LOAN AGREEMENT
LOAN AGREEMENT, dated as of July 17, 2001 between NORTH AMERICAN
TECHNOLOGIES GROUP, INC., a Delaware corporation, (the "Borrower" or "NATK"),
and XXXXXXX X. XXXXXXXXXX, with an address of c/o Bank of America Capital
Investors, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxx 00000-0000 (the
"Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender make the Loan (as
hereinafter defined) and the Lender has agreed to make the Loan on and subject
to the terms and conditions hereof;
NOW, THEREFORE, each of the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
hereby agree as follows:
A G R E E M E N T:
1. GENERAL DEFINITIONS
1.1. Definitions When used herein, the following terms shall have the
following meanings:
Agreement shall mean this Loan Agreement as the same may be amended,
extended, supplemented, modified, restated or replaced from time to time.
Borrower shall mean North American Technologies Group, Inc., a
Delaware corporation.
Business Day shall mean a day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of Texas.
Unless specifically denoted "Business Days" herein, references to "days" shall
mean calendar days.
Closing Date shall mean the date of initial issuance of a Note. The
closing shall take place on the Closing Date at the offices of Xxxxxxxx
Ingersoll Professional Corporation at such time or at such other place as the
parties agree.
Common Stock shall mean common stock, par value $0.001 per share, of
North American Technologies Group, Inc., a Delaware corporation.
Default Rate shall mean the rate or rates determined from time to time
pursuant to Section 4.2.
Equity Securities shall mean any equity securities of Borrower
(including preferred and common stock), any rights, options or warrants to
acquire such securities, and any debt instrument convertible or exercisable into
such securities.
Event of Default shall mean any of the Events of Default described in
Section 7.1.
Financials shall mean the audited financial statements of the Borrower
for the fiscal years ended December 31, 2000 and 1999.
GAAP shall mean generally accepted accounting principles as are in
effect from time to time and applied on a consistent basis (except for changes
in application in which the Borrower's independent certified public accountants
concur) both as to classification and amounts.
Law shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any national, federal, state, local or
other government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
Lender shall mean each holder, from time to time, of a Note or Notes,
including successors and assigns.
Lien shall mean any mortgage, pledge, security interest, encumbrance,
lien, charge, or claim upon property of any kind, whether or not voluntarily
given (including, without limitation, any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease in
the nature thereof, the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction, and the recording of or
agreement to provide any instrument for recording under the recording or other
laws of any state or other jurisdiction).
Loan shall mean the loan made pursuant to Section 2.1.
Loan Documents shall mean all agreements, instruments and documents
whether heretofore, now or hereafter executed by or on behalf of the Borrower
with respect to or in connection with this Agreement including, without
limitation, the Notes.
Maturity Date shall mean July 16, 2002.
Note shall mean a Note or Notes made by the Borrower to the Lender
pursuant to Section 2.1 in the form of Exhibit "A".
Original Issue Date shall mean the date on which the first Note was
issued.
Uniform Commercial Code shall mean the Uniform Commercial Code of the
State of Texas or any other applicable jurisdiction, as amended from time to
time.
1.2. Construction. Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular, the singular the plural
and the part the whole; "or" has the inclusive meaning represented by the phrase
"and/or," and "including" has the meaning represented by the phrase "including
without limitation." References in this Agreement to
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"determination" of or by the Lender shall be deemed to include good faith
estimates by the Lender (in the case of quantitative determinations) and good
faith beliefs by the Lender (in the case of qualitative determinations).
Whenever the Lender are granted the right herein to act in their sole discretion
or to grant or withhold consent, such right shall be exercised in good faith.
The words "hereof," "herein," "hereunder" and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement. The section and other headings contained in this Agreement and the
Table of Contents preceding this Agreement are for reference purposes only and
shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection, schedule and exhibit
references are to this Agreement unless otherwise specified.
1.3. Accounting Principles. Except as otherwise provided in this
Agreement, all computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to this Agreement
shall be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial terms shall
have the meanings ascribed to such terms by GAAP.
