EXHIBIT 10.1
------------
COMMERCIAL LOAN AND SECURITY AGREEMENT
--------------------------------------
THIS IS A COMMERCIAL LOAN AND SECURITY AGREEMENT dated as of the
16th day of May, 2005 by and among
NEWALLIANCE BANK
a Connecticut banking corporation
with a place of business at
000 Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxxx 00000 ("Lender")
and
CAS MEDICAL SYSTEMS, INC.
a Delaware corporation
with a place of business at
00 Xxxx Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("Borrower")
and
STATCORP, INC.
a Delaware corporation
with a place of business at
00000 Xxxxx Xxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxxx, Xxxxxxx 00000 ("Guarantor")
RECITALS
WHEREAS, Borrower and Guarantor have entered into a certain Stock
Purchase Agreement dated as of May 15, 2005, wherein the Borrower has agreed to
purchase and acquire all the issued and outstanding stock of Guarantor; and
WHEREAS, Lender has agreed to finance the acquisition of Guarantor
by Borrower with a certain term loan in the original principal amount of Four
Million Two Hundred Thousand and 00/100 ($4,200,000.00) Dollars of even date
herewith, all pursuant to the terms of a note of even date herewith (the
"Note"), a copy of which is attached hereto as Schedule A.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS (reference being hereby
made to Appendix I appended hereto for the definition of certain capitalized
terms used herein):
SECTION 1. LOAN; INTEREST; SECURITY INTERESTS; FINANCING STATEMENTS;
---------------------------------------------------------
COLLATERAL; STOCK PLEDGE.
-------------------------
1.1 The Loan. Subject to all of the terms and conditions of this
Agreement:
(A) Term Loan. Lender hereby agrees to lend to Borrower and
Borrower hereby borrows from Lender the sum of $4,200,000.00 as a term loan (the
"Loan"), which Loan is payable in equal monthly payments of principal and
interest commencing July 1, 2005, each in
1
the amount of $61,533.03, continuing on the first (1st) day of each month
thereafter through May 1, 2012, and a final payment of $61,532.07 shall be paid
on the Maturity Date, when the entire unpaid balance of the Loan, together with
all accrued and unpaid interest, shall be due and payable, (all as more
particularly set forth in the Note).
1.2 Interest.
All outstanding amounts under the Loan shall bear interest at
a rate per annum equal to six (6.0%) percentage per annum.
1.3 Payment. Principal and interest on the Loan shall be payable
by Borrower monthly on the first (1 st) day of each calendar month. Interest on
the Loan shall be computed on a basis of a three hundred sixty (360) day year
for the actual number of days elapsed.
1.4 Prepayment. The Loan may be paid at any time without the
imposition of any prepayment fee or penalty.
1.5 Guaranty. The Loan shall be jointly, severally and
unconditionally guaranteed by the Guarantor.
1.6 Security Interests.
(A) As security for the payment of the Loan and the Guaranty,
and the performance by Borrower and Guarantor of all of their respective
obligations under this Agreement and the other Loan Documents, Borrower and
Guarantor hereby mortgage, pledge and assign to Lender, and give and grant to
Lender, a security interest in all of its personal property and fixtures,
including, without limitation, all right, title and interest in and to the items
and types of property, described or referred to below, whether now owned or
hereafter acquired, and the proceeds and products thereof (all of which property
is herein collectively called the "Collateral") which security interests are and
shall remain first and prior and which Collateral shall remain free and clear of
all mortgages, pledges, security interests, liens and other encumbrances and
restrictions on the transfer thereof, except for the Permitted Liens as
specifically set forth in Schedule B attached.
(i) Accounts;
(ii) Certified Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights
with respect thereto, including without
limitation, all licenses, options, warranties,.
service contracts, program services, test rights,
maintenance rights, support rights, improvement
rights, renewal rights and indemnifications, and
any substitutions, replacements, additions or
model conversion of any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Equipment;
2
(ix) Financial Assets;
(x) Fixtures;
(xi) General Intangibles, including without limitation
Payment Intangibles and Software;
(xii) Goods (including without limitation all of its
Equipment, Fixtures and Inventory), and all
accessions, additions, attachments, improvements,
substitutions and replacements thereto and
therefor;
(xiii) Instruments;
(xiv) Intellectual Property;
(xv) Inventory;
(xvi) Investment Property;
(xvii) Money (of every jurisdiction whatsoever);
(xviii) Letter of Credit Rights;
(xix) Payment Intangibles;
(xx) Security Entitlements;
(xxi) Supporting Obligations;
(xxii) Uncertificated Securities; and
(xxiii) To the extent not included in the foregoing, all
other personal property of any kind or
description;
together with books, records, writings, data bases, information and other
property relating to, used and useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided that to the extent that the provisions of any lease or
license of Computer Hardware and Software or Intellectual Property expressly
prohibit (which prohibition is enforceable under applicable law) any assignment
thereof, and the grant of a security interest therein, Lender will not enforce
its security interest in any of Borrower's or Guarantor's rights under such
lease or license (other than in respect to the Proceeds thereof) for so long as
such prohibition continues, it being understood that upon request of Lender,
Borrower and Guarantor will in good faith use reasonable efforts to obtain
consent for the creation of a security interest in favor of Lender (and to
Lender's enforcement of such security interest in favor of Lender) in each
Borrower's and Guarantor's rights under such lease or license.
(B) The Loan will be further secured by a second mortgage (the
"Mortgage") and a Collateral Assignment of Leases and Rentals (the "Collateral
Assignment") on the Borrower's fee interest in the real property known as 00
Xxxx Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx, all as more particularly described
on Schedule C attached hereto (the "Mortgaged Property"). The Mortgaged Property
is subject to no prior security interest or lien except as disclosed on Schedule
B-1 to the title insurance policy issued this date to Bank insuring the priority
of the Mortgage. Such liens (if any) together with extension, substitutions,
replacements thereof are hereafter referred to as the "Permitted Liens". The
Mortgage and Collateral Assignment shall be executed by Borrower at the time of
closing and shall be in form and substance satisfactory to Bank.
3
1.7 Lien Perfection: Further Assurances. Borrower and Guarantor
shall execute such UCC-1 financing statements as are required by the Code and
such other instruments, assignments or documents as are necessary to perfect
Lender's lien upon any of the Collateral and shall take such other action as may
be required to perfect or to continue the perfection of Lender's lien upon the
Collateral. Unless prohibited by applicable law, Borrower and Guarantor hereby
authorize Lender to file any such financing statements, including, without
limitation, financing statements that indicate the Collateral (i) as "all assets
of the Borrower or Guarantor" or words of similar effect, or (ii) as being of an
equal or lesser scope, or with greater or lesser detail, than as set forth in
Section 1.6, on the Borrower's and Guarantor's behalf. The Borrower and the
Guarantor also hereby ratify their authorization for Lender to have filed in any
jurisdiction any like financing statements or amendments thereto if filed prior
to the date hereof. The parties agree that a photographic or other reproduction
of this Agreement shall be sufficient as a financing statement and may be filed
in any appropriate office in lieu thereof. At Lender's request, the Borrower and
the Guarantor shall also promptly execute or cause to be executed and shall
deliver to Lender any and all documents, instruments and agreements deemed
necessary by Lender to give effect to or to carry out the terms or intent of the
Documents.
(A) Other Actions. Further to insure the attachment,
perfection and first priority of (subject to Permitted Liens), and the ability
of the Lender to enforce the Lender's security interest in the Collateral, the
Borrower and Guarantor each agree, in each case and at the Borrower's or
Guarantor's expense, to take the following action with respect to the following
Collateral:
(i) Promissory Note and Tangible Chattel Paper. If
either the Borrower or the Guarantor shall, now or at any time hereafter, hold
or acquire any promissory notes or Tangible Chattel Paper, the Borrower or
Guarantor, as the case may be, shall advise Lender, in writing, of the existence
of such promissory notes or tangible chattel paper, and at the Lender's request
and option, shall forthwith endorse, assign and deliver the same to the Lender,
accompanied by such instruments of transfer or assignment duly executed in blank
as the Lender may from time to time specify.
(ii) Deposit Accounts. For each Deposit Account that
Borrower or Guarantor at any time opens or maintains, each Borrower and the
Guarantor shall, at the Lender's request and option, pursuant to an agreement in
form and substance satisfactory to the Lender, either (a) cause the depositary
bank to agree to comply, without further consent of the Borrower or the
Guarantor, at any time with instructions from the Lender to such depositary bank
directing the disposition of funds from time to time credited to such Deposit
Account, or (b) arrange for the Lender to become the customer of the depositary
bank with respect to the Deposit Account, with the Borrower and Guarantor being
permitted, only with the consent of the Lender, to exercise rights to withdraw
funds from such Deposit Account. The Lender agrees with the Borrower and
Guarantor that the Lender shall not give any such instructions or withhold any
withdrawal rights from the Borrower or the Guarantor, unless a Default or Event
of Default has occurred and is continuing. The provisions of this paragraph
shall not apply to (i) any Deposit Account for which the Borrower or the
Guarantor, the depositary bank and the Lender have entered into a cash
collateral agreement specially negotiated among the Borrower or the Guarantor,
the depositary bank and the Lender for the specific purpose set forth therein,
(ii) a
4
deposit account for which the Lender is the depositary bank and is in automatic
control, and (iii) any Deposit Accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of the Borrower's or Guarantor's employees.
(iii) Investment Property. If the Borrower or the
Guarantor shall at any time hold or acquire any Certificated Securities, the
Borrower or the Guarantor shall advise Lender, in writing, of the existence of
such certificated securities, and at the Lender's request and option, forthwith
endorse, assign and deliver the same to the Lender, accompanied by such
instruments of transfer or assignment duly executed in blank as the Lender may
from time to time specify. If the Borrower or the Guarantor shall at any time
hold or acquire any Uncertificated Securities directly by the issuer thereof,
the Borrower or the Guarantor shall immediately notify the Lender thereof and,
at the Lender's request and option, pursuant to an agreement in form and
substance satisfactory to the Lender, either (a) cause the issuer to agree to
comply, without further consent of the Borrower or the Guarantor or such
nominee, at any time with instructions from the Lender as to such Uncertificated
Securities, or (b) arrange for the Lender to become the registered owner of the
Uncertificated Securities. If any Certificated Securities or Uncertificated
Securities or other Investment Property now or hereafter acquired by the
Borrower or the Guarantor are held by the Borrower or the Guarantor or their
nominee through a securities intermediary or commodity intermediary, the
Borrower or the Guarantor shall immediately notify the Lender thereof and, at
the Lender's request and option, pursuant to an agreement in form and substance
satisfactory to the Lender, either (i) cause such securities intermediary or (as
the case may be) commodity intermediary to agree to comply, in each case without
further consent of the Borrower or the Guarantor or such nominee, at any time,
with entitlement orders or other instructions from the Lender to such securities
intermediary as to such Certificated Securities or Uncertificated Securities or
other Investment Property, or (as the case may be) to apply any value
distributed on account of any commodity contract as directed by the Lender to
such commodity intermediary, or (ii) in the case of Financial Assets or other
Investment Property held through a securities intermediary, arrange for the
Lender to become the entitlement holder with respect to such Investment
Property, with the Borrower or the Guarantor being permitted, only with the
consent of the Lender, to exercise rights to withdraw or otherwise deal with
such investment property. The Lender agrees with the Borrower or the Guarantor
that the Lender shall not give any such entitlement orders or instructions or
directions to any such issuer, securities intermediary or commodity
intermediary, and shall not withhold its consent to the exercise of any
withdrawal or dealing rights by the Borrower or the Guarantor, unless a Default
or Event of Default has occurred and is continuing, or after giving effect to
any such investment and withdrawal rights not otherwise permitted by this
Agreement, would occur. The provisions of this paragraph shall not apply to any
Financial Assets credited to a securities account for which the Lender is the
securities intermediary. Notwithstanding the foregoing, and in furtherance
thereof, Borrower has this date entered into a Pledge Agreement of all of the
issued and outstanding stock of Guarantor, and has endorsed, assigned and
delivered to Lender such stock accompanied by duly executed stock powers in
blank as are necessary to pledge such stock to Lender.
