EXHIBIT 10.6
CONSTRUCTION LOAN AGREEMENT
This agreement ("Agreement") is made and entered into this 5/th/ day
of February, 2004, by and among NORTH AMERICAN TECHNOLOGIES GROUP, INC.
("NATK"), a Delaware corporation, TIETEK TECHNOLOGIES, INC. ("TTT"), a Texas
corporation, and TIETEK LLC ("TieTek"), a Delaware limited liability company,
and TIE INVESTORS, LLC ("Tie Investors"), a Texas limited liability company.
NATK, TTT and TieTek are hereinafter collectively, and jointly and severally,
called "Borrower," and Tie Investors is hereinafter called "Lender."
W I T N E S S E T H:
WHEREAS, Borrower has obtained from Lender a Commitment (as
hereinafter defined) for a Loan; and
WHEREAS, Borrower and Lender wish to enter into this Agreement in
order to set forth the terms and conditions of the disbursement of the Loan to
be made in accordance with the Commitment;
NOW, THEREFORE, in consideration of the mutual promises hereinafter
contained and of other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Lender hereby agree as follows:
ARTICLE I.
DEFINITIONS
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1.1. Defined Terms. As used in this Agreement, the following terms
shall have the meanings shown:
(a) "Assets." Each and all of the following property, rights,
or interests of Borrower as each such term is defined in the Uniform
Commercial Code as adopted and currently in force in the state of Texas,
including, but not limited to, any such property, rights or interests
acquired by Borrower after the date hereof, but excluding the Excluded
Assets (as hereinafter defined): (i) accounts; (ii) chattel paper (whether
tangible or electronic); (iii) commercial tort claims; (iv) deposit
accounts; (v) documents; (vi) equipment; (vii) financial assets; (viii)
fixtures; (ix) general intangibles; (x) goods; (xi) instruments; (xii)
insurance claims and proceeds; (xiii) inventory; (xiv) investment property;
(xv) letter of credit rights; (xvi) payment intangibles; (xvii) promissory
notes; and (xviii) intellectual property; and all proceeds of the
foregoing. The term "Assets" also includes all patents (issued and applied
for), copyrights, trademarks, trade names,
licenses, trade secrets and processes, and other intellectual property of
Borrower, including, without limitation, U.S. Patent No. 5,886,078 dated
Xxxxx 00, 0000, X. S. Patent Published Application No. 20020123553 dated
March 5, 2001, Trademark "TieTek", Registration No. 2467881, issued July
10, 2001, and all other such rights and properties described in NATK's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002,
including any additions and substitutions thereto.
(b) "Assignment of Leases and Rents." That certain Assignment
of Leases and Rents dated of even date herewith and executed by TieTek LLC
as Assignor in favor of Tie Investors as Assignee.
(c) "Bridge Loan." That certain loan in the original principal
amount of Two Million One Hundred Thousand Dollars ($2,100,000) made by Tie
Investors to NATK, TieTek Technologies and TieTek pursuant to that certain
loan agreement between those parties dated August 15, 2003, as evidenced by
the Bridge Loan Note.
(d) "Bridge Loan Note." That certain promissory note dated
August 15, 2003, in the original principal amount of Two Million One
Hundred Thousand Dollars ($2,100,000) executed by NATK, TieTek
Technologies, and TieTek in favor of Tie Investors.
(e) "Business." The manufacture and production of composite
railroad ties (and other such products manufactured by using the same or
related technology) using licensed trade secrets, processes, and other
intellectual property of Borrower, including, without limitation, the
intellectual property listed on Schedule 1.1(e).
(f) "Closing Costs." All costs of closing the Loan and all
expenses of Lender with respect thereto, as more specifically described in
Article IV, Section 4.1(n).
(g) "Closing Date" shall mean the date upon which Borrower and
Lender have executed and delivered this Agreement.
(h) "Commitment." A letter agreement dated December 19, 2003.
(i) "Deed of Trust." A Deed of Trust, Security Agreement,
Assignment of Rents and Fixture Filing of even date herewith, conveying the
Premises to the Trustee named therein and granting a security interest in
certain property and rights to secure payment of the Note.
(j) "Default or Event of Default." Default or Event of Default
shall mean any of the events specified in Article VI of this Agreement.
(k) "Disbursal Schedule." The schedule of estimated
disbursements of the proceeds of the Loan agreed upon in writing by Lender
and Borrower or as modified from time to time upon written approval from
Lender.
(l) "Excluded Assets." The specific assets of NATK which are
set forth on Schedule 1.1(l).
(m) "Fifth Advance." The fifth installment of the Loan funded
by the Lender in the amount of One Million Dollars ($1,000,000).
(n) "Financing Statement." One or more Financing Statements
executed by Borrower in favor of Lender, perfecting the security interest
in the Assets created by the Security Agreement and the Patent Security
Agreement.
(o) "First Advance." The first installment of the Loan funded
by the Lender[DLI] in the amount of Two Million One Hundred Eighty-nine
Thousand Three Hundred Seventy-Five Dollars ($2,189,375).
(p) "Fourth Advance." The fourth installment of the Loan funded
by the Lender in the amount of Four Hundred Thousand Dollars ($400,000).
(q) "Governmental Authority." The United States, the state, the
county, and the city, or any other political subdivision in which the
Premises is located, and any other political subdivision, agency or
instrumentality exercising jurisdiction over the Borrower, the Business, or
the Premises.
(r) "Governmental Requirements." All laws, ordinances,
statutes, codes, rules, regulations, orders and decrees of any Governmental
Authority applicable to the Borrower, the Business, or the Premises.
(s) "Improvements." An industrial complex comprised of six (6)
buildings of approximately 189,449 square feet and appurtenant improvements
located on the Land.
(t) "Land." The real property described in Exhibit A attached
hereto and made a part hereof.
(u) "Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on contract, constitutional,
common, or statutory law, and including, but not limited to, the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale, or trust receipt, or a lease, consignment or
bailment for security purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, liens and other statutory, constitution, or common law rights
of landlords, leases and other title
exceptions and encumbrances affecting Property. For the purposes of this
Agreement, any Borrower shall be deemed to be the owner of any Property
which it has acquired or holds subject to a conditional sale agreement,
financing lease, or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
(v) "Loan." A loan advanced in multiple disbursements as set
forth herein in the aggregate maximum principal amount of Fourteen Million
Dollars ($14,000,000) from Lender to Borrower, secured by a first lien on
the Assets and a Deed of Trust Mortgage and Security Agreement on the
Premises.
(w) "Loan Documents." This Agreement, the Note, the Deed of
Trust, the Security Agreement, the Patent Security Agreement, the
Intercreditor Agreement, the Voting Agreement, the Non-Compete Agreement,
the NATK Royalty Agreement, the TieTek Royalty Agreement, the Membership
Interest Pledge Agreements, the Solvency Certificates, and any other
documents to be executed by Borrower or any of their respective
shareholders pertaining to the Loan.
(x) "NATK." North American Technologies Group, Inc., a Delaware
corporation.
(y) "Note." A promissory note of even date herewith in
substantially the form of Exhibit B attached hereto payable to the order of
Lender and in the principal amount of the Loan.
(z) "Patent Security Agreement." An agreement substantially in
the form of Exhibit C attached hereto granting to Lender a first lien on
all of Borrower's intellectual property, including, but not limited to, all
trademarks, copyrights, licenses, and patents (issued and applied for).
