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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 30, 1998
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
---------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-16217 33-0041789
-------- ------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4710 Bellaire Blvd., Suite 301, Bellaire, Texas 77401
----------------------------------------------- -----
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 662-2699
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
None
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 30, 1998 (the "Closing Date"), North American Technologies Group,
Inc. (together with its subsidiaries, "NATK" or the "Company") completed the
sale to Active Environmental Technologies, Inc., a New Jersey corporation
("Active Environmental"), of substantially all of the assets (the "EET Assets")
of NATK's subsidiary, EET, Inc. ("EET"). Active Environmental is not related to
any director, officer or, to the knowledge of NATK, any principal stockholder of
NATK or EET. The EET Assets primarily relate to EET's patented TechXTract(R)
technology used to provide on-site decontamination of buildings and equipment
contaminated with polychlorinated biphenyls, radioactive isotopes or other toxic
materials. The purchase price therefor consisted of a cash payment of $200,000,
two promissory notes and the assumption by the purchaser of certain contractual
obligations. The first such promissory note is in the principal amount of
$363,436, bears interest at a per annum rate of six percent (6%) and is payable
in ten (10) quarterly payments, the first such payment being due and payable on
September 30, 1998. The second such promissory note is in the principal amount
of $436,835, bears interest at a per annum rate of nine and one-half percent
(9 1/2%) and is payable in twelve (12) annual payments, the first such payment
being due and payable on September 30, 2001. The purchase price was based
primarily on the expected market value of the technology included in the EET
Assets. The Company expects to recognize a gain of approximately $370,000 on
this transaction.
A portion of the net proceeds of the sale of the EET Assets was used to
repay certain obligations owed by NATK and/or EET. NATK intends to apply the
remainder of the net proceeds of the sale of the EET Assets to fund its working
capital and other commitments.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
None
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None
ITEM 5. OTHER EVENTS
None
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
None
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
None
(b) Pro forma financial information.
Pro Forma Consolidated Balance Sheet
as of December 31, 1997 (unaudited) Page 4
Pro Forma Consolidated Statements of Operations
for the Year Ended December 31, 1997 (unaudited) Page 5
(c) Exhibits.
10.28 Asset Purchase Agreement, dated as of March 30, 1998, by and
between EET, Inc. and Active Environmental Technologies, Inc.
10.29 Promissory Note, dated March 30, 1998, issued by Active
Environmental Services, Inc. in the principal amount of
$363,436.
10.30 Promissory Note, dated March 30, 1998, issued by Active
Environmental Services, Inc. in the principal amount of
$436,835.
ITEM 8. CHANGE IN FISCAL YEAR
None
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
None
3
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NORTH AMERICAN TECHNOLOGIES GROUP, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
DEC 31, 1997 DEC 31, 1997
(AUDITED) (A) (B) (UNAUDITED)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash $ 348,991 $ 200,000 $ 548,991
Accounts receivable, net 285,623 285,623
Inventories 6,395 (2,414) 3,981
Current portion of notes receivable 100,000 72,688 172,688
Prepaids 103,087 103,087
------------ ------------
Total Current Assets 844,096 1,114,370
Notes receivable 881,960 727,583 1,609,543
Property and equipment, net 149,946 (3,937) 146,009
Intangibles, net 4,576,284 (482,959) 4,093,325
Other assets 292,291 (11,282) 281,009
-------------------------------------------------------------------------
Total $ 6,744,577 ($500,592) $ 1,000,271 $ 7,244,256
=========================================================================
Current maturities of LTD (3,800) (3,800)
Accts. pay & accrd expenses (455,664) (130,000) (585,664)
Deferred dividends payable (193,448) (193,448)
------------ ------------
Total current liabilities (652,912) (782,912)
Long term debt, net (503,178) (503,178)
Deferred dividends payable (13,985) (13,985)
Stockholder's equity (5,574,502) 630,592 (1,000,271) (5,944,181)
-------------------------------------------------------------------------
Total ($6,744,577) 500,592 (1,000,271) ($7,244,256)
=========================================================================
A To adjust for the sale of assets and record certain contingent liabilities retained
by the seller.
B To adjust for consideration received of cash and promissory notes.
The above pro forma consolidated balance sheet as of December 31, 1997 reflects the sale by North
American Technologies Group, Inc. of certain assets of its wholly-owned subsidiary, EET, Inc.
</TABLE>
4
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NORTH AMERICAN TECHNOLOGIES GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED YEAR ENDED
DEC. 31, 1997 DEC. 31, 1997
(AUDITED) (A) (UNAUDITED)
---------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 3,553,117 $ 740,693 $ 2,812,424
Cost of revenues 2,436,261 465,009 1,971,252
---------------------------------------------------------
Gross profit 1,116,856 275,684 841,172
Selling, general & administrative 4,282,925 603,989 3,678,936
---------------------------------------------------------
Operating loss before adjustment (3,166,069) (328,305) (2,837,764)
Impairment of certain long-lived assets 1,202,628 0 1,202,628
---------------------------------------------------------
Operating loss (4,368,697) (328,305) (4,040,392)
Other income & expense, net 37,406 37,406
---------------------------------------------------------
Net loss $ (4,331,291) $ (328,305) $ (4,002,986)
=========================================================
Net loss per share $ (0.22) $ (0.14)
Weighted average number of ============ ============
common shares outstanding 28,864,720 28,864,720
============ ============
A To remove the operating results of the extraction division of EET, Inc.
from the consolidated statement of operations of North American
Technologies Group, Inc. for the period indicated.
The above pro forma consolidated statement of operations reflects the sale by North American Technologies
Group, Inc. of certain assets of its wholly-owned subsidiary, EET, Inc.
Note: in calculating the net loss per common share, the loss has been increased by dividends on preferred stock.
</TABLE>
5
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
Date: April 13, 1998 By: /s/ Tim B. Tarrillion
-------------- --------------------------------
Chairman of the Board, President
and Chief Executive Officer
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EXHIBIT 10.28
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), is made and entered into
as of March 30, 1998, by and between EET, INC., a Texas corporation ("Seller"),
and ACTIVE ENVIRONMENTAL TECHNOLOGIES, INC., a New Jersey corporation
("Purchaser").
RECITALS
Seller is in the business (the "Business") of producing, marketing, selling
and/or licensing certain chemical products and related services used primarily
in environmental clean-up, including without limitation the chemicals known
under the trademark TechXtract(R). The parties hereto desire to provide for the
purchase and sale of certain assets of the Business of Seller, on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS; CERTAIN RELATED MATTERS
1.1 PURCHASE AND SALE OF PURCHASED ASSETS. Subject to the terms and
conditions of this Agreement, and on the basis and in reliance on the
representations, warranties, covenants and agreements set forth in this
Agreement, at the Closing (as defined below), Seller shall sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser shall purchase from
Seller, the following assets of Seller utilized in connection with the Business
(collectively, the "Purchased Assets"), which Purchased Assets shall consist of
and include the following:
(a) all patents, trademarks, trade names, tradedress, service marks,
licenses, inventions, processes, trade secrets, designs, drawings and all other
proprietary, technical and other information and intellectual property and all
licenses, permits and other rights to use the foregoing, whether patentable or
unpatentable, used in connection with the Seller's operations, including that
which is set forth on SCHEDULE 1.1(A) attached hereto and made a part hereof
(collectively, the "Intellectual Property");
(b) to the extent transferable or assignable by their express terms or
the terms of any law relating thereto, the agreements, contracts and sales
orders, if any, to which Seller is a party relating to its operations,
identified on SCHEDULE 1.1(B), attached hereto and made a part hereof
(collectively, the "Assigned Contracts");
(c) the inventories of products, work-in-progress, materials and
supplies, identified on SCHEDULE 1.1(C), attached hereto and made a part hereof,
together with all pre-paid items, transferable manufacturer's material, product
and supplies warranties, and other related
<PAGE>
business and other assets, whether tangible or intangible, and whether currently
existing or hereafter arising or acquired (collectively, the "Assigned
Inventory");
(d) the office equipment identified on SCHEDULE 1.1(D) hereto and made
a part hereof;
(e) all customer lists, supplier lists, and marketing and advertising
materials;
(f) the computer equipment and information, if any, identified on
SCHEDULE 1.1(F) attached hereto and made a part hereof;
(g) those certain tools, machinery and other items of tangible
personal property, if any, identified on SCHEDULE 1.1(G) attached hereto and
made a part hereof;
(h) the goodwill of the Business, together with all benefits naturally
incident thereto, including all rights Seller may have to use the name "EET,
Inc.";
(i) all rights, claims, lawsuits and choses in action against third
parties relating to the Purchased Assets arising out of transactions occurring
prior to the Closing.