(iv) Collateral in the Possession of a Bailee. If any
Collateral is at any time in the possession of a bailee, the Borrower or the
Guarantor shall promptly notify
5
the Lender thereof and, at the Lender's request and option, shall promptly
obtain an acknowledgment from the bailee, in form and substance satisfactory to
the Lender, that the bailee holds such Collateral for the benefit of the Lender
and such bailee's agreement to comply without further consent of the Entities,
at any time with instructions of the Lender as to such Collateral. The Lender
agrees with the Borrower or the Guarantor that the Lender shall not give any
such instructions unless a Default or Event of Default has occurred and is
continuing or would occur after taking into account any action by the Borrower
or the Guarantor with respect to the bailee.
(v) Electronic Chattel Paper and Transferable
Records. If the Borrower or the Guarantor at any time holds or acquires an
interest in any Electronic Chattel Paper or any "transferable record", as that
term is defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act (the "Electronic Signatures Act"), or in Section 16 of
the Uniform Electronic Transactions Act ("UETA") as in effect in any relevant
jurisdiction, the Borrower or the Guarantor shall promptly notify the Lender
thereof and, at the request and option. of the Lender, shall take such action as
the Lender may reasonably request to vest in the Lender control, under Section
9-105 of the Code, of such Electronic Chattel Paper or control under Section 201
of the Electronic Signatures Act or, as the case may be, Section 16 of UETA, as
so in effect in such jurisdiction, of such transferable record. The Lender
agrees with the Borrower or the Guarantor that the Lender will arrange, pursuant
to procedures satisfactory to the Lender and so long as such procedures will not
result in the Lender's loss of control, for the Borrower or the Guarantor to
make alterations to the Electronic Chattel Paper or transferable record
permitted under said Section 9-105 or, as the case may be, Section 201 of the
Electronic Signatures Act or Section 16 of the UETA for a party in control to
make without loss of control, unless a Default or Event of Default has occurred
and is continuing or would occur after taking into account any action by the
Borrowers or the Guarantor with respect to such Electronic Chattel Paper or
transferable record.
(vi) Letter-of-Credit Rights. If the Borrower or the
Guarantor are at any time a beneficiary of any Letter of Credit Rights now or
hereafter, the Borrower or the Guarantor shall promptly notify the Lender
thereof and, at the request and option of the Lender, the Borrower or the
Guarantor shall, pursuant to an agreement in form and substance satisfactory to
the Lender, either (a) arrange for the issuer and any confirmer or other
nominated person of such Letter of Credit Rights to consent to an assignment to
the Lender of the proceeds of the letter of credit evidencing the Letter of
Credit Rights or (b) arrange for the Lender to become the transferee beneficiary
of the Letter of Credit Rights.
(vii) Commercial Tort Claims. If the Borrower or the
Guarantor shall, now or at any time hereafter, hold or acquire a Commercial Tort
Claim, the Borrower or the Guarantor shall immediately notify the Lender in a
writing signed by the Borrower or the Guarantor of the particulars thereof and
grant to the Lender in such writing a security interest therein and in the
proceeds thereof, with such writing to be in form and substance satisfactory to
the Lender, and do such other acts or things deemed appropriated by Lender to
give Lender a security interest in any such Commercial Tort Claim.
(viii) Other Actions as to any and all Collateral. The
Borrower or the Guarantor further agree, upon reasonable request of the Lender
and at the Lender's option, to
6
take any and all other action as the Lender may determine to be necessary or
useful for the attachment, perfection and first priority of, and the ability of
the Lender to enforce, the Lender's security interest in any and all of the
Collateral, including, without limitation (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under
the Code, to the extent, if any, that the Borrower's or Guarantor's signature
thereon is required therefor, (b) causing the Lender's name to be noted as
secured party on any certificate of title for a titled good if such notation is
a condition to attachment, perfection or priority of, or ability of the Lender
to enforce, the Lender's security interest in such Collateral, (c) complying
with any provision of any statute, regulation or treaty of the United States as
to any Collateral if compliance with such provision is a condition to
attachment, perfection or priority of, or ability of the Lender to enforce, the
Lender's security interest in such Collateral, (d) obtaining governmental and
other third party waivers, consents and approvals in form and substance
satisfactory to the Lender, including, without limitation, any consent of any
licensor, lessor or other person obligated on the Collateral, (e) obtaining
waivers from mortgagees and landlords in form and substance satisfactory to the
Lender and (f) taking all actions under any earlier versions of the Code or
under any other law, as reasonably determined by the Lender to be applicable in
any relevant Uniform Commercial Code or other jurisdiction, including any
foreign jurisdiction.
(B) Lender's Obligations and Duties. Anything herein to the
contrary notwithstanding, Borrower and Guarantor shall remain obligated and
liable under each contract or agreement comprised in the Collateral to be
observed or performed by Borrower and Guarantor thereunder. The Lender shall not
have any obligation or liability under any such contract or agreement by reason
of or arising out of this Agreement or the receipt by the Lender of any payment
relating to any of the Collateral, nor shall the Lender be obligated in any
manner to perform any of the obligations of the Borrower or the Guarantor under
or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Lender in respect of the
Collateral or as to the sufficiency of any performance by any party under any
such contract or agreement, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have
been assigned to the lender or to which the Lender may be entitled at any time
or times. The Lender's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with such Collateral in the same
manner as the Lender deals with similar property for its own account.
1.8 Collateral Assignments of Leases.
(A) Guarantor shall deliver to Lender a collateral assignment
of their respective interest as tenant respecting each Lease to which they are a
party, each such assignment to be consented to by the Landlord thereunder. =
1.9 Insurance.
(A) Borrower and Guarantor shall maintain, with insurers
satisfactory to Lender, insurance with respect to the Collateral owned by it or
in which it has an interest and its
7
other properties and business against loss or damage to the extent that property
of similar character is usually so insured by other companies engaged in a
similar business, including without limitation the coverage described on
Schedule G. Borrower and the Guarantor shall pay the premiums of such insurance
promptly. Without limiting the foregoing, such insurance must include:
(i) public and product liability insurance in such
amounts and covering such risks, as Lender may require,
(ii) all worker's compensation and other employees'
liability insurance as may be required by law,
(iii) insurance with respect to items of the Collateral
constituting tangible personal property and fixtures, and with respect to its
other properties both real and personal, including, without limitation, the
Borrower's and the Guarantor's business premises, to the full extent of the
insurable value thereof, and including All Risk coverage (so-called) covering
such other risks, as Lender may require, and
(iv) business interruption insurance in amounts
sufficient to cover the reasonable needs of the Borrower's or Guarantor's
business during periods of partial or complete interruption of any of the
Borrower's or Guarantor's business.
(B) All of Borrower's or the Guarantor's property insurance
policies, whether with respect to items of the Collateral or otherwise, must
contain loss payable and/or mortgagee clauses in form and substance satisfactory
to Lender, naming Lender as loss payee and/or mortgagee, and providing:
(i) that all proceeds thereunder shall be payable
directly to Lender,
(ii) that such insurance shall not be affected by any
act or neglect of the insured or owner of the property described in said policy,
and
(iii) that such policy and loss payable clause may not
be cancelled, amended or terminated (including, without limitation, for
non-payment of premium) unless at least thirty (30) days prior written notice
thereof has been given to Lender.
(C) Borrower and the Guarantor shall furnish evidence
satisfactory to Lender confirming to Lender the insurance at the time in force
pursuant to this Section specifying the amount and character of coverage,
identifying the insurers and certifying as to no default in the payment of
current premiums thereon and will furnish Lender with original or duplicate
original copies of all policies. With respect to claims under any such policies:
(i) Borrower and the Guarantor shall notify Lender
immediately of any material loss giving rise to such claim,
8
(ii) Borrower and the Guarantor shall immediately file
all proofs of claim with respect thereto, and
(iii) no settlement in excess of $50,000 shall be
entered into by the Borrower or the Guarantor without the consent of Lender, in
its discretion.
(D) All insurance proceeds in excess of $50,000 received by
Lender may, in Lender's sole discretion, (i) be retained by Lender for
application to the payment of any of the principal, whether, or not due, or
interest or such other obligation or Indebtedness which constitutes all or any
part of the Loan as well as any expenses relating thereto as Lender may
determine, in its sole discretion or (ii) be re-advanced for the purpose of
replacing or restoring the Collateral, in a manner and on terms satisfactory to
Lender. Notwithstanding the foregoing, Lender shall have no liability or
obligation with respect to such insurance or the maintenance or adequacy
thereof. Borrower shall be entitled to retain all insurance proceeds less than
or equal to $50,000.
If Lender chooses to re-advance the insurance proceeds to restore or
replace the Collateral, Lender may advance such insurance proceeds as the work
progresses and may require, as a condition to each advance, the submission of
invoices and other documentation so as to justify the need for and amount of
such advance. Any excess proceeds after such repairs or restorations are
completed shall be retained by Lender for application against the Loans.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS.
------------------------------------------
Borrower and Guarantor represent and warrant to and covenant with
Lender as of the date hereof, except as set forth on Schedule E attached hereto:
2.1 Organization, Charter, Laws and Capitalization.
(A) The Borrower and the Guarantor are duly organized and
validly existing corporations under the laws of the State of Delaware and each
is qualified and in good standing in all states in which each is doing business.
(B) The execution, delivery and performance of this Agreement
are within Borrower's and Guarantor's corporate powers, have been duly
authorized, are not in contravention of any law or any terms of Borrower's or
Guarantor's charter or by-laws or other incorporation papers or any agreement or
undertaking to which Borrower or Guarantor are a party.