2. LOAN
2.1. The Loan.
(a) Subject to the terms and conditions hereof, the Lender hereby
agrees to make a loan (the "Loan") to the Borrower in the aggregate principal
amount advanced by the Lender of $100,000.
2.2. Repayment of Loan; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the Lender
the full outstanding principal amount of the Loan, together with all unpaid
interest thereon and all other outstanding unpaid amounts owing to Lender under
or in connection with the Loan Documents, on the Maturity Date (or on such
earlier date that the Loan becomes due and payable pursuant to Section 7). The
Borrower hereby agrees to pay interest on the unpaid principal amount of the
Loan and unpaid overdue interest from time to time outstanding, from the
issuance of the Note until payment in full thereof at the rates per annum, on
the dates, and in the form and manner set forth herein.
(b) The Loan shall be evidenced by the Note or Notes. The Note or
Notes shall (i) be dated the date of the issuance of the first Note, (ii) be
payable in full on the Maturity Date (or such earlier date that the Loan becomes
due and payable pursuant to Section 7) and (iii) provide for the accrual of
interest for the period from the date thereof until paid in full on the unpaid
principal amount time to time outstanding at the rates per annum, on the dates,
and in the form and manner set forth herein.
2.3. Conversion; Prepayments
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(a) Notwithstanding any term to the contrary contained herein, each
Lender may elect at any time while any Note remains unpaid to convert all or any
portion of the principal of and all accrued but unpaid interest on any Note into
shares of Common Stock or other Equity Securities in accordance with Article 4
hereof by providing written notice to the Borrower to such effect at least five
(5) days prior to the date for such payment, which notice shall be irrevocable
once given (unless such exercise is conditioned upon the closing of the sale of
such Equity Securities).
(b) All or any portion of the principal of any Note may be prepaid by
the Borrower in cash, in whole or in part, at any time on thirty (30) days'
prior written notice, which notice shall be irrevocable once given. Following
the Lender's receipt of such a notice, and without limiting Section 2.3(a)
above, the Lender may, at any time within twenty-five (25) days of its receipt
of such a notice, notify the Borrower that it elects to convert all or any
portion of the principal amount of and accrued and unpaid interest on the Note
as provided in subsection (a) of this Section 2.3, which notice shall be
irrevocable once given (unless such exercise is conditioned upon the closing of
the sale of such Equity Securities).
2.4. Interest Rates.
(a) The Loan shall bear interest at a rate equal to ten percent (10%)
per annum.
(b) Upon the occurrence of an Event of Default hereunder and until
such Event of Default is cured by Borrower or waived by Lender hereunder, the
outstanding principal amount of the Loan and all accrued but unpaid interest on
such principal and any other amounts payable by the Borrower shall to the
fullest extent permitted by law, bear interest at a rate of twelve percent (12%)
per annum, in each case from the date of such non-payment until such amount is
paid in full (as well as before judgment and during the pendency of any
bankruptcy, insolvency or similar proceeding).
(c) Interest on the outstanding principal amount of the Note shall
accrue and shall be payable upon the earlier to occur of (i) prepayment of the
Note under Section 2.3(b) hereof, (ii) conversion of the Note under Section 4.1
hereof, except to the extent that any accrued but unpaid interest is converted
into shares of Common Stock, and (iii) the Maturity Date, provided that interest
accruing pursuant to paragraph (b) of this subsection shall be payable from time
to time on demand.
2.5. Computation of Interest
(a) Interest shall be calculated on the basis of a 360-day year for
the actual number of days elapsed.
(b) Notwithstanding any other provisions of any of the Loan Documents,
the Borrower shall not be required to make any payments of interest or other
amounts hereunder or under any other Loan Document to the extent such payments
would cause the rate of interest charged hereunder to exceed the highest rate
permitted under applicable law. Any such payments
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which are received by Lender may, at Lender's option, be applied against payment
of principal of the Loan or other obligations payable to Lender hereunder or
returned to Borrower.