1.2 EXCLUDED ASSETS. As used herein, the term, "Purchased Assets" shall
mean only those items or assets specifically identified in Section 1.1, and the
schedules relating thereto, as a Purchased Asset, and to the extent any item of
the Seller has not been identified in Section 1.1 hereto, and the schedules
relating thereto, such item shall constitute an "Excluded Asset" for all
purposes.
1.3. PURCHASE PRICE. In exchange for Seller's sale, transfer, conveyance,
assignment and delivery of the Purchased Assets, and subject to the terms and
conditions of this Agreement, and on the basis and in reliance on the
representations, warranties, covenants and agreements set forth in this
Agreement, at the Closing:
(a) Cash Portion of the Purchase Price. Purchaser shall pay to Seller
in cash an aggregate amount equal to $200,000;
(b) The A Note. Purchaser shall deliver to Seller a promissory note
(the "A Note"), substantially in the form of EXHIBIT A, attached hereto and made
a part hereof;
(c) The B Note. Purchaser shall deliver to Seller a promissory note
(the "B Note"), substantially in the form of EXHIBIT B, attached hereto and made
a part hereof, and
(d) Assumed Liabilities. Purchaser shall assume and timely pay and
perform (i) all liabilities and obligations accruing prior to the Closing that
are identified and set forth on SCHEDULE 1.3(D), attached hereto and made a part
hereof, and (ii) all liabilities and obligations relating to the Purchased
Assets accruing on and after the Closing, including without limitation those
arising with respect to the Assigned Contracts, but excluding any liabilities or
obligations that may be asserted against Purchaser as a successor owner of any
of the Purchased Assets for
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events occurring prior to the Closing and not otherwise assumed in clause (i)
above (collectively, the items described in this sentence are sometimes referred
to herein as the "Assumed Liabilities"). Without limiting the generality of the
foregoing, but except as otherwise provided in Section 5.2 hereof, Purchaser and
Seller agree that, as between Purchaser and Seller, all sales tax payable,
property tax payable, insurance payable and employee benefits arising or
accruing as a result of the operation of the Business and the ownership of the
Purchased Assets prior to the Closing shall be the sole responsibility of
Seller. Other than the Assumed Liabilities, and except as expressly provided
otherwise in this Agreement or any other agreement to which Purchaser is a
party, Purchaser shall not assume or be responsible for paying or performing any
other obligation or liability of Seller.
1.4 ALLOCATION OF PURCHASE PRICE. Seller and Purchaser agree that for
Federal income tax purposes the entire value of the Purchased Assets and the
Assumed Liabilities ("Tax Purchase Price") shall be allocated as reasonably
determined in good faith by Purchaser, based on the fair market value of the
Purchased Assets. Purchaser agrees to deliver to Seller on or before June 30,
1998, its determination as to the allocation of the Tax Purchase Price. Such
allocation is intended by the parties to comply with Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder. Any additional matters to be determined in connection therewith will
be reasonably determined in good faith by Purchaser in accordance with generally
accepted accounting principles, insofar as possible.
Seller and Purchaser shall prepare on or before August 15, 1998, and timely
file the applicable Form 8594 with their respective Federal income tax returns
for the taxable year that includes the Closing. The parties agree to use the
agreed-on allocation set forth in the preceding paragraph in all returns and
reports filed with the taxing authorities. Each party shall take no action
inconsistent with the allocation reported on the Form 8594. If the Internal
Revenue Service, or any other taxing authority, challenges the allocation of the
Tax Purchase Price, the party whose return is being examined shall promptly
notify the other party and shall promptly keep the other party fully informed
regarding all developments with respect to the allocation of the Tax Purchase
Price.
ARTICLE II
THE CLOSING
2.1 CLOSING. The closing ("Closing") of the purchase and sale of the
Purchased Assets and the related transactions shall take place at the offices of
Seller, located at 4710 Bellaire Blvd., Suite 301, Bellaire, Texas 77401, at
10:00 a.m., local time, on the date hereof, or at such other time and place and
on such other date as the parties hereto shall agree, but in no event shall such
date be later than April 6, 1998, unless such date is extended by the mutual
written agreement of the parties hereto. The transactions described in Section
2.2 hereof are sometimes referred to as the "Closing Transactions."
3
<PAGE>
2.2 CLOSING TRANSACTIONS. At the Closing:
(a) Bill of Sale. Seller and Purchaser shall execute and deliver to
each other that certain Bill of Sale, Assignment and Assumption Agreement,
substantially in the form of EXHIBIT C, attached hereto and made a part hereof
(the "Bill of Sale");
(b) Purchase Price. Purchaser shall issue and deliver to Seller by
certified or cashier's check the Cash Portion of the Purchase Price;
(c) The Notes. Each of Purchaser and Seller shall execute the A Note
and the B Note (collectively, the "Notes"), and the originals of each such Note
shall be delivered to Seller;
(d) Patent and Trademark Assignments. Seller and Purchaser shall
execute and deliver to each other certain Patent and Trademark Assignments, each
generally in the form of EXHIBIT D, attached hereto and made a part hereof (the
"Patent Assignments"), and shall execute, deliver and cause to be filed with the
appropriate filing offices all other documents necessary to evidence the
transfer and assignment of the Intellectual Property from the Seller to the
Purchaser;
(e) Collateral Assignments. As collateral security for the payment
and performance of the Notes, Purchaser shall execute and deliver to Seller
certain Collateral Assignments of the Intellectual Property, each generally in
the form of EXHIBIT E, attached hereto and made a part hereof (the "Collateral
Assignments"), together with such other documents, including financing
statements, as shall be necessary to perfect a security interest in favor of the
Seller in the Intellectual Property to secure the payment of the Notes;
(f) Non-Competition Agreement. Seller and Purchaser shall execute and
deliver to each other a non-competition agreement (the "Non-Competition
Agreement"), substantially in the form of EXHIBIT F, attached hereto and made a
part hereof; and
(g) Certificates. Each of Seller and Purchaser shall deliver to the
other a certificate executed by a proper officer as to incumbency and such other
matters as shall be reasonably requested.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants, to Purchaser as follows:
(a) Corporate Existence and Power. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Texas. Seller has all corporate powers and all governmental licenses,
authorizations, consents and approvals in the United
4
<PAGE>
States required to carry on its business as now conducted, except where the
failure to have any of the foregoing would not have a Material Adverse Effect.
(b) Corporate Authorization. The execution, delivery and performance
by the Seller of this Agreement, and each of the exhibit agreements to which it
is a party (collectively the "Seller Closing Agreements"), and the consummation
by it of the transactions contemplated hereby are within such organization's
corporate powers and, have been duly authorized by all necessary corporate
action. Each of this Agreement and each Seller Closing Agreement has been duly
executed by Seller and constitutes a valid and binding agreement of the Seller,
enforceable against it in accordance with its terms. As of the Closing all
corporate action on the part of the Seller required under applicable law in
order to consummate the transactions contemplated to be consummated by it in
connection with the Agreement will have occurred.