(C) Except for Borrower's ownership of all of the issued and
outstanding stock of Guarantor, Borrower owns no stock or an ownership interest
of any other business entity. Borrower may acquire a minority ownership position
in any other entity, provided such investment does not exceed $100,000.
(D) All of the Borrower's and Guarantor's issued and
outstanding stock is duly authorized, validly issued, fully paid and
non-assessable.
9
(E) The financial statements presented by the Borrower and
the Guarantor to Lender are true, complete and correct and fairly present in all
material respects the financial condition of the Borrower and the Guarantor as
of the date of such statements and the results of their operations for the
period then ended. There has been no material adverse change to any of
Borrower's or Guarantor's financial condition since the date of such financial
statements.
(F) Neither Borrower nor Guarantor has, within five (5)
years, of the date hereof changed its name or been a party to any merger or
consolidation. Borrower and Guarantor shall give Lender thirty (30) days prior
written notice of any change of name or any new trade or fictitious name.
2.2 Collateral, Claims, Actions, Place of Business, Mortgaged
Property, etc.
(A) Except pursuant to this Agreement and as set forth on
Schedule E, no financing statement has been filed with respect to any Collateral
or any of the Borrower's or Guarantor's assets.
(B) The Borrower and the Guarantor each have good and
sufficient title to their respective Collateral.
(C) Except for the Permitted Liens as set forth on Schedule
B, neither the Collateral nor any other asset of the Borrower or the Guarantor
will be permitted to be, in any respect, encumbered other than by this security
interest (and same will be true of Collateral acquired hereafter when acquired).
(D) To the best of Borrower's and Guarantor's knowledge, and
except in the ordinary course of business, Collateral which are Accounts are
bona fide.
(E) All state and federal tax returns have been properly
completed and filed and all required taxes and assessments have been paid
through the date hereof for Borrower and Guarantor. No claims have been asserted
by any governmental authority and no audits or notices of audits are pending.
Borrower's and Guarantor's chief place of business is the address shown above
and Borrower and Guarantor shall give Lender at least sixty (60) days prior
written notice of any change.
(F) Except as set forth on Schedule E, the Collateral and
business records pertaining to the Collateral and Loans, including those
pertaining to all accounts and contract rights, shall be kept at the above
address of the Borrower and Guarantor unless prior written notice to Lender to a
change of location is given.
(G) Other than pursuant to this Agreement and as set forth in
Schedule E, neither the Borrower or the Guarantor have any other indebtedness or
contingent liabilities, except for accounts payable incurred in the ordinary
course of Borrower's or Guarantor's business;
10
(H) The Borrower and the Guarantor are not in default of any
material agreement to which they are a party or to the best of their knowledge
to any decree, law or order by which they are bound, including without
limitation those relating to the environment.
(I) No litigation, suits or actions are pending or to the
best of their knowledge threatened against the Borrower or the Guarantor.
(J) Borrower and Guarantor each hold all necessary material
licenses, consents (governmental or otherwise), patents, trademarks and all
other intellectual property rights as are necessary to enable Borrower and
Guarantor to conduct their business as presently conducted and as contemplated.
(K) Borrower and Guarantor hold the property, casualty and
liability insurance described in Section 1.9 above and all amounts due
thereunder or with respect thereto have been paid.
(L) Borrower and Guarantor perform no work on any contracts
for the United States government or any agency or subdivision thereof.
(M) Except as set forth on Schedule E, none of Borrower's or
Guarantor's material Equipment was purchased as used equipment.
(N) Except as set forth on Schedule E, none of Borrower's or
Guarantor's Equipment has been moved to its present location within the past
four (4) months.
(O) Except as set forth on Schedule E, none of any Borrower's
or Guarantor's Inventory is stored in any warehouse that is not owned or leased
in total by Borrower or Guarantor.
(P) Except as set forth on Schedule E, no Borrower or
Guarantor are subject to any payment or performance bonds.
(Q) Borrower and the Guarantor are in material compliance
with all laws, ordinances, rules and regulations, including without limitation
ERISA, OSHA, all state and federal environmental laws and those of the Internal
Revenue Service.
(R) Except as set forth on Schedule E, no Borrower or
Guarantor nor Guarantor's shareholders are a party to any written shareholder
agreement, voting trust, voting agreement, purchase agreement or the like.
(S) Each of Borrower and Guarantor, after giving effect to
the transactions described herein, are solvent and anticipate that they will be
able to meet their debts as they mature and has adequate capital to conduct the
business in which they are engaged and are about to engage.
11
(T) To the best of the knowledge and belief of Borrower, no
proceedings have been threatened or commenced by any authority having the power
of eminent domain to condemn any part of the Property.
(U) (a) The Mortgaged Property and the uses made thereof
comply with all applicable restrictive covenants, zoning ordinances and building
codes, all applicable health and environmental laws and regulations, and all
other applicable laws, rules and regulations; (b) all permits, licenses and
approvals necessary to erect improvements on the Mortgaged Property have been
issued and are presently in effect; (c) the Mortgaged Property is within all
applicable environmental and safety standards; (d) no notice has been received
from any federal, state or municipal regulatory authority or agency in
connection with any claimed violation of any of the aforesaid; (e) Borrower is
the only tenant or occupant of the Mortgaged Property.
2.3 Payments. Borrower and Guarantor shall:
(A) pay punctually the Loan, when due, as required by the
terms of the Note, in U.S. Dollars and at its address shown above;
(B) pay on demand any and all charges customarily levied or
incurred by Lender;
(C) pay before due any and all taxes, assessments and/or
charges of every kind or description levied or assessed against any Borrower or
any of its assets;
(D) pay all insurance premiums before the same are due;
(E) maintain all of its main operating accounts with Lender.
(F) pay any and all costs and expenses (whether taxes,
assessments, insurance premiums or otherwise) required to be paid by Borrower
under any of the Loan Documents which are paid or advanced by Lender: filing,
recording, publication, appraisal and search fees paid or incurred by Lender in
connection with Lender's transactions with Borrower or Guarantor, reasonable
costs and expenses incurred by Lender in the disbursement or collection of funds
to or from Borrower or Guarantor, charges resulting from the dishonor of checks;
reasonable costs and expenses incurred by Lender to correct any default or
enforce any provision of the Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale or advertising to sell the Collateral, or any portion thereof, irrespective
of whether a sale is consummated; and reasonable costs and expenses incurred by
Lender in enforcing or defending the Loan Documents, including, but not limited
to, costs and expenses incurred in connection with any proceeding, suit,
enforcement or judgment, or appeal; and Lender's reasonable attorney's fees and
expenses incurred in advising, structuring, drafting, reviewing, administering,
amending, terminating, enforcing, defending, or otherwise representing Lender
concerning the Loan Documents or the Obligations.
2.4 Preservation of Collateral. Borrower and Guarantor shall:
12
(A) preserve the Collateral in good condition and order
(ordinary wear and tear excepted) and not permit it to be abused or misused;
(B) defend the Collateral against all claims and demands of
all Persons other than Lender;
(C) not allow any Collateral to be affixed to real estate;
(D) not allow any Collateral nor any interest therein to be
sold, leased or in any way transferred, except Inventory in the ordinary course
of the Borrower's or Guarantor's business and obsolete Equipment and Inventory;
(E) until receiving contrary instructions from Lender as may
be permitted under the terms of this Agreement, collect its Accounts, contract
rights, chattel paper and other debts in the ordinary course of business;
(F) upon request of Lender as may be permitted under the
terms of this Agreement, pay or deliver all proceeds of Accounts and all
proceeds of Inventory to Lender immediately upon receipt in the identical form
received without co-mingling with other property;
(G) when and to the extent required by Lender as may be
permitted under the terms of this Agreement, notify account debtors and obligors
that their Accounts, contract rights, instruments, documents or chattel paper
have been assigned to Lender and shall be paid directly to Lender;
(H) take necessary steps to preserve the liability to the
Borrower and the Guarantor of their account debtors, except in the ordinary
course of business;
(I) take any action reasonably required by Lender with
reference to the Federal Assignment of Claims Act;
(J) during regular business hours of Borrower and Guarantor
and upon reasonable notice, allow Lender to inspect any of the Borrower's or
Guarantor's properties or offices and to inspect the Collateral and copy all
records relating to the Collateral and Loan and to conduct audits of Collateral
levels and to inspect Borrower's and Guarantor's books and records at such
intervals as Lender shall require and shall pay all costs associated with such
inspections if an Event of Default or Default has occurred and is continuing or
if a Default or Event of Default is discovered during said inspection;
(K) transfer possession of and assign all instruments,
documents and chattel paper, which are part of the Collateral, to Lender,
immediately upon request as may be permitted under the terms of this Agreement;
(L) perfect a security interest (using a method reasonably
satisfactory to Lender) in goods covered by any instrument, document or chattel
paper in the Collateral;
13
(M) notify Lender of any material change occurring in or to
Collateral or any material adverse change to its business or prospects, or in
any material fact or circumstance warranted or represented by Borrowers herein,
or furnished to Lender, or if any Default or Event of Default occurs;
(N) pay all costs required under the terms of this Agreement
that are necessary to perform any act or duty required by this Agreement,
including, but not limited to, attorneys' fees, insurance premiums, taxes and
assessments;
(O) maintain such insurance as is required by Lender under
Paragraph 1.9 hereof naming Lender as Loss Payee and/or Additional Insured; and
(P) maintain compliance in all material respects with all
Environmental Laws, including without limitation the disposition of Hazardous
Substances; and
(Q) maintain compliance with all laws, ordinances, rules and
regulations of any governmental authority or subdivision, including without
limitation all usury laws; and
(R) upon request by Lender as may be permitted under the
terms of this Agreement, sign or allow Lender to sign any papers necessary to
obtain, preserve, enforce and liquidate this security interest in any
jurisdiction and during the existence of a Default or Event of Default, Borrower
and Guarantor hereby appoints Lender its agent and attorney-in-fact, irrevocable
as coupled with an interest, for such purpose.