2.6. Payments, Etc. All payments (including prepayments) to be made by the
Borrower hereunder or under any other Loan Document, whether on account of
principal, interest or otherwise, shall be made without set off or counterclaim
and shall be made prior to 12:00 Noon, Houston local time, on the due date
thereof (whether at the stated maturity, on a prepayment date or by acceleration
or otherwise) to the Lender to its address shown herein or such other account or
place as Lender may from time to time designate, in Dollars. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day, and, interest
thereon shall be payable at the then applicable rate during such extension.
3. CONDITIONS OF LENDING.
Notwithstanding any other provision of this Agreement or any other Loan
Document and without affecting in any manner the rights of the Lender under this
Agreement, it is understood and agreed that the Lender shall have no obligation
at any time under Article 2 of this Agreement unless and until the following
conditions have been and continue to be satisfied, all in form and substance
satisfactory to the Lender and its counsel:
3.1. The Loan.
(A) The Lender shall have received, on or prior to a Closing
Date, the following documents:
(i) this Agreement, duly executed and delivered;
(ii) the Note in the form of Exhibit "A", duly executed and
delivered;
(iii) a certificate dated the Closing Date and signed by
the Secretary or Assistant Secretary of the Borrower, certifying
as to (a) the Borrower's organizational documents including its
articles or certificate of incorporation and bylaws and good
standing of the Borrower in each state in which it is organized
or qualified to do business, (b) certified copies of the
resolutions of the Board of Directors of the Borrower authorizing
the execution and delivery of this Agreement and the other Loan
Documents by specified officers of the Borrower, and (c) the
names of the Borrower's officers, the offices that each holds and
the authenticity of their signatures; and
(iv) such other documents and certificates as to the
transactions contemplated by this Agreement and the other Loan
Documents as the Lender may reasonably request.
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(B) The representations and warranties of the Borrower contained
in Article 5 hereof shall be true on and as of each Closing Date; the
Borrower shall have complied with all covenants and conditions hereof;
there shall exist on the Closing Date no Event of Default; and the
Borrower shall have delivered to the Lender a certificate of its Chief
Executive Officer, President and Chief Financial Officer dated the
Closing Date, to each such effect.
(C) All legal details and proceedings taken or to be taken in
connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to the
Lender and its counsel, and the Lender and its counsel shall have
received all such counterpart originals or certified or other copies
of such documents as the Lender or its counsel may reasonably request.
4. CONVERSION PRIVILEGE.
4.1. Right To Convert:
(a) Common Stock. Subject to the provisions for adjustment
hereinafter set forth, the principal of and all accrued but unpaid interest on
any Note shall, at the option of any Lender, at any time, be convertible in the
manner hereinafter set forth into fully paid and nonassessable shares of Common
Stock at a rate (the "Conversion Rate") equal to the lesser of (i) $1.00 per
share (subject to adjustment as provided in Section 4.1(d)) or (ii) the price
per share for Common Stock issued in any transaction concluded within ninety
(90) days of the date of this Loan Agreement (or equivalent price per share for
Common Stock issued pursuant to the conversion or exercise of any Equity
Security issued within 90 days of the date of this Loan Agreement) provided,
however, that no adjustment under clause (ii) shall result in a Conversion Price
below $.75 per share.
(b) Equity Securities or Common Stock Issued in Transaction with a
Strategic Investor. In the event the Borrower shall (i) issue any Equity
Securities after the date hereof (other than upon exercise or conversion of any
Equity Securities of the Borrower outstanding on the date hereof) or (ii) enter
into a transaction with a strategic partner in which the Borrower issues Common
Stock at a per share price below the then-current Conversion Rate, then, in
addition to the Lender's right to convert to Common Stock, the Lender shall have
the right (y) in the case of the issuance by the Borrower of Equity Securities,
to convert the principal of and all accrued but unpaid interest on any Note into
shares of such Equity Securities on the basis of one dollar of converted
principal and/or interest on a Note for each dollar of the initial purchase
price for such Equity Securities, and (z) in the case of a transaction with a
strategic partner, to convert the principal of and all accrued and unpaid
interest on any Note to Common Stock at the same price as the stock issued to
the strategic partner. Notwithstanding the foregoing, in no event shall the
Conversion Price be adjusted under this 4.1(b) to a price below $.75 per share.