(aa) "Person" shall mean any individual, partnership, firm,
corporation (including, but not limited to, Borrower), association, joint
venture, trust or other entity, or any government or political subdivision
or agency, department or instrumentality thereof.
(bb) "Premises." The Land and the Improvements.
(cc) "Property" shall mean any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or intangible,
including, without limitation, the Assets and the Premises.
(dd) "SEC Reports." The NATK 10QSB filed in November 2003 with
the Securities and Exchange Commission.
(ee) "Second Advance." The second installment of the Loan funded
by the Lender in the amount of Four Million Two Hundred Fifty Thousand
Seven Hundred Eighty-seven Dollars ($4,250,787).
(ff) "Security Agreement." An agreement substantially in the
form of Exhibit D attached hereto granting to Lender a first lien on all of
the Assets.
(gg) "Seventh Advance." The seventh installment of the Loan
funded by the Lender in the amount as determined in accordance with Section
5.1(g).
(hh) "Sixth Advance." The sixth installment of the Loan funded
by Lender in the amount of One Million Dollars ($1,000,000).
(ii) "Solvent" shall mean with respect to any Person on a
particular date, the condition that, on such date, (i) the fair value of
the property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Person; (ii) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable
liabilities of such Person on its debts as they become absolute and
matured; (iii) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (iv) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an
unreasonably small amount of capital.
(jj) "Third Advance." The third installment of the Loan funded
by the Lender in the amount of Two Hundred Fifty Thousand Dollars
($250,000).
(kk) "Tie Investors." Tie Investors, LLC, a Texas limited
liability company.
(ll) "TieTek." TieTek LLC, a Delaware limited liability company.
(mm) "TTT." TieTek Technologies, Inc., a Texas corporation.
(nn) "Title Company." Republic Title of Texas Inc. located at
0000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000.
ARTICLE II.
THE LOAN.
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2.1. The Loan. Subject to and upon the terms, conditions and
limitations contained in this Agreement and relying on the representations and
warranties contained in this Agreement and the other Loan Documents, Lender
agrees to lend, and Borrower agrees to borrow and take down, the Loan, to be
evidenced by the Note. All proceeds of the Loan shall be advanced against the
Note as provided in Article V hereof and shall be used by Borrower for the
specific purposes provided in Article V. The principal amount actually owing on
the Note from time to time shall be the aggregate of all advances theretofore
made by the Lender against the Note less all payments theretofore made on the
principal of the Note. The Loan shall bear interest as set forth in the Note.
Principal and interest shall be due and payable as set forth in the Note.
Amounts borrowed and repaid hereunder shall not be reborrowed.
2.2. Security for the Loan. The Loan, as evidenced by the Note, shall
be secured by (i) the Deed of Trust; (ii) the Security Agreement; (iii) the
Patent Security Agreement; and (iv) the Membership Interest Pledge Agreements.
2.3. Schedule of Disbursements. Disbursement of the proceeds of the
Loan is to be made by Lender to Borrower in accordance with the Disbursal
Schedule.
2.4. Final Disbursement. Lender shall have no obligation to make any
disbursement of the Loan after expiration of the Interim Loan Period as that
term is defined in the Note.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
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3.1. Representations and Warranties of Borrower. Borrower hereby
represents and warrants to Lender that:
(a) Status and Authority of North American Technologies Group,
Inc. NATK is a Delaware corporation duly organized and existing under
the laws of the state of Delaware and has the power, authority and
legal right to carry on the business now being conducted by it and to
enter into, and to engage in the transactions contemplated by, the
Loan Documents. The execution and delivery of the Loan Documents and
the performance and observance of the provisions thereof have been
authorized in accordance with the certificate of incorporation and
bylaws of NATK and will have been duly authorized by all necessary
actions of the board of directors and shareholders of NATK as
contemplated in the Voting Agreement.
(b) Status and Authority of TieTek Technologies, Inc. TTT is a
Texas corporation duly organized and existing under the laws of the
state of Texas and has the power, authority and legal right to carry
on the business now being conducted by it and to enter into, and to
engage in the transactions contemplated by, the Loan Documents. The
execution and delivery of the Loan Documents and the performance and
observance of the provisions thereof have been authorized in
accordance with the articles of incorporation and bylaws of TTT and
have been duly authorized by all necessary actions of the board of
directors and shareholders of TTT.
(c) Status and Authority of TieTek LLC. TieTek is a limited
liability company duly organized and existing under the laws of the
state of Delaware and has the power, authority and legal right to own
the Premises, to carry on the business now being conducted by it and
to enter into, and to engage in the transactions contemplated by, the
Loan Documents. The execution and delivery of the Loan Documents and
the performance and observance of the provisions thereof have been
authorized in accordance with all applicable laws and in accordance
with the Regulations of TieTek and have been duly authorized by all
necessary actions of the governing board and members of TieTek.
(d) Validity of Loan Documents. The Loan Documents are in all
respects legal, valid and binding according to their terms, and the
Deed of Trust grants to Lender a valid and enforceable first lien upon
and security interest in the Premises and fixtures of Borrower located
on or to be located thereon, and the Security Agreement and the Patent
Security Agreement, collectively, grant to Lender a valid and
enforceable first lien upon, and security interest in, the Assets.
(e) Ownership of Assets. The Assets constitute all the assets
necessary for or used in the operation of the Business. Borrower has
good, indefeasible title to the Assets, free and clear of all liens
and encumbrances, except those listed on Schedule 3.1(g).
(f) Subsidiaries. TTT and TieTek are the only subsidiaries of
NATK which own or have rights to assets necessary for or used in the
operation of the Business by Borrower.
(g) Priority of Lien on Personalty. Except as set forth on
Schedule 3.1(g) attached hereto, no security interest (except in favor
of Lender) exists with respect to any Assets of Borrower.
(h) Conflicting Transactions of Borrower. The consummation of
the transactions hereby contemplated and the performance of the
obligations of Borrower under and by virtue of the Loan Documents will
not result in any breach of, or constitute a default under, any
mortgage, deed of trust, lease, loan or credit
agreement, corporate charter, bylaws, or other instrument to which
Borrower is a party or by which it or the Property may be bound or
affected.
(i) Pending Litigation. Other than set forth in the SEC
Reports, there are no material actions, suits or proceedings pending,
or to the knowledge of Borrower threatened, against or affecting
Borrower, the Property, or involving the validity or enforceability of
any of the Loan Documents or the priority of the Liens thereof, at law
or in equity, or before or by any Governmental Authority; and to
Borrower's knowledge, it is not in default with respect to any order,
writ, injunction, decree or demand of any court or any Governmental
Authority.
(j) No Prior Work. Except as set forth on Schedule 3.1(j), no
work or construction has been commenced on the Land, and no materials
have been delivered to the Land which could in either case result in
the imposition of a mechanic's or materialmen's lien on the Premises.
(k) Violations of Governmental Requirements. Borrower has no
knowledge of any violations or notices of violations of any
Governmental Requirements.
(l) No Consents Necessary. No consent of any other person,
entity, or party, and no consent, license, approval or authorization
of, or registration or declaration with, any Governmental Authority is
required in connection with the execution, delivery, performance,
validity or enforceability of the transactions contemplated by this
Agreement or the Loan Documents.
(m) Condition of Premises. The Premises is not now damaged or
injured as a result of any fire, explosion, accident, flood or other
casualty.
(n) Financial Statements. The financial statements and the
information regarding Borrower heretofore delivered to Lender are true
and correct in all material respects, having been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the period covered thereby, and fairly
present the financial condition of Borrower as of the date thereof. No
material adverse change has occurred in the financial condition of
Borrower reflected therein since the date thereof.