2.5 Restrictions. Borrower and Guarantor shall not:
(A) Except for Permitted Liens, suffer to exist any liens on
any of its assets except in favor of Lender nor agree to pledge and/or xxxxx x
xxxx or security interest in any of its assets with any party other than Lender;
(B) merge, consolidate or dispose of any material asset,
except Inventory, in the ordinary course and Inventory and Equipment that is
obsolete;
(C) suffer to exist any Indebtedness , except for
Indebtedness to Lender and for Indebtedness secured by any Permitted Liens, the
Indebtedness described on Schedule E and payables incurred in the ordinary
course of Borrowers' business;
(D) make any loans or advances except in the ordinary course
of business to anyone in excess of $10,000.00 in the aggregate;
(E) suffer to exist any litigation against it or any of its
material assets except if such litigation is adequately insured against or if
Borrower believes that there is a good defense and adequate reserves are set
aside on the books and records of the Borrowers;
(F) except as described on Schedule G or as otherwise
permitted hereunder, cause to exist any Subsidiary or Affiliate or engage in any
transaction with any related Person;
14
(G) with respect to ERISA, engage in any "prohibited
transaction", incur any "accumulated funding deficiency", terminate any pension
plan so as to create any lien on any asset of any Borrower or Guarantor, or
otherwise not be in full compliance;
(H) except as described on Schedule E, guarantee or otherwise
assure any obligation of any other party;
(I) enter into any real property or personal property lease
outside the ordinary course of business or enter into any real property lease
having an annual rental in excess of $100,000.00 or a personal property lease
having an annual rental in excess of $30,000.00;
(J) declare or pay any dividends or distributions;
(K) purchase any securities (other than the stock of
Guarantor) issued by, or otherwise invest in, any publicly or privately held
entity in an amount exceeding $100,000.00 without prior written approval of
Lender except to purchase Certificates of Deposit issued by any lending
institution having a net worth of at least $50,000,000.00 or other short term
investments offered by Lender;
(L) except as described on Schedule E or otherwise permitted
in (K) above, create or participate in the creation of any partnership, joint
venture, corporation, limited liability company or other entity (including, but
not limited to, any Subsidiaries) or engage in any business other than the
business presently conducted by it;
(M) suffer any change in executive management, unless such
executive is replaced with a person of similar experience;
(N) redeem or cause the redemption of a material portion of
its shares;
(O) make payments on any other Indebtedness owing by it
before the same is due.
(P) suffer to exist any judgment against it or any of its
assets that is not subject to a mandatory stay pending appeal;
2.6 Accounting; Financial Statements and Other Information.
Borrower shall maintain a system of accounts established and administered in
accordance with GAAP and practices consistently applied. Borrower and Guarantor
shall deliver or cause to be delivered to Lender:
(A) Financial Reports.
(i) As soon as available and in any event within
forty-five (45) days after the end of each Fiscal Quarter, a balance sheet of
the Borrower and the Guarantor, in consolidating and consolidated form, as of
the end of such period, and a statement of income and
15
retained earnings of the Borrower and Guarantor, in consolidating and
consolidated form, for the period commencing at the end of the previous Fiscal
Year and ending with the end of such period, all in reasonable detail, and duly
certified by the Chief Financial Officer of the Borrower and the Guarantor as
having been prepared in accordance with GAAP and fairly presenting the financial
position and results of operations of the Borrower and Guarantor for such
period, together with a statement of such individual preparing such statements
to the effect that in the course of the preparation of such statements said
individual has gained no knowledge that a Default or Event of Default has
occurred and is continuing or, if, in the opinion of said individual, a Default
or Event of Default has occurred and is continuing, a statement as to the nature
thereof and the action which the Borrower or the Guarantor proposes to take with
respect thereto (the provision for such a statement herein shall in no way be
construed as a consent to the existence of such an Event nor the granting of
time to cure). Borrower shall also provide to Lender a copy of its SEC 10-Q
filing together with the foregoing financial information (unless such filing has
been properly extended, in which case a copy of the same shall be provided
within fifteen days of filing).
(ii) As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year of the Borrower and the
Guarantor, a copy of the. annual unqualified audited report for such year for
the Borrower and the Guarantor, including therein, a balance sheet of the
Borrower and the Guarantor as of the end of such Fiscal Year and a statement of
income, retained earnings and statement of changes in financial position of the
Borrower and the Guarantor for such Fiscal Year, in each case on a consolidated
and consolidating basis, and on a consolidated basis, in each case as to such
consolidated statements "Certified" by a firm of independent certified public
accountants selected by the Borrower and the Guarantor but acceptable to Lender
such acceptance by Lender not to be unreasonably withheld Borrower shall also
provide to Lender a copy of its SEC 10-K filing, together with the foregoing
financial information (unless filing has been extended, in which case, a copy of
the same shall be provided within fifteen days of filing).
(iii) Such other data and information (financial and
otherwise) bearing upon or related to Borrower's and Guarantor's financial
condition, results of operations or assets, as Lender from time to time may
reasonably request.
(B) Account's Receivable Reports. Within ten (10) days after
the end of each month, provide Lender with report of the list of Accounts,
including aging of Accounts by invoice, and such other information, as Lender
shall request.
2.7 Financial Covenants. Borrower and Guarantor, on a consolidated
basis, shall continuously maintain the following, to be tested at the end of
each Fiscal Year, calculated in accordance with GAAP, as shown on the financial
statements required to be provided pursuant to Section 2.6, and continuously in
between such statements:
(A) a ratio of Borrower's and Guarantor's total Indebtedness
to Borrower's and Guarantor's Net Worth of not more than 2.5 to 1.0; and
16
(B) a minimum debt service coverage ratio ( EBIDA divided by
Debt Service) of not less than 1.4 to 1.0 from the date hereof through the
fiscal year ending December 31, 2005, and not less than 1.5 to 1.0 at all times
thereafter.
2.8 Notice of Certain Events and Changes; Governmental Notices.
(i) Promptly after becoming aware of any condition,
event or state of facts which constitutes a Default or Event of Default,
Borrower and Guarantor shall give written notice to Lender specifying the nature
and period of existence thereof. Borrower and Guarantor shall give Lender prompt
written notice of any condition, event or state of facts which causes or may
cause material loss or depreciation in the value of the Collateral and of the
commencement or threat in writing of any action, proceeding or investigation or
the occurrence or existence of any other event, matter or cause whatsoever,
which, either in any case or in the aggregate results or might result in any
material adverse change in its business, prospects, profits, properties,
operations or condition (financial or otherwise). Borrower and Guarantor shall
give Lender at least sixty (60) days' prior written notice of any proposed
change in their place or places of business, any proposed change of location of
any of the Collateral (other than sales permitted hereunder) and any proposed
changes in its name.
(ii) As soon as reasonably practicable, after the
issuance thereof, Borrower and Guarantor shall send to Lender a copy of all
notices of investigation, claims of violation or possible violation and/or
orders issued by any federal, state or municipal regulatory authority under any
laws or regulations adopted thereby which are directed to and received by
Borrower and Guarantor. Further, as soon as reasonably practicable, Borrower and
Guarantor shall send to Lender copies of all reports or other materials filed by
it with or issued or sent to it by the Securities and Exchange Commission and
all reports, notices or statements sent by it to its stockholders.
2.9 Environmental Compliance.
(A) Borrower and Guarantor shall comply in all material
respects with all applicable Environmental Laws, regulations, rules, standards,
orders and agreements. Whenever, pursuant to any such legal requirement, the
Borrower and the Guarantor are obligated to report to any party the existence of
a Spill (as such term is defined in Section 1 of Public Act 85-443), "Release"
(as defined in 42 U.S. Code 9601 et seq.), "Hazardous Waste" (as defined in
Section 22a-115 of Connecticut General Statutes), "Hazardous Substance" (as
defined in 42 U.S. Code 9601 et seq.) or other environmental contamination on or
emanating from the Borrower's or Guarantor's business premises, Borrower and
Guarantor shall, simultaneously and in writing, report the existence of such
conditions to Lender at the address set forth in Section 12 hereof.
(B) In addition to any and all other liability of the
Borrower and Guarantor to Lender hereunder, Borrower and Guarantor shall jointly
and severally indemnify the Lender against any loss or damage that shall occur
to Lender as a result of the application of the Super Lien Act (Section 22a-452a
of the Connecticut General Statutes) or any other federal, state, local or
quasi-governmental law, rule, regulation, ordinance or the like.
17
(C) The Lender and/or its authorized representatives has the
right once per year and any time during the occurrence of any Default or Event
of Default, at reasonable times and upon reasonable notice to Borrower and
Guarantor, to enter upon the Borrower's and Guarantor's business premises for
the purpose of conducting inspections and/or audits of the Borrower's and
Guarantor's environmental compliance and/or of the Borrower's or Guarantor's
methods and/or procedures for disposal of waste products used in the course of
each Borrower's or Guarantor's business. Borrower and Guarantor shall correct
any discrepancies found during such inspections or audits promptly.
(D) In the event that any lien is filed against Borrower's or
Guarantor's properties or any claim is made against the Borrower or the
Guarantor by any governmental entity in connection with the discharge of
hazardous substances or wastes then Borrower or Guarantor shall either (i) pay
the claim and remove any lien from the applicable property or (ii) furnish to
such governmental entity that imposed the xxxx x xxxx, cash deposit or other
security reasonably satisfactory to such governmental entity in an amount
sufficient to discharge the lien.
2.10 Use of Proceeds.
(A) Borrower acknowledges that it has used the proceeds of
the Loan to fund the purchase of all of the outstanding common stock of the
Guarantor and for working capital.
(B) Borrower shall not, directly or indirectly, apply any
part of any proceeds of the Loan to the purchasing or carrying of any "margin
stock" within the meaning of Regulation U or Regulation G of the Board of
Governors of the Federal Reserve System, or for any use which will cause a
violation of any other regulation of the Board of Governors of the Federal
Reserve System or of any regulations, interpretations or rulings thereunder,
including without limitation Regulations G, U, T and X.
SECTION 3. EVENTS OF DEFAULT.
------------------
Each of the following events shall be considered an "Event of
Default":
3.1 If the Borrower or Guarantor defaults in the payment of the
Loan, owing by them within three (3) days of when the same becomes due and
payable, whether at any stated maturity, or by declaration, acceleration or
otherwise;
3.2 If the United States Securities and Exchange Commission shall
provide any notice to the Borrower, the Guarantor, or to any shareholder of the
Borrower or Guarantor respecting any material violation by Borrower or Guarantor
of any law or regulation respecting a material portion of Borrower's or
Guarantor's shares or shall suspend any material trading of such shares;
3.3 If the Borrower or Guarantor fails to perform or comply with
any term or covenant applicable to it contained in this Agreement, or contained
in any other Loan Documents;
18
3.4 If any representation or warranty made by or on behalf of the
Borrower or Guarantor, in this Agreement or in the Schedules hereto, or in any
of the other Loan Documents, or in connection with the transactions contemplated
hereby and thereby proves to be false or incorrect in any material respect;
3.5 If the Borrower or Guarantor defaults in the payment of any
Indebtedness for borrowed money or defaults with respect to any of the terms of
any evidence of such Indebtedness or of any indenture or other agreement
relating thereto which causes the acceleration of such Indebtedness, or if the
Borrower or Guarantor commits any breach or defaults under any material contract
to which it is or becomes a party or by which it is or becomes bound and such
failure or default shall continue after the applicable grace period or notice
period, if any;
3.6 If the Borrower or Guarantor fails to pay, when due, any tax
or assessment or any other loan or obligation of the Borrower or Guarantor on or
before the date the same is due unless such obligation is being contested in
good faith or if any Borrower is in default under any instrument or document
relating thereto and such failure or default shall continue after the applicable
grace period or notice period, if any;
3.7 If the Borrower or Guarantor makes an assignment for the
benefit of creditors, or admits in writing an inability to pay debts as they
become due, or files a voluntary petition in bankruptcy, or is adjudicated a
bankrupt or insolvent, or files any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation, or files any answer admitting or fails to deny the material
allegations of a petition filed against it for any such relief, or seeks or
consents to or acquiesces in the appointment of any trustee, receiver or
liquidator of itself or of all or any substantial part of its properties, or its
directors or majority stockholders takes any action looking to its dissolution
or liquidation, or it ceases doing business as a going concern;
3.8 If, within sixty (60) days after the commencement of any
proceeding against the Borrower or the Guarantor seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such proceeding
has not been dismissed, or if, within sixty (60) days after the appointment,
without such Borrower's or Guarantor's or the acquiescence of any trustee,
receiver or liquidator of itself or of all or any substantial part of its
properties, such appointment has not been vacated;
3.9 Failure by Borrower or Guarantor to maintain its primary
operating accounts with Lender.