(c) Notice of Certain Transactions. Borrower shall provide notice to
Lender of any issuance of Equity Securities, specifying all of the terms and
conditions of such securities and offering in order to permit Lender to
determine whether Lender will convert its Note and
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accrued interest into such Equity Securities, and contemporaneously with any
notice delivered under Section 2.3(b).
(d) Reservation of Stock Issuable Upon Conversion. The Borrower shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the Notes, such number of its shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding Notes. If at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding Notes, the Borrower
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
(e) Adjustments In case the Borrower shall, at any time while a Note
is outstanding (i) pay a stock dividend in shares of Common Stock, (ii) make a
distribution on shares of its capital stock in shares of Common Stock or other
capital stock, (iii) issue rights or warrants to holders of Common Stock
entitling them to subscribe for or purchase any shares of capital stock,
including Common Stock, (iv) distribute to holders of Common Stock any assets or
evidence of indebtedness, (v) declare and/or pay cash dividends on Common Stock,
(vi) reclassify or reorganize the Common Stock or other shares of capital stock,
(vii) merge, consolidate, sell substantially all its assets or participate in a
share exchange, or (viii) convert Borrower into any other type of entity, then
an appropriate adjustment to the terms of conversion shall be made so as to
preserve for Lender all of the economic and other values attributable to
Lender's rights to convert a Note.
5. REPRESENTATIONS AND WARRANTIES.
5.1. General Representations and Warranties. The Borrower represents and
warrants to the Lender that:
(A) Organization, Qualification and Capitalization; Subsidiaries.
The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware; the Borrower
has the lawful power to own or lease its properties and to engage in
the business it presently conducts and contemplates conducting. The
Borrower's authorized capital stock consists of (i) 50,000,000 shares
of common stock, par value $0.001 per share, of which approximately
15,500,000 shares would be issued and outstanding on a fully diluted
basis assuming the exercise of all outstanding warrants or securities
convertible into Common Stock and options exercisable to purchase
Common Stock; and (ii) 10,000,000 shares of Preferred Stock, par value
$0.001 per share, of which 138,293 shares are issued, outstanding and
designated as the Borrower's Series F Cumulative Convertible Preferred
Stock; Series G Cumulative Convertible Preferred Stock, Subseries I;
Series G Cumulative Convertible Preferred Stock, Subseries II; and
Series G Convertible Preferred Stock, Subseries III, Series H
Convertible Preferred Stock and Series I Convertible Preferred Stock.
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(B) Power and Authority. The Borrower has the corporate power
and authority to make and carry out this Agreement and the other Loan
Documents, to execute and deliver this Agreement and the other Loan
Documents, and to make the borrowings contemplated hereby and to
perform its obligations under this Agreement and the other Loan
Documents, all such actions have been duly authorized by all necessary
corporate proceedings on its part.
(C) Validity and Binding Effect; Consents. This Agreement and
the other Loan Documents have been duly and validly executed and
delivered by the Borrower. This Agreement and the other Loan
Documents constitute legal, valid and binding obligations of the
Borrower and any other parties thereto, enforceable in accordance with
their respective terms, except to the extent that enforceability of
the foregoing may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally or by laws or judicial
decisions limiting the right of specific performance.
(D) Financials. The Financials have been prepared in accordance
with GAAP applied on a consistent basis and fairly present the assets,
liabilities and financial condition and results of operations and cash
flows of the Borrower at and as of the dates thereof; there are no
material liabilities, direct or indirect, fixed or contingent, of the
Borrower which are not reflected in the Financials nor omissions of
other facts or circumstances which are or may be material.