(o) Commissions. Any brokerage commissions, finder's fees or
similar payments due third parties (hereinafter "Commissions") in
connection with the transaction contemplated hereby have been paid in
full and any such Commissions coming due in the future will be
promptly paid by Borrower, except as set forth in a Finder's Fee
Agreement by and among Borrower, Lender, and Sponsor Investments, LLC
of even date with this Agreement. Borrower agrees to and shall
indemnify Lender from any liability, claims or losses arising by
reason of any such Commissions. This provision shall survive the
repayment of the Loan
made in connection herewith and shall continue in full force and
effect so long as the possibility of such liability, claims or losses
exists.
(p) No Homestead. The Land and Improvements thereon do not and
will not constitute the residential or business homestead of Borrower.
(q) Solvency. Borrower is, and after giving effect to each
disbursement of the Loan will be, Solvent.
(r) Taxes; Governmental Charges. Borrower has filed all tax
returns and reports required to be filed and has paid all taxes,
assessments, fees and other governmental charges levied upon any of
them or upon any of their respective Properties or income which are
due and payable, including interest and penalties, except (i) to the
extent the same are being contested in good faith by appropriate
actions or proceedings and for which adequate reserves for the payment
thereof as required by generally accepted accounting principles have
been provided, or (ii) to the extent the failure to file such returns
or pay such taxes could not reasonably be expected to have a material
adverse effect.
(s) Capital Structure. Schedule 3.1(s) hereto accurately
reflects, as of the date hereof, the authorized, issued and
outstanding equity of TTT and TieTek, including the names of (and
number and class of units or other equity securities held by) the
record and beneficial owners of such securities. Except as set forth
in Schedule 3.1(s) hereto, as of the date hereof, there are no
outstanding shareholders or members agreements, voting agreements or
other agreements of any nature which in any way restrict or effect the
transfer, pledge or voting of any of the equity securities of TTT or
TieTek or subject any of such securities to any put, call, redemption
obligation or similar right or obligation of any nature.
(t) No Legal Bar or Resultant Lien. The execution, delivery and
performance of the Loan Documents do not and will not violate or
create a default under any provisions of the articles or certificate
of incorporation, certificate of limited partnership, articles or
certificate of organization, bylaws, partnership agreement,
regulations or other organizational documents of NATK, TTT or TieTek
or any contract, agreement, instrument or governmental requirement to
which any of them is subject, or (except as contemplated in the Loan
Documents) result in the creation or imposition of any Lien upon any
Properties of any of them.
ARTICLE IV.
COVENANTS OF BORROWER
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4.1. Covenants of Borrower. Borrower hereby covenants and agrees with
Lender as follows:
(a) Loan Documents. Borrower shall permit no default under the
terms of the Loan Documents beyond the expiration of any applicable
grace, notice, or cure period.
(b) Title Insurance. Borrower shall furnish to Lender, at
Borrower's expense, a mortgagee title insurance policy (herein called
the "Mortgagee Title Policy") showing Lender as the insured
thereunder, in the amount of Four Million Two Hundred Thousand Dollars
($4,200,000) and in form and substance and written by the Title
Company on behalf of an underwriter satisfactory to Lender insuring a
valid first lien upon the Premises by virtue of the Deed of Trust and
containing no exceptions except those specifically approved in writing
by Lender. If the underwriter issuing the Mortgagee Title Policy
becomes insolvent or is placed in receivership or for any other reason
such Mortgagee Title Policy becomes unforceable, Borrower shall
furnish Lender, at Borrower's expense, another mortgagee title
insurance policy in the amount of, and in substitution for, the
original Mortgagee Title Policy and meeting the above requirements.
(c) Insurance. Borrower shall obtain and maintain such
insurance or evidence of insurance as Lender may reasonably require,
together with endorsements to the policies naming Lender as a loss
payee or an additional insured, as applicable, and containing
provisions that such policies will not be canceled without thirty (30)
days' prior written notice having been given by the insurance company
to Lender (unless a shorter time is prescribed by applicable insurance
regulations), including, but not limited to, the following:
(i) Hazard Insurance. Fire and extended coverage
insurance, and such other hazard insurance insuring
the Premises as Lender may reasonably require, such
insurance to be obtained immediately and to be kept
in full force and effect at all times thereafter
until the payment in full of the Loan evidenced by
the Note.
(ii) Commercial General Liability and Workmen's
Compensation Insurance. A certificate from an
insurance company indicating the Borrower is covered
to Lender's reasonable satisfaction by public
liability and workmen's compensation insurance.
(iii) Other Insurance. Such other insurance as may be
required by the Deed of Trust.
(d) Collection of Insurance Proceeds. Borrower shall cooperate
with Lender in obtaining for Lender the benefits of any insurance or
other proceeds lawfully or equitably payable to it in connection with
the transactions contemplated hereby and the collection of any
indebtedness or obligation of Borrower to Lender incurred hereunder
(including the payment by Borrower of the expense of an independent
appraisal on behalf of Lender in case of a fire or other casualty
affecting the Premises).
(e) Vouchers. Borrower shall deliver to Lender, upon written
demand, true copies of any contracts, bills of sale, statements,
receipted vouchers or agreements under which Borrower claims title to
any materials, fixtures or articles incorporated in the Improvements
or otherwise subject to the lien of the Deed of Trust.
(f) Liens. Borrower will not install nor otherwise incorporate
in the Improvements any materials, equipment or fixtures under any
conditional sales agreements or security agreement whereby the right
is reserved or accrued to anyone to remove or repossess any such
items. Borrower will not cause or permit any lien or claim for lien
for any labor and/or material to be filed or to become valid or
effective against the Premises; provided, however, that the existence
of any unperfected and unrecorded mechanic's lien shall not constitute
a violation of this subsection if payment is not yet due for the work
giving rise to the lien. Notwithstanding the foregoing, Borrower may,
in good faith, by appropriate proceedings, contest the validity,
applicability or amount of any asserted mechanic's or materialmen's
lien, and pending such contest Borrower shall not be deemed in default
hereunder if Borrower provides Lender with security reasonably
satisfactory to Lender and if Borrower promptly causes to be paid any
amount adjudged by a court of competent jurisdiction to be due, with
all costs and interest thereon, promptly after such judgment;
provided, however, that in any event, each such contest shall be
concluded and the lien, interest and costs shall be paid, bonded
around or otherwise removed upon completion of construction.
(g) Estoppel Certificate. Borrower shall deliver to Lender,
promptly after a written request therefor by Lender, but no more often
than twice per calendar year, an estoppel certificate, duly
acknowledged, stating the amount advanced to Borrower under this
Agreement and the amounts due on the Note and whether any offsets or
defenses exist under or against the Note.
(h) Cooperation Regarding Financial Condition. Borrower shall
cooperate with Lender and its representatives to the end that Lender
shall be fully apprised regarding Borrower's continuing financial
condition and, upon written
request of Lender or any of its representatives, will furnish Lender
or such representatives such documents, instruments, financial
statements or other information as are required to be furnished
pursuant to the terms of the Deed of Trust. Borrower shall maintain
such documents, instruments and financial statements which relate to
its financial condition.
