THIRD MODIFICATION AGREEMENT
EXHIBIT
10.1
THIS
THIRD MODIFICATION AGREEMENT (the “Modification Agreement”), dated as
of March 11, 2010 by and between CAS MEDICAL SYSTEMS, INC., a Delaware
corporation having its chief executive office at 00 Xxxx Xxxxxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxxx (the “Borrower”) and NEWALLIANCE BANK, a Connecticut stock
savings bank with a place of business at 000 Xxxxxx Xxxxxx, Xxx Xxxxx,
Xxxxxxxxxxx 00000 (the “Bank”).
W I T N E S S E T H
WHEREAS,
the Borrower executed a Commercial Revolving Promissory Note in the original
stated principal amount of Ten Million Dollars ($10,000,000.00) dated February
11, 2008, as modified by a Debt Modification Agreement (the “First
Modification”) from Borrower dated December 31, 2008, and as further modified by
a Second Modification Agreement between Bank and Borrower executed April 3, 2009
(the “Second Modification”) (said Commercial Revolving Promissory Note, as
modified by the First Modification and Second Modification , herein called the
“Note” and the loan evidenced by the Note herein called the “Loan”);
and
WHEREAS
the Note was issued pursuant to a Commercial Loan Agreement dated February 11,
2008 between Borrower and Bank, including a Commercial Loan Agreement Addendum
(“Addendum”) also dated February 11, 2008 between Borrower and Bank, which said
Commercial Loan Agreement, including the Addendum, was modified by the First
Modification and the Second Modification (said Commercial Loan Agreement,
including the Addendum, as modified by the First Modification and Second
Modification herein called the “Loan Agreement”);
and
WHEREAS
pursuant to the Loan Agreement, the maximum principal amount of the Loan
permitted to be outstanding at any time pursuant to the Loan Agreement was
reduced to Five Million Dollars, and subject to such further requirements and
limitations as are set forth in the Loan Agreement;
WHEREAS,
Borrower’s
obligations to the Bank, including those under the Note and Loan Agreement are
secured inter
alia by a
security interest in the Collateral, as defined in the Security Agreement (as
modified by the First Modification and Second Modification, the “Security Agreement”) from
Borrower to Bank dated February 11, 2008, and herein also called the “Collateral;” and
WHEREAS,
in connection with the Loan, Borrower executed and delivered various other
documents, instruments and/or indemnities to Bank (said documents, instruments
and indemnities, including without limitation, the Note, the Loan Agreement, the
Security Agreement, the Loan Documents as defined in the Loan Agreement, and all
other documents evidencing, securing, or relating to the Loan, collectively
called the “Loan
Documents”); and
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WHEREAS, Borrower has requested a
modification of the Loan Documents in order to amend the Debt Service Coverage
Ratio covenant contained in the Loan Agreement, to extend the maturity of the
Loan and to consider certain assets of Statcorp, Inc. (“Statcorp”), a Delaware
corporation and a subsidiary of Borrower, in determining the Borrowing Base
under the Loan Agreement, and the Bank is willing to amend the Loan Documents
subject to and on the terms and conditions set forth herein.
NOW,
THEREFORE in consideration of the mutual promises and covenants contained
herein, the parties hereto agree as follows:
1.
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Borrower
acknowledges and agrees that (i) as of the date hereof and before giving
effect to any Advance made this date under the Loan Agreement, or other
transactions occurring as of the date hereof, including any checks
presented for payment or electronic funds transfers or loan sweeps made as
of the date hereof, the outstanding principal balance due Bank under the
Note isTwo Million
One Hundred Twenty Nine Thousand One Hundred One and 35/100 Dollars
($2,129,101.35); and (ii) the said principal balance is due and owing to
the Bank under the Note, without defense, offset or
counterclaim.
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2.
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The
Note is hereby modified as follows:
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a) The Note shall mature on
April 1, 2011, which date shall constitute the “Maturity Date” as defined in the
Note.
b) To indicate that
commencing March 11, 2010, and continuing thereafter the annual interest rate on
the Note shall be equal to the greater of (a) the Base Rate (as hereafter
defined) in effect from time to time, plus two percentage points (2.00%) or (b)
five percent (5.00%) (“Floor Rate”). The Base Rate is subject to
change on a daily basis. Whenever the Base Rate changes, the interest
rate on the Note is subject to change without notice or demand, so that the
annual interest rate on the outstanding principal balance of the Note will at
all times be equal to the greater of (a) the Base Rate plus 2.00% or (b) the
Floor Rate. The term “Base Rate” shall mean the rate designated from
time to time by the Bank as its “Base Rate.” The Base Rate is not
necessarily the best or lowest interest rate charged by the
Bank. Notwithstanding the foregoing, after the occurrence of an Event
of Default, as defined in the Note, or after the Maturity Date as defined in the
Note, and including the period after any judgment has been rendered with respect
to the Note, the interest rate on the outstanding principal balance of the Note
shall be three percentage points (3.0%) per annum higher than the rate of
interest otherwise payable under the Note.
