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Exhibit 10.1
PROMISSORY NOTE
No. 1 November 13, 2003
FOR VALUE RECEIVED, the undersigned, ECOLOGY COATING, INC., a
California
corporation (the "Payor"), promises to pay to RICHARD D.
STROMBACK (together
with his successors and assigns, referred to as the "Payee"), in
the manner and
at the place provided in this Note the principal amount set
forth on Exhibit A,
which is the total of the various advances (the "Advances") that
the Payee has
made to the Payor under this Note. The outstanding principal
balance of this
Note shall be payable on December 31, 2007 (the "Maturity
Date").
ARTICLE 1
TERMS OF REPAYMENT
1.1 INTEREST. This Note shall bear interest ("Interest") equal
to four
percent (4%) per annum on the unpaid principal balance, computed
on a three
hundred sixty-five (365)-day year, during the term of the Note.
Interest will
accrue on each Advance commencing on the date of the Advance as
set forth in
Exhibit A to this Note. The Payor shall pay all Interest on or
before the
Maturity Date. In no event shall the rate of Interest payable on
this Note
exceed the maximum rate of interest permitted to be charged
under applicable
law.
1.2 PAYMENTS. All payments under this Note shall first be
credited against
costs and expenses provided for hereunder, second to the payment
of any
penalties, third to the payment of accrued and unpaid interest,
if any, and the
remainder shall be credited against principal. All payments due
hereunder shall
be payable in legal tender of the United States of America, and
in same day
funds delivered to the Payee by cashier's check, certified
check, or any other
means of guaranteed funds to the mailing address provided below,
or at such
other place as the Payee or any holder hereof shall designate in
writing for
such purpose from time to time. If a payment hereunder otherwise
would become
due and payable on a Saturday, Sunday or legal holiday, the due
date thereof
shall be extended to the next succeeding business day, and
Interest, if any,
shall be payable thereon during such extension.
1.3 VOLUNTARY PRE-PAYMENT. The Payor may voluntarily prepay this
Note in
whole or in part at any time without penalty.
1.4 MANDATORY PRE-PAYMENT. If Payor sells, or transfers in any
manner, all
or substantially all of its assets or merges into another
corporation, then all
amounts owed under this Note shall become immediately due and
payable.
1.5 EXEMPTION FROM RESTRICTIONS. It is the intent of the Payor
and the
Payee in the execution of this Note that the indebtedness
hereunder be exempt
from the restrictions of the usury laws of any applicable
jurisdiction. The
Payor and the Payee agree that none of the terms and provisions
contained herein
shall be construed to create a contract for the use, forbearance
or detention of
money requiring payment of interest at a rate in excess of the
maximum interest
rate permitted to be charged by the laws of any applicable
jurisdiction. In such
event, if any holder of
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this Note shall collect monies which are deemed to constitute
interest which
would otherwise increase the effective interest rate on this
Note to a rate in
excess of the maximum rate permitted to be charged by the laws
of any applicable
jurisdiction, all such sums deemed to constitute interest in
excess of such
maximum rate shall, at the option of such holder, be credited to
the payment of
the principal amount due hereunder or returned to the Payor.
1.6 UNSECURED NOTE. This Note is unsecured.
ARTICLE 2
COVENANTS
2.1 CONVERSION INTO COMMON STOCK. The Payor shall give the Payee
the option
to convert this Note, in whole or in part, into Common Stock of
the Payor under
terms acceptable to the Payor and the Payee at any point prior
to the Maturity
Date.
2.2 NOTICE OF DEFAULT. So long as any amount under this Note
shall remain
unpaid, the Payor will, unless the Payee otherwise consents in
writing, promptly
give written notice to the Payee in reasonable detail of the
occurrence of any
Event of Default, or any condition, event or act which with the
giving of notice
or the passage of time or both would constitute an Event of
Default.
ARTICLE 3
DEFAULT
3.1 EVENTS OF DEFAULT. Any of the following events shall
constitute an
"Event of Default" hereunder:
3.1.1 Failure by the Payor to pay the principal or Interest, if
any,
of this Note when due and payable on any Payment Date or on the
Maturity Date,
which failure continues for a period of thirty (30) days after
written notice of
default has been given by the Payee to the Payor; or
3.1.2 The entry of an order for relief under Federal Bankruptcy
Code
as to the Payor or approving a petition in reorganization or
other similar
relief under bankruptcy or similar laws in the United States of
America or any
other competent jurisdiction, and if such order, if involuntary,
is not
satisfied or withdrawn within sixty (60) days after entry
thereof; or the fil
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