(c) No Contravention. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
conflict with or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any right or obligation or to loss of a benefit
under, any provision of the Articles of Incorporation of the Seller, the Bylaws
of the Seller or any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Seller or such party's properties or assets, or result in the creation or
imposition of any Encumbrance on any asset of the Seller, except for (i) such
approvals as have been obtained on or before the date hereof or (ii) any of the
same as is not reasonably likely to have a Material Adverse Effect or materially
and adversely affect the ability of the Seller to consummate the transactions
contemplated by this Agreement. No unobtained consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by or with respect to the
Seller in connection with the execution and delivery of this Agreement by it or
the consummation by it of the transactions contemplated hereby, except where the
failure to obtain such consent, approval, order or authorization, or to effect
such registration, declaration or filing is not reasonably likely to have a
Material Adverse Effect or materially and adversely affect the ability of
Purchaser or the Seller to consummate the transactions contemplated by the
Agreement. Notwithstanding anything in this Agreement to the contrary,
Purchaser acknowledges that neither Seller nor any other party has requested or
received the consent or approval of the other party to any Assigned Contract
relating to the assignment of the rights, title and interest of Seller in and to
such Assigned Contract in favor of Purchaser as contemplated by this Agreement,
and Seller shall have no responsibility regarding requesting or securing such
consent or approval, other than as provided in Section 5.4. As a result, Seller
makes no representation or warranty regarding the validity of any assignment of
any Assigned Contract or the rights thereto as contemplated by this Agreement
without such consent or approval, and Purchaser agrees to assume all risk and
responsibility with respect thereto.
5
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(d) Litigation. Except as disclosed to Purchaser in SCHEDULE 3.1(D),
(i) there is no action, dispute, suit, investigation or proceeding pending
against or, to the knowledge of Seller, threatened or contemplated, against or
affecting the Business, Seller or any of the Purchased Assets before any court
or arbitrator or any governmental body, agency or official (provided, however,
as to any such pending matter outside the United States, the representation
included in this clause (i) is limited to the knowledge of Seller), (ii) there
is no condition, state of facts or event that might reasonably form the basis of
any such proceeding and (iii) Seller is not a party to the provisions of any
judgment, order, writ, injunction or decree of any court, arbitrator or
governmental or regulatory official, body or authority affecting or that could
reasonably be expected to affect the Purchased Assets or this Agreement.
(e) Compliance with Laws. To the knowledge of Seller, Seller is not
in violation of, and has not violated, any applicable provisions of any laws,
statutes, ordinances or regulations, other than as would not be reasonably
likely to have a Material Adverse Effect on Seller.
(f) Title to Purchased Assets; Rights to Acquire. Seller has good and
marketable title to the Purchased Assets, and will convey the Purchased Assets
to Purchaser, free and clear of all Encumbrances. No person, firm or entity
other than Purchaser has any right to acquire any of the Purchased Assets or any
part thereof.
(g) Occasional Sale. The sale of the Purchased Assets as contemplated
by this Agreement is exempt from Texas state sales tax in that either it
constitutes an "occasional sale," as that term is defined under applicable Texas
laws, rules and regulations, or another exemption exists from the requirements
that such sales tax be collected and paid in connection with the sale of the
Purchased Assets as contemplated by this Agreement.
(h) Employee Benefit Plans. Except as disclosed in SCHEDULE 3.1(H)
hereof, Purchaser will not be required to pay, perform or assume any obligation
under any employee benefit plan or employee welfare plan of Seller relating to
any of their employees as a result of this Agreement and the transactions
contemplated hereby, including any such plan governed by the provisions of the
Employee Retirement Income Security Act of 1974, as amended to date,
(i) Certain Agreements. SCHEDULE 3.1(I) hereto sets forth a list and
a brief description of all contracts and agreements related to any of the
Purchased Assets or the Business and to which Seller is a party or by which
Seller or the Purchased Assets are bound, other than the Assigned Contracts,
including without limitation certain non-competition agreements described in
said schedule (collectively, the "Other Contracts"). Each of the Other
Contracts is valid and binding and in full force and effect and the parties
thereto are not in default thereof.
(j) Full Disclosure. Except as otherwise disclosed in or contemplated
by this Agreement, there is no fact known to the Seller that is not disclosed or
referred to in this Agreement that could reasonably be expected to have a
Material Adverse Effect on the
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Purchased Assets. The information provided and statements made by Seller in this
Agreement do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
herein, in light of the circumstances under which they were made, misleading.
Notwithstanding anything in this Agreement to the contrary, Purchaser
acknowledges that neither Seller nor any other party has made or is making, in
connection with any financial information provided to Purchaser in connection
with this Agreement, including without limitation any forward looking
statements, any representation or warranty as to the future financial
performance of any of the Purchased Assets or the Business after Purchaser's
purchase of the Purchased Assets, and Seller shall have no responsibility
regarding any such forward looking statements or financial projections,
including sales projections or cash flow projections. As a result, Seller makes
no representation or warranty regarding the validity of any such forward looking
statements or financial information, and Purchaser agrees to assume all risk and
responsibility with respect thereto.
3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
represents and warrants to the Seller the following:
(a) Corporate Existence and Power. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New Jersey. Purchaser has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where the failure to have any of the foregoing would not have
a Material Adverse Effect. Purchaser has heretofore delivered to Seller a true,
correct and complete copy of its articles of incorporation, together with all
amendments thereto, as currently in effect (such articles of incorporation are
sometimes referred to herein as the "Purchaser's Governing Documents").
(b) Corporate and Other Authorization. The execution, delivery and
performance by Purchaser of this Agreement and the consummation by it of the
transactions contemplated hereby are within such Purchaser's corporate powers
and authority, and have been duly authorized and approved of by all necessary
corporate action, including without limitation any authorization or approval
required of its Board of Directors and Shareholders. This Agreement and each of
the other documents executed by Purchaser on the date hereof in connection with
the Closing, including without limitation, the Collateral Assignments, the Bill
of Sale and the Notes, have been duly executed by Purchaser and constitute valid
and binding agreements of Purchaser, enforceable against Purchaser in accordance
with their terms. As of the Closing all corporate action on the part of
Purchaser required under applicable law in order to consummate the Closing
Transactions will have occurred.
(c) No Contravention. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
conflict with or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any right or obligation or to loss or a benefit
under, any provision of Purchaser's Governing Documents or any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or
7
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regulation applicable to Purchaser, or its properties or assets, or result in
the creation or imposition of any encumbrance on any asset of Purchaser. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, is required by
or with respect to Purchaser in connection with the execution and delivery of
this Agreement by such party or the consummation by such party of the
transactions contemplated hereby.
(d) Litigation. Except as disclosed to Seller prior to the date hereof
(a) there is no action, dispute, suit, investigation or proceeding pending
against, threatened or contemplated, against or affecting Purchaser before any
court or arbitrator or any governmental body, agency or official, (b) there is
no condition, state of facts or event that might reasonably form the basis of
any proceeding; and (c) Purchaser is not a party to the provisions of any
judgment, order, writ, injunction or decree of any court, arbitrator or
governmental or regulatory official, body or authority affecting or that could
reasonably be expected to affect the Business, the Purchased Assets or this
Agreement.
(e) Full Disclosure. Except as otherwise disclosed in or contemplated
by this Agreement, there is no fact known to Purchaser that is not disclosed or
referred to in this Agreement that could reasonably be expected to have a
Material Adverse Effect on the Purchaser's ability to consummate the
transactions contemplated by this Agreement and perform its obligations
hereunder. The information provided and statements made by Purchaser in this
Agreement do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
herein, in light of the circumstances under which they were made, misleading.