(E) Absence of Certain Developments. Except as disclosed in the
Borrower's publicly-filed reports with the Securities and Exchange,
including without limitation its Annual Report on Form 10-KSB for the
year ended December 31, 2000, since the date of the latest Financials,
(i) there has been no material adverse change in the financial
condition, results of operations or cash flows of Borrower, (ii) the
Borrower has not incurred any material liabilities or material
contingent liabilities, (iii) the Borrower has not declared any
dividends or purchased any of its capital stock, (iv) the Borrower has
not entered into any material transactions outside the ordinary course
of business, (v) the Borrower has not made a loan or sold any assets
to any officer, director, employee or shareholder of Borrower, or any
agreement or commitment therefor, (vi) the Borrower has not had any
material loss, destruction or damage to any property, whether or not
insured, (vii) the Borrower has not had any acquisition or disposition
of any assets (or any contract or arrangement therefore), or any other
transaction otherwise than for fair value in the ordinary course of
business, and (viii) the Borrower has not committed itself to any of
(i) through (vii) above.
(F) The Borrower has reserved from its authorized but unissued
capital stock a sufficient number of shares of Common Stock issuable
upon the conversion of the principal of and interest on the Loan
(assuming interest will accrue at 10% per annum to the Maturity Date).
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(G) When issued upon the conversion of the principal of and
interest on any Note, the Common Stock issued will be duly issued,
fully paid and nonassessable.
6. COVENANTS AND CONTINUING AGREEMENTS.
6.1. Affirmative Covenants. From the date hereof and thereafter until the
termination of the Loan and until the principal of and all interest on the Notes
has been paid in full, the Borrower covenants and agrees as follows:
(A) Preservation of Existence, etc. The Borrower shall maintain
its corporate existence and its license or qualification and good
standing in each jurisdiction in which its ownership or lease of
property or the nature of its business makes such license or
qualification necessary.
(B) Keeping of Records and Books of Account. The Borrower shall
maintain and keep proper books of record and account which enable the
Borrower to issue financial statements in accordance with GAAP and as
otherwise required by applicable law, and in which full, true and
correct entries shall be made in all material respects of all its
dealings and business and financial affairs.
7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.
7.1. Events of Default. The occurrence or existence of any of the
following events, conditions, acts or omissions and failure by the Borrower to
cure such an event, condition, act or omission within ten days of the Borrower's
receipt of a notice from the Lender with respect thereto or, if such event,
condition, act or omission is not susceptible to cure within such period the
failure of the Borrower to commence within such period and thereafter diligently
pursue a cure of such event, condition, act or omission, shall constitute an
"Event of Default" hereunder unless waived by the Lender:
(A) The Borrower fails to pay any principal of or interest on the
Loan when due and payable;
(B) Any representation, warranty, statement, report, financial
statement or certificate made or delivered by the Borrower to the
Lender shall prove to have been false or misleading in any material
respect as of the time it was made or furnished;
(C) The Borrower fails to perform, keep or observe any term,
provision, condition or covenant contained in this Agreement or in any
other Loan Document, which is required to be performed, kept or
observed by the Borrower;
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(D) Any of the Loan Documents shall cease to be legal, valid and
binding agreements enforceable against the party executing the same or
such party's successors and assigns (as permitted under the Loan
Documents) in accordance with the respective terms thereof or shall in
any way be terminated (except in accordance with its terms) or become
or be declared ineffective or inoperative or shall in any way be
challenged or contested or cease to give or provide the respective
interests, rights, remedies, powers or privileges intended to be
created thereby;
(E) An application is made by the Borrower for the appointment of
a receiver, trustee or custodian for any of the Borrower's assets; or
a petition under any section or chapter of the federal Bankruptcy Code
or any similar law shall be filed by the Borrower; or the Borrower
makes an assignment for the benefit of its creditors or any case or
proceeding is filed by the Borrower for its dissolution, liquidation
or termination; or
(F) The Borrower ceases to conduct its business as now conducted;
or the Borrower is enjoined, restrained or in any way prevented by
court order from conducting all or any material part of its business
affairs and such injunction, restraint or other preventive order is
not dismissed within thirty (30) days after the entry thereof; or a
petition under any section or chapter of the federal Bankruptcy Code
or any similar law is filed against the Borrower or any case or
proceeding is filed against the Borrower for its dissolution or
liquidation, and such petition, case or proceeding is not dismissed
within thirty (30) days after the filing thereof.