(i) Indemnity of Lender. Borrower shall indemnify and hold
harmless Lender (for purposes of this subsection, the term "Lender"
shall include the directors, officers, employees and agents of Lender
and any persons or entities owned or controlled by, owning or
controlling, or under common control or affiliated with Lender) from
and against, and reimburse them for, all claims, demands, liabilities,
losses, damages, causes of action, judgments, penalties, costs and
expenses (including, without limitation, reasonable attorney's fees)
which may be imposed upon, asserted against or incurred or paid by
them by reason of, on account of or in connection with any bodily
injury or death or property damage occurring in or upon or in the
vicinity of the Premises through any cause whatsoever or asserted
against them on account of any act performed or omitted to be
performed hereunder or on account of any transaction arising out of or
in any way connected with the Premises or with this Agreement or any
other Loan Document. WITHOUT LIMITATION, IT IS THE INTENTION OF
BORROWER AND BORROWER AGREES THAT THE FOREGOING INDEMNITIES SHALL
APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO CLAIMS, DEMANDS,
LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES,
COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEY'S FEES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY OR ANY
STRICT LIABILITY. HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO ANY
INDEMNIFIED PARTY TO THE EXTENT THE SUBJECT OF THE INDEMNIFICATION IS
CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF SUCH INDEMNIFIED PARTY. The foregoing indemnities shall survive the
termination of this Agreement, the foreclosure of the Security
Agreement or the Patent Security Agreement or the Membership Interest
Pledge Agreements or conveyance in lieu of foreclosure and the
repayment of the Loan and the discharge and release of the Loan
Documents. Any amount to be paid hereunder shall be subject to and
governed by the provisions of Section 7.2 hereof.
(j) Protection of Intellectual Property. Borrower shall take
all steps required to preserve and protect all of its patents, patent
applications, licenses, trademarks, trade names, and all other
intellectual or other similar property, including, but not limited to,
timely paying all royalties, license fees, filing fees or registration
fees, and diligently defending all threats of infringement thereon and
challenges to the validity thereof.
(k) Insurance Coverage. Borrower will furnish to Lender, upon
request, a summary of the insurance coverages of Borrower in form and
substance reasonably satisfactory to Lender; upon renewal of any such
insurance policy, a copy of an insurance certificate summarizing the
terms of such policy; and upon request of Lender, copies of the
applicable policies.
(l) Other Information. Borrower will furnish to Lender, with
reasonable promptness, such other information about the business and
affairs and financial condition of Borrower as Lender may reasonably
request from time to time, including, without limitation, monthly
accounts receivable aging and reconciliation, accounts payable aging
and reconciliation, sales reports and inventory designations.
(m) Expenses and Approval of Documents. Borrower shall pay all
costs of closing the Loan and all expenses of Lender with respect
thereto (the "Closing Costs"), including, but not limited to,
reasonable legal fees (including reasonable legal fees incurred by
Lender subsequent to the closing of the Loan but incurred in
connection with the disbursement, administration, collection or
transfer of the Loan), title insurance premiums and other charges of
the Title Company issuing the Mortgagee Title Policy, all
environmental consulting fees and all other fees and expenses related
to the environmental due diligence performed by Lender with respect to
the Premises (including reasonable attorneys' fees), appraisal fees,
consulting architect fees, consulting inspection fees, advances,
recording expenses, surveys, intangible taxes, expenses of foreclosure
(including reasonable attorneys' fees) and similar items, and shall
allow all closing papers, Loan Documents and other legal matters to be
subject to the approval of Lender's attorneys.
(n) Additional Documents. Borrower shall:
(i) Regarding Preservation of Security. Sign and deliver
to Lender such documents, instruments, assignments
and other writings, and do such other acts as are
reasonably necessary to preserve and protect the
collateral at any time securing or intended to secure
the Note, as Lender may reasonably require; and
(ii) Regarding this Agreement. Promptly do and execute, at
its expense, all and such further lawful and
reasonable acts, conveyances and assurances for the
better and more effective carrying out of the intents
and purposes of the Loan Documents, including this
Agreement, or to correct any omissions in the Loan
Documents, including this Agreement, or to further
evidence and more fully describe the collateral, or
to more fully state the security obligations set out
herein or
in any of the Loan Documents, or to perfect, protect
or preserve any Liens created pursuant to any of the
Loan Documents, or to make any recording, to file any
notices, or obtain any consents, all as Lender shall
reasonably require from time to time (provided that
Borrower shall not be required to increase its
obligations in connection with the Loan).
ARTICLE V.
LOAN FUNDING
------------
5.1. Loan Funding. The Loan shall be funded in seven (7) or more
installments (each referred to as an "Advance") as follows:
(a) The First Advance in the amount of Two Million One Hundred
Eighty-nine Thousand Three Hundred Seventy-five Dollars ($2,189,375) shall
be used solely for the purpose of repaying the principal and all accrued
interest on the Bridge Loan and shall be disbursed to Lender on the Closing
Date.
(b) The Second Advance in the amount of Four Million Two
Hundred Fifty Thousand Seven Hundred Eighty-seven Dollars ($4,250,787)
shall be used solely for the purpose of reimbursing NATK for costs incurred
in connection with the Business and shall be disbursed to NATK by wire
transfer on the Closing Date.
(c) The Third Advance in the amount of Two Hundred Fifty
Thousand Dollars ($250,000) shall be used solely for the purpose of paying
Lender's Closing Costs, other than Lender's Closing Costs attributable to
environmental due diligence performed by or at Lender's request in
connection with the Loan (the "Environmental Closing Costs") and shall be
disbursed to Lender on the Closing Date.
(d) The Fourth Advance in the amount of Four Hundred Thousand
Dollars ($400,000) shall be used solely for the purpose of allowing
Borrower to recoup its equity in the Premises and shall be disbursed to
Borrower by wire transfer on the Closing Date.
(e) The Fifth Advance in the amount of One Million Dollars
($1,000,000) shall be used solely for working capital for new plant
operations at the Premises and shall be disbursed to Borrower by wire
transfer on the Closing Date.
(f) The Sixth Advance in the amount of One Million Dollars
($1,000,000) shall be used solely for payments on the new equipment,
engineering and construction as specified on Schedule 5.1(e) attached
hereto (the "New Equipment") and shall be disbursed to Borrower.
(g) The Seventh Advance shall be an amount equal to the
Environmental Closing Costs incurred by Lender and shall be disbursed to
Lender on the 30/th/ day after the Closing Date.
(h) All subsequent advances which, in the aggregate, shall not
exceed the remaining principal balance of the Loan which has not previously
been disbursed, shall be used by Borrower for its operating expenses,
interest payments, capital requirements to complete the purchase of all
equipment, and such other purposes related to the Business as may
reasonably be requested by Borrower and approved by Lender and shall be
disbursed to Borrower by wire transfer within three (3) days after approval
thereof by Lender.
5.2. Conditions Precedent to Loan Funding. Except as otherwise
provided herein, the following shall be conditions precedent to Lender's
obligations to make the First Advance under the Loan and any other Advance under
the Loan:
(a) Representations and Warranties. On the date of each Advance
(each such date hereinafter called a "Loan Funding Date"), all of
Borrower's representations and warranties contained herein or in any other
Loan Document or in the Commitment shall be true and correct in all
material respects.
(b) Covenants and Agreements. On each Loan Funding Date,
Borrower shall have performed each covenant and agreement to be performed
by it on or before the Loan Funding Date pursuant to this Agreement, any
other Loan Document or the Commitment, within the time specified.
(c) Execution of Deed of Trust, Assignment of Leases and
Rents,Security Agreement, and Patent Security Agreement. Borrower shall
have executed and delivered to Lender, the Deed of Trust, the Assignment of
Leases and Rents, the Security Agreement, and the Patent Security
Agreement.