ARTICLE IV
CONDITIONS TO CONSUMMATION OF THE CLOSING TRANSACTIONS
4.1 CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller to
consummate the Closing Transactions and the other transactions contemplated to
be consummated by such party at the Closing are subject to the satisfaction (or
waiver by Seller) at or prior to the Closing (or at such other time prior
thereto as may be expressly provided in this Agreement) of each of the following
conditions:
(a) The representations and warranties of the Purchaser set out in
this Agreement shall be true and correct in all material respects, and no fact
or circumstance shall have come to the attention of Seller that is not disclosed
in this Agreement or any document or other writing delivered by Purchaser to
Seller prior to the date of this Agreement that could reasonably be expected to
have a Material Adverse Effect on Purchaser, Seller or the consideration to be
received by the Seller in connection with the transactions contemplated hereby
to be consummated at the Closing;
(b) Purchaser shall have complied in a timely manner and in all
material respects with its covenants and agreements set out in this Agreement;
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(c) All director, shareholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal, state and local governmental authorities and
agencies, as are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this Agreement to the
contrary) to complete the purchase and sale of the Purchased Assets and the
other transactions at the Closing shall have been secured, including without
limitation that this Agreement shall have been approved by the affirmative vote
of the directors and shareholders of Seller, as may be required by applicable
law or their applicable Governing Documents;
(d) No statute, rule, regulation, executive order, decree, injunction
or restraining order shall have been enacted, entered, promulgated or enforced
by any court of competent jurisdiction or governmental authority that prohibits
or restricts the consummation of the purchase and sale of the Purchased Assets
at the Closing or the related transactions;
(e) The Closing shall have occurred not later than April 6, 1998,
unless such date is extended by the mutual written agreement of the parties
hereto; and
(f) All of the documents to be executed at or before the Closing shall
have been executed, and all of the actions described in Section 2.2 to occur at
or before the Closing shall have occurred.
4.2 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The obligations of the
Purchaser to consummate the Closing Transactions and the other transactions
contemplated to be consummated by such Party at the Closing are subject to the
satisfaction (or waiver by Purchaser) at or prior to the Closing (or at such
other time prior thereto as may be expressly provided in this Agreement) of each
of the following conditions:
(a) The representations and warranties of Seller set out in this
Agreement shall be true and correct in all material respects, and no fact or
circumstance that is not disclosed in this Agreement or any document or other
writing delivered by Seller to Purchaser prior to the date of this Agreement
shall have come to the attention of Purchaser that could reasonably be expected
to have a Material Adverse Effect on Seller, Purchaser or Purchaser's right to
own, use and exploit any of the Purchased Assets.
(b) Seller shall have complied in a timely manner and in all material
respects with its covenants and agreements set out in this Agreement.
(c) All director, shareholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal, state and local governmental authorities and
agencies, as are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this Agreement to the
contrary) to complete the transactions contemplated to occur at the Closing
shall have been secured, including without limitation that this Agreement shall
have been
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approved by the affirmative vote of the directors and shareholders of Seller, as
may be required by applicable law or their applicable Governing Documents.
(d) No statute, rule, regulation, executive order, decree, injunction
or restraining order shall have been enacted, entered, promulgated or enforced
by any court of competent jurisdiction or governmental authority that prohibits
or restricts the consummation of the purchase and sale of the Purchased Assets
at the Closing or the related transactions.
(e) The Closing shall have occurred not later than April 6, 1998,
unless such date is extended by the mutual written agreement of the parties
hereto.
(f) All of the documents to be executed at or before the Closing shall
have been executed, and all of the actions described in Section 2.2 to occur at
or before the Closing shall have occurred.
ARTICLE V
COVENANTS
5.1 PURCHASER TO PAY CERTAIN FEES. The Purchaser agrees to pay, and shall
be responsible for the payment at Closing of (a) one-half of all legal fees and
expenses, other than the filing fees described in clause (b) below, incurred by
the Seller in connection with the preparation of the documents required for the
sale of the Purchased Assets, and (b) all filing fees associated with filing of
record the Patent Assignments and the Collateral Assignments; provided, however,
that the Purchaser shall not be obligated to pay with respect to (a) above, an
amount in excess of $5,000 in the aggregate.
5.2 EMPLOYEES. At the Closing, (i) Seller shall terminate the employment
of all personnel employed by Seller (other than Tim Tarrillion and Judy Shields)
and Seller will bear the cost of any such termination; (ii) Ron Borah shall
execute a release agreement, in form and substance agreeable to Seller,
evidencing the termination of Ron Borah's employment with the Seller and /or
Seller's sole shareholder, North American Technologies Group, Inc. ("NATK"),
pursuant to that certain Employment Agreement, dated February 7, 1995, between
Ron Borah and NATK, and (iii) Purchaser shall employ Ron Borah from and after
the Closing and shall provide Seller with evidence of such employment.
Notwithstanding the foregoing, Purchaser shall promptly reimburse Seller for all
amounts paid out by Seller on behalf of Ron Borah during the period which is
ninety (90) days from the date of Closing, under COBRA or otherwise, for health
insurance and/or life insurance. Except as otherwise provided in this Section
5.2, Purchaser shall assume no liability, obligation or responsibility under any
bonus, life insurance, health insurance, or other plan whereby Seller provides
benefits for any of the employees or their beneficiaries, and Purchaser shall be
permitted, but not obligated, to hire any of the other employees of Seller.
5.3 DISCLOSURE DOCUMENTS. From time to time after the Closing and without
further consideration, Purchaser shall supply to Seller any necessary
information in writing, or cause the necessary information to be supplied in
writing, relating to Seller for inclusion in any
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documents to be filed with the Securities and Exchange Commission or any
regulatory agency in connection with the transactions contemplated by this
Agreement.
5.4 FURTHER ASSURANCES. From time to time after the Closing and without
further consideration, each of the parties hereto covenants and agrees to
execute and deliver such additional or further instruments of conveyance,
assignment, assumption and transfer, and take such actions, as any other party
hereto may reasonably request in order to more effectively convey and transfer
to such other party the assets, rights or other property to be sold or conveyed
to such other party hereunder or as shall be reasonably necessary or appropriate
in connection with the carrying out of such other party's obligations hereunder;
provided, that Seller shall only be obligated to use its reasonable efforts, at
the request and the sole cost and expense of Purchaser, to secure any consent or
approval of any third party regarding any assignment of any Assigned Contract,
and to the extent that such Assigned Contract requires such consent or approval
by its express terms or the terms of any law relating thereto, and such consent
or approval has not been obtained, Seller agrees to take such other actions as
may be reasonably requested by Purchaser (and at the sole cost and expense of
Purchaser) in order to secure for the benefit of Purchaser all rights and
benefits of such Assigned Contract. Without limiting the generality of the
foregoing:
(a) each of Seller and Purchaser agrees to deliver promptly (and in no
event later than five (5) business days after receipt of the same) to the other
party hereto any revenues or other amounts collected or received by it to which
the other hereto is entitled to receive by the terms of this Agreement; and
(b) Seller agrees to enforce, at the request and sole cost and expense
of Purchaser, any non-competition, confidentiality and non-disclosure rights
that Seller may have with respect to any of the Business or any of the Purchased
Assets under any of the agreements described on SCHEDULE 3.1(I), attached hereto
and made a part hereof.
5.5 BOOKS AND RECORDS. Seller will, when requested by the Purchaser to do
so, make available for inspection and photocopying, at Purchaser's expense, any
of its books and records, and will furnish to the Purchaser all appropriate and
reasonably necessary information regarding the Business within a reasonable time
after written request therefor.
5.6 UNCLAIMED ASSIGNED INVENTORY. Seller and Purchaser agree that in the
event Purchaser decides, in its sole discretion, not to take possession of any
of the Assigned Inventory listed on SCHEDULE 1.1(C) hereto within two (2) weeks
after the Closing, Seller, at Seller's expense, but without deduction from or
reimbursement of any portion of the Purchase Price, will dispose of such
unclaimed Assigned Inventory in a manner it deems appropriate, and Purchaser
shall not be responsible or liable for such disposition.
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ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY SELLER. Seller agrees to indemnify, defend and
hold harmless, Purchaser and its affiliates, officers, directors, employees,
contractors and agents (collectively, Purchaser and such other parties are being
referred to as the "Purchaser Parties") against and from any and all taxes,
penalties, interest, claims, suits, causes of action (recognized now or at any
later time), liabilities (including liabilities for latent defects arising from
a product sold or service provided by Seller before the Closing and latent
employment claims arising from Seller's employment of any person before the
Closing), responsibilities, damages, losses, costs, assessments and expenses,
including without limitation reasonable attorney's fees and other expenses of
defending any actions or claims, amounts of judgments and amounts paid in
settlement (collectively, all of the foregoing being referred to herein as
"Costs") incurred by, asserted against or imposed upon any of the Purchaser
Parties arising out of or attributable to:
(a) Any breach of any representation, warranty, covenant or agreement
made by Seller herein or in any schedule, exhibit, certificate, document or
agreement furnished by Seller in connection herewith (including without
limitation any of the documents to be executed and delivered at the Closing;
(b) Any nonfulfillment of any agreement or covenant hereunder or
entered into in connection herewith by Seller; or
(c) Any claim, whether known or unknown, arising out of, or by virtue
of, or based upon Seller's ownership or operation of any Purchased Asset or the
Business (or Seller's failure to fulfill any obligation in connection therewith)
prior to the Closing, except to the extent expressly assumed, as set forth in
Section 1.3(d) hereof, by Purchaser pursuant to this Agreement.