Upon the occurrence of any Default or Event of Default, in addition
to its rights and remedies under this Agreement, or the other Documents and any
other instruments, Lender may, at its option, declare the Loan or any portion
thereof to be immediately due and payable, whereupon the same shall forthwith
mature and become due and payable, together with interest accrued thereon and
together with any and all costs of collection, including, but not limited to,
reasonable attorneys fees, without notice and without presentment, demand or
protest, all of which are hereby waived.
19
SECTION 4. SET-OFF RIGHTS.
---------------
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, Lender is hereby authorized
by Borrower and Guarantor at any time or from time to time after the occurrence
any Default or Event of Default, without notice to Borrower or Guarantor, or to
any other Person, any such notice being hereby expressly waived by the Borrower
or the Guarantor to set off and to appropriate and to apply any and all
balances, deposits, credits, Collateral and property of Borrower or Guarantor
held at, or in transit to, any of its offices for the account of the Borrower or
the Guarantor or any of their Subsidiaries (regardless of whether then due to
the Borrower or the Guarantor or their Subsidiaries) and any other property at
any time held or in transit or owing by that Lender or that holder to or for the
credit or for the account of the Borrower or Guarantor against and on account of
the Loan. The Borrower and Guarantor agree, to the fullest extent permitted by
law, that (a) Lender or any holder may exercise its right to set off with
respect to the Loans and may sell participations in such set off to other
lenders and holders and (b) any lender or holder so purchasing a participation
in the Loan made or held by other lenders or holders may exercise all rights of
set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of the
Loan in the amount of such participation and (3) the rights contained in this
paragraph exist regardless of whether the Loan has matured.
SECTION 5. REMEDIES ON DEFAULT; PROVISIONS RE: COLLATERAL, ETC.
----------------------------------------------------
5.1 If a Default or Event of Default occurs, Lender may accelerate
and declare to be immediately due and payable the Loan and may proceed to
protect and enforce its rights by suit in equity, action at law or other
appropriate proceedings, whether for the specific performance of any agreement
contained herein or in any other Loan Document, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any right, power or remedy granted thereby or by law, equity or otherwise.
5.2 Upon the occurrence of any Default or Event of Default, the
Borrower and Guarantor grants a royalty-free license to the Lender for all
patents, service marks, trademarks, tradenames, copyrights, computer programs
and other intellectual property and proprietary rights sufficient to permit the
Lender to exercise all rights granted to the Lender pursuant to this Agreement.
5.3 Without limitation of any rights and remedies of Lender as a
secured party under the Code and any rights or remedies set forth in any of the
Loan Documents, if a Default or Event of Default exists hereunder, Lender has
all of the following rights and remedies with respect to the Collateral or any
portion thereof
(A) Lender may at any time and from time to time with or
without judicial process and the aid or assistance of others, enter upon any
premises in which any of the Collateral may be located and, without resistance
or interference by Borrower and Guarantor, take possession of the Collateral
and/or dispose of any part or all of the Collateral on any such premises; and/or
require Borrower or Guarantor to assemble and make available to Lender, at the
20
expense of Borrower or Guarantor, any part or all of the Collateral at any place
or time designated by Lender which is reasonably convenient to the Borrower and
Guarantor and Lender; and/or remove any part or all of the Collateral from any
premises on which any part may be located for the purpose of effecting sale or
other disposition thereof; and buy or sell, resell, lease, assign and deliver,
grant options for or otherwise dispose of any or all of the Collateral in its
then condition or following any commercially reasonable preparation or
processing, at public or private sale or proceedings, by one or more contracts,
in one or more parcels, at the same or different times, with or without having
the Collateral at the place of sale or other disposition, for cash and/or
credit, and upon any terms, at such place(s) and time(s) and to such Persons as
Lender deems best, all without demand for performance or any notice or
advertisement whatsoever, except that if any of the Collateral is perishable or
is of a type that can decline speedily in value, the Borrower and Guarantor
shall be given five (5) business days notice describing in general non-specific
terms, the Collateral to be disposed of by one-time publication in a newspaper
of general circulation in the county where the sale is to be conducted. If any
of the Collateral is sold by Lender upon credit or for future delivery, Lender
will not be liable for the failure of the purchaser to pay for same and in such
event Lender may resell such Collateral. Lender may buy any part or all of the
Collateral at any public sale and if any part or all of the Collateral is of a
type customarily sold in a recognized market or is of the type which is the
subject of widely distributed standard price quotations Lender may buy at
private sale and may make payment therefor by application of all or a part of
the Loans;
(B) Lender may, in Lender's discretion, apply the cash
proceeds from any sale or other disposition of the Collateral, first, to the
reasonable expenses of retaking, holding, preparing for sale, selling, leasing
and otherwise disposing of such Collateral, to reasonable appraisal, accounting
and attorneys' fees and all legal expenses, travel and other expenses which are
to be paid or reimbursed to Lender, pursuant hereto or pursuant to the other
Loan Documents, second, to all accrued interest, fees and charges outstanding
with respect to the Loans in such order, as Lender shall determine, third, to
principal and all other outstanding portions of the Loans in such order, as
Lender shall determine, fourth, any surplus to any other secured parties having
an interest in the Collateral known to Lender in accordance with their
interests, and fifth, any surplus to the Borrower and Guarantor; provided,
however, that Borrower and Guarantor shall remain liable with respect to unpaid
portions of the Loan and will pay Lender on demand any deficiency remaining
together with interest thereon.
Notwithstanding any of the foregoing, Borrower and Guarantor
acknowledge that Lender is making the Loan in reliance on the totality of the
Collateral and this Agreement specifically prohibits subordinate liens thereon.
Consequently, Lender shall have no liability to marshal assets for the benefit
of any other creditor, or be subject to any restrictions with respect to the
liquidation or other disposal of the Collateral;
(C) Lender may appropriate, set-off and apply to the payment
of all or any part of the Loans any and all balances, sums, property, claims,
credits, deposits, accounts, reserves, collections, drafts, notes or other items
or proceeds of the Collateral, in or coming into the possession, custody,
safekeeping or control of Lender or any affiliate of Lender or its agents, or
belonging to any Borrower and in such manner as Lender may, in its discretion
determine, and
21
the proceeds of any such set-off shall be applied in accordance with the
provisions of the preceding Subparagraph hereof;
(D) Neither the Borrower or the Guarantor shall commingle any
of the proceeds of the Collateral received after the occurrence of an Event of
Default with any other of its property. The Borrower and the Guarantor shall
segregate any such proceeds, hold them in trust as the exclusive property of
Lender, and Borrower and Guarantor shall immediately deliver to Lender the
identical checks, monies, or other proceeds of Collateral received;
(E) Upon the written request of Lender made to Borrower and
Guarantor, Borrower and Guarantor shall:
(i) Notify all account debtors that the Accounts have
been assigned to Lender and that any payments on such Accounts should be made
directly to Lender; and/or
(ii) Turn over to Lender any and all inventory
returned in connection with any of its Accounts; and/or
(iii) Xxxx or stamp all invoices with a legend
satisfactory to Lender so as to require that the same should be paid directly to
Lender.
Notwithstanding the foregoing, Lender may at any time after
the occurrence of a Default or Event of Default upon written notice to the
Borrower and Guarantor, notify account debtors to make such payments of the
Accounts directly to Lender.
SECTION 6. CUMULATIVE REMEDIES; NO WAIVERS, ETC.
-------------------------------------
No right, power or remedy granted to Lender in this Agreement or in
the other Loan Documents is intended to be exclusive, but each shall be
cumulative and in addition to any other rights, powers or remedies referred to
in this Agreement, in the other Loan Documents or otherwise available to Lender
at law or in equity; and the exercise or beginning of exercise by Lender of any
one or more of such rights, powers or remedies, shall not preclude the
simultaneous or later exercise by Lender of any or all of such other rights,
powers or remedies. No waiver by, nor any failure or delay on the part of Lender
in any one or more instances to insist upon strict performance or observance of
one or more covenants or conditions hereof, or of the other Loan Documents shall
in any way be, or be construed to be, a waiver of such covenant in any other
instance or to prevent Lender's rights to later require the strict performance
or observance of such covenants or conditions, or otherwise prejudice Lender's
rights, powers or remedies.
SECTION 7. PARTIAL INVALIDITY; WAIVERS.
----------------------------
7.1 If any term or provision of this Agreement or any of the other
Loan Documents or the application thereof to any Person or circumstance shall,
to any extent, be invalid or unenforceable by reason of any applicable law, the
remainder of this Agreement and the other Loan Documents, or application of such
term or provision to Persons or circumstances
22
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each tern and provision of this Agreement and the other
Loan Documents shall be valid and be enforced to the fullest extent permitted by
law. To the full extent, however, that the provisions of any such applicable law
may be waived, they are hereby waived by the Borrower and Guarantor to the end
that this Agreement and the other Loan Documents shall be deemed to be valid and
binding obligations enforceable in accordance with their terms.
7.2 To the extent permitted by applicable law, the Borrower and
Guarantor hereby waive protest, notice of protest, notice of default or
dishonor, notice of payments and non-payments, or of any default.
7.3 WITH RESPECT TO ANY CONTROVERSY, ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THE TRANSACTIONS DESCRIBED
HEREIN OR CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH
THE LOANS, THE COLLATERAL AND/OR ANY OF THE OTHER LOAN DOCUMENTS BORROWERS AND
LENDER EACH VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHT TO OR CLAIM FOR A TRIAL
BY JURY.