(d) Execution of Intercreditor Agreement. Avalanche Resources,
Ltd. shall have executed and delivered to Lender an intercreditor agreement
(the "Intercreditor Agreement") substantially in the form of Exhibit E
attached hereto acknowledging that any and all liens and security interests
held by Avalanche Resources, LTD in the Assets are subordinate to the
liens, rights, remedies and powers granted to Lender pursuant to this
Agreement and the Loan Documents.
(e) Execution and Recording of Loan Documents. Borrower shall
have delivered to Lender evidence, in form satisfactory to Lender, that the
Loan Documents have each been duly executed and constitute valid, binding
documents, enforceable in accordance with their respective terms and have
been, or are being, filed or recorded, as appropriate, in all proper
offices.
(f) Mortgagee Title Policy. Borrower shall have furnished
Lender with the Mortgagee Title Policy.
(g) Insurance. Borrower shall have obtained the insurance and
delivered the policies and certificates to Lender as required by Subsection
4.1(c) above.
(h) Regulations of TieTek LLC. TieTek Technologies and Sponsor
Investments, LLC shall have executed and delivered to Lender the
Regulations of TieTek LLC in the form attached hereto as Exhibit F, along
with evidence satisfactory to Lender of the due authority thereof.
(i) Voting Agreement. Avalanche Resources LTD, Xxxxx X.
Xxxxxxxx, and Xxxx Xxxxxxx shall have executed and delivered to Lender the
Voting Agreement in the form attached hereto as Exhibit G, along with
evidence satisfactory to Lender of the due authority thereof.
(j) Legal Opinion. Lender shall have received a legal opinion
in the form attached hereto as Exhibit H from Xxxxx & Ketchand, legal
counsel to Borrower regarding the consummation, validity and enforceability
of the Loan Documents and the Regulations of TieTek LLC.
(k) Non-Compete Agreement. NATK, TTI, Lender, and TieTek shall
have executed and delivered to Lender a non-compete agreement in the form
attached hereto as Exhibit I.
(l) TieTek Royalty Agreement. Borrower shall have delivered to
Lender a royalty agreement in the form attached hereto as Exhibit J (the
"TieTek Royalty Agreement"), duly executed by all parties thereto.
(m) NATK Royalty Agreement. Borrower shall have delivered to
Lender a royalty agreement in the form attached hereto as Exhibit K (the
"NATK Royalty Agreement"), duly executed by all parties thereto.
(n) Membership Interest Pledge Agreements. TTT shall have
delivered to Lender the Membership Interest Agreements in favor of Lender
and Sponsor Investments, LLC in the forms attached hereto as Exhibit L (the
"Membership Interest Pledge Agreements"), duly executed by all parties
thereto.
(o) Solvency Certificates. Borrower shall have executed and
delivered to Lender solvency certificates in the form attached hereto as
Exhibit M (the "Solvency Certificates"), duly executed by all parties
thereto.
(p) Other Documents. Borrower shall have executed and delivered
to Lender such other documents and certificates as Lender or Lender's
counsel may reasonably request.
ARTICLE VI
DEFAULTS
--------
6.1. Event of Default. An "Event of Default" shall be deemed to have
occurred hereunder if:
(a) Payments. (i) Borrower shall fail to pay when due any
principal of the Loan or the Note, or any fee or any other amount
payable hereunder or under the any other Loan Document; or (ii)
Borrower shall fail to pay when due any interest on the Loan or the
Note and such failure to pay shall continue unremedied for a period of
five (5) days;
(b) Default Under Loan Documents. Any default or event of
default occurs under any of the Loan Documents (taking into account
all applicable grace periods); or
(c) Breach of Covenant. Borrower, NATK or TieTek Technologies
breaches or fails timely and properly to observe, keep or perform any
covenant, agreement, warranty or condition herein, or in any other
Loan Document required to be observed, kept or performed by such
entity, other than those referred to in any other subsection hereof,
if such failure continues for twenty (20) days after receipt of
written notice and demand for the performance of such covenant,
agreement, warranty or condition; or
(d) Breach of Representation. Any representation contained
herein or in any other Loan Documents is false or misleading in any
material respect; or
(e) Filing of Liens Against the Assets. Any lien other than
those listed on Schedule 3.1(g) shall be filed against the Assets and
shall not be removed within twenty (20) days after such filing; or
(f) Filing of Lien Against the Premises. Any lien, mortgage,
deed of trust, or other encumbrance shall be filed against the
Premises or against any other real property now owned or hereafter
acquired by Borrower.
(g) Litigation. Any suit shall be filed against Borrower, which
if not dismissed within thirty (30) days and if adversely determined,
could substantially impair the ability of Borrower to perform each and
every one of its obligations under and by virtue of the Loan
Documents; or
(h) Levy Upon the Premises or the Assets. A levy be made under
any process on, or a receiver be appointed for, the Premises, any of
the Assets, or any other property of Borrower, and such levy or
appointment shall not be removed or dismissed within thirty (30) days;
or
(i) Acceleration of Other Debts. Borrower does, or omits to do,
any act, or any event occurs, as a result of which any material
obligation of Borrower, not arising hereunder, is declared immediately
due and payable by the holder thereof; or
(j) Assignment for Benefit of Creditors or Other Actions. Any
of the following occurs: (i) Borrower shall make an assignment for the
benefit of creditors or be unable to pay its debts generally as they
become due; (ii) Borrower shall petition or apply to any tribunal for
the appointment of a trustee, receiver, or liquidator of it, or of any
substantial part of its assets, or shall commence any proceedings
relating to Borrower under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debts, conservatorship,
moratorium, dissolution, liquidation or other debtor relief laws of
any jurisdiction, whether now or hereafter in effect; or (iii) any
such petition or application shall be filed, or any such proceedings
shall be commenced, against Borrower and Borrower consents thereto or
the same is not dismissed or otherwise discharged within thirty (30)
days, or an order, judgment or decree shall be entered appointing any
such trustee, receiver or liquidator, or approving the petition in any
such proceedings; or
(k) Challenge to Validity of Loan Documents. Borrower, or any
affiliate of Borrower, or any other party related to Borrower shall
challenge the validity or enforceability of any of the Loan Documents.
ARTICLE VII
REMEDIES
--------
7.1 Remedies. Upon the occurrence of any one or more of the events
of default set out in Article VI hereof, Lender shall at its option be entitled
to proceed to exercise any of the following remedies:
(a) Borrower agrees that the occurrence of such event of
default shall constitute a default under each of the Loan Documents,
thereby entitling Lender (i) to exercise any of the various remedies
therein provided including the acceleration of the indebtedness
evidenced by the Note and the foreclosure of the Deed of Trust, the
Security Agreement, and the Patent Security Agreement; and (ii)
cumulatively to exercise all other rights, options and privileges
provided by law.
(b) Lender may declare all indebtedness secured by the Deed of
Trust, the Security Agreement, and the Patent Security Agreement
immediately due and payable, and Lender shall be released from all
obligations, including all funding obligations, to Borrower under this
Agreement, provided, that upon the occurrence of any Event of Default
described in Section 6.1(i), all obligations, including all funding
obligations, of Lender to Borrower shall automatically and immediately
expire, and all obligations shall automatically become immediately due
and payable without notice or demand of any kind.