6.2 INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify, defend
and hold harmless Seller, and its affiliates, officers, directors, employees,
contractors and agents (collectively, Seller and such other parties are being
referred to as the "Seller Parties") against and from any and all Costs incurred
by, asserted against or imposed upon any of the Seller Parties arising out of or
attributable to:
(a) Any breach of any representation, warranty, covenant or agreement
made by Purchaser herein or in any schedule, exhibit, certificate, document or
agreement furnished by Purchaser in connection herewith or relating hereto
(including without limitation any of the documents to be executed and delivered
at the Closing);
(b) Any nonfulfillment of any agreement hereunder or entered into in
connection herewith by Purchaser; or
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(c) Any claim, whether known or unknown, arising out of, or by virtue
of, or based upon Purchaser's ownership or operation of any Purchased Asset or
the Business (or Purchaser's failure to fulfill any obligation in connection
therewith) after the Closing.
6.3 CERTAIN INDEMNIFICATION-RELATED MATTERS. Any party entitled to
indemnification under the provisions of this Article shall: (a) give prompt
notice to the indemnifying party of any claim with respect to which such
indemnified party seeks indemnification (provided, however, that the failure to
timely provide such notice shall not affect an indemnified party's rights under
this Article unless such failure shall have prejudiced or adversely affected any
indemnifying party's rights with respect to such claim) and (b) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim or
such indemnifying party fails or refuses to timely select and engage counsel
reasonably satisfactory to the indemnifying party, permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party. If such defense is assumed, the indemnifying party
will not be subject to any liability for any settlement made without its consent
(but such consent will not be unreasonably withheld). Without the consent of an
indemnified party (which consent will not be unreasonably withheld), an
indemnifying party shall not agree to any settlement that requires an
indemnified party to make any payment, incur any other cost or assume any other
liability or obligation that is not entirely performed by the indemnifying
party. An indemnifying party who is not entitled, or elects not, to assume the
defense of a claim will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which case such
indemnifying party shall pay the fees and expenses of a sufficient number of
counsel so that such conflicts are resolved.
6.4 RIGHT OF OFFSET BY PURCHASER AGAINST NOTES. In the event that the
Seller is liable for indemnification to Purchaser, Purchaser may, to the extent
permitted by applicable law, offset the amount of the indemnification by
reducing the amount owed by Purchaser to Seller under the Notes, by the amount
to be indemnified. Purchaser may not offset the indemnification due against the
Notes unless (a) the amount to be indemnified is reduced to a judgment by any
court of competent jurisdiction; and (b) Seller is insolvent or otherwise unable
to indemnify Purchaser in any way other than offset against the Notes.
ARTICLE VII
TERMINATION
7.1 TERMINATION. This Agreement may be terminated and the purchase and
sale of the Purchased Assets and the other Closing Transactions may be abandoned
at any time prior to the Closing:
(a) by mutual written consent of Purchaser and Seller; or
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(b) by either of Seller or Purchaser:
(i) if the Closing shall not have occurred on or before April 6,
1998, unless such date is extended by the mutual written agreement of the
parties hereto, and in such event, only until the date the Closing has been
extended; provided, however, that the right to terminate this Agreement under
this Section 7.1(b)(i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before that date; or
(ii) if any court of competent jurisdiction, or any governmental
body, regulatory or administrative agency or commission having appropriate
jurisdiction shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall not have been overturned; or
(iii) if the board of directors of Seller, in the exercise of its
fiduciary duty and after consultation with counsel, or if the requisite
shareholder(s) of Seller, shall have failed to approve of the consummation of
the transactions contemplated hereby.
7.2 NOTICE AND EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
pursuant to which such termination is made, and this Agreement shall forthwith
become void and have no effect without any liability on the part of any party or
its directors, officers or shareholders, except for the provisions of Article
VI, this Section 7.2 and Sections 8.1, 8.3, 8.9 and 8.10, which shall survive
any termination of this Agreement. Nothing contained in this Section 7.2 shall
relieve any party from any liability for any breach of this Agreement.
7.3 EXTENSION; WAIVER. Any time prior to the Closing, the parties may (a)
extend the time for the performance of any of the obligations or other acts of
any other party under or relating to this Agreement; (b) waive any inaccuracies
in the representations or warranties by any other party or (c) waive compliance
with any of the agreements of any other party or with any conditions to its own
obligations. Any agreement on the part of any other party to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE VIII
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the parties hereto shall not be deemed waived
or otherwise affected by any investigation made by any other party hereto. Each
representation and warranty shall continue for a period of two (2) years after
the Closing. The provisions of this Section shall have no effect upon any other
obligation of the parties, whether to be performed before or after the Closing.
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8.2 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows (or at such other address or facsimile number
for a party as shall be specified by like notice):
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(a) if to Purchaser, at: with a copy to:
Active Environmental The Law Offices of Alan H. Schorr
Technologies, Inc. 10,000 Lincoln Drive West
40 High Street, Suite 100 Suite 1
Mount Holly, NJ 08060 Marlton, NJ 08053
Attention: Michael A. Iles Attention: Eric Lavdas
Fax: (609) 702-0265 Fax: (609) 983-3049
(b) if to the Seller, at: with a copy to:
EET, Inc.
4710 Bellaire Blvd., Suite 301 Theodore J. Lee
Bellaire, Texas 77401 3104 Edloe, Suite 204
Attention: President Houston, Texas 77027
Fax: (713) 662-3728 Fax: (713) 623-0990
8.3 EXPENSES. Except as otherwise expressly provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses whether or not the transactions contemplated hereby are
consummated.
8.4 AMENDMENT AND MODIFICATION. This Agreement may not be amended except
by an instrument in writing signed by all of the parties hereto.
8.5 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, including all exhibits
and Schedules hereto, (a) constitutes the entire agreement among the parties
with respect to its subject matter and supersedes all prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to such subject matter and (b) shall not be assigned by operation of law
or otherwise without the express prior written consent of Purchaser, in the case
of Seller's assignment, and without the express prior written consent of, in the
case of Purchaser's assignment, which consent (either of Purchaser or of Seller)
shall not be unreasonably withheld.
8.6 BINDING EFFECT; BENEFIT. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors and assigns.
Nothing in this Agreement is intended to confer on any person other than the
parties to this Agreement or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
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8.7 HEADINGS. The descriptive headings of the articles, sections,
subsections, exhibits and schedules of this Agreement are inserted for
convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement.
8.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
8.9 GOVERNING LAW. Subject to the governing law provisions set forth in
the Notes, this Agreement shall be governed by and construed in accordance with
the laws of the state of New Jersey, without regard to the laws that might
otherwise govern under principles of conflicts of laws applicable thereto.
8.10 COURTS IN BURLINGTON COUNTY, NEW JERSEY TO HAVE EXCLUSIVE
JURISDICTION. SUBJECT TO THE JURISDICTIONAL PROVISIONS SET FORTH IN THE NOTES,
THE PARTIES AGREE THAT THE FEDERAL AND STATE COURTS LOCATED IN BURLINGTON
COUNTY, NEW JERSEY SHALL HAVE EXCLUSIVE JURISDICTION OVER AN ACTION BROUGHT TO
ENFORCE THE RIGHTS AND OBLIGATIONS CREATED IN OR ARISING FROM THIS AGREEMENT,
AND EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE JURISDICTION OF SAID
COURTS. NOTWITHSTANDING THE ABOVE, APPLICATION MAY BE MADE BY A PARTY TO ANY
COURT OF COMPETENT JURISDICTION WHEREVER SITUATED FOR ENFORCEMENT OF ANY
JUDGMENT AND THE ENTRY OF WHATEVER ORDERS ARE NECESSARY FOR SUCH ENFORCEMENT.
8.11 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
8.12 CERTAIN DEFINITIONS. As used herein:
(a) "affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended to date (the "Exchange Act");
(b) "business day" shall mean any day other than a Saturday, Sunday
or a day on which federally chartered financial institutions are not open for
business in the City of Houston, Texas;
(c) "Encumbrance" shall mean any lien, claim, charge, pledge,
security interest hypothecation or other claim or encumbrance;
(d) "Material Adverse Effect" shall mean any adverse effect on the
business, condition (financial or otherwise) or results of operation of the
relevant party and its subsidiaries, if any, which is material to such party and
its Subsidiaries, if any, taken as a whole;
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(e) "Person" means any individual, corporation, partnership,
association, trust or other entity or organization, including a governmental or
political subdivision or any agency or institution thereof; and
(f) "Subsidiary" shall mean, when used with reference to an entity,
any corporation, a majority of the outstanding voting securities of which is
owned directly or indirectly, or a majority of the board of directors of which
may be elected, by such entity.
IN WITNESS WHEREOF, each of the parties have caused this Agreement to
be duly executed by or on behalf of such party, all as of the date first written
above.
SELLER: EET, INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
PURCHASER: ACTIVE ENVIRONMENTAL
TECHNOLOGIES, INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
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Exhibit A The A Note
Exhibit B The B Note
Exhibit C Bill of Sale
Exhibit D Patent Assignments
Exhibit E Collateral Assignments
Exhibit F Non-Competition Agreement
Schedule 1.1(a) Intellectual Property, Licenses and Permits
Schedule 1.1(b) Assigned Contracts
Schedule 1.1(c) Inventory
Schedule 1.1(d) Office Equipment
Schedule 1.1(f) Computer Equipment and Information
Schedule 1.1(g) Tools and Other Tangible Property
Schedule 1.3(d) Assumed Liabilities
Schedule 3.1(d) Pending Seller Litigation
Schedule 3.1(h) Employee Benefit Plans
Schedule 3.1(i) Other Contracts
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EXHIBIT 10.29
PROMISSORY NOTE
$363,436.00 March 30, 1998
Bellaire, Texas
FOR VALUE RECEIVED, ACTIVE ENVIRONMENTAL TECHNOLOGIES, INC., a New Jersey
corporation ("Maker"), promises to pay to the order of EET, INC., a Texas
corporation ("Payee"), in Bellaire, Texas, or at such other place in the United
States of America as Payee may designate in writing, the principal sum of THREE
HUNDRED SIXTY THREE THOUSAND FOUR HUNDRED THIRTY SIX AND NO/100 DOLLARS
($363,436.00), in lawful money of the United States of America, together with
interest on the unpaid principal balance thereof, until the unpaid principal
balance shall be paid in full at the per annum rate of interest equal to six
percent (6%); provided, however, that after maturity, whether maturity is
brought about by acceleration as described in this promissory note (this "Note")
or otherwise, the rate of interest shall be the highest lawful, non-usurious
rate of interest then permitted under Texas law. Interest shall be calculated
on the basis of a 365- or 366-day year as appropriate, and shall be calculated
from the date of each principal advance hereunder.
This Note is the A Note, as defined in that certain Asset Purchase
Agreement (the "Asset Purchase Agreement"), dated as of the date hereof, by and
among the Maker as "Purchaser" and the Payee as "Seller." Capitalized terms
used but not defined herein have the meanings given them in the Asset Purchase
Agreement.
1. Installments of principal and unpaid interest on this Note shall be
due and payable in ten (10) payments (the "Installment Payments"), each in an
amount sufficient to fully amortize the outstanding balance of this Note, the
first such Installment Payment to be in an amount equal to $40,000, commencing
on September 24, 1998, and continuing regularly and quarterly thereafter (each
such quarterly payment date being referred to herein as a "Payment Date"), until
maturity. In addition to the Installment Payments, the Maker shall be required
to pay on each Payment Date an amount equal to fifty percent (50%) of all
amounts collected by the Maker or any of its affiliates since immediately
preceding the Payment Date from any and all Sublicense Agreements (each such
payment being herein referred to as a "Mandatory Prepayment Amount"). As used
herein, the term, "Sublicense Agreement" means and includes any license,
sublicense, grant, rental or conveyance of a right or other interest to any
party by Maker or any of its affiliates to made, use, produce, provide, market,
distribute, sell or otherwise exploit or apply any of the designs, technologies,
formulations, methods or know-how included in the Intellectual Property, or any
improvements thereto. To the extent of any partial payment or any partial
prepayment, whether mandatory or otherwise, amounts received shall first be
applied to accrued and unpaid interest and the remainder, if any, shall be
applied to the payment of outstanding principal, whereupon the principal balance
shall be reamortized, and all future Installment Payments due and payable
hereunder shall be recalculated accordingly. All Installment Payments and
Mandatory Prepayment Amounts, and
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any voluntary prepayments, if any, made by the Maker under this Note shall be
recorded by the Payee on Schedule 1 attached hereto and made a part hereof.
Unless one or more prepayments are received hereunder, and so long as there is
not a default hereunder, each Installment Payment shall be in an amount equal to
$40,000; provided, however, that the final Installment Payment shall be in an
amount equal to all remaining outstanding principal and all accrued and unpaid
interest thereon. Upon its receipt of any payments hereunder, the Payee shall
provide the Maker with a copy of Schedule 1 reflecting all amounts paid and any
and all readjustments made to future Installment Payments. All unpaid principal
and accrued and unpaid interest shall be due and payable in full on December 24,
2000.
2. In the event that any payment hereunder is due on a day other than a
business day, such payment shall instead be due and payable on the next
succeeding business day. As used herein, the term "business day" means any day
other than either a Federal holiday or a day during which state or federally-
chartered banks located in Harris County, Texas are required by law to be
closed.
3. This Note, and all amounts due hereunder, may be prepaid, in whole or
in part, at Maker's option at any time and from time to time, without premium or
penalty, upon two days' prior written notice, and pursuant to the attached
schedule of payments.
4. In the event that there is a failure to pay when due any interest or
principal hereunder and such failure shall continue unremedied for a period of
thirty (30) days after receipt of written notice of such failure to pay (a
"default"), then Payee, without the necessity of further demand or presentment,
may accelerate and declare in a writing delivered to Maker the entire principal
balance of this Note then due and payable, together with any accrued interest
thereon, and may exercise any other remedy or remedies then available to it
hereunder or under law.
5. Maker hereby waives presentment for payment, demand, notice of
protest, and protest of this Note, as well as all other notices relating to this
Note, except as described in the immediately preceding paragraph. Payee shall
not by any act of omission or commission be deemed to waive any right or remedy
hereunder or under law, except such waiver as shall be in writing and signed by
Payee, and then only to the extent specifically set forth therein; a waiver as
to one event shall not be a bar to or waiver of any other right or remedy as to
a subsequent event.
6. All notices, requests, demands, waivers and other communications
required or permitted to be given under this document shall be in writing and
shall be deemed to have been duly given if delivered personally, if mailed
(certified or registered mail with postage prepaid) or if sent by
telecopier/facsimile as follows (or at such other address or telecopy/facsimile
number for a party as shall be specified by like notice):
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if to any Payee, at: if to Maker, at:
EET, Inc. Active Environmental Technologies, Inc.
4710 Bellaire Blvd., Suite 301 40 High Street, Suite 100
Bellaire, Texas 77401 Mount Holly, New Jersey 08060
Attention: President Attn: Michael A. Iles
Fax: (713) 662-3728 Fax: (609) 702-0265
7. This instrument and the rights and obligations hereunder shall
terminate upon the satisfaction in full of all obligations of Maker hereunder,
and upon such termination, Payee agrees to re-deliver this Note marked
"CANCELED" to Maker.
