xxxxxx County, Texas selected by Secured
Party, upon such terms and conditions and for such consideration as Secured
Party shall deem appropriate (in Secured Party's sole discretion), so long as
the same are determined and conducted in a commercially reasonable manner, as
such term is defined in and interpreted under the Uniform Commercial Code as in
effect in the State of Texas on the date hereof.
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7. All notices, requests, demands, waivers and other communications
required or permitted to be given under this document shall be in writing and
shall be deemed to have been duly given if delivered personally, if mailed
(certified or registered mail with postage prepaid) or if sent by
telecopier/facsimile as follows (or at such other address or telecopy/facsimile
number for a party as shall be specified by like notice):
If to Maker: If to any Payee:
North American Technologies
Group, Inc./ Gaia Holdings, Inc.
Gaia Technologies, Inc. 0000 Xxxxxxxx Xxxx., Xxxxx 000
0000 Xxxxxxxx Xxxx, Xxxxx 000 Xxxxxxxx, Xxxxx 00000
Xxxxxxxx, Xxxxx 00000 Attn: Xxxxxxx X. Xxxxxxx and
Attn: Xxx X. Xxxxxxxxxx Xxxxx X. Xxxxxxxx
Telecopy/Facsimile No: Telecopy/Facsimile No:
(000) 000-0000 (000) 000-0000
with a copy to:
Xxxx Xxxxxxxx
Xxxxx, Xxxxx & Xxxxx
909 Xxxxxx, Suite 0000
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telecopy/Facsimile No:
(000) 000-0000
and with a copy to:
J. Xxxxx Xxxxxxx
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
8. The Payee and Maker intend to contract in strict compliance with
applicable usury law from time to time in effect. In furtherance thereof such
persons stipulate and agree that none of the terms and provisions contained
herein or in the Asset Purchase Agreement or in any other document executed and
delivered pursuant thereto shall ever be construed to provide for such interest
in excess of the maximum amount of interest permitted to be charged by
applicable law from time to time in effect. The holder of this Note expressly
disavow any intent to charge or collect excessive unearned interest in the event
the maturity of this Note is accelerated for any reason (whether by action of an
holder, any prepayments hereafter agreed to, the provisions of Paragraph 1
hereof or otherwise), and if any such acceleration or other event occurs, and,
as a result thereof, any amounts held to constitute interest are determined to
exceed any applicable legal limit, then such excess amounts shall, without
penalty, be applied to reduce the amounts otherwise owing under this Note or
otherwise returned to the Maker. Neither the Maker nor any present or future
endorsers, sureties, guarantors or other persons hereafter becoming liable for
payment of any obligations hereunder, under the Asset Purchase Agreement or any
other
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document executed and delivered pursuant to the Asset Purchase Agreement shall
ever be liable for unearned interest thereon or shall ever be required to pay
interest thereon in excess of the maximum amount that may be lawfully charged
under applicable law from time to time in effect, and the provisions of this
Paragraph 8 shall control over all other provisions herein or in the Asset
Purchase Agreement which may be in conflict or apparent conflict herewith.
9. This instrument and the rights and obligations hereunder shall
terminate upon the satisfaction in full of all obligations of Maker hereunder,
and upon such termination, Secured Party agrees to execute, at the expense of
Maker, such reasonable instruments to release its rights in and to the
Collateral as Maker may reasonably request.
10. THIS NOTE SHALL BE CONSTRUED, INTERPRETED, AND THE RIGHTS OF THE
PARTIES DETERMINED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. This Note may be
executed in counterparts each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Note
effective as of the date first above written.
"MAKER"
NORTH AMERICAN
TECHNOLOGIES GROUP, INC.
By: /s/ Xxx X. Xxxxxxxxxx
Xxx X. Xxxxxxxxxx
President and Chief Executive Officer
GAIA TECHNOLOGIES, INC.
By: /s/ Xxx X. Xxxxxxxxxx
Xxx X. Xxxxxxxxxx
President
"PAYEE"
GAIA HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: President
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