(c) Lender shall have the right at any time and from time to
time, without notice to Borrower (any such notice being expressly
waived), to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held, and
any other indebtedness at any time owing by Lender to or for the
credit or the account of Borrower, against any and all of the
indebtedness of Borrower evidenced by the Note or this Agreement
and/or secured by the Deed of Trust, the Security Agreement, and the
Patent Security Agreement, irrespective of whether or not Lender shall
have made any demand under this Agreement or the Note and although
such indebtedness may be unmatured. Lender agrees to notify Borrower
promptly after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such
set-off and application. The rights of Lender under this subsection
are in addition to any other rights and remedies (including, without
limitation, other rights of set-off) which Lender may have under the
Note or the other Loan Documents or otherwise.
7.2. Failure to Perform. If Borrower fails to perform any act or to
take any action or to pay any amount provided to be paid by it under the
provisions of any of the covenants and agreements contained in this Agreement or
in any other Loan Document, Lender may, but shall not be obligated to, perform
or cause to be performed such act or take such action or pay such money, and any
expenses so incurred by Lender and any money so paid by Lender shall be an
advance against the Note and shall bear interest from the date of making such
payment until paid at the Default Rate (as defined in the Note) and shall be
part of the indebtedness secured by the Deed of Trust, the Security Agreement,
and the Patent Security Agreement, and Lender, upon making any such payment,
shall be subrogated to all rights of the person, corporation or body politic
receiving such payment.
7.3 Notice to NATK. Notwithstanding anything herein to the contrary,
Lender shall not foreclose upon the Assets or the Premises without giving
forty-five (45) days' advance written notice thereof to NATK.
ARTICLE VIII
POST-CLOSING COVENANTS
----------------------
8.1 Post-Closing Covenants of NATK and TTT.
(a) Within ninety (90) days after the Closing Date, Borrower
shall deliver the following documents to Lender (collectively, the
"Post-Closing Documents"):
(i) The Transfer Documents as hereinafter defined. As used
herein, "Transfer Documents" shall mean those
assignments, bills of sale and assignments of patent
properly executed by NATK and/or or TTT pursuant to
which all of the Assets pledged to Lender pursuant
hereto which were owned by NATK and/or TTT on the
Closing Date were transferred to TieTek LLC which
Transfer Documents shall contain such representations,
warranties and indemnities with respect thereto and in
favor of Lender as Lender, in its sole discretion,
shall deem satisfactory;
(ii) Evidence of compliance with all applicable laws,
statutes and regulations and the bylaws, charters, and
governing documents of NATK and/or TTT, as the case
may be, in the form of certified copies of director
resolutions approving the Loan Agreement, all Loan
Documents, all transactions contemplated in the Loan
Agreement, the Transfer Documents, and all documents
contemplated in the Transfer Documents, including the
granting of the option to Sponsor Investments, LLC
(the "Sponsor Option");
(iii) Evidence of shareholder approval (including
resolutions certified by the Secretary of NATK) of the
Loan, the transfer of the Assets to TieTek, the
granting of the Sponsor Option, and related
transactions;
(iv) A balance sheet certified by the auditors of TieTek
reflecting the assets and liabilities of TieTek upon
completion of the transfers contemplated in the
Transfer Documents;
(v) Legal opinion of Xxxxx & Ketchand opining as to the
legality and enforceability of the Transfer Documents
(in such form as Lender, in its sole discretion, shall
deem
satisfactory); and
(vi) Any other documentation requested by Lender's counsel.
(b) Failure to deliver any of the Post-Closing Documents to
Lender within ninety (90) days after the Closing shall constitute an
Event of Default under the Loan.
8.2 Post-Closing Covenants of Lender. Provided that Lender receives
from Borrower all of the Post-Closing Documents within ninety (90) days after
the Closing Date, then as soon as practicable but not later than one hundred
twenty (120) days after the Closing Date, Lender shall execute and deliver to
NATK and TTT documents releasing NATK and TTT from their respective obligations
under the Note, the Security Agreement, and the Patent Security Agreement (the
"Release Documents").
ARTICLE IX
GENERAL CONDITIONS
------------------
9.1. Rights of Third Parties. All conditions of Lender's obligations
hereunder, including the obligation to make advances, are imposed solely and
exclusively for the benefit of Lender and its successors and assigns and no
other person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will make
advances or refuse to make advances in the absence of strict compliance with any
or all thereof and no other person shall, under any circumstances, be deemed to
be a beneficiary of such conditions, any and all of which may be freely waived
in whole or in part by Lender at any time if in its sole discretion it deems it
desirable to do so.
9.2. Waivers. No waiver of or consent to any departure from any
provision hereof shall be effective unless in writing and signed by Lender and
shall be effective only in the specific instance for the purpose for which given
and to the extent specified in such writing. No advance of Loan proceeds
hereunder shall constitute a waiver of any of the conditions to Lender's
obligation to make further advances nor, in the event Borrower fails to satisfy
any such condition, shall any advance have the effect of precluding Lender from
thereafter declaring such failure to be an event of default. No waiver of any
default hereunder shall affect or constitute a waiver of any later default. No
delay or omission of Lender to exercise any right or remedy upon the happening
of any event of default shall impair any such right or remedy or be deemed to be
a waiver of such event of default.
9.3. Evidence of Satisfaction of Conditions. Any condition of this
Agreement which requires the submission of evidence of the existence or
nonexistence of a specified fact or facts implies as a condition the existence
or nonexistence, as the case may be, of such fact or facts, and Lender shall, at
all times, be free independently to establish to its reasonable satisfaction and
in its discretion such existence or nonexistence.
9.4. Assignment by Borrower. Anything to the contrary herein
notwithstanding, Borrower shall have no right to assign its rights hereunder or
the proceeds of the Loan without the written consent of Lender and any such
assignment or purported assignment shall, at Lender's option, relieve Lender
from all further obligations hereunder and shall constitute a default under this
Agreement.
9.5. Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors and assigns of such party shall be included and all
covenants and agreements contained in this Agreement by or on behalf of the
Borrower or by or on behalf of Lender shall bind and inure to the benefit of
their respective heirs, legal representatives, successors and assigns, whether
so expressed or not.
9.6. Exercise of Rights and Remedies. All rights and remedies of
Lender hereunder or under the Note or under any other Loan Document shall be
separate, distinct and cumulative and no single, partial or full exercise of any
right or remedy shall exhaust the same or preclude Lender from thereafter
exercising in full or in part the same right or remedy or from concurrently or
thereafter exercising any other right or remedy which Lender may have hereunder,
under the Note or any other Loan Document, or at law or in equity, and each and
every such right and remedy may be exercised at any time or from time to time.
9.7. Headings. The headings of the sections and subsections of this
Agreement are for the convenience of reference only, are not to be considered a
part hereof and shall not limit or otherwise affect any of the terms hereof.
9.8. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
THE PARTIES' RIGHTS AND OBLIGATIONS HEREUNDER AND THEREUNDER SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO TEXAS' PRINCIPLES OF CONFLICTS
OF LAW) AND THE LAW OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN SUCH
STATE. BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS, TEXAS, OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS.
9.9. Supplement to Deed of Trust, Security Agreement, and Patent
Security Agreement. The provisions of this Agreement are not intended to
supersede the provisions of the Deed of Trust, the Security Agreement, or the
Patent Security Agreement, but shall be construed as supplemental thereto. In
the event of any inconsistency between the provisions hereof and said documents,
it is intended that, during the applicability of this Agreement, this Agreement
shall be controlling.