7.4 THE BORROWER AND GUARANTOR ACKNOWLEDGE THAT THE WITHIN
AGREEMENT EVIDENCES A COMMERCIAL TRANSACTION AND THAT IT COULD, UNDER CERTAIN
CIRCUMSTANCES HAVE THE RIGHT UNDER CHAPTER 903a, AS FROM TIME TO TIME AMENDED,
OF THE CONNECTICUT GENERAL STATUTES, SUBJECT TO CERTAIN LIMITATIONS, TO NOTICE
OF AND HEARING ON THE RIGHT OF THE LENDER TO OBTAIN A PREJUDGMENT REMEDY, SUCH
AS ATTACHMENT, GARNISHMENT AND/OR REPLEVIN, UPON COMMENCING ANY LITIGATION
AGAINST BORROWER. NOTWITHSTANDING, BORROWER AND GUARANTOR HEREBY WAIVE ALL
RIGHTS TO NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER TO WHICH IT MIGHT
OTHERWISE HAVE THE RIGHT UNDER SAID CHAPTER 903 a, AS FROM TIME TO TIME AMENDED,
OR UNDER ANY OTHER STATE OR FEDERAL STATUTE OR CONSTITUTION IN CONNECTION WITH
THE OBTAINING BY THE LENDER OF ANY PREJUDGMENT REMEDY BY REASON OF THIS
AGREEMENT, OR BY REASON OF ANY BORROWER'S OR GUARANTOR'S OBLIGATIONS OR ANY
RENEWALS OR EX TENSION S OF THE SAME. BORROWER AND GUARANTOR ALSO WAIVE ANY AND
ALL OBJECTION WHICH IT MIGHT OTHERWISE ASSERT, NOW OR IN THE. FUTURE, TO THE
EXERCISE OR USE BY LENDER OF ANY RIGHT OF SETOFF, REPOSSESSION OR SELF HELP AS
MAY PRESENTLY EXIST UNDER STATUTE OR COMMON LAW.
7.5 EACH OF THE BORROWER AND GUARANTOR SPECIFICALLY WAIVES AND
RELINQUISHES ANY CLAIM TO INCIDENTAL AND/OR CONSEQUENTIAL DAMAGES ARISING IN ANY
WAY OUT OF AN ALLEGED BREACH HEREOF BY LENDER AND AGREES THAT DAMAGES FOR WHICH
LENDER MAY BE LIABLE, 1F ANY, SHALL BE LIMITED TO THOSE DIRECT DAMAGES PROVEN TO
HAVE BEEN SUFFERED BY THE BORROWER AND GUARANTOR ARISING DIRECTLY FROM SUCH
BREACH.
23
7.6 So long as Lender complies with its obligations, if any under
the Code, Lender shall not in any way or manner be liable or responsible for (a)
the safekeeping of the Inventory or Equipment, (b) any loss or damage thereto
occurring or arising in any manner or fashion from any cause (c) any diminution
in the value thereof, or (d) any act or default of any carrier, warehouseman,
bailee, forwarding agency or other Person whomsoever. All risk of loss or damage
or destruction of the Inventory or Equipment shall be borne by Borrower and
Guarantor.
SECTION 8. EXPENSES/INDEMNITY.
------------------
The Borrower and Guarantor agree that it shall:
8.1 pay or reimburse Lender on demand for any and all reasonable
charges, costs and taxes incurred in the preparation, documentation and
implementation of this Agreement, and all Loan Documents, and any amendment
thereto, including, without limitation, all recording and filing fees, appraisal
fees and reasonable fees and disbursements of Lender's special counsel retained
in connection therewith, including payment upon the Closing hereof of any
portion of such charges, costs and fees for which an invoice shall be rendered;
8.2 indemnify and save Lender harmless from, and pay or reimburse
Lender for, all charges, costs, damages, liabilities and expenses, including
reasonable attorneys' fees, if any, incurred by Lender relating to:
(i) the Note or any of the other Loan Documents;
(ii) the exercise by the Lender of any of its rights, remedies
or powers hereunder, the Note or any of the other Loan Documents;
(iii) the performance of any obligation of Borrower and
Guarantor in connection with the Mortgaged Property;
(iv) the attempted enforcement or enforcement of this
Agreement or the other Loan Documents, or the collection or attempted collection
of any of the obligations owing under any thereof, including, without
limitation, the Loans, or the realization or attempted realization upon any of
the Collateral;
(v) the prosecution or defense of any action or proceeding
concerning any matter growing out of or connected with this Agreement, the other
Loan Documents or the Collateral;
(vi) any Hazardous Substance at, on, in, under, or about all
or any portion of any property owned, occupied and/or operated by the Borrower
or Guarantor, including without limitation the Mortgaged Property, or any
environmental condition within, on, from, related to, or attaching to any such
property;
24
(vii) any Release or threatened Release of any Hazardous
Substance from any properly owned, occupied or operated by the Borrower or the
Guarantor or from the Borrower's or Guarantor's operations or other activities,
including without limitation any Release by any prior owner, occupant or
operator of any such property;
(viii) any violation or claim of violation of any
Environmental Law by the Borrower or the Guarantor or its operations or other
activities;
(ix) any other environmental condition or matter within, on,
from or related to or affecting any property owned, leased or operated by the
Borrower or the Guarantor or Borrower's or Guarantor's operations or other
activities;
(x) any other operations or activities of the Borrower or the
Guarantor or conditions or occurrences arising from the Borrower or the
Guarantor on the Borrower's or Guarantor's properties (all the foregoing under
this paragraph collectively, the "Indemnified Liabilities"). In addition, at
Lender's discretion, Borrower and Guarantor shall defend (with counsel
satisfactory to the Lender) Lender against those Indemnified Liabilities which
the Lender shall choose Borrower or Guarantor to defend Lender against
(provided, that, it is understood and agreed that all reasonable costs and
expenses of counsel incurred by Lender in defending itself against any
Indemnified Liability shall be Indemnified Liabilities for which Borrower and
Guarantor are responsible for payment under this subparagraph). The agreements
in this section shall survive any payment of the Loans or any other amounts
payable hereunder or under any other Loan Document and/or any termination of
this Agreement or any Document or the release of any Collateral. All amounts
payable under this Section shall be payable by the Borrower and Guarantor on
demand by the Lender.
SECTION 9. FURTHER ASSURANCES; POSSESSION OF COLLATERAL; POWER OF
------------------------------------------------------
ATTORNEY.
---------
At any time and from time to time, upon the demand of the Lender as
permitted by this Agreement, the Borrower or the Guarantor shall, at the
Borrower's and Guarantor's expense (i) immediately give, execute, deliver,
pledge, endorse, file, and/or record any notice, statement, financing statement,
instrument, documents, chattel paper, agreement, or other papers that may be
necessary or desirable, or that the Lender may request, in order to effectuate
performance by Borrower or the Guarantor of any of their obligations under this
Agreement or the other Loan Documents in order to create, preserve, perfect, or
validate any security interest granted pursuant hereto or intended to be granted
hereunder or to enable the Lender to exercise or enforce its rights hereunder or
with respect to such security interest; and (ii) keep, stamp, or otherwise xxxx
any and all documents, instruments, chattel paper, and its books and records
relating to the Collateral in such manner as the Lender may require. At any time
after the occurrence of a Default or Event of Default, the Borrower and
Guarantor hereby irrevocably appoint the Lender (and any of its attorneys,
officers, employees or agents) as its true and lawful agent and
attorney-in-fact, said appointment being coupled with an interest with full
power of substitution, in the name of the Borrower and the Guarantor, the
Lender, or otherwise, for the sole use and benefit of the Lender in its sole
discretion, but at the Borrower's and Guarantor's expense, to exercise, to the
extent permitted by law, in its name or in the name of the Borrower or the
Guarantor or otherwise, the powers set forth herein, whether or not any of the
Loans are due (i) to endorse the
25
name of the Borrower and the Guarantor upon any instruments of payment, freight,
or express xxxx, xxxx of lading, storage, or warehouse receipt relating to the
Collateral and to demand, collect, receive payment of, settle, or adjust all or
any of the Collateral; (ii) to correspond and negotiate directly with insurance
carriers; and (iii) to sign and file one or more financing statements naming
Borrower and Guarantor as debtor and the Lender as secured party to execute any
notice, statement, instruments, agreement, or other paper that the Lender may
require to create, preserve, perfect, or validate any security interest granted
pursuant hereto or to enable the Lender to exercise or enforce its rights
hereunder or with respect to such security interest. Neither the Lender nor its
attorneys, officers, employees, or agents shall be liable for acts, omissions,
any error in judgment, or mistake in fact in its/their capacity as agent or
attorney-in-fact. This power, being coupled with an interest is irrevocable
until the Loans have been fully satisfied and this Agreement has been
terminated. The Lender is expressly authorized to file financing statements
without the Borrower's or Guarantor's signature.
SECTION 10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND
-------------------------------------------
WARRANTIES, ETC.
----------------
All agreements, covenants, representations and warranties contained
herein or made in writing by or on behalf of the Borrower and Guarantor, in
connection with the transactions contemplated hereby, shall survive the
execution and delivery of this Agreement and the related Loan Documents and
shall continue until the Loan has been paid in full and this Agreement has been
terminated. All statements contained in any certificate or other instrument
delivered by or on behalf of the Borrower or the Guarantor, pursuant hereto or
in connection with the transactions contemplated hereby, shall be deemed
representations and warranties made hereunder.
SECTION 11. FAILURE TO PERFORM.
------------------
If the Borrower or Guarantor fail to observe or perform any of the
covenants hereof, Lender may pay amounts or incur liabilities to remedy or
attempt to remedy any such failure (including, without limitation, any sums
payable under any statute relating to the environment) and all such payments
made and liabilities incurred shall be for the account of the Borrower and the
Guarantor, and all such amounts shall be repaid by Borrower or Guarantor on
demand, together with interest thereon at the Default Rate as defined in the
Note or may be repaid by a withdrawal from any of the Borrower's or Guarantor's
accounts maintained with Lender. The provisions of this Section and any such
action by Lender shall not prevent any default in the observance or performance
of any covenant hereof from constituting an Event of Default hereunder.
SECTION 12. NOTICES, ETC.
-------------
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to be duly delivered if mailed, postage
prepaid, by first class registered mail, return receipt requested, or by any
nationally recognized receipted delivery or courier service:
(A) if to Lender:
26
NewAlliance Bank
000 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxx Xxxxxx
with a copy to:
--------------
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx, Xxxxx & Segaloff, P.C.
00 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
or at such other address as may have been furnished in writing by Lender to
Borrower; or
(B) if to Borrower:
CAS Medical Systems, Inc.
00 Xxxx Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
with a copy to:
---------------
Xxxxxx & Xxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
or at such other address as may have been furnished in writing by Borrower to
Lender.
SECTION 13. AMENDMENTS AND WAIVERS.
----------------------
Neither this Agreement nor any other Loan Document nor any term
hereof or thereof may be changed, waived, discharged or terminated, except by a
writing signed by all of the parties hereto.
SECTION 14. MISCELLANEOUS.
