Exhibit 10.28
Promissory Note
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1. For value received, and pursuant to a Settlement Agreement dated February 1,
2001 attached hereto (Settlement Agreement), Xxxxx Medical Corp., a Delaware
corporation (Xxxxx or Maker), for itself and its successors and assigns,
promises to pay to the United States of America (Holder), or its assignee, the
full principal sum of $ 5,200,000, together with interest accruing at the rates
of 5.25% per annum through year 1, 6.50% per annum through year 2, and 7.25% per
annum through years 3-5 (Outstanding Balance) as set forth below.
Schedule of Payments (including interest)
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Quarters Date Payment Principal Interest Balance
Due
5.25% 5,200,000
Down Payment 02/7/01 500,000 500,000 4,700,000
Year one 1 04/1/01 75,000 75,000 4,625,000
2 07/1/01 106,953 5,000 101,953 4,620,000
3 10/1/01 135,638 75,000 60,638 4,545,000
4 01/1/02 134,653 75,000 59,653 4,470,000
Year one total 952,244 730,000
6.50%
Year two 5 03/1/02 173,425 125,000 48,425 4,345,000
6 06/1/02 195,606 125,000 70,606 4,220,000
7 09/1/02 193,575 125,000 68,575 4,095,000
8 12/1/02 191,544 125,000 66,544 3,970,000
Year two total 754,150 500,000
7.25%
Year three 9 03/1/03 271,956 200,000 71,956 3,770,000
10 06/1/03 268,331 200,000 68,331 3,570,000
11 09/1/03 264,706 200,000 64,706 3,370,000
12 12/1/03 261,081 200,000 61,081 3,170,000
Year three total 1,066,075 800,000
7.25%
Year four 13 03/1/04 407,456 350,000 57,456 2,820,000
14 06/1/04 401,113 350,000 51,113 2,470,000
15 09/1/04 394,769 350,000 44,769 2,120,000
16 12/1/4 388,425 350,000 38,425 1,770,000
Year four total 1,591,763 1,400,000
7.25%
Year five 17 03/1/05 432,081 400,000 32,081 1,370,000
18 06/1/05 474,831 450,000 24,831 920,000
19 09/1/05 466,675 450,000 16,675 470,000
20 12/1/05 478,519 470,000 8,519 --
Year five total 1,852,106 1,770,000
TOTAL - ALL YEARS 6,216,338 5,200,000
2. Payments will be made by wire transfer as indicated in the Settlement
Agreement. If there is any change in the method or instructions of payment, the
Holder shall inform the Maker at least 5 business days before payment is due.
3. This Note may be prepaid, in whole or in part, without penalty or premium.
Partial payment does not alter the interest rate applicable each year as
reflected in paragraph 1 of this Note.
4. Pursuant to the Settlement Agreement, the Maker procured from Fleet National
Bank and shall deliver or cause to be delivered to the United States of America,
Letter of Credit No. ASL-3005090-110 MMC , established in favor of the United
States by Fleet National Bank (Letter of Credit). The Maker agrees, and the
holder of this Note, by its acceptance hereof, likewise agrees, that, except
with respect to indebtedness covered by Letter of Credit No.
ASL-3005090-110 MMC issued by Fleet National Bank on February 1, 2001, the
indebtedness represented by this Note, is subordinate to the Maker's
indebtedness under the Loan and Security Arrangement between Fleet Capital
Corporation and the Maker, dated January 26, 2001. The Holder may draw on the
Letter of Credit only upon an Event of Default as defined by this Note. Maker
may, with the prior written approval of the Holder, cause to be issued a
substitute Letter of Credit of like terms and conditions. If the Letter of
Credit expires before the entire outstanding balance due under this Note is
paid, Xxxxx shall cause to be issued a substitute Letter of Credit of like terms
and conditions.
5. Maker is in default of this Note on the date of occurrence of any of the
following events (Events of Default).
A. Maker's failure to procure, deliver, or maintain the Letter of
Credit.