7.2. Acceleration of Liabilities. Upon the occurrence and continuation
of an Event of Default mentioned in any of Sections 7.1(A) through 7.1(F), all
of the outstanding principal of and accrued and unpaid interest on the Loan may,
at the option of the Lender and without demand, notice or legal process of any
kind, be declared, and immediately shall become, due and payable.
7.3. Remedies. Upon and after an Event of Default, the Lender shall have
in addition to all of the rights and remedies contained in this Agreement or in
any other Loan Document or other applicable law, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by law.
8. MISCELLANEOUS
8.1. Modification of Agreement; Sale of Interest. This Agreement and the
other Loan Documents may not be modified, altered or amended, except by an
agreement in writing signed by the Borrower and the Lender holding a majority in
principal amount of the Notes then outstanding.
8.2. No Implied Waivers; Cumulative Remedies; Writing Required. No course
of dealing and no delay or failure of the Lender in exercising any right, power,
remedy or privilege
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under this Agreement or any other Loan Document shall affect any other or future
exercise thereof or operate as a waiver thereof; nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power, remedy or privilege preclude any further exercise thereof or any
other right, power, remedy or privilege. The rights and remedies of the Lender
under this Agreement and the other Loan Documents are cumulative and not
exclusive of any rights or remedies which they would otherwise have. Any waiver,
permit, consent or approval of any kind or character on the part of the Lender
of any provision of, or any breach or default under, this Agreement or any other
Loan Document must be in writing and shall be effective only to the extent
specifically set forth in such writing.
8.3. Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
8.4. Successors and Assigns. This Agreement and the other Loan Documents
shall be binding upon and inure to the benefit of the successors and assigns of
the Borrower and the Lender.
8.5. Governing Law; Submission to Jurisdiction. This Agreement has been
delivered at Houston, Texas and shall be deemed to have been made at Houston,
Texas, and shall be interpreted, and the rights and liabilities of the parties
hereto shall for all purposes be governed by and construed and enforced, in
accordance with the internal laws of the State of Texas applicable to agreements
executed, delivered and performed within such state without giving effect to the
principles of conflicts of laws of such state. As part of the consideration for
new value this day received, Borrower hereby consents to the jurisdiction of any
state or federal court located within the County of Xxxxxx, State of Texas, and
waives personal service of any and all process upon Borrower, and consents that
all such service of process be made by registered mail directed to Borrower at
the address stated on the first page hereof (or such other address as may be
duly designated by Borrower pursuant to section 8.6 hereof) and service so made
shall be deemed to be completed upon actual receipt thereof.
8.6. Notice. Except as otherwise provided herein, any notice or other
written communication required hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered (i) upon deposit in the
United States mail, with proper postage prepaid, (ii) by hand delivery, (iii) by
overnight express mail courier, or (iv) by telecopier, and addressed to the
party to be notified at the address set forth below or to such other address as
each party may designate for itself in writing by like notice, provided notices
to the Lender shall not be effective until received.
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To the Lender:
Xxxxxxx X. Xxxxxxxxxx
c/o Bank of America Capital Investors
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Telecopier: (000)000-0000
To the Borrower:
North American Technologies Group, Inc.
00000 X. Xxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, President
Telecopier: (000) 000-0000
with a copy to: Xxxxxxxx Xxxxxxxxx Professional Corporation
Eleven Penn Center
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esquire
Telecopier: (000) 000-0000
8.7. Section Titles. The article and section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
8.8. Prior Understanding. This Agreement supersedes all prior understandings
and agreements, whether written or oral, between the parties hereto and thereto
relating to the transactions provided for herein or therein, including any prior
proposal or commitment letters.
8.9. Duration; Survival. All representations and warranties of the
Borrower contained herein or made in connection herewith shall survive the
making of the Loan and shall not be waived by the execution and delivery of this
Agreement, any investigation by the Lender or payment in full of the Loan. All
covenants and agreements of the Borrower contained in Articles 7 and 9 herein
shall continue in full force and effect from and after the date hereof so long
as the Borrower may borrow hereunder and until termination of this Agreement and
payment in full of the Loans. All covenants and agreements of the Borrower
contained herein relating to the payment of principal, interest, additional
compensation or expenses, fees or expenses and indemnification shall survive
payment in full of the Loan and termination of this Agreement.
8.10. Exceptions to Covenants. The representations, warranties and
covenants contained herein shall be independent of each other and no exception
to any representation,
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warranty or covenant shall be deemed to be an exception to any other
representation, warranty or covenant contained herein unless expressly provided,
nor shall any such exceptions be deemed to permit any action or omission that
would be in contravention of applicable law.
8.11. Holiday Payments. If any payment to be made to the Lender hereunder
shall become due on a date not a Business Day, such payment shall be made on the
next succeeding Business Day and interest shall accrue on any principal amount
of such payment until the date on which such principal amount is paid to the
Lender.
8.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, and intending to be legally bound hereby, this
Agreement has been duly signed, sealed and delivered by the undersigned as of
the day and year specified at the beginning hereof.
ATTEST: BORROWER
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
__________________________ By:_________________________________
Title: Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
LENDER
WITNESS: XXXXXXX X. XXXXXXXXXX
___________________________ By:_________________________________
Name:
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TABLE OF CONTENTS
Page
----
1. GENERAL DEFINITIONS............................................ 1
1.1. DEFINITIONS.................................................. 1
1.2 CONSTRUCTION................................................. 2
1.3 ACCOUNTING PRINCIPLES........................................ 3
2. LOAN........................................................... 3
2.1 THE LOAN..................................................... 3
2.2. REPAYMENT OF LOAN; EVIDENCE OF DEBT.......................... 3
2.3. CONVERSION; PREPAYMENTS...................................... 3
2.4. INTEREST RATES............................................... 4
2.5. COMPUTATION OF INTEREST...................................... 4
2.6. PAYMENTS, ETC................................................ 5
3. CONDITIONS OF LENDING.......................................... 5
3.1. THE LOAN..................................................... 5
4. CONVERSION PRIVILEGE........................................... 6
4.1. RIGHT TO CONVERT............................................. 6
5. REPRESENTATIONS AND WARRANTIES................................. 7
5.1. GENERAL REPRESENTATIONS AND WARRANTIES....................... 7
6. COVENANTS AND CONTINUING AGREEMENTS............................ 9
6.1. AFFIRMATIVE COVENANTS........................................ 9
7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.............. 9
7.1. EVENTS OF DEFAULT............................................ 9
7.2. ACCELERATION OF LIABILITIES.................................. 10
7.3. REMEDIES..................................................... 10
i
8. MISCELLANEOUS.................................................. 10
8.1. MODIFICATION OF AGREEMENT; SALE OF INTEREST.................. 10
8.2. NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED.... 10
8.3. SEVERABILITY................................................. 11
8.4. SUCCESSORS AND ASSIGNS....................................... 11
8.5. GOVERNING LAW; SUBMISSION TO JURISDICTION.................... 11
8.6. NOTICE....................................................... 11
8.7. SECTION TITLES............................................... 12
8.8. PRIOR UNDERSTANDING.......................................... 12
8.9. DURATION; SURVIVAL........................................... 12
8.10. EXCEPTIONS TO COVENANTS...................................... 12
8.11. HOLIDAY PAYMENTS............................................. 13
8.12. COUNTERPARTS................................................. 13
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