c) To
indicate that interest on the outstanding principal balance of the Note shall be
due and payable monthly in arrears on the first day of each calendar
month. If not sooner paid, all outstanding principal under the Note,
together with accrued but unpaid interest shall be due and payable in full on
April 1, 2011, unless extended in writing by the holder of the Note, in its sole
and absolute discretion, upon terms and conditions acceptable to that
holder.
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d) To indicate that
references therein to the “Commercial Loan Agreement” or the “Agreement” shall
mean the “Loan Agreement” as that term is defined in this Modification
Agreement, as modified by this Modification Agreement, as the same may be
further amended and/or restated from time to time.
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3.
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The
Loan Agreement is modified as
follows:
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a) Section
1.1 of the Loan Agreement is modified to provide as follows:
Upon and
subject to the terms and conditions set forth in this Agreement, the Bank agrees
to lend to Borrower, and the Borrower may borrow from the Bank, from time to
time (the “Loan”), up to
the principal amount (hereinafter referred to as the “Borrowing Base”) which is the
lesser of:
a.
The sum of:
(1) Seventy-Five
Percent (75.00%) of the
Borrower’s Eligible Receivables and Seventy-Five Percent (75.00%) of Statcorp
Eligible Receivables (as hereafter defined); AND
(2) the
lesser of two million five hundred thousand dollars ($2,500,000.00) or Thirty
Percent (30.00%) of the
Borrower’s Eligible Inventory plus Thirty Percent (30.00%) of the
Statcorp Eligible Inventory (as hereafter defined);
OR
b. FIVE MILLION DOLLARS
($5,000,000.00).
which
amount the Borrower may borrow, repay and reborrow until the Maturity Date, as
hereinafter defined, subject to the terms and conditions hereof; provided
however, the maximum principal amount of the Loan outstanding at any one time
shall not exceed the Borrowing Base. The term “Statcorp Eligible Receivables”
shall mean “Eligible Receivables,” as defined in the Security Agreement from
Statcorpto Bank dated March 11, 2010, as the same may be amended and/or restated
from time to time (“Statcorp
Security Agreement”) and the term “Statcorp Eligible Inventory”
shall mean “Eligible Inventory,” as defined in the Statcorp Security
Agreement.
b) The
second and third paragraphs of Section 1.2 are modified to provide as
follows:
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In
addition to the forgoing, Borrower shall have no right to obtain any Advance
which if made would result in the principal balance of the Loan exceeding the
Borrowing Base. Nothing herein shall be construed to require the Bank to lend up
to the Borrowing Base, and nothing shall prohibit the Bank from lending in
excess of the Borrowing Base.
In the
event the Borrowing Base is exceeded at any time, Borrower shall pay such excess
amount on demand.
c) Section
3.1(c) of the Loan Agreement is modified to provide as follows:
Borrower
shall have no right to obtain any Advance, which if made would result in the
principal balance of the Loan exceeding the Borrowing Base.
d) Section
3.1(c) is modified to indicate that “Eligible Inventory” shall no longer include
work-in-process (other than raw materials and finished goods which would
otherwise constitute Eligible Inventory) and to further indicate that Eligible
Inventory shall not include slow moving Inventory, as determined by the
Bank. All other requirements of “Eligible Inventory” shall remain
unchanged.
e) Section
3.1(c) is further modified to indicate that in addition to the requirements set
forth in the definition of “Eligible Receivables,” Eligible Receivables shall
not include all of the accounts owed by an account debtor where fifty percent
(50.00%) or more of all of the accounts owed by that account debtor are past due
more than the 90 days from the invoice date ; or (ii) any account from an
account debtor located outside of the United States, unless supported by foreign
credit insurance or a letter of credit which has been assigned to Bank,
in both instances acceptable to the Bank, in its sole and absolute
discretion, or unless otherwise agreed to by Bank. Section 3.1(c) is
further modified to indicate that in addition to the requirements set forth in
the definition of “Eligible Inventory,” Eligible Inventory
shall not
include Inventory which is not in Debtor’s possession and control or
Inventory which is not located at the locations known as 00000-000 Xxxxx Xxxxx
Xxxx, Xxxxxxxxxxxx, XX 00000, or 30- 38 and 40- 44 East Industrial
Road, Branford , CT, unless otherwise agreed to by the Bank.
f) Section
4.2 of the Loan Agreement is modified to provide as follows:
Borrowing
Base Certificates and Reports shall be delivered to the Bank concurrently with
any request for an Advance and also monthly on the fifteenth day of each month.
Said monthly Borrowing Base Certificates and Reports shall show the status of
Inventory and Accounts of Borrower and Statcorp, on a consolidated basis (and
Eligible Inventory and Statcorp Eligible Inventory, on a consolidated basis, and
Eligible Receivables and Statcorp Eligible Receivables, on a consolidated basis)
as of the last business day of the preceding month. Such Borrowing
Base Certificates and Reports submitted at the time of a request for an Advance,
shall reflect Inventory and Accounts of Borrower and Statcorp,
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on a
consolidated basis (and Eligible Inventory and Statcorp Eligible Inventory, on a
consolidated basis, and Eligible Receivables and Statcorp Eligible
Receivables, on a consolidated basis) as of the close of business on the last
business day preceding the date of the request for Advance. The Borrowing Base
Certificates and Reports shall be in such form and detail as the Bank may
require. Upon request of the Bank from time to time, the Borrower shall deliver
a Borrowing Base Report reflecting Inventory and Accounts of Statcorp and
Borrower on a non-consolidated basis as well as Eligible Inventory, Statcorp
Eligible Inventory, Eligible Receivables and Statcorp Eligible Receivables, on a
non- consolidated basis.
Without
limiting the foregoing, in order to verify the validity of any Borrowing Base
Certificate, Borrower shall, upon the request of Bank, promptly furnish Bank
with copies of Borrower’s purchase orders, sales journals, invoices, chattel
paper, customer’s purchase orders, or the equivalent, and original shipping or
delivery receipts for all Inventory purchased and goods sold, and Borrower shall
warrant the genuineness thereof. In addition, Borrower shall provide Bank, on a
quarterly basis, commencing on July 15, 2010 and on the fifteenth day of each
calendar quarter thereafter, a report identifying the location of and all names
and addresses of all persons or entities other than the Borrower or Statcorp,
such as lessees, consignees, warehousemen or purchasers of chattel paper, which
have possession or are intended to have possession of any of the Collateral as
defined in the Security Agreement and the Statcorp Security Agreement consisting
of instruments, chattel paper, inventory or equipment. Such reports
shall, at the request of Bank, contain an estimate of the value of such
Collateral located at such locations.
g) Section
3.1 (d) is modified to provide as follows:
In the
event the Borrowing Base is exceeded at any time, Borrower shall pay such excess
amount on
demand. Nothing herein shall be construed to require the Bank to lend
up to the Borrowing Base, and nothing shall prohibit the Bank from lending in
excess of the Borrowing Base.
h) Section
4.3(c) of the Loan Agreement is modified to provide as follows:
Borrower
and Statcorp’s accounts receivable agings on a consolidated basis in form and
detail satisfactory to Bank, shall be provided to Bank on the fifteenth day of
each month and at the time of each request for an Advance. Such monthly agings
shall show the aging of accounts for Borrower and Statcorp on a consolidated
basis as of the last business day of the preceding month. Such agings
submitted at the time of a request for an Advance, shall reflect the aging of
accounts for Borrower and Statcorp on a consolidated basis as of the close of
business on the last business day preceding the date of the request for
Advance. Upon request of Bank from time to time, Borrower shall
deliver agaings for a Borrower and Statcorp on a non-consolidated
basis.
i) Section
4.5 of the Loan Agreement is modified to provide as follows:
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The
Borrower shall maintain a minimum Debt Service Coverage Ratio of 1.25 to 1.0 as
of March 31, 2010 and thereafter (tested quarterly on a year-to-date
basis). The Debt Service Coverage Ratio shall be defined as (earnings
before interest expense, taxes, depreciation and amortization) divided by
(current maturities of long term debt plus interest expense), all as determined
in accordance with generally accepted accounting principles.
j) The
Loan Agreement is modified to indicate that the term “Borrowing Base” as used in
the Loan Agreement, shall have the meaning of “Borrowing Base” set forth in
Section 3a of this Modification Agreement.
k) The
Loan Agreement is modified to indicate that references to the Note therein shall
mean the “Note,” as that term is defined in this Modification Agreement, as
modified by this Modification Agreement, as the same may be further amended
and/or restated from time to time; and references to the Security Agreement
therein shall mean the “Security Agreement,” as that term is defined in this
Modification Agreement, as modified by this Modification Agreement, as the same
may be further amended and/or restated from time to time.
l) The
terms of the Addendum (as defined in this Modification Agreement) shall no
longer be in effect.
m) The
following shall be added to the Loan Agreement as Section 4.18:
The Bank
shall have the right to perform examinations and audits of the Collateral for
the Loan, from time to time at the Borrower’s expense, including without
limitation, Borrower’s books and records, accounts, purchase orders, sales
journals, invoices, chattel paper, customer’s purchase orders, or the
equivalent, and original shipping or delivery receipts for all inventory
purchased and goods sold. In addition, the Bank shall have the right to require
the establishment of a lockbox by Borrower at the Bank and a blocked account for
the collection of Borrower’s accounts and other receivables, on terms
satisfactory to the Bank and at the expense of the Borrower. The Bank shall also
have the right to notify account debtors of Borrower upon or at any time after
the occurrence of an Event of Default, to pay accounts and other receivables
directly to the Bank. Borrower shall pay to the Bank, upon demand,
all fees, costs and expenses incurred or charged by Bank in connection with any
such examination, audit, lockbox, and notification.
n) The
Loan Agreement is modified to indicate that all references therein to the “Loan
Document” or “Loan Documents” shall mean collectively and individually the Note,
Loan Agreement, the Security Agreement, the Statcorp Security Agreement, the
Statcorp Guaranty, all as defined in this Modification Agreement, as the same
may be amended/or restated from time to time, including by this Modification
Agreement, and all other documents now or hereafter evidencing, securing,
guarantying or relating to the loan evidenced by the Note, as amended by
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this
Modification Agreement, and as the same may be further amended and/or restated
from time to time, or any guaranty thereof, and including this Modification
Agreement. The Loan Agreement is further modified to indicate that all
references therein to the “Statcorp Guaranty” shall have the meaning ascribed to
it in this Modification Agreement.
o) The
Loan Agreement is modified to indicate that in addition to the Events of Default
set forth in Section 6 thereof, each of the following shall constitute an Event
of Default and the Cure Right shall not be applicable to any of the
following:
(i)
Statcorp’s failure to keep in force any insurance required under the Statcorp
Security Agreement; or (ii) Statcorp shall cease to legally exist; or
(iii) the dissolution of the Statcorp or the filing by or
against Statcorp of any petition, arrangement, reorganization, or the like under
any insolvency or bankruptcy law, or the adjudication of Statcorp as bankrupt,
or the making of an assignment for the benefit of creditors, or the appointment
of a receiver for any part of any of Statcorp’s properties; or (iv) any material
change in the structure of Statcorp’s business operations which in the
reasonable judgment of the Bank materially and adversely affects the ability of
the Statcorp to pay or perform under any of the Loan Documents or otherwise
impairs any security of the Bank; or (v) any merger or consolidation of Statcorp
with or into another entity or any spinoff or reorganization of Statcorp; or
(vi) the occurrence of a default or an Event of Default (as defined therein)
under, or demand for payment of the Statcorp Security Agreement, the Statcorp
Guaranty or any other existing or future agreement from Statcorp in favor of
Bank; or (vii) there is a material adverse change in the condition or affairs
(financial or otherwise) of Statcorp, or a material adverse change (financial or
otherwise) in the collateral which secures any obligations of Statcorp to Bank,
and such change causes the Bank, in good faith, to deem itself insecure with
respect to the repayment and performance of any obligations of Statcorp to Bank;
or (viii) any representation or warranty made by the Statcorp in any of the Loan
Documents, or in any existing or future agreement from Statcorp in favor of Bank
shall be incorrect or untrue in any material respect as of the date when made,
or any statement, certificate or data furnished by the Borrower in connection
with the Loan or any said existing or future agreement shall be incorrect or
untrue in any material respect as of the date thereof or as of the date
specified therein, as the case may be; or (ix) any default in this Modification
Agreement; or (x) the failure to keep, perform or carry out the Statcorp
Guaranty.
4. Borrower
represents and warrants that the only commercial tort claims it has as of the
date hereof are described on Schedule
4 attached hereto and incorporated herein (“Tort Claims”). To secure the
Obligations as defined in the Security Agreement, as amended by this
Modification Agreement, Borrower hereby grants to the Bank a security interest
in the Tort Claims. Borrower agrees that the Tort Claims shall
constitute “Collateral” as defined in the Security Agreement and that Bank shall
have all rights with respect to the Tort Claims, as it has under the Security
Agreement with respect to the other Collateral described in the Security
Agreement, as amended hereby and the Security Agreement is amended to include in
the definition of “Collateral” therein, the Tort Claims.
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5.
A. Borrower shall deliver to Bank contemporaneously
herewith a Trademark and Letters Patent Security Agreement (“Patent Assignment”) providing
to Bank a first priority collateral assignment, lien and security interest in
all intellectual property of the Borrower, including, without limitation,
patents, trademarks and copyrights of Borrower and pending applications
therefor. The Patent Assignment shall be in form and substance satisfactory to
Bank. Such Patent Assignment shall be filed in the U.S. Patent/Trademark Officer
(“PTO”) and any other governmental officers as the Bank may
require. Borrower shall provide Bank with such searches of the PTO
and other governmental offices as Bank may require, at the Borrower’s expense,
to confirm that Bank has a first priority collateral assignment, lien and
security interest in all intellectual property of the Borrower.
B. Borrower
shall also cause to be delivered to the Bank the Statcorp Security Agreement and
a Guaranty from Statcorp (as the same may amended and/or restated from time to
time, the “Statcorp
Guaranty”) both dated the date hereof and both in form and substance
satisfactory to the Bank.
6. The
Loan Documents are hereby reaffirmed and modified to incorporate the terms
contained in this Modification Agreement. Any default in this
Modification Agreement shall be an Event of Default as defined in the Loan
Agreement. The Borrower acknowledges and agrees that without limiting any other
rights or remedies available to the Bank at law, equity or by contract, upon the
occurrence of an Event of Default, as defined in or under the Note or Loan
Agreement, or the failure to comply with the terms of this Modification
Agreement, the entire principal balance of the Note, with accrued interest
thereon shall, at the option of holder of the Note, become due and payable
forthwith without demand or notice.
7. The
Borrower reaffirms all its representations, warranties, covenants (both
affirmative and negative), waivers and indemnities contained in the Loan
Documents, as modified hereby. All of the representations and
warranties set forth in the Loan Documents are true and correct as if made on
the date of execution of this Agreement except as waived in the Waiver
Letter.
8. The
Borrower represents, acknowledges and affirms that it has no claim, defense,
offset or counterclaim whatsoever against Bank with respect to the Note, the
Loan Agreement, or any other Loan Document, or the modifications made herein,
and that Bank is relying on this representation in agreeing to said
modifications. The Borrower further acknowledges that Bank would not
agree to said modifications unless the Borrower made the representations
contained in this paragraph, and elsewhere in this Modification Agreement,
freely and willingly, after due consultation with its
attorneys. Borrower further represents that this Modification
Agreement, and all of the Loan Documents executed by it, are its valid and
binding obligations and enforceable in accordance with their terms and further
represents that except as waived in the Waiver Letter, no Event of Default (as
defined in the Loan Agreement or any Loan Document) has occurred nor has there
occurred any event or condition which, with the giving of notice or the passage
of time or both would constitute an Event of Default.
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9. In
furtherance of the immediately preceding paragraph, Borrower, as of the date of
this Modification Agreement, releases, and forever discharges the Bank, its
officers, agents, successors and assigns, from any and all claims, actions,
causes of action, obligations and liabilities of any kind known or unknown which
the Borrower has or may have as of the date hereof, whether relating
to the Note, the Loan Agreement, any of the Loan Documents or any of the
transactions contemplated hereby or consummated in connection herewith, or any
negotiations in connection with any of the foregoing, or otherwise.
10. The
Borrower agrees that nothing contained herein shall in any way impair the Note,
Loan Agreement, the Security Agreement or any other Loan Document, and the
Collateral shall remain in all respects subject to the lien, charge and
encumbrance of the Security Agreement. The Borrower further agrees
that nothing contained herein or modified pursuant to this Modification
Agreement shall affect or be construed to affect the lien, charge or encumbrance
of the security interests granted by the Borrower or the priority thereof, over
other liens, charges and encumbrances, or release or affect the liability of any
other party or parties who may now or hereafter be liable under, pursuant to, or
on account of the Note, the Loan Agreement and/or the other Loan Documents. The
Borrower acknowledges, confirms and agrees that (i) the Security Agreement and
the security interest in the Collateral granted to the Bank pursuant to the
Security Agreement, as modified hereby, secure among other things, and without
limiting the terms of the Security Agreement, as modified hereby, the Borrower’s
obligations under this Modification Agreement, as well as the other Loan
Documents; and (ii) the “Obligations” as defined in the Security Agreement,
include, without limitation, all liabilities, obligations, indebtedness, duties,
and covenants of the Borrower under this Modification Agreement, and under the
Note and the Loan Agreement, both as modified by this Modification
Agreement.
11. Borrower
acknowledges and agrees that it is not permitted to sell or otherwise dispose of
any Collateral, as defined in the Security Agreement, as amended hereby (other
than the sale of inventory in the ordinary course of Borrower’s business),
without the prior written consent of the Bank, in the Bank’s sole discretion. To
the extent the Bank shall in future, in its sole and absolute discretion,
provide its written consent to any sale or disposition of the Collateral, the
Bank may, at its option and without limiting any of its rights, condition its
consent on the Borrower’s payment to the Bank of the proceeds from the sale or
disposition and shall have the right, in its sole and absolute discretion, to
apply such proceeds to any of Borrower’s then outstanding obligations to the
Bank, which may include the Loan or any other loans or obligations outstanding
from Borrower to the Bank.
12.
Concurrently with the execution and delivery of this Agreement by the Bank and
the Borrower, the Bank shall deliver a letter substantially in the form set
forth in Schedule
A attached hereto and made a part hereof (“Waiver Letter”) in connection
with the testing of the Debt Service Coverage Ratio as of December
31, 2009 under the Loan Agreement. Borrower shall pay Bank,
concurrently with the execution and delivery of this Agreement and the Waiver
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Letter by
Bank and the Borrower, a fee (“Waiver Fee”) in the amount of
twenty-five thousand dollars ($25,000.00), to induce Bank to issue the Waiver
Letter.
13. Borrower
shall pay a fee of fifty thousand dollars ($50,000.00) to the Bank on the date
of execution of this Modification Agreement by Borrower, in consideration of and
as set forth in the Bank’s issuance of the commitment letter dated February 19,
2010 (“Commitment Letter”) relating to the modifications
described herein (the “Commitment Fee”). The Borrower
shall also pay, upon demand, all costs and expenses, including reasonable
attorneys’ fees, incurred by Bank in connection with the Loan, including,
without limitation, matters relating to the Debt Service Coverage Ratio and the
transaction of which this Modification Agreement forms a part, including the
preparation of this Modification Agreement and the closing of the transaction
contemplated hereby.
14. Capitalized
terms not otherwise defined herein shall have the same meaning as in the
document to which they refer. Except as modified by this Modification
Agreement, the Note, the Loan Agreement and all other Loan Documents shall
remain unchanged and in full force and effect. Borrower shall keep
and perform all of the terms and agreements contained in the Loan Documents, as
modified by this Modification Agreement.
15. This
Modification Agreement shall be binding upon and inure to the benefit of the
parties hereto, their respective heirs, successors and assigns. This
Modification Agreement may only be amended in writing. If any term or
provision of this Modification Agreement or the application thereof to any
person or circumstance, shall to any extent be invalid or unenforceable, the
remainder of this Modification Agreement, or the application of such term or
provision to persons or circumstances other than those as to which it is invalid
or unenforceable, shall not be affected thereby, and each term and provision of
this Modification Agreement shall be valid and enforceable to the fullest extent
permitted by law. To the extent of any conflict between the
Commitment Letter and this Modification Agreement, this Modification Agreement
shall control.
16. This
Agreement may be signed in one or more counterparts all of which shall
constitute one document and shall be construed under the laws of the State of
Connecticut. The Recitals are incorporated herein.
17. THE
BORROWER ACKNOWLEDGES THAT THE NOTE, THE LOAN AGREEMENT, ALL LOAN DOCUMENTS AND
THIS MODIFICATION AGREEMENT RESULT FROM A COMMERCIAL TRANSACTION AND THE
BORROWER HEREBY WAIVES ANY RIGHT TO NOTICE OR HEARING UNDER THE CONSTITUTION OF
THE UNITED STATES OR ANY STATE OR FEDERAL LAW, INCLUDING CONNECTICUT
GENERAL STATUTES SECTION 52-278a ET SEQ., AS NOW OR HEREAFTER AMENDED, OR ANY
SUCCESSOR ACT OR ACTS THERETO, AND WAIVES ANY REQUIREMENTS FOR THE POSTING OF
ANY BOND IN CONNECTION WITH ANY PREJUDGMENT REMEDY SOUGHT. THE
BORROWER AUTHORIZES THE ATTORNEY FOR ANY HOLDER OF THE NOTE TO ISSUE A WRIT FOR
PREJUDGMENT REMEDY
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WITHOUT
COURT ORDER. BORROWER ACKNOWLEDGES THAT IT MAKES THIS WAIVER
KNOWINGLY AND VOLUNTARILY AFTER CONSULTATION WITH ITS ATTORNEY.
18. THE
BORROWER WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING ON
ANY MATTER ARISING IN CONNECTION WITH THE NOTE, THE LOAN AGREEMENT, ANY LOAN
DOCUMENT, THIS MODIFICATION AGREEMENT OR IN ANY WAY RELATED TO THE FINANCING
TRANSACTIONS OF WHICH THIS MODIFICATION AGREEMENT IS A PART AND/OR THE DEFENSE
OR ENFORCEMENT OF ANY OF BANK’S RIGHTS OR REMEDIES. BORROWER
ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY AND VOLUNTARILY AFTER
CONSULTATION WITH ITS ATTORNEY.
19. Borrower
will, upon demand, furnish to the Bank such further information,
and
will
execute and deliver such instruments or documents, and will do all such acts as
the Bank may, at any time or from time to time, reasonably request, or as may be
necessary or appropriate to establish and maintain a valid and enforceable first
priority security interest of the Bank in the Collateral, as defined in the
Security Agreement, as modified hereby and in the Collateral, as defined in the
Patent Assignment.
20. Borrower
shall cause to be delivered to the Bank contemporaneously herewith
(i) a legal opinion from Borrower’s counsel with respect to this Modification
Agreement, a current UCC Search of the Delaware Secretary of State
and such other searches of governmental offices as the Bank may require,
including a current search from the U.S. Patent/Trademark Office,
all in form and substance satisfactory to the Bank; and (ii) a
current Certificate of Good Standing from the Delaware Secretary of
State as to Borrower, and a current Certificate of Authority to
Transact Business, as to Borrower from the Connecticut Secretary of State and
such other States as the Bank may require; and (iii) a resolution of the board
of directors of the Borrower certified by the Secretary or other officer of the
Borrower (other than Xxxxxxx X. Xxxxx) in form and substance satisfactory to the
Bank, which among other things authorizes the Borrower’s entering into the
transaction contemplated hereby and its execution and delivery of
this Modification Agreement and other documents as may be required by the Bank,
including the Patent Assignment (iv) such other information, materials and
documents as Bank may require, including without limitation, landlord consent
agreements.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
11
Signed,
Sealed and Delivered
|
|
In
The Presence Of:
|
|
CAS
MEDICAL SYSTEMS, INC.
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|
/s/ Xxxxxxxxx X. XxXxxxxx
Xxxxxxxxx
X. XxXxxxxx
|
|
/s/ Xxxx X. Xxxxxxxxx
Xxxx
X. Xxxxxxxxx
|
By:
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx
X. Xxxxx
Its:
Chief Financial Officer
|
|
|
NEWALLIANCE
BANK
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|
/s/ Xxxxxxxxx X. XxXxxxxx
Xxxxxxxxx
X. XxXxxxxx
|
|
/s/ Xxxx X. Xxxxxxxx
Xxxx
X. Xxxxxxxxx
|
By:
/s/ Xxxxx X. Xxxxxxx
Xxxxx
X. Xxxxxxx
Its
Vice President
|
STATE OF
CONNECTICUT
COUNTY OF NEW HAVEN
|
)
)
)
|
ss. New Haven March 11, 2010 |
Personally appeared Xxxxxxx X. Xxxxx,
Chief Financial Officer of CAS
MEDICAL SYSTEMS, INC., a Delaware corporation, signer and sealer of the
foregoing instrument, and acknowledged the same to be his free act and deed as
such officer and the free act and deed of said corporation, before
me.
/s/ Xxxxxxxxx X. XxXxxxxx
Xxxxxxxxx
X. XxXxxxxx
Commissioner
of the Superior Court
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12
STATE OF
CONNECTICUT
COUNTY OF NEW HAVEN
|
)
)
)
|
ss. New Haven March 11, 2010 |
Personally appeared Xxxxx X. Xxxxxxx,
Vice President, of NewAlliance Bank, a
Connecticut
bank, signer and sealer of the foregoing instrument and acknowledged the same to
be his free act and deed as such officer and the free act and deed of said Bank,
before me.
/s/ Xxxx X. Xxxxxxxxx
Xxxx
X. Xxxxxxxxx
Commissioner
of the Superior
Court
|
13
SCHEDULE
A
March 11,
2010
Xx.
Xxxxxxx Xxxxx, CFO
CAS
Medical Systems, Inc.
00 Xxxx
Xxxxxxxxxx Xxxx
Xxxxxxxx,
XX 00000
Dear Xx.
Xxxxx:
Reference
is made to the Commercial Loan Agreement between CAS Medical Systems, Inc.
(“Borrower”) and NewAlliance Bank (“Bank”) dated February 11, 2008, as modified
by a Debt Modification Agreement (the “First Modification”) dated December 31,
2008, a Second Modification Agreement executed April 3, 2009 (the “Second
Modification”) reducing the maximum principal amount of the loan made pursuant
thereto to $5,000,000.00, and a Third Modification Agreement dated of even date
herewith (the “Third Modification” and said Commercial Loan Agreement as so
modified and described, herein called the “Loan Agreement”). Pursuant
to the Second Modification Agreement and other agreements from Borrower in favor
of Bank, the Borrower was required to maintain a minimum Debt Service Coverage
Ratio, as defined in the Second Modification, tested as of December 31, 2009, on
a rolling four quarter basis, of 1.0x.
Borrower
has requested that the Bank waive the testing of the Debt Service Coverage Ratio
as of December 31, 2009, in conjunction with the execution of the Third
Modification. This letter is issued pursuant to the Third
Modification.
Accordingly,
subject to the terms set forth in this letter and payment of the Waiver Fee as
defined in the Third Modification, the Bank hereby waives the testing, as of
December 31, 2009, (but not as to any future time) of the Debt Service Coverage
Ratio, under the Loan Agreement and under any other agreements from Borrower,
with or in favor of Bank (whether or not related to the Loan Agreement) which
require the testing of the Debt Service Coverage Ratio as of December 31,
2009. Such waiver shall not be effective as to the testing of the
Debt Service Coverage Ratio at any time after December 31, 2009 in any document
from the Borrower to the Bank, including the Loan Agreement.
Nothing
contained in this letter shall be construed as a waiver of any default or Event
of Default under or as defined in the above-referenced Loan Agreement or any
other agreement from Borrower in favor of Bank, which may occur or exist on any
future occasion and the Bank shall have no obligation to waive any such default
or Event of Default or to waive or insist upon strict enforcement of any
covenant in any agreement from Borrower in favor of the Bank. Upon any default
or Event of Default under or as defined in any agreement from Borrower in favor
of Bank, including the Loan Agreement, or upon demand for payment under any
agreement from Borrower in favor of the Bank, the Bank shall be entitled to
exercise all rights and remedies
available
at law equity and/or by contract.
Please
sign below where indicated to evidence your agreement to the
foregoing.
Sincerely,
NewAlliance
Bank
By:
Xxxxx
X. Xxxxxxx
Vice
President
Agreed
and Accepted:
CAS
Medical Systems, Inc.
By:
Xxxxxxx
Xxxxx
Its:
Chief Financial Officer
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Date: March 11,
2010
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Schedule
4 Commercial Tort Claims
On August
7, 2009, Somanetics Corporation (“Somanetics”) filed an action against CAS
Medical Systems, Inc. (the “Company”) in the United States District Court for
the Eastern District of Michigan alleging patent infringement, false
advertising, and common law unfair competition and libel. The complaint
requests injunctive relief and unspecified monetary damages, including treble
damages and reasonable attorneys’ fees. On October 19, 2009, the Company
answered the complaint, denying all allegations against it. In addition, the
Company has asserted counterclaims against Somanetics for violation of the
antitrust laws and for a declaration that the patents sued upon are invalid,
unenforceable, and/or have not been infringed by the Company.
The term
“Tort Claims” as used herein shall mean the following:
All
commercial tort claims of Borrower against Somanetics Corporation, now owned or
existing, or hereafter arising or acquired, including without limitation any and
all counterclaims or claims of Borrower against Somanetics Corporation now
or hereafter asserted in, or in connection with that certain action, Somanetics
Corporation v. CAS Medical Systems, Inc. U.S. District Court Eastern District of
Michigan (Detroit) Case No. 09-cv-13110 Counter Claimant CAS Medical Systems,
Inc. v. Counter Defendant Somanetics Corporation, and together with all damages
arising from any and all of the foregoing, and proceeds of all of the
foregoing.