8. As security for the payment and performance of the obligations of
Maker under this Note, Maker has entered into and delivered to the Payee that
certain Collateral Assignment more particularly described in the Asset Purchase
Agreement. Upon the occurrence of a default, in addition to any other right or
remedy granted hereunder, under the Collateral Assignment or under law, the
Payee may, in accordance with the terms and provisions of the Collateral
Assignment, exercise, with reference to the Collateral described therein, any
and all rights and remedies of a secured party applicable to such Collateral,
including, without limitation, the right and power to realize upon the
Collateral at a public or private sale. In the event that the proceeds of any
such sale are insufficient to pay all amounts to which the Payee is legally
entitled, the Maker shall be liable for the deficiency.
9. It is the intention of Payee and Maker to comply with applicable usury
laws; accordingly, it is agreed that notwithstanding any provisions to the
contrary in this Note, in no event shall this Note require or permit the
payment, charge or receipt of interest, as defined under applicable usury laws,
in excess of the maximum amount permitted by such laws. If any such excess of
interest is contracted for, charged, taken, reserved or received under this
Note, or if the maturity of the indebtedness evidenced by this Note is
accelerated in whole or in part, or in the event that all or part of the
principal of or interest on this Note shall be prepaid, so that under any of
such circumstances the amount of interest contracted for, charged, taken,
reserved or received under this Note on the amount of principal actually
outstanding from time to time under this Note shall exceed the maximum amount of
interest permitted by applicable usury laws, then in any such event (a) the
provisions of this Paragraph shall govern and control, (b) neither Maker nor any
other party now or hereafter liable for the payment of this Note shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount of interest permitted to be contracted for by, charged to,
taken, reserved or received from the party obligated thereon under applicable
usury laws, (c) any such excess which may have been collected either shall be
applied as a credit against the then unpaid principal amount on this Note or
refunded to the party paying the same, at the holder's option, (d) any such
excess which may have been charged shall be canceled ab initio and be of no
force or effect and (e) the effective rate of interest shall be automatically
reduced to the maximum lawful rate of interest permitted under applicable usury
laws as now or hereafter construed by the courts having jurisdiction thereof.
It is further agreed that, without limitation of the foregoing, all calculations
of the rate of interest contracted for, charged,
3
<PAGE>
taken, reserved or received under this Note, which are made for the purpose of
determining whether such rate exceeds the maximum lawful rate of interest shall
be made, to the extent permitted by applicable usury laws, by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the indebtedness evidenced by this Note, all interest at any time
contracted for, charged or received from Maker or otherwise by the holder or
holders hereof in connection with this Note.
10. This Note shall be governed by and construed in accordance with the
laws of the state of Texas, without regard to the laws that might otherwise
govern under principles of conflicts of laws applicable thereto.
11. THE PARTIES AGREE THAT THE FEDERAL AND STATE COURTS LOCATED IN HARRIS
COUNTY, TEXAS SHALL HAVE NON-EXCLUSIVE JURISDICTION OVER AN ACTION BROUGHT TO
ENFORCE THE RIGHTS AND OBLIGATIONS CREATED IN OR ARISING FROM THIS NOTE, AND
EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE JURISDICTION OF SAID
COURTS. NOTWITHSTANDING THE ABOVE, APPLICATION MAY BE MADE BY A PARTY TO ANY
COURT OF COMPETENT JURISDICTION WHEREVER SITUATED FOR ENFORCEMENT OF ANY
JUDGMENT AND THE ENTRY OF WHATEVER ORDERS ARE NECESSARY FOR SUCH ENFORCEMENT.
12. This Note may be assigned by the Payee at any time without the prior
written consent of the Maker.
13. To the fullest extent permitted by applicable law and subject to the
conditions set forth in Section 6.4 of the Asset Purchase Agreement, the Maker
shall have the right to offset against this Note any indemnification amounts due
from Payee to the Maker pursuant to and in accordance with the terms of Section
6.1 of the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Note
effective as of the date first above written.
"MAKER" ACTIVE ENVIRONMENTAL
TECHNOLOGIES, INC.
By: _____________________________________
Name: _______________________________
As Its Authorized: __________________
"PAYEE" EET, INC.
By: _____________________________________
Name: _______________________________
As Its Authorized: __________________
4
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
ADJUSTED
INSTALLMENT MANDATORY AGGREGATE INSTALLMENT
PAYMENT PREPAYMENT PRINCIPAL PAYMENT
AMOUNT AMOUNT DATE OUTSTANDING AMOUNT
------ ------ ---- ----------- ------
<S> <C> <C> <C> <C>
- ------------ ------------ -------- ------------ ------------
- ------------ ------------ -------- ------------ ------------
- ------------ ------------ -------- ------------ ------------
- ------------ ------------ -------- ------------ ------------
- ------------ ------------ -------- ------------ ------------
- ------------ ------------ -------- ------------ ------------
</TABLE>
5
<PAGE>
EXHIBIT 10.30
PROMISSORY NOTE
$436,835.00 March 30, 1998
Bellaire, Texas
FOR VALUE RECEIVED, ACTIVE ENVIRONMENTAL TECHNOLOGIES, INC., a New Jersey
corporation ("Maker"), promises to pay to the order of EET, INC., a Texas
corporation ("Payee"), in Bellaire, Texas, or at such other place in the United
States of America as Payee may designate in writing, the principal sum of FOUR
HUNDRED THIRTY SIX THOUSAND EIGHT HUNDRED THIRTY FIVE AND NO/100 DOLLARS
($436,835.00), in lawful money of the United States of America, together with
interest on the unpaid principal balance thereof, until the unpaid principal
balance shall be paid in full at the per annum rate of interest equal to nine
and one-half percent (9 1/2%); provided, however, that after maturity, whether
maturity is brought about by acceleration as described in this promissory note
(this "Note") or otherwise, the rate of interest shall be the highest lawful,
non-usurious rate of interest then permitted under Texas law. Interest shall be
calculated on the basis of a 365- or 366-day year as appropriate, and shall be
calculated from the date of each principal advance hereunder.
This Note is the B Note, as defined in that certain Asset Purchase
Agreement (the "Asset Purchase Agreement"), dated as of the date hereof, by and
among the Maker as "Purchaser" and the Payee as "Seller." Capitalized terms
used but not defined herein have the meanings given them in the Asset Purchase
Agreement.
1. Installments of principal and unpaid interest on this Note shall be
due and payable in twelve (12) payments (the "Installment Payments"), each in an
amount sufficient to fully amortize the outstanding balance of this Note, the
first such Installment Payment to be in an amount equal to $75,000, commencing
on February 1, 2001, and continuing regularly and annually thereafter (each such
annual payment date being referred to herein as a "Payment Date"), until
maturity. In addition to the Installment Payments, the Maker shall be required
to pay on each Payment Date an amount equal to fifty percent (50%) of all
amounts collected by the Maker or any of its affiliates since immediately
preceding the Payment Date from any and all Sublicense Agreements (each such
payment being herein referred to as a "Mandatory Prepayment Amount"). As used
herein, the term, "Sublicense Agreement" means and includes any license,
sublicense, grant, rental or conveyance of a right or other interest to any
party by Maker or any of its affiliates to made, use, produce, provide, market,
distribute, sell or otherwise exploit or apply any of the designs, technologies,
formulations, methods or know-how included in the Intellectual Property, or any
improvements thereto. To the extent of any partial payment or any partial
prepayment, whether mandatory or otherwise, amounts received shall first be
applied to accrued and unpaid interest and the remainder, if any, shall be
applied to the payment of outstanding principal, whereupon the principal balance
shall be reamortized, and all future Installment Payments due and payable
hereunder shall be recalculated accordingly. Notwithstanding the foregoing, in
the event that on a Payment Date any portion of the A Note, as defined in the
Asset Purchase Agreement, remains unpaid, the Mandatory Prepayment Amount due
hereunder shall be applied first to the repayment of the A Note, and the
remainder, if any, to this Note. All Installment Payments and Mandatory
Prepayment Amounts, and
1
<PAGE>
any voluntary prepayments, if any, made by the Maker under this Note shall be
recorded by the Payee on Schedule 1 attached hereto and made a part hereof.