9.10. Usury. Lender and Borrower intend in the execution of the Note,
this Agreement and all other instruments now or hereafter securing the Note or
executed in connection therewith or under any other written or oral agreement by
Borrower in favor of Lender to contract in strict compliance with applicable
usury law. In furtherance thereof, Lender and Borrower stipulate and agree that
none of the terms and provisions contained in the Note, this Agreement or any
other instrument securing the Note or executed in connection herewith, or in any
other written or oral agreement by Borrower in favor of Lender, shall ever be
construed to create a contract to pay for the use, forbearance or detention of
money, interest at a rate in excess of the maximum interest rate permitted to be
charged by applicable law; neither Borrower nor any endorsers or other parties
now or hereafter becoming liable for payment of the Note or the other
indebtedness secured by the Loan Documents shall ever be obligated or required
to pay interest on the Note or on indebtedness arising under any instrument
securing the Note or executed in connection therewith, or in any other written
or oral agreement by Borrower in favor of Lender, at a rate in excess of the
maximum interest that may be lawfully charged under applicable law; and that the
provisions of this section shall control over all other provisions of the Note,
this Agreement and any other instruments now or hereafter securing the Note or
executed in connection herewith or any other oral or written agreements which
may be in apparent conflict herewith. Lender expressly disavows any intention to
charge or collect excessive unearned interest or finance charges in the event
the maturity of the Note is accelerated. If the maturity of the Note shall be
accelerated for any reason or if the principal of the Note is paid prior to the
end of the term of the Note, and as a result thereof the interest received for
the actual period of existence of the Loan exceeds the applicable maximum lawful
rate, Lender shall, at its option, either refund to Borrower the amount of such
excess or credit the amount of such excess against the principal balance of the
Note then outstanding and thereby shall render inapplicable any and all
penalties of any kind provided by applicable law as a result of such excess
interest. In the event that Lender shall contract for, charge or receive any
amounts and/or any other thing of value which are determined to constitute
interest which would increase the effective interest rate on the Note or the
other indebtedness secured by the Loan Documents to a rate in excess of that
permitted to be charged by applicable law, an amount equal to interest in excess
of the lawful rate shall, upon such determination, at the option of Lender, be
either immediately returned to Borrower or credited against the principal
balance of the Note then outstanding or the other indebtedness secured by the
Loan Documents, in which event any and all penalties of any kind under
applicable law as a result of such excess interest shall be inapplicable. By
execution of this Agreement, Borrower acknowledges that it believes the Loan to
be non-usurious and agrees that if, at any time, Borrower should have reason to
believe, that the Loan is in fact usurious, it will give Lender notice of such
condition and Borrower agrees that Lender shall have ninety (90) days after
receipt of such notice in which to make appropriate refund or other adjustment
in order to correct such condition if in fact such exists. The term "applicable
law" as used in this section shall mean the laws of the state of Texas or the
laws of the United States, whichever laws allow the greater rate of interest, as
such laws now exist or may be changed or amended or come into effect in the
future.
9.11. Invalid Provisions to Affect No Others. If fulfillment of any
provision hereof or any transaction related hereto at the time performance of
such provisions shall be due, shall involve transcending the limit of validity
prescribed by law, then ipso facto the obligation to
be fulfilled shall be reduced to the limit of such validity; and if any clause
or provisions herein contained operates or would prospectively operate to
invalidate this Agreement in whole or in part, then such clause or provision
only shall be held for naught, as though not herein contained, and the remainder
of this Agreement shall remain operative and in full force and effect.
9.12. Number and Gender. Whenever the singular or plural number,
masculine or feminine or neuter gender is used herein, it shall equally include
the other.
9.13. Amendments. Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
9.14. Notice. Any notice or communication required or permitted
hereunder shall be given in writing, sent by (a) personal delivery, or (b)
expedited delivery service with proof of delivery, or (c) United States Mail,
postage prepaid, registered or certified mail, addressed as follows:
To Lender: 0000 Xxxxxx Xxxx, Xxxxx 0000
--------- Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
with copy to: Xxxxxxx Corporation
------------ 0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Legal Department
Telephone: 000-000-0000
Fax: 000-000-0000
To Borrower: 00000 Xxxx Xxxxx Xxxx
----------- Xxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
with copy to: Xxxxx & Ketchand
------------ Nine Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Xx.
Telephone: 000-000-0000
Fax: 000-000-0000
or to such other address or to the attention of such other person as hereafter
shall be designated in writing by the applicable party sent in accordance
herewith. Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of
delivery service or mail, as of the date of first attempteddelivery at the
address and in the manner provided herein.
9.15. Legal Proceedings. Lender shall have the right to commence,
appear in, or to defend any action or proceeding purporting to affect the rights
or duties of the parties hereunder or the payment of any funds, and in
connection therewith pay necessary expenses, employ counsel and pay its
reasonable fees. Any such expenditures shall be considered additional advances
hereunder and shall bear interest at the rate payable under the Note for
installments of principal and/or interest after maturity shall be secured by the
Loan Documents and shall be paid by Borrower to Lender upon demand.
9.16. Assignment by Lender. Lender shall have the right to assign any
portion of this Agreement and/or the Loan and to disseminate to such lender any
information it has pertaining to the Loan, including without limitation,
complete and current credit information on Borrower and any of its principals.
In the event of such an assignment, Borrower will agree to such modifications to
this Agreement as will facilitate such assignment, provided that such
modifications will be at Lender's expense and will not add to the obligations of
Borrower. It is understood that any assignment by Lender will not result in
additional cash expense to Borrower. Neither the shareholders, nor the trustees
of a real estate investment trust assignee shall be personally liable for the
obligations of such trust and Borrower will agree to look solely to the trust
property for the payment of any claim hereunder.
9.17 Participations and Assignments by Lender. Lender shall have the
right to assign or grant participating interests in any portion of this
Agreement and/or the Loan and to disseminate to such lender any information it
has pertaining to the Loan, including without limitation, complete and current
credit information on Borrower and any of its principals. In the event of such
sale of participation or assignment, Borrower will agree to such modifications
to this Agreement as will facilitate such sale of participation or assignment,
provided that such modifications will be at Lender's expense and will not add to
the obligations of Borrower. It is understood that any sale of participation or
assignment by Lender will not result in additional cash expense to Borrower.
Neither the shareholders, nor the trustees of a real estate investment trust
assignee shall be personally liable for the obligations of such trust and
Borrower will agree to look solely to the trust property for the payment of any
claim hereunder. Borrower acknowledges that Lender and any successor lender may
enter into a separate agreement regarding the rights, duties and obligations of
Lender and other matters pertaining thereto without Borrower's consent,
provided, that no consent or agreement by Borrower shall be required to amend,
modify, change, restate, waive, supplement, discharge, cancel or terminate any
provision of this Agreement so long as no additional duties are required to be
assumed by Borrower. Each successor lender shall have all of the rights and
benefits with respect to the obligations, Note, collateral and/or Loan Documents
held by it as fully as if the original holder thereof, and either Lender or any
successor lender may be designated as the sole agent to manage the transactions
and obligations contemplated therein.
9.18. Lender Not a Joint Venturer. Notwithstanding anything to the
contrary herein contained, Lender, by entering into this Agreement or by any
action taken pursuant hereto,
will not be deemed a partner or joint venturer with Borrower. Further, this
Agreement shall not be deemed to create a fiduciary relationship between Lender
and Borrower.