--------------
This Agreement and each other Loan Document granting Lender a
security interest in any personal property of Borrower and Guarantor shall be
deemed a security agreement within the meaning of the Code. Where any provision
in this Agreement refers to action to be taken by any person or entity, or which
such person or entity is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person or
entity.
SECTION 15. GOVERNING LAW.
-------------
27
This Agreement and the other Loan Documents contemplated hereby
shall be construed and enforced in accordance with and governed by the laws of
the State of Connecticut. The Borrower and Guarantor hereby specifically consent
to the jurisdiction of the Courts of the State of Connecticut and agree to be
personally bound by the decisions of the Court of the State of Connecticut.
SECTION 16. SUPERCEDURE.
------------
To the extent there is any inconsistency between the terms of this
Agreement and any other Loan Document, this Agreement shall control.
SECTION 17. SUCCESSORS AND ASSIGNS.
-----------------------
All of the terms of this Agreement and such other Loan Documents
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, whether so expressed or
not, and by any other holder or holders at the time of any of the Loans or any
part thereof.
SECTION 18. HEADINGS.
---------
The headings in this Agreement are for the purposes of reference
only and shall not limit or otherwise affect any of the terms hereof.
SECTION 19. COUNTERPARTS.
-------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and by the several parties hereto in separate
counterparts, but all of which together shall constitute one and the same
instrument.
SECTION 20. THIRD PARTIES.
--------------
This Agreement is between Lender and the Borrower and Guarantor only
and shall not be relied upon by any third party. Without limiting the foregoing,
Lender shall have no liability to any party whatever (including, without
limitation, either Borrower, or Guarantor, or anyone conducting business with
any of the foregoing) in the event Lender exercises its rights under this
Agreement and/or the other Loan Documents contemplated hereby.
SECTION 21. TIME OF THE ESSENCE.
--------------------
Time is of the essence for the performance by the Borrower and
Guarantor of any of Borrower's or Guarantor's obligations set forth in this
Agreement.
SECTION 22. GENDER AND NUMBER; NO RULE OF STRICT CONSTRUCTION.
--------------------------------------------------
28
Whenever the context herein so requires, the neuter gender includes
the masculine and feminine, and the singular number includes the plural and
vice-versa. The Borrower or the Guarantor acknowledge that Borrower and
Guarantor and Borrower's or Guarantor's counsel have had an opportunity to
review and negotiate the terms of this agreement and the other Loan Documents
and that no rule of strict construction shall be used against the Lender with
respect to any of the Loan Documents shall be construed. On the contrary, the
Loan Documents shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of the parties.
SECTION 23. NO FIDUCIARY RELATIONSHIP.
--------------------------
The Borrower and Guarantor acknowledge that Lender does not have a
fiduciary relationship to the Borrower or the Guarantor and the relationship
between Lender and Borrower and Guarantor are solely that of creditor and
debtor.
SECTION 24. CERTAIN DISCLOSURES.
--------------------
Attached hereto as part of Schedule G is a listing of the following
information:
(A) Each Borrower's and Guarantor's Officers, Directors,
Stockholders of five (5%) percent or more of the Shares of Borrower's stock, and
Number of Shares of Borrower's stock held by each;
(B) Date of most recently prepared Financial Statements;
(C) Indebtedness Owing by Borrower and Guarantor other than
to Lender;
(D) Borrower's and Guarantor's Patents, Trademarks, Trade
Names, Copyrights;
(E) Pending or Threatened Litigation involving the Borrower
or the Guarantor;
(F) Each of Borrower's and Guarantor's Licensing Agreements,
Governmental Consents;
(G) Past Changes to Borrower's or Guarantor's Name;
(H) Leases to which Borrower and Guarantor are a party;
(I) Locations where any Collateral is kept;
(J) Description and date of purchase of used Equipment and
Equipment which has been relocated within the past four (4) months.
SECTION 25. SURETYSHIP WAIVERS.
-------------------
29
The Borrower and Guarantor hereby expressly waive any right to
compel Lender to xxx or enforce payment of any and all indebtedness of the
Borrower and Guarantor hereunder. The Borrower and Guarantor hereby expressly
waives presentment, protect, notice, demand or action on delinquency in respect
of any such indebtedness or liability.
No invalidity, irregularity or unenforceability, by reason of any
bankruptcy or similar law, any law or order of any government or agency thereof
purporting to reduce, amend or otherwise affect any indebtedness or liability of
the Borrower or Guarantor, shall affect, impair or be a defense to the
obligations of the Borrower or Guarantor hereunder unless such invalidity,
irregularity or unenforceability is also applicable to such Borrower or
Guarantor.
Without, in any manner, limiting the generality of the foregoing,
Borrower and Guarantor agree that Lender may from time to time extend any
accommodations to the Borrower and Guarantor, consent to any action or
non-action of the Borrower and Guarantor which, in the absence of such consent,
violates or may violate this Agreement, with or without consideration, on such
terms and conditions as may be acceptable to Lender, without in any manner
affecting or impairing or varying the liability of the Borrower and Guarantor
hereunder. The Borrower and Guarantor waive any right to require Lender to
proceed against the Borrower and Guarantor, to proceed against, seek or exhaust
any Collateral or other security held from the Borrower or the Guarantor or to
pursue any remedy in Lender's power whatsoever. Lender may, in its sole
discretion, release the Borrower and Guarantor from any and all liability
hereunder, take additional collateral from the Borrower and Guarantor and/or
release collateral from any Borrower, without affecting the liability of the
Borrower and Guarantor hereunder. The obligations of the Borrower and Guarantor
hereunder and under the other Loan Documents shall continue to be effective or
be reinstated (as the case may be) if at any time payment by the Borrower or the
Guarantor of all or any part of the liabilities or indebtedness owing to Lender
is rescinded or must otherwise be returned by Lender, including, without
limitation, upon the insolvency, bankruptcy or reorganization of the Borrower
and Guarantor or otherwise, all as though such payment to Lender had not been
made.
SECTION 26. RELEASE.
--------
Upon full payment and satisfaction of the Loan and the interest
thereon and expenses incurred by Lender in connection therewith and upon
termination of this Agreement by Lender, the parties shall thereupon
automatically each be fully, finally, and forever released and discharged from
any further claim, liability or obligation in connection with the Loans or any
of them. Notwithstanding the foregoing, in the event any payment is recovered
from Lender in whole or in part, as a result of any insolvency proceedings or
otherwise, the rights, benefits and security interests of Lender under this
Agreement shall remain in full force and effect as to any and all of such
recovered sums, all of which shall be Loans hereunder.
SECTION 27. NO USURY.
---------
This Agreement and all of the other Loan Documents are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the
30
indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to
be paid to Lender for the use or the forbearance of the indebtedness evidenced
hereby exceed the maximum permissible under applicable law. As used herein, the
term "applicable law" shall mean the law in effect as of the date hereof
provided, however that in the event there is a change in the law which results
in a higher permissible rate of interest, then this Agreement and each of the
Loan Documents shall be governed by such new law as of its effective date. In
this regard, it is expressly agreed that it is the intent of Borrowers and
Lender in the execution, delivery and acceptance of the Notes to contract in
strict compliance with the laws of the State of Connecticut from time to time in
effect.
If, under or from any circumstances whatsoever, fulfillment of any
provision hereof or of any of the Loan Documents at the time of performance of
such provision shall be due, shall involve transcending the limit of such
validity prescribed by applicable law, then the obligation to be fulfilled shall
automatically be reduced to the limits of such validity, and if under or from
circumstances whatsoever Lender should ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced
hereby and not to the payment of interest. This provision shall control every
other provision of all agreements between Borrower, Guarantor and Lender.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement to be executed and delivered on the day and year first above
mentioned.
CAS MEDICAL SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
Its President and Chief Executive Officer
STATCORP, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
Its Chief Executive Officer
NEWALLIANCE BANK
By: /s/ Xxx X. Xxxxxx
-------------------------------------
Xxx X. Xxxxxx
Its Vice President
31
SCHEDULE OF SCHEDULES
SCHEDULE SUBJECT
A Term Note
B Permitted Liens
C Mortgaged Property
D Omitted
E Exceptions to Representations, Warranties and Covenants
F Omitted
G Certain Disclosures
32
APPENDIX I
As used herein, the following terms have the following meanings:
ACCOUNTS: means, in addition to the meaning ascribed to Accounts in
the Code, all presently existing or hereafter acquired accounts, accounts
receivable, chattel paper, notes, leases, drafts, acceptances and writings
evidencing a monetary obligation and/or security interest in or a lease of
goods, all rights to receive the payment of money or other considerations under
present or future contracts or by virtue of merchandise sold or leased, services
rendered, advances made or other considerations given, whether or not earned by
performance and whether or not evidenced by or set forth in or arising out of
any present or future chattel paper, instrument, document, note, draft, lease,
acceptance, writing, bond, insurance policy, instrument, document or General
Intangible and whether or not verbal in nature, and all extensions and renewals
of any thereof, any reversion of pension plan excess funding, all rights under
and/or arising out of present or future contracts, agreements or General
Intangibles, including, without limiting the foregoing, all payments under
licensing agreements or arrangements, all right, title and interest in
merchandise which gave rise to any or all of the foregoing, including, inter
alia, all goods in transit and all returned, reclaimed or repossessed goods and
all claims for insurance respecting the same, all claims for tax refunds, all
claims or causes of action which any of the Borrowers may now or hereafter have
whether arising in connection with or under any agreement, contract, document,
instrument or chattel paper or verbally or by operation of law or otherwise, and
all present and future indebtedness and obligations of any affiliate or
subsidiary to it/them, all whether now owned or hereafter acquired or in which
any of the Borrowers may now have or may hereafter acquire any interest and all
of its/their right, title and interest in and to ail assets and properties in
which it has been granted a security interest or lien to secure the payment of
such indebtedness and obligations.
AFFILIATE: with reference to any Person, any director, officer or
employee of such Person, any corporation, association, firm or other entity in
which such Person has a direct or indirect controlling interest or by which such
Person is directly or indirectly controlled or is under direct or indirect.
common control with such Person.
AGREEMENT: this Loan Agreement, as it may be amended from time to
time.
ASSETS: at a particular date, all amounts which would, in conformity
with GAAP, be included under assets (of which, inventory shall be stated on a
first in, first out basis) on a consolidated balance sheet of a Person as at
such date.
ASSIGNMENTS: the collateral assignments of leases referred to in
Section 1.8.
BORROWER: the meaning specified on page one of this Agreement.
CHATTEL PAPER: the meaning ascribed to such term in the Code.
33
CODE: the Connecticut Uniform Commercial Code, as amended or revised
from time to time.
COMMERCIAL TORT CLAIMS: the meaning ascribed to such term in the
Code.
COMPUTER HARDWARE: the meaning ascribed to such term in the Code.