Unless one or more prepayments are received hereunder, and so long as there is
not a default hereunder, each Installment Payment shall be in an amount equal to
$75,000; provided, however, that the final Installment Payment shall be in an
amount equal to all remaining outstanding principal and all accrued and unpaid
interest thereon. Upon its receipt of any payments hereunder, the Payee shall
provide the Maker with a copy of Schedule 1 reflecting all amounts paid and any
and all readjustments made to future Installment Payments. All unpaid principal
and accrued and unpaid interest shall be due and payable in full on February 24,
2012.
2. In the event that any payment hereunder is due on a day other than a
business day, such payment shall instead be due and payable on the next
succeeding business day. As used herein, the term "business day" means any day
other than either a Federal holiday or a day during which state or federally-
chartered banks located in Harris County, Texas are required by law to be
closed.
3. This Note, and all amounts due hereunder, may be prepaid, in whole or
in part, at Maker's option at any time and from time to time, without premium or
penalty, upon two days' prior written notice, and pursuant to the attached
schedule of payments.
4. In the event that there is a failure to pay when due any interest or
principal hereunder and such failure shall continue unremedied for a period of
thirty (30) days after receipt of written notice of such failure to pay (a
"default"), then Payee, without the necessity of further demand or presentment,
may accelerate and declare in a writing delivered to Maker the entire principal
balance of this Note then due and payable, together with any accrued interest
thereon, and may exercise any other remedy or remedies then available to it
hereunder or under law.
5. Maker hereby waives presentment for payment, demand, notice of
protest, and protest of this Note, as well as all other notices relating to this
Note, except as described in the immediately preceding paragraph. Payee shall
not by any act of omission or commission be deemed to waive any right or remedy
hereunder or under law, except such waiver as shall be in writing and signed by
Payee, and then only to the extent specifically set forth therein; a waiver as
to one event shall not be a bar to or waiver of any other right or remedy as to
a subsequent event.
6. All notices, requests, demands, waivers and other communications
required or permitted to be given under this document shall be in writing and
shall be deemed to have been duly given if delivered personally, if mailed
(certified or registered mail with postage prepaid) or if sent by
telecopier/facsimile as follows (or at such other address or telecopy/facsimile
number for a party as shall be specified by like notice):
2
<PAGE>
if to any Payee, at: if to Maker, at:
EET, Inc. Active Environmental Technologies, Inc.
4710 Bellaire Blvd., Suite 301 40 High Street, Suite 100
Bellaire, Texas 77401 Mount Holly, New Jersey 08060
Attention: President Attn: Michael A. Iles
Fax: (713) 662-3728 Fax: (609) 702-0265
7. This instrument and the rights and obligations hereunder shall
terminate upon the satisfaction in full of all obligations of Maker hereunder,
and upon such termination, Payee agrees to re-deliver this Note marked
"CANCELED" to Maker.
8. As security for the payment and performance of the obligations of
Maker under this Note, Maker has entered into and delivered to the Payee that
certain Collateral Assignment more particularly described in the Asset Purchase
Agreement. Upon the occurrence of a default, in addition to any other right or
remedy granted hereunder, under the Collateral Assignment or under law, the
Payee may, in accordance with the terms and provisions of the Collateral
Assignment, exercise, with reference to the Collateral described therein, any
and all rights and remedies of a secured party applicable to such Collateral,
including, without limitation, the right and power to realize upon the
Collateral at a public or private sale. In the event that the proceeds of any
such sale are insufficient to pay all amounts to which the Payee is legally
entitled, the Maker shall be liable for the deficiency.
9. It is the intention of Payee and Maker to comply with applicable usury
laws; accordingly, it is agreed that notwithstanding any provisions to the
contrary in this Note, in no event shall this Note require or permit the
payment, charge or receipt of interest, as defined under applicable usury laws,
in excess of the maximum amount permitted by such laws. If any such excess of
interest is contracted for, charged,
3
<PAGE>
taken, reserved or received under this Note, or if the maturity of the
indebtedness evidenced by this Note is accelerated in whole or in part, or in
the event that all or part of the principal of or interest on this Note shall be
prepaid, so that under any of such circumstances the amount of interest
contracted for, charged, taken, reserved or received under this Note on the
amount of principal actually outstanding from time to time under this Note shall
exceed the maximum amount of interest permitted by applicable usury laws, then
in any such event (a) the provisions of this Paragraph shall govern and control,
(b) neither Maker nor any other party now or hereafter liable for the payment of
this Note shall be obligated to pay the amount of such interest to the extent
that it is in excess of the maximum amount of interest permitted to be
contracted for by, charged to, taken, reserved or received from the party
obligated thereon under applicable usury laws, (c) any such excess which may
have been collected either shall be applied as a credit against the then unpaid
principal amount on this Note or refunded to the party paying the same, at the
holder's option, (d) any such excess which may have been charged shall be
canceled ab initio and be of no force or effect and (e) the effective rate of
interest shall be automatically reduced to the maximum lawful rate of interest
permitted under applicable usury laws as now or hereafter construed by the
courts having jurisdiction thereof. It is further agreed that, without
limitation of the foregoing, all calculations of the rate of interest contracted
for, charged, taken, reserved or received under this Note, which are made for
the purpose of determining whether such rate exceeds the maximum lawful rate of
interest shall be made, to the extent permitted by applicable usury laws, by
amortizing, prorating, allocating and spreading in equal parts during the period
of the full stated term of the indebtedness evidenced by this Note, all interest
at any time contracted for, charged or received from Maker or otherwise by the
holder or holders hereof in connection with this Note.
10. This Note shall be governed by and construed in accordance with the
laws of the state of Texas, without regard to the laws that might otherwise
govern under principles of conflicts of laws applicable thereto.
11. THE PARTIES AGREE THAT THE FEDERAL AND STATE COURTS LOCATED IN HARRIS
COUNTY, TEXAS SHALL HAVE NON-EXCLUSIVE JURISDICTION OVER AN ACTION BROUGHT TO
ENFORCE THE RIGHTS AND OBLIGATIONS CREATED IN OR ARISING FROM THIS NOTE, AND
EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE JURISDICTION OF SAID
COURTS. NOTWITHSTANDING THE ABOVE, APPLICATION MAY BE MADE BY A PARTY TO ANY
COURT OF COMPETENT JURISDICTION WHEREVER SITUATED FOR ENFORCEMENT OF ANY
JUDGMENT AND THE ENTRY OF WHATEVER ORDERS ARE NECESSARY FOR SUCH ENFORCEMENT.
12. This Note may be assigned by the Payee at any time without the prior
written consent of the Maker.
13. To the fullest extent permitted by applicable law and subject to the
conditions set forth in Section 6.4 of the Asset Purchase Agreement, the Maker
shall have the right to offset against this Note any indemnification amounts due
from Payee to the Maker pursuant to and in accordance with the terms of Section
6.1 of the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Note
effective as of the date first above written.
"MAKER" ACTIVE ENVIRONMENTAL
TECHNOLOGIES, INC.
By: ____________________________________
Name: ______________________________
As Its Authorized: _________________
"PAYEE" EET, INC.
By: ____________________________________
Name: ______________________________
As Its Authorized: _________________
4
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
ADJUSTED
INSTALLMENT MANDATORY AGGREGATE INSTALLMENT
PAYMENT PREPAYMENT PRINCIPAL PAYMENT
AMOUNT AMOUNT DATE OUTSTANDING AMOUNT
------ ------ ---- ----------- ------
<S> <C> <C> <C> <C>
- ----------- ------------ -------- ------------ -----------
- ----------- ------------ -------- ------------ -----------
- ----------- ------------ -------- ------------ -----------
- ----------- ------------ -------- ------------ -----------
- ----------- ------------ -------- ------------ -----------
- ----------- ------------ -------- ------------ -----------
</TABLE>
5