9.19. Agent. Lender and its successors and assigns hereby (i)
designate and appoint Tie Investors, and its successors and assigns, to act as
agent for Lender and its successors and assigns under this Agreement and all
other Loan Documents; (ii) irrevocably authorize Tie Investors to take all
actions on its behalf under the provision of this Loan Agreement and all other
Loan Documents; and (iii) to exercise all such powers and rights, and to perform
all such duties and obligations hereunder and thereunder. Tie Investors, on
behalf of Lender, shall hold all collateral, payments of principal and interest,
fees, charges and collections received pursuant to this Agreement and all other
Loan Documents. Borrower acknowledges that Lender and its successors and assigns
transfer and assign to Tie Investors the right to act as Lender's agent to
enforce all rights and perform all obligations of Lender contained herein and in
all of the other Loan Documents. Borrower shall within ten (10) days after
Lender's reasonable request, take such further actions, obtain such consents and
approvals and duly execute and deliver such further agreements, amendments,
assignments, instructions or documents as Lender may request to evidence the
appointment and designation of Tie Investors as agent for Lender and other
financial institutions from time to time party hereto and to the other Loan
Documents.
9.20. Survival of Covenants. All covenants of either party contained
herein shall continue and survive until the Loan has been fully paid and
discharged.
9.21. Time Is of the Essence. Time is of the essence of this
Agreement.
9.22. Waiver of Judicial Procedural Matters. BORROWER HEREBY EXPRESSLY
AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY LENDER IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS, ANY AND EVERY
RIGHT IT MAY HAVE TO (I) INJUNCTIVE RELIEF, (II) A TRIAL BY JURY, (III)
INTERPOSE ANY COUNTERCLAIM THEREIN (OTHER THAN A COMPULSORY COUNTERCLAIM) AND
(IV) HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR
PROCEEDING. Nothing herein contained shall prevent or prohibit Borrower from
instituting or maintaining a separate action against Lender with respect to any
asserted claim.
9.23. Joint and Several Liability. Each Borrower acknowledges that it
is jointly and severally liable for all of the obligations under the Loan
Documents. Each Borrower expressly understands, agrees and acknowledges that (i)
Borrowers are affiliated entities by common ownership; (ii) each Borrower
desires to have the availability of one common credit facility instead of
separate credit facilities; (iii) each Borrower has requested that Lender extend
such a common credit facility on the terms herein provided; (iv) Lender will be
lending against, and relying on a lien upon, all of each Borrower's assets even
though the proceeds of any particular loan made hereunder may not be advanced
directly to a particular Borrower; (v) each Borrower will nonetheless benefit by
the making of all such loans by Lender and the availability of a single credit
facility of a size greater than each could independently warrant; and (vi) all
of the representations, warranties, covenants, obligations, conditions,
agreements and other terms
contained in the Loan Documents shall be applicable to and shall be binding upon
each Borrower.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE FOLLOWS.]
IN WITNESS WHEREOF, Borrower and Lender have hereunto caused these
presents to be executed on the date first above written.
BORROWER:
NORTH AMERICAN TECHNOLOGIES
GROUP, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Its: Chief Executive Officer
TIETEK TECHNOLOGIES, INC., a Texas
corporation
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Its: President
TIETEK LLC, a Delaware limited liability
company
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Its: President
LENDER:
TIE INVESTORS, LLC, a Texas limited
liability company
By: XXXXXXX VPC, INC., a Delaware
corporation, Manager
By: /s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx, Vice President
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Land
Exhibit B Note
Exhibit C Patent Security Agreement
Exhibit D Security Agreement
Exhibit E Intercreditor Agreement
Exhibit F Regulations of TieTek LLC
Exhibit G Voting Agreement
Exhibit H Legal Opinion
Exhibit I Non-Compete Agreement
Exhibit J TieTek Royalty Agreement
Exhibit K NATK Royalty Agreement
Exhibit L Membership Interest Pledge Agreements
Exhibit M Solvency Certificates
Schedule 1.1(e) Intellectual Property
Schedule 1.1(l) Excluded Assets
Schedule 3.1(g) Liens
Schedule 3.1(j) No Prior Work
Schedule 3.1(s) Capital Structure
Schedule 5.1(e) New Equipment
SCHEDULE 1.1(e)
TO
CONSTRUCTION LOAN AGREEMENT
Intellectual Property
---------------------
Issued U.S. Patents of Debtor:
Patent No. Issue Date Title
5,886,078 March 23, 1999 Polymeric Compositions
and methods for making
construction materials
from them
Pending U.S. Patent Applications of Debtor:
Published Application No. Application Date Title
-------------------------
20020123553 March 5, 2001 Railroad Tie and method
for making same
Registered Trademarks and Trade Names:
Registration No. Issue Date Xxxx
----------------
2467881 July 10, 2001 TieTek
SCHEDULE 1.1(l)
TO
CONSTRUCTION LOAN AGREEMENT
Excluded Assets
---------------
Excluded Assets shall mean all of the following assets of NATK: (i) cash; (ii)
securities (investment and stock of subsidiaries [other than TieTek]); (iii)
patents and other proprietary rights not pertaining or related to the Business;
(iv) contracts unrelated to the Business; (v) except contracts or contract
rights related to the Business permitted to be conducted by NATK as contemplated
in Sections 6.05 and 6.06 of the Regulations of TieTek LLC; (vi) corporate books
and records and furniture; (vii) claims unrelated to the operation of the
Business; and (viii) any other assets of NATK unrelated to the Business.
SCHEDULE 3.1(g)
TO
CONSTRUCTION LOAN AGREEMENT
Liens
-----
Creditor Second Collateral Financing Statement No.
----------------------- ----------------- -----------------------
Toyota Motor Company 4 forklifts 498810
498809
583055
583056
Fidelity Leasing, Inc. Air Compressor 01-23898
Avalanche Resources, LTD has subordinated its lien(s) evidenced by Financing
Statement Nos. 30020419605 (with respect to assets of NATK) and 30611460 (with
respect to assets of TieTek, Inc.) to the lien(s) ofLender pursuant to that
certain Intercreditor Agreement among Lender, Borrower, and Avalanche Resources,
LTD dated of even date herewith.
SCHEDULE 3.1(j)
TO
CONSTRUCTION LOAN AGREEMENT
No Prior Work
-------------
Project construction has begun, including cleanup, foundation preparation to
receive heavy equipment, maintenance on the sprinkler system, upgrading the
electrical work, isolating an area for raw materials storage, and shipping
material to the site.
SCHEDULE 3.1(s)
TO
CONSTRUCTION LOAN AGREEMENT
Capital Structure
-----------------
TieTek LLC has 1,000 Class A Membership Interests owned by TieTek Technologies,
Inc., and one Class B Membership Interest owned by Sponsor Investments, LLC, a
Texas limited liability company. The Regulations of TieTek LLC contain
provisions which restrict or affect the transfer, pledge, or voting of the
membership interests and subject such interests to certain obligations and
rights on transfer. TTT has one class of common stock consisting of 1,000
shares, all of which are owned by NATK.
SCHEDULE 5.1(e)
TO
CONSTRUCTION LOAN AGREEMENT
New Equipment
-------------
Raw Material-Silos/Bins/Controls $ 1,201,000
Mixing-2 Banburys/2 Extruders 1,314,000
Molding-2 Systems 2,130,000
Chiller 80,000
X-Ray/Quality 250,000
Texturing 280,000
Tie Logistics 125,000
Shredder 150,000
Site (elec., found, air) 960,000
Building 150,000
Engineering 350,000
Installation 850,000
Permitting 50,000
Ventilation/Env. 110,000
-----------