CONTRACT RIGHTS: the meaning ascribed to such term in the Code.
CLOSING: the date hereof.
COLLATERAL: the meaning specified in Section 1.6.
DEBT SERVICE: being "for an accounting period, the sum of (i)
principal amortization; (ii) interest expense; and (iii) scheduled payments by
Borrower on capitalized leases".
DEFAULT: the occurrence of any event which with the giving of notice
or passage of time (other than stated grace periods), or both, might become an
Event of Default. Deposit Accounts: means, in addition to the definition of
Deposit Accounts in the Code, all presently existing or hereafter acquired
deposit accounts, certificates of deposit, securities, acceptances, bonds and
any evidence thereof and documents relating thereto, including without
limitation all monies and credit balances now or hereafter in the possession or
under the control of any of the Borrower and the Guarantor and any and all tax
escrows and insurance escrow accounts under the possession or control of the
Borrower and the Guarantor.
DOCUMENTS: the meaning ascribed to such term in the Code.
EBIDA: being "net income for an accounting period, to which is added
back: (i) interest expense; and (ii) depreciation expense and amortization to
the extent deducted from such net income during such accounting period, all as
determined by GAAP".
ENVIRONMENTAL LAWS: any and all applicable foreign, Federal, state
and local statutes, laws, regulations, rules, ordinances, orders, guidances,
policies or common law (whether now existing or hereafter enacted or
promulgated) pertaining to the environment, of any and all Federal, state or
local governments and governmental and quasi-governmental agencies, bureaus,
subdivisions, commissions or departments which may now or hereafter have
jurisdiction over the Borrower or the Guarantor and all applicable judicial and
administrative and regulatory decrees, judgments and orders, including common
law rulings and determinations, relating to injury to, or the protection of,
real or personal property or human health or the environment, including, without
limitation, all requirements pertaining to reporting, licensing, permitting,
investigation, remediation and removal of emissions, discharges, releases or
threatened releases of Hazardous Substances, chemicals substances, pollutants or
contaminants whether solid liquid or gaseous in nature, into the environmental
or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of such Hazardous Substances, chemical
substances, pollutants or contaminants.
34
Without limiting the generality of the foregoing, the term
"Environmental Laws" shall encompass each of the following statutes, and
regulations promulgated thereunder, and amendments and successors to such
statutes and regulations, as may be enacted and promulgated from time to time:
Federal Occupational Safety and Health Act ("OSHA"); the Clean Air Act ("CAA");
the Toxic Substances Control Act ("TSCA"); the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("XXXX"); the Clean Water Act
("CWA"); the Resource Conservation and Recovery Act, as amended by the Hazardous
and Solid Waste Amendments of 1984 ("RCRA"); the Hazardous Materials
Transportation Act; and all applicable Environmental Laws of each state and
municipality in which Borrower conducts business or locates assets and all rules
and regulations thereunder and amendments thereto and all similar state and
local laws, rules and regulations.
ENVIRONMENTAL NOTICE: any summons, citation, directive, order,
claim, litigation, pleading, investigation, proceeding, judgment, letter or
other written communication from the U.S. Environmental protection Agency or any
other governmental authority or any other person in any way related to any
Environmental Law or any Environmental Permit.
EQUIPMENT: means, in addition to the definition of Equipment in the
Code, all equipment, machinery, chattels, tools, dies, jigs, molds, parts,
machine tools, small tools, perishable tools, furniture and fixtures, of every
nature, presently existing or hereafter acquired, wherever located, and all
additions and accessories thereto and substitutions therefor and all parts and
equipment which may be attached to or which are necessary to the operation and
use of any or all of the foregoing, whether or not the same shall be deemed to
be affixed to real property, and all rights under or arising out of present or
future contracts relating to the foregoing; all whether now owned or hereafter
acquired or in which the Borrower or the Guarantor may now have or may hereafter
acquire any interest and all whether now existing or hereafter arising. The
security interest described herein continues in all collateral described in this
Paragraph notwithstanding sale, exchange or other disposition thereof by the
Borrower or the Guarantor.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA AFFILIATE: each trade or business (whether or not incorporated
and whether or not foreign) which is or may hereafter become a member of a group
of which Borrower is a member and which is treated as a single employer under
ERISA Section 4001(b)(1) or IRC Section 414.
EVENT OF DEFAULT: the meaning specified in Section 3.
FINANCIAL ASSETS: the meaning ascribed to such term in the Code.
FISCAL QUARTER: the three (3) month periods ending each March, June,
September and December.
FISCAL YEAR: a twelve (12) month year ending on December 31.
35
FIXTURES: the meaning ascribed to such term in the Code.
GAAP: generally accepted accounting principals and practices
consistently applied from accounting period to accounting period.
GENERAL INTANGIBLES: means, in addition to the definition of General
Intangibles in the Code, all general intangibles of every nature, including,
without limitation, all rights of the Borrower and the Guarantor to any form of
payments, all rights of the Borrower and the Guarantor to any form of payment of
tax refunds, any reversion of pension plan excess funding, patents, trademarks,
licensing agreements, royalty payments, copyrights, service names, service marks
and logos, deposits, certificates of deposit, goodwill, interests in leases
whether as a lessor or as a lessee whether presently existing or hereafter
acquired.
GOODS: the meaning ascribed to such term in the Code.
HAZARDOUS SUBSTANCE: any chemical, compound, material, mixture or
substance: (i) the presence of which requires or may hereafter require
notification, investigation, monitoring or remediation under any Environmental
Law; (ii) which is or becomes defined as a "Hazardous Waste", "Hazardous
Material" or "Hazardous Substance" or "Toxic Substance" or "Pollutant" or
"Contaminant" under any present or future applicable Federal, state or local law
or under the rules and regulations adopted or promulgated pursuant thereto,
including, without limitation, the Environmental Laws; (iii) which is toxic,
explosive, corrosive, reactive, ignitable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by
any governmental authority,. agency, department, commission, board, agency or
instrumentality of any foreign country, the United States; any state of the
United States, or any political division thereof to the extent any of the
foregoing has or had jurisdiction over Borrower; (iv) without limitation, which
contains gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls ("PBCs"); or (v) any other chemical, material or
substance, exposure to, or disposal of, which is now or hereafter prohibited,
limited or regulated by any federal, state or local governmental body,
instrumentality or agency.
INDEBTEDNESS: as applied to a Person, and without duplication, (a)
all items, except items of capital stock or of surplus or of general contingency
reserves or of reserves for deferred income taxes if in compliance with this
Agreement which in accordance with generally accepted accounting principles and
practices would be included in determining total liabilities as shown on the
liability side of a balance sheet of such person as at the date of which
indebtedness is to be determined, (b) all indebtedness secured by any mortgage,
pledge, lease, lien or conditional sale or other title retention agreement
existing on any property or asset owned or held by such person subject thereto,
whether or not such indebtedness shall have been assumed, and (c) all
indebtedness of others which such Person has directly or indirectly guaranteed,
endorsed, discounted or agreed (contingently or otherwise) to purchase or
repurchase or otherwise acquire, or in respect of which such Person has agreed
to supply or advance funds (whether by way of loan, stock purchase, capital
contribution or otherwise) or otherwise to become liable directly or indirectly
with respect thereto.
INSTRUMENTS: the meaning ascribed to such term in the Code.
36
INTELLECTUAL PROPERTY: the meaning ascribed to such term in the
Code.
LENDER: the meaning specified on page one of this Agreement.
LETTER OF CREDIT RIGHTS: the meaning ascribed to such term in the
Code.
LIABILITIES: at a particular date, all Indebtedness which would, in
conformity with GAAP, be included under liabilities on a consolidated balance
sheet of a Person as at such date, including book overdrafts.
LOAN DOCUMENTS: the Agreement, the Note, the Mortgage, the
Collateral Assignment, the Environmental Indemnity Agreement, the Stock Pledge
and all other documents and instruments executed in connection with or in
furtherance of this Agreement or any of the aforesaid documents.
LOAN: the meaning specified in Section 1.1.
MATURITY DATE: June 1, 2012.
NET WORTH: as of the date of determination, the excess, if any, of
Borrowers' assets over their Indebtedness, such assets and Indebtedness to be
determined in accordance with GAAP.
NOTE: the Term Note.
OSHA: Occupational Safety and Health Act, as amended.
PAYMENT INTANGIBLES: the meaning ascribed to such term in the Code.
PROCEEDS: means, in addition to the definition of Proceeds in the
Code, all proceeds and all products of all of the Collateral and any collateral
described in any financing statement filed in connection with the transaction
contemplated hereby.
PBGC: The Pension Benefit Guaranty Corporation.
PERMITTED LIENS: means the following types of Liens: (a) the
existing Liens disclosed in Schedule B, (b) Liens for taxes, assessments or
other governmental charges not yet due and payable or being contested in good
faith by appropriate proceedings and with respect to which appropriate reserves
have been established in accordance with GAAP and which proceedings do not
create any unreasonable risk of forfeiture with respect to the property which is
the subject of the proceedings; (c) statutory Liens, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law, which are
incurred in the ordinary course of business and are (i) for sums not more than
thirty (30) days delinquent or (ii) being contested in good faith by appropriate
proceedings and with respect to which appropriate reserves have been established
in accordance with GAAP; (d) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social
37
security, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money); (e) easements, rights-of-way, restrictions, and other similar charges or
encumbrances not interfering in any material respect with the ordinary conduct
of the business of the Borrowers; (f) Liens in favor of or approved by the
Lender in writing in its sole discretion; and (g) purchase money security
interests securing amounts less than $50,000 in the aggregate, per year.
PERSON: a corporation, an association, a partnership, an
organization, a limited liability company, a business, an individual or a
government or political subdivision thereof or any governmental agency.
RECEIVABLES: the meaning ascribed to such term in the Code.
RELEASE: any release, emission, disposal, leaching or migration into
the environment (including, without limitation, the abandonment or disposal of
any barrels, containers, or other closed receptacles containing any Hazardous
Substances) or into or out of any property owned, occupied or used by Borrower.
REVENUE CODE: the Internal Revenue Code.
SECURITY ENTITLEMENTS: the meaning ascribed to such term in the
Code.
SOFTWARE: the meaning ascribed to such term in the Code.
SPILL: the meaning specified in Section 2.9(A).
SUBSIDIARY: with reference to any Person, is a corporation, or
similar association or entity not less than a majority of the outstanding shares
of the class or classes of stock, having by the terms thereof ordinary voting
power to elect a majority of the directors, managers or trustees of such
corporation, association or entity, of which are at the time owned or
controlled, directly or indirectly, by such Person of by a Subsidiary of such
Person.
TANGIBLE CHATTEL PAPER: the meaning ascribed to such term in the
Code.
TERM LOAN: the meaning specified in Section 1.1(A).
UNCERTIFICATED SECURITIES: the meaning specified in Section 1.6.
38