B. Maker's failure to pay any amount provided for in this Note within
two days of when such payment is due and payable; provided, however, that an
Event of Default does not occur if because of events outside of Maker's control,
the Holder does not receive the paid amount after transmission by Maker. Maker
will make its best efforts to insure Holder's receipt of the paid amount.
C. If prior to making the full payment of the amount due under this
Note, any case, proceeding, or other action is instituted;
a. under any law relating to bankruptcy, insolvency,
reorganization, or relief of debtors, seeking to have any
order for relief of debtors, or seeking to adjudicate Xxxxx
as bankrupt or insolvent; or
b. seeking appointment of a receiver, trustee, custodian or
other similar official for Xxxxx or for all or any
substantial part of Xxxxx'x assets.
D. If, paragraph 13 of the Settlement Agreement is violated.
6. The Maker shall provide the United States written notice of an Event of
Default within two (2) business days of such event by overnight mail, delivered
to the Office of the United States Attorney for the District of Connecticut
(USAO), at 000 Xxxxxx Xxxxxx Xxx Xxxxx, XX 00000.
7. Upon the occurrence of an Event of Default, without further notice or
presentment and demand by the United States:
A. The portion of the Outstanding Balance secured by the Letter of
Credit shall become immediately due and payable, and the portion of the
Outstanding Balance not secured by the Letter of Credit shall become due and
payable after 30 days from an Event of Default not cured within 30 days (default
amount). Interest shall accrue on the default amount from the date of the Event
of Default at 12 per cent per annum, compounded daily.
B. The United States may draw the full amount available for drawing
under the Letter of Credit and retain all proceeds thereof, and the default
amount shall be reduced by the amount of such draw.
C. The United States retains any and all other rights and remedies it
has or may have under law and equity, and may exercise those rights or remedies.
D. No failure or delay on the part of the United States to exercise any
right or remedy shall operate as a waiver of the United States' rights. No
partial or single exercise by the United States of any right or remedy shall
operate as a waiver of the United States' rights.
E. Maker will pay the United States all reasonable costs of collection,
including reasonable attorneys' fees and expenses.
8. Waiver by the Holder of any default by Maker, its successors, or assigns will
not constitute a waiver of a subsequent default. Failure by the Holder to
exercise any right, power, or privilege which it may have by reason of default
will not preclude the exercise of such right, power, or privilege so long as
such default remains uncured or if a subsequent default occurs.
9. This Note shall be governed and construed according to the laws of the United
States of America.
10. Maker acknowledges that it is entering into this Note, freely, voluntarily
and with no degree of compulsion whatsoever.
11. Xxxxx shall provide the USAO a certified copy of a resolution of Xxxxx'x
Board of Directors affirming that Xxxxx has authority to enter into this Note,
and that Xxxxx'x Board of Directors has: (1) reviewed this Note, the Letter of
Credit, and the Settlement Agreement; (2) consulted with legal counsel in
connection with this matter; (3) voted to authorize Xxxxx to enter into this
Note on behalf of Maker; and (4) voted to authorize the corporate officer
identified below to execute this Note and to take such further steps as
necessary to carry out the terms of this Note.
IN WITNESS THEREOF, Maker intending to be legally bound hereby and so bind its
successors and assigns, has caused this Note to be executed by its proper
corporate officer and its corporate seal hereunto affixed, duly attested this 1,
day of February, 2001
XXXXX MEDICAL CORP.
by:
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
President and CEO
February 1, 2001
Corporate Seal
Corporate Acknowledgment
State of Connecticut
On February 1, 2001, before me personally came Xxxxx X. Xxxxxx, to me known who,
being duly sworn, did depose and state that (1) she resides in Connecticut, (2)
is an officer of Xxxxx Medical Corp. (Xxxxx), the corporation described in and
which executed the above instrument, (3) she knows the seal of Xxxxx, (4) the
seal affixed to said instrument is such corporate seal, (4) that it was so
affixed by order of the Board of Directors of Xxxxx, (5) and that she signed her
name thereto by like order.
/s/ Xxxxxx Xxxxxx
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Notary Public
State of Connecticut
My Commission Expires:
