CONSTRUCTION LOAN AGREEMENT
This Agreement made as of this _____ day of July, by and between
Thermodynetics, Inc., a Delaware corporation with a principal place of business
at 651 Day Hill Road, Windsor, Connecticut 06095, (the "Borrower") and USTrust,
a Massachusetts trust company with a usual place of business at 30 Court Street,
Boston, Massachusetts 02108 ("Bank").
W I T N E S E T H :
WHEREAS, Borrower wishes to borrow up to the aggregate amount of One
Million Seven Hundred Fifty Thousand ($1,750,000.00) Dollars to satisfy certain
obligations of the Borrower to the Bank and for the improvement of certain real
property located in 651 Day Hill Road, Windsor, Connecticut 06095 (the
"Premises"); and
WHEREAS, subject to the terms and conditions herein provided, Bank is
willing to extend such loan.
NOW, THEREFORE, the parties hereby agree:
ARTICLE I
Definitions
For the purposes of this Agreement, the capitalized words and phrases
defined in this Article and in the introductory paragraph above shall have the
meanings herein ascribed to them.
1.01 "Advance(s)" shall mean a sum of money loaned by Bank to Borrower
pursuant to Article II of this Agreement for the construction of the
Improvements on the Premises.
1.02 "Architect" shall mean any architect engaged by Borrower and approved
by Bank in connection with construction of the Improvements.
1.03 "Availability Period" shall mean the period commencing on the
Commencement Date and ending on the Conversion Date.
1.04 "Banking Day" shall mean any business day on which banks are
authorized to be and are open for business in Boston, Massachusetts.
1.05 "Borrowing Date" shall mean and refer to that date specified in a
Notice of Borrowing as the date on which an Advance is to be made and that date
on which Bank shall make an Advance pursuant to Article II.
1.06 "Closing Date" shall mean the date hereof.
1.07 "Commencement Date" shall mean the date the Borrower commences
construction of the Improvements, but not later than _______________, 1999.
1.08 "Construction Amount" shall mean up to One Million Fifty Eight
Thousand Four Hundred Thirty-Nine ($1,058,439.00) Dollars.
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1.09 "Construction Contracts" shall mean all contracts between Borrower and
other persons pursuant to which such other persons will furnish labor, materials
and/or services in connection with the construction of the Improvements, and
shall include contracts between Borrower and any Architect. A list of
Construction Contracts is attached hereto as Exhibit D.
1.10 "Construction Loans" shall mean the aggregate unpaid balance of the
principal amount of all Advances (plus the amount used to payoff the Borrower's
Term Note to the Bank in the original principal mount of $875,000,000 (the
"Payoff")).
1.11 "Construction Note" shall mean the Construction to Permanent Note
executed by Borrower of even date in the face amount of One Million Seven
Hundred Fifty Thousand ($1,750,000.00) Dollars evidencing Borrower's obligation
to repay the Construction Loans, executed and delivered by Borrower to Bank.
1.12 "Conversion Date" shall mean December 1, 1999.
1.13 "Cost Breakdown/Disbursement Schedule" shall mean the construction
budget and disbursement schedule attached hereto as Exhibit A which is a
proposed budget relating to the construction of the Improvements.
1.14 "Events of Default" shall mean those events set forth in Article X of
this Agreement.
1.15 "General Conditions Precedent" shall mean those conditions set forth
in Article VI of this Agreement.
1.16 "Improvements" shall mean the construction of certain improvements on
the Premises pursuant to the Plans.
1.17 "Independent Engineer" shall mean an independent engineer, architect
or contractor hired by Borrower with Bank approval at Borrower's sole cost and
expense, to monitor the progress and quality of construction of the Improvements
and perform such other consulting responsibilities as Bank may require.
1.18 "Interest Payment Date" shall mean the first day of each calendar
month, commencing with the first of such dates next succeeding the date hereof.
1.19 "Mortgage" shall mean the Open-End Mortgage executed by Borrower of
even date encumbering the Premises and securing the Obligations.
1.20 "Notice of Borrowing" shall mean a written request by Borrower for an
Advance and Independent Engineer's Certificate in the form of Exhibit C attached
hereto.
1.21 "Obligations" shall mean all loans, advances, indebtedness,
liabilities, indemnity agreements and amounts, liquidated or unliquidated, owing
from Borrower to Bank at any time including without limitation obligations
arising under the Construction Note, each of every kind, nature and description
arising under this Agreement or arising under any mortgage, security agreement
or other agreement, instrument or document now or hereafter executed and
delivered to Bank pursuant hereto or in connection herewith, and whether secured
or unsecured, direct or indirect (that is, whether the same are due directly
from Borrower to Bank, or as an endorser or a guarantor) absolute or contingent,
due or to become due, now existing or hereafter contracted. Said term shall also
include all interest, fees and other charges chargeable to Borrower by Bank from
time to time hereunder and all covenants, agreements or undertakings of
Borrower, whether for the payment of money or otherwise arising under this
Agreement or arising under any mortgage, security agreement or other agreement,
instrument or document now or hereafter executed and delivered to Bank pursuant
hereto or in connection herewith.
1.22 "Permanent Loan" shall mean the aggregate principal balance of the
Construction Loans (on the Conversion Date), plus all accrued interest, fees and
other charges outstanding.
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1.23 "Permits" shall mean all licenses and permits required by any federal,
state, municipal or other governmental authority in connection with the
construction of the Improvements including all Certificates of Occupancy. A list
of Permits is attached hereto as Exhibit E
1.24 "Plans" shall mean the plans and specifications relating to the design
and construction of the Improvements which are attached or more particularly
described on Exhibit F attached hereto.
1.25 "Specific Conditions Precedent" shall mean those conditions set forth
in Article V of this Agreement.
ARTICLE II
Construction Loans
2.01 Subject to and upon the terms and conditions herein provided, Bank
may, in its discretion, make Advances to Borrower during the Availability Period
upon Borrower's request and provided that each of the following conditions are
met as of the Borrowing Date:
(a) After giving effect to such Advance, the Advances shall not exceed the
Construction Amount.
(b) Borrower has complied with all General Conditions Precedent.
(c) Borrower has complied with all Specific Conditions Precedent.
(d) No Event of Default has occurred (which has not been waived or cured)
and no event has occurred which upon the passage of time or the giving of notice
or both would constitute an Event of Default.
(e) Bank has received from Borrower, not less than two (2) Banking Days
prior to the Borrowing Date, a Notice of Borrowing, in the form of Exhibit B
attached hereto or such other form as Bank may require, requesting an Advance.
Borrower may submit no more than one (1) Notice of Borrowing requesting an
Advance in any thirty (30) day period. Advances shall be in minimum increments
of $50,000.00. Each Notice of Borrowing shall be accompanied by the following:
to the extent any portion of the requested Advance is to be paid for costs
incurred in connection with construction of the Improvements, a requisition on
the appropriate AIA Form together with copies of all invoices related thereto
and appropriate mechanics' lien waivers. Except as specifically agreed to
between Borrower and Bank, each such requisition shall be net of retainage,
which retainage shall be in the amount of ten (10%) percent of any such Advance.
2.02 Advances shall be made in accordance with the provisions of Article V
hereof, by crediting the amount thereof to Borrower's loan account maintained
with Bank; provided, however, that Bank retains the right to issue a check
comprising the Advance made payable directly to the intended payee.
ARTICLE III
Repayment
3.01 The Construction Loans shall bear interest at the variable rate of the
Bank's Base Lending Rate plus one (1%) percent per annum. Interest only shall be
paid monthly in arrears commencing on the first day of the first month next
succeeding the date hereof until the Conversion Date. Interest shall be computed
on the basis of a 360-day year for the actual number of days elapsed.
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3.02 On the Conversion Date, provided no Event of Default has occurred
hereunder which has not been waived or cured, the outstanding principal balance
of the Construction Loans, plus all accrued interest, fees and other charges
outstanding shall be amortized over a twenty (20)-year schedule for a term of
five (5) years, based upon either (i) a fixed rate equal to the Bank's cost of
funds on that date plus two hundred twenty-five basis points or (ii) interest
shall continue to be paid at the Base Lending Rate plus one (1%) percent per
annum. Borrower shall make such election prior to the Conversion Date for the
balance of the term of the Construction Note. Interest shall be calculated on
the basis of a 360-day year for the actual number of days elapsed.
3.03 Interest payable by the Borrower to the Bank on any Obligation after
maturity or upon the occurrence of Event of Default shall be payable at the
default rate set forth in the Construction Note.
3.04 The Borrower shall pay late charges in accordance with the terms of
the Construction Note.
3.05 The Construction Loan may be prepaid only in accordance with and
subject to the prepayment provisions contained in the Construction Note.
3.06 All payments to be made by Borrower to Bank hereunder, whether of
principal, interest, premium, fees or of any other kind, shall be paid to Bank
at its offices at the address set forth above, or at such other address which
Bank may request by written notice to Borrower.
3.07 Borrower hereby authorizes Bank to charge any and all amounts due from
Borrower to Bank pursuant to this Agreement or otherwise, to Borrower's loan
account maintained with Bank.
ARTICLE IV
Security, Guarantees and Supplementary Documentation
4.01 As security for the payment and performance of the Obligations,
Borrower shall grant to Bank the following rights and interests, each of which
shall be more particularly described in certain instruments which shall be
executed contemporaneously herewith or hereafter and in any extension,
modification or amendment thereof:
(a) A mortgage of Borrower's interest in the Premises which shall be
subject to no prior mortgage, lien, encumbrance or charge of any kind or nature,
except as set forth on Schedule B of the Title Policy.
(b) An assignment of, and security interest in, all rights of Borrower
under all Construction Contracts, which assignment shall be subject to no prior
assignment, security interest, lien, encumbrance or charge of any kind or
nature.
(c) An assignment of, and security interest in, all rights of Borrower in,
to and under all Permits, which assignment shall be subject to no prior
assignment, security interest, lien, encumbrance or charge of any kind or
nature.
(d) An assignment of, and security interest in, all rights of Borrower in
and to the Plans, which assignment shall be subject to no prior assignment,
security interest, lien, encumbrance or charge of any kind or nature.
(e) A security interest in all personal property assets of Borrower
including all construction materials, fixtures, machinery and equipment.
(f) An assignment, security interest, and/or mortgage of all proceeds of
the foregoing, subject to no prior security interest, mortgage, assignment,
lien, encumbrance or charge of any kind or nature.
4.02 Any and all deposits or other sums at any time credited by or due from
Bank to Borrower shall, at all times, constitute additional security for all
Obligations and
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may be set off against any of the Obligations at any time after the occurrence
of an Event of Default, whether or not other security held by Bank is deemed to
be adequate. Any and all instruments, documents, policies and certificates of
insurance, securities, goods, accounts receivable, choses in action, chattel
paper, cash, personal property and the proceeds thereof owned by Borrower or in
which Borrower has an interest which now or hereafter are at any time in
possession or control of Bank or in transit by mail or courier to or from Bank
or in the possession of any third party acting in Bank's behalf, without regard
to whether Bank received the same in pledge, for safekeeping as agent for
collection or transmission or otherwise or whether Bank has conditionally
released the same, shall constitute additional security for the Obligations and
may be applied at any time, after the occurrence of an Event of Default, to the
Obligations, whether or not other security held by Bank is deemed to be
adequate.
4.03 All Obligations of the Borrower to the Bank shall be guaranteed on an
unlimited, joint and several basis, by Turbotec Products, Inc., TPI Systems,
Inc. and National Energy Systems, Inc. (each a "Corporate Guarantor") pursuant
to a certain Multi-Entity Guaranty dated May 24, 1993 (the "Guaranty").
ARTICLE V
Specific Conditions Precedent
5.01 Prior to making an Advance, Bank may require an inspection of the
Premises by its employees and/or the Independent Engineer for the purpose of
assuring that the progress and quality of the construction is as represented by
the Notice of Borrowing requesting such Advance, and, until such inspection,
Bank need not make the Advances therein requested. The Bank shall make such
inspection within two (2) Banking Days after receipt of any Notice of Borrowing.
If such inspection does not furnish such assurance to Bank, Bank may reject such
Notice of Borrowing and need not make the Advance therein requested. If such
inspection is not completed on or before the Borrowing Date specified in said
Notice of Borrowing, Bank may defer any action as to that Notice of Borrowing
for a reasonable time until such inspection is completed. Such inspection and
determination is solely for the benefit of Bank, and the making of an Advance
with or without such inspection shall not be a representation by Bank of any
kind or nature nor a waiver by Bank of any rights Bank may have under this
Agreement. Borrower shall provide Bank or the Independent Engineer with such
further information, certifications, surveys (including foundation surveys) and
other assurances as Bank or the Independent Engineer may require.
5.02 If at any time during the course of construction of the Improvements,
Bank, in its sole judgment, should determine that the unadvanced portion of the
Construction Amount is insufficient to complete the construction of the
Improvements in accordance with the Plans, then, on Bank's demand, Borrower
shall deposit with Bank such amount as Bank shall require so that the aggregate
of such deposited amount and the then unadvanced portion of the Construction
Amount shall equal the amount necessary, as determined by Bank in its sole
judgment, to complete the construction as aforesaid. Such deposit shall be held
by Bank as security for the Obligations. Subsequent Notice(s) of Borrowing shall
first request a release of such deposit, and no Advance shall be made hereunder
until the entirety of such deposit shall have been released. Borrower shall meet
any demand made by Bank under this Section within ten (10) days, and until such
demand is met, Bank shall have no obligation to make any Advance hereunder and
failure to meet such demand will constitute an Event of Default under Article X
hereof.
5.03 Advances made by Bank hereunder shall be used by Borrower solely for
the payment of costs pursuant to the Cost Breakdown/Disbursement Schedule,
unless otherwise authorized by Bank, in its sole discretion.
5.04 Subject to the conditions set forth in Article II, Bank shall make the
final Advance (including all retainage held by Bank) at such time as (a) the
Improvements are substantially completed to the satisfaction of Bank in
accordance with the terms and conditions set forth herein; (b) Borrower has
delivered to Bank an as-built survey of the Premises; (c) a final unconditional
Certificate of Occupancy has been issued by the appropriate government
authority; (d) the Improvements are free of all liens other than those of Bank,
those accrued for real estate taxes not yet due and payable and those set forth
on Schedule B of the Title Policy; and (e) all applicable statutory lien periods
have expired or appropriate lien waivers have been delivered to Bank.
<PAGE>
ARTICLE VI
General Conditions Precedent
6.01 Borrower shall execute and deliver to Bank on or before the Closing
Date, all instruments and documents to be executed and delivered by Borrower
pursuant to the terms of this Agreement.
6.02 Bank's rights in and to all mortgages, security interests, assignments
and pledges shall be perfected.
6.03 Borrower shall deliver to Bank on or before the Closing Date, evidence
of insurance pertaining to the Premises naming Bank as mortgagee, loss payee and
additional insured.
6.04 Borrower shall furnish to Bank on or before the Closing Date a Cost
Breakdown/Disbursement Schedule, a copy of which is attached hereto as Exhibit
A. Such Cost Breakdown/Disbursement Schedule shall be acceptable to Bank in all
respects and shall contain a complete budget for the entire cost of the
Improvements, including, without limitation: (i) the direct costs of
constructing and equipping the Improvements; (ii) all indirect costs including,
but not limited to, interest, real estate taxes, insurance, and legal fees; and
(iii) a trade breakdown for all construction costs on an appropriate AIA form.
6.05 Borrower shall deliver to Bank on or before the Closing Date, all
Construction Contracts, a list of which is attached hereto as Exhibit D. All
Construction Contracts shall contain such terms and provisions which are
acceptable to Bank including, but not limited to, provisions relating to
retainage, performance bonds and insurance.
6.06 Borrower shall deliver to Bank on or before the Closing Date, all
permits (except for the Certificate of Occupancy), a list of which is attached
hereto as Exhibit E. All such Permits shall be acceptable to Bank in all
respects.
6.07 Borrower shall deliver to Bank on or before the Closing Date, all
Plans, which Plans are more particularly described on Exhibit F attached hereto.
All such Plans shall be acceptable to Bank in all respects.
6.08 Borrower shall deliver to Bank on or before the Closing Date, a survey
of the Premises. Such survey shall show the dimensions and area of the Premises,
dimensions and locations of all improvements, utilities, parking areas,
driveways, easements, zoning district zones, adjoining streets, distance to and
name of nearest intersecting street, whether the Premises is located in a
Federal Flood Hazard Zone and such other information as Bank may require and as
appropriate under the circumstances.
6.09 Borrower shall furnish to Bank on or before the Closing Date, a
certificate of the architect, in form and substance satisfactory to Bank,
stating (as appropriate) that: (i) all utility facilities, including, without
limitation, electrical, gas, water, sewer, septic, telephone and storm drainage
facilities are available at the Premises, as a matter of right, without the
requirement of any governmental approvals; and (ii) such utilities are adequate
to serve the entire Premises upon completion of the construction of the
Improvements.
6.10 In the event the Premises is located in a Federal Flood Hazard Zone,
Borrower shall obtain and furnish to Bank on or before the Closing Date, and
thereafter maintain, flood insurance with respect to the Premises acceptable to
Bank in all respects.
ARTICLE VII
Warranties and Representations
<PAGE>
7.01 To induce Bank to enter into this Agreement and to provide financing
to the Borrower hereunder, Borrower makes the following representations and
warranties, each of which shall be deemed to be newly made on each Borrowing
Date:
(a) Borrower has good and clear record and marketable title to the
Premises, free and clear of all mortgages, liens, pledges, charges, security
interests and encumbrances, other than those being granted to Bank pursuant
hereto, and those reflected on Schedule B of the ALTA title insurance policy
delivered to Bank (the "Title Policy").
(b) No event has occurred and no condition exists which, upon the execution
and delivery of this Agreement, would constitute an Event of Default hereunder.
(c) To the best of Borrower's knowledge, Borrower is not required to obtain
any consent, approval or authorization of, or file, register or qualify with,
any governmental authority in order to validly execute and deliver this
Agreement or any instrument, agreement or document contemplated hereunder, or
perform Borrower's obligations under this Agreement or any such instrument,
agreement or document.
(d) The Cost Breakdown/Disbursement Schedule truly and accurately sets
forth the projected budget for construction of the Improvements.
(e) The Construction Contracts delivered to Bank are true and complete
copies of all Construction Contracts available to Borrower and such Construction
Contracts have not been materially altered or amended.
(f) To the best of Borrower's knowledge, the Permits delivered to Bank
constitute all licenses and permits required by any federal, state, municipal or
other governmental authority in connection with the construction of the
Improvements (except a final Certificate of Occupancy).
(g) The Plans delivered to Bank are complete in all respects and have not
been materially altered or amended.
ARTICLE VIII
Affirmative Covenants
8.01 Borrower hereby covenants and agrees that it shall:
(a) Pay to Bank all Obligations when due.
(b) Promptly, punctually and faithfully perform or observe any and all
terms, covenants and agreements to be performed or observed on its part pursuant
to this Agreement or any instrument, document or agreement executed in
connection herewith.
(c) Keep proper books of account relating to the construction of the
Improvements and the operation of the Premises in which full, true and correct
entries will be made of its transactions in accordance with generally accepted
accounting principles consistently applied.
(d) Make its books and records available in its offices for inspection,
examination and copying by Bank and Bank's representatives at all reasonable
times, and shall permit inspection of the Premises by Bank and Bank's
representatives at all reasonable times.
(e) Furnish such information and statements as Bank may reasonably request.
<PAGE>
(f) Comply with all laws and regulations imposed by the federal, state or
local government or any other governing authority which are applicable to
Borrower and/or the Premises.
(g) Pay all real and personal property taxes, assessments and charges and
all franchise, income, unemployment, old age benefit, withholding, sales and
other taxes assessed against Borrower or payable by Borrower at such times and
in such manner to prevent any penalty from accruing or any lien or charge from
attaching to Borrower's properties. The provisions of this Section shall not
preclude Borrower from contesting in good faith and diligently prosecuting any
such tax; provided, however, that Borrower shall upon request of Bank, deposit
with Bank funds sufficient to discharge such tax in the event such contest is
resolved against Borrower. Borrower shall not be in default under this Section
by reason of the existence of a lien for taxes not then due.
(h) Put and maintain the Premises and the Improvements thereon in good
repair, working condition, and order, and, from time to time, make all necessary
and proper repairs, renewals and replacements.
(i) Maintain, at all times, insurance relating to the Premises and the
personal property located thereon covering such risks and in such amounts as
Bank may reasonably require, all such insurance to be in such form and for such
periods and written by such companies as shall be acceptable to Bank.
(j) Pay or reimburse Bank, on demand, for all expenses (including, without
limitation, reasonable attorneys' fees and expenses) incurred or paid by Bank in
connection with the preparation, interpretation, amendment, administration,
enforcement or defense of this Agreement, and any instrument, agreement or
document to be delivered pursuant hereto.
(k) Punctually and promptly make all payments and perform all other
obligations which may be required of Borrower with respect to any indebtedness
(whether for money borrowed, goods purchased, services rendered or otherwise)
owing to any persons, firms or corporations other than Bank, including, without
limitation, indebtedness which may be secured by a security interest in assets
of Borrower, or property of Borrower, and all obligations under the terms of any
lease in which Borrower is the lessee. The provisions of this Section shall not
preclude Borrower from contesting in good faith and diligently prosecuting any
such indebtedness or obligation.
(l) Cause the construction of the Improvements to be completed on or before
the end of the Availability Period in accordance with the Plans, in a good and
workmanlike manner, and with materials of the quality called for in the Plans.
(m) Pay or reimburse Bank, on request, for all costs, expenses and fees
incurred or paid by Bank in connection with the retention and employment of the
Independent Engineer to review the Plans, Construction Contracts and Cost
Breakdown/ Disbursement Schedule, and to inspect and certify the progress at the
construction of the Improvements and to perform such other consulting
responsibilities as Bank may from time to time require.
ARTICLE IX
Negative Covenants
9.01 Borrower shall not:
(a) Transfer, sell or dispose of the Premises or any legal or equitable
interest therein (or in the Borrower) or any of Borrower's personal property
located thereon or used in connection therewith, except as set forth on Schedule
B of the Title Policy.
(b) Grant or suffer to exist, without Bank's prior written consent, any
mortgage, pledge, title retention agreement, security interest, lien, charge or
encumbrance with respect to the Premises, or any of Borrower's personal property
located thereon or used in connection therewith, except as set forth on Schedule
B of the Title Policy.
<PAGE>
(c) Make any alterations or amendments to the Construction Contracts which
would, in the aggregate, result in a change of more than $20,000.00 in the
projected cost of constructing the Improvements, unless Borrower obtains Bank's
prior consent.
(d) Make any alterations or amendments to the Plans which would, in the
aggregate, result in a change of more than $20,000.00 in the projected cost of
constructing the Improvements, unless Borrower obtains Bank's prior consent.
(e) Use, without Bank's prior written consent, any portion of the proceeds
of any Advance for any purpose other than payment of costs as set forth in the
Cost Breakdown/Disbursement Schedule or as authorized by Bank.
ARTICLE X
Default
10.01 Upon the occurrence of any one or more of the following events
(herein, "Events of Default"), any and all Obligations of Borrower to Bank shall
become immediately due and payable, at the option of Bank and without notice or
demand. The occurrence of any such Event of Default shall also constitute,
without notice or demand, a default under all other agreements between Bank and
Borrower and instruments and papers given to Bank by Borrower, whether such
agreements, instruments, or papers now exist or hereafter arise, namely:
(a) The failure by Borrower to pay the Obligations within ten (10) days
after the date when due.
(b) The failure by Borrower to promptly, punctually and faithfully perform,
or observe any term, covenant or agreement on its part to be performed or
observed pursuant to any of the provisions of this Agreement.
(c) The failure by Borrower to construct, or cause the construction of, the
Improvements in a workmanlike manner in accordance with the Plans and to
complete such construction as evidenced by the issuance of a final unconditional
Certificate of Occupancy on or before the Conversion Date.
(d) The failure of the Borrower to commence construction on or before the
Commencement Date.
(e) The determination by Bank that any representation or warranty
heretofore, now or hereafter made by Borrower to Bank, in any document,
instrument, agreement, or paper was not materially true or accurate when given.
(f) The occurrence of any event of default under any agreement between Bank
and Borrower or instrument or paper given Bank by Borrower, whether such
agreement, instrument, or paper now exists or hereafter arises (notwithstanding
that Bank may not have exercised its rights upon default under any such other
agreement, instrument or paper).
(g) The occurrence of any event such that any indebtedness of Borrower to
anyone other than Bank could be accelerated, notwithstanding that such
acceleration has not taken place.
(h) The attachment and failure to have such attachment released within
thirty (30) days of filing or such longer period as agreed to by Bank at that
time so long as Bank is satisfied with Borrower's efforts to have such
attachment released, levy or seizure of any of Borrower's property.
(i) The termination of existence, dissolution, or liquidation of Borrower.
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(j) Any act by, against, or relating to Borrower, or its property or
assets, which act constitutes the application for, consent to, or sufferance of
the appointment of a receiver, trustee or other person, pursuant to court action
or otherwise, over all or any part of Borrower's property; provided, however, if
such act is commenced against the Borrower, the Borrower shall have a period of
thirty (30) days to cause the same to be dismissed, unless such act commenced
against the Borrower was commenced pursuant to Title 11 of the United States
Code entitled "Bankruptcy" (commonly referred to as the "Bankruptcy Code") in
which event the same shall immediately constitute an Event of Default.
(k) The granting of any trust mortgage or execution of an assignment for
the benefit of the creditors of Borrower, or the occurrence of any other
voluntary or involuntary liquidation or extension of debt agreement for
Borrower; the failure by Borrower to generally pay the debts of Borrower as they
mature; adjudication of bankruptcy or insolvency relative to Borrower; the entry
of an order for relief or similar order with respect to Borrower in any
proceeding pursuant to Title 11 of the United States Code entitled "Bankruptcy"
(the "Bankruptcy Code") or any other federal bankruptcy law; the filing of any
complaint, application, or petition by or against Borrower initiating any matter
in which Borrower is or may be granted any relief from the debts of Borrower
pursuant to the Bankruptcy Code or any other insolvency statute or procedure;
the calling or sufferance of a meeting of creditors of Borrower; the meeting by
Borrower of a formal or informal creditor's committee; the offering, or entering
into, by Borrower of any composition, extension or any other arrangement seeking
relief or extension for the debts of Borrower, or the initiation of any other
judicial or non!judicial proceeding or agreement by, against or including
Borrower which seeks or intends to accomplish a reorganization or arrangement
with creditors.
(l) The entry of any judgment against Borrower in excess of $50,000.00,
which judgment is not satisfied or appealed from (with execution or similar
process stayed) within thirty (30) days of its entry.
(m) The entry of any court order which enjoins, restrains or in any way
prevents Borrower from conducting all or any part of its business affairs in the
ordinary course of business.
(n) The occurrence of any material uninsured loss, theft, damage or
destruction to any material asset(s) of Borrower.
(o) Any act by or against, or relating to Borrower or its assets pursuant
to which any creditor of Borrower seeks to reclaim or repossess or reclaims or
repossesses all or a portion of Borrower's assets having a value in excess of
$50,000.00.
(p) The occurrence of any event or circumstance with respect to Borrower
such that Bank shall believe in good faith that the prospect of payment of all
or any part of the Obligations or the performance by Borrower under this
Agreement or any other agreement between Bank and Borrower is impaired or there
shall occur any material adverse change in the business or financial condition
of Borrower.
(q) The cessation of construction of the Improvements for ten (10)
consecutive business days, except for cessation resulting from impossibility of
performance due to force majeure.
(r) The failure of the Borrower to deposit any funds required under Section
5.02 hereof upon demand.
(s) The occurrence of any of the foregoing Events of Default with respect
to any guarantor, endorser, or surety to Bank of the Obligations, as if such
guarantor, endorser or surety, were the "Borrower" described herein.
(t) The termination of any guaranty by any guarantor of the Obligations.
(u) The occurrence of an Event of Default under or termination for any
reason of the Amended and Restated Loan and Security Agreement (Accounts
Receivable and Inventory) dated October 31, 1994, as amended, between the Bank
and Turbotec Products, Inc.
<PAGE>
10.02 Upon the occurrence of an Event of Default, Bank may declare any
obligation Bank may have hereunder to be canceled, declare all Obligations of
Borrower to be due and payable and proceed to enforce payment of the Obligations
and to exercise any and all of the rights and remedies afforded to Bank under
the terms of this Agreement or otherwise.
ARTICLE XI
Special Provisions
11.01 In addition to any and all rights and remedies which Bank may have
pursuant to this Agreement, any other instrument or document executed in
connection herewith or applicable law, Bank may, after the occurrence of an
Event of Default, in its sole discretion, take immediate possession of the
Premises, manage and operate the Premises and proceed to complete the
Improvements. In connection with the foregoing rights, Bank may do all things it
deems advisable, in its sole discretion, including, but not limited to, the
following: (a) make any payments with respect to any Obligation of Borrower to
Bank or any obligation of Borrower to any other person in connection with the
construction of the Improvements; (b) make additions and changes in the Plans;
(c) employ contractors, subcontractors, architects, engineers and others in
connection with construction of the Improvements; (d) pay, settle or compromise
all existing bills and claims which are or may be liens against the Premises or
may be necessary or desirable for the completion of the Improvements; (e)
purchase and maintain insurance, including title insurance; (f) lease or license
the Premises to others, in whole or in part; (g) use and operate the Premises
itself, or through a subsidiary or affiliate, including the operation of any
business or other activity similar to that previously engaged in on the
Premises; (h) prosecute and defend all actions and proceedings in connection
with the construction of the Improvements; (i) discontinue construction of the
Improvements and refuse to make further payments to any other person for the
account of Borrower; and (j) demolish any Improvements on the Premises, either
in whole or in part. The foregoing rights and remedies may be executed by Bank
in its sole discretion, but under no circumstance shall Bank be deemed obligated
to exercise any of such rights or remedies. Borrower hereby appoints Bank as
Borrower's irrevocable attorney in fact coupled with an interest, with full
powers of substitution, to act in Borrower's name and on Borrower's behalf in
connection with any of the foregoing rights and remedies. Any expenses paid or
incurred by Bank in connection with exercising the foregoing rights or remedies
shall be treated as an Advance and added to the Construction Loans due from
Borrower to Bank, and Borrower agrees to repay to Bank all such amounts on
demand, with interest as herein provided, notwithstanding that such Construction
Loans may exceed the Construction Amount. In addition, Borrower agrees to pay
Bank for services rendered in connection with completion of the construction of
the Improvements in an amount equal to ten (10%) percent of the cost of such
completion. Any income or other receipts resulting from exercise by Bank of the
foregoing rights shall be for the account of Borrower and shall be applied to
the Obligations in such manner as Bank, in its sole discretion, deems
appropriate. Bank's exercise of any of the foregoing rights and remedies shall
be undertaken by Bank as a mortgagee-in-possession for the maintenance and
preservation of its collateral and not as a successor to any business or other
activities of Borrower.
ARTICLE XII
Miscellaneous
12.01 All communications herein provided shall be in writing and shall be
sufficient if actually received or if sent by certified mail, return receipt
requested, or by a recognized overnight carrier and addressed to the respective
parties at the addresses set forth in the beginning of this Agreement or at such
other addresses as the parties hereto may request in writing, with copies to:
<PAGE>
If to the Bank: USTrust
30 Court Street
Boston, MA 02108
Attn: James H. Herzog, Jr., Vice President
With copies to: Shapiro, Israel & Weiner, P.C.
100 North Washington Street
Boston, MA 02114
Attn: Brian T. Garrity, Esq.
If to the Borrower: Thermodynetics, Inc.
Post Office Box 40
651 Day Hill Road
Windsor, CT 06095
Attn: Robert I. Lieberman
Treasurer and Chief Financial Officer
With copies to: Kenneth B. Lerman, Esquire
651 Day Hill Road
Windsor, CT 06095-0040
12.02 Borrower will, from time to time, execute and deliver to Bank all
such other instruments and documents and take or cause to be taken such other
action as Bank may reasonably request in order to effectuate the agreements
contemplated herein.
12.03 Bank shall not be deemed to have waived any of its rights hereunder
unless such waiver is in writing and duly executed by an authorized officer of
Bank. No waiver on Bank's part on any one occasion shall be deemed a waiver on
any other occasion.
12.04 This Agreement may be amended only by an instrument in writing and
duly executed by Borrower and an authorized officer of Bank.
12.05 All covenants, agreements, representations and warranties contained
in this Agreement shall bind Borrower and its successors and assigns, and shall
inure to the benefit of Bank and its successors and assigns. Notwithstanding the
foregoing, Borrower may not assign any of its rights hereunder.
12.06 All rights and remedies of Bank hereunder shall be cumulative, and
may be exercised by Bank, in its sole discretion, at any time, in any manner and
in any order.
12.07 If any provisions of this Agreement shall be deemed illegal or
unenforceable for any reason, such illegality or unenforceability shall relate
solely to such provision and shall not affect the remainder of this Agreement.
12.08 This Agreement shall be construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts except with respect to the recorded
real estate documents which will be construed in accordance with the laws of the
State of Connecticut.
12.09 This Agreement shall take effect as an instrument under seal.
12.10 The captions herein contained are inserted as a matter of convenience
only and such captions do not form a part of this Agreement and shall not be
utilized in the construction hereof.
<PAGE>
ARTICLE XIII
Jury Trial Waiver
13.01 BORROWER WAIVES ANY RIGHT TO TRIAL BY JURY BORROWER MAY HAVE IN ANY
ACTION OR PROCEEDING, IN LAW OR EQUITY, IN CONNECTION WITH THIS AGREEMENT.
BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT. BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT OF ANY
SUCH SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY
TRIAL PROVISION. BORROWER ACKNOWLEDGES THAT BANK HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT WITH BORROWER BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS
PARAGRAPH.
EXECUTED as an instrument under seal as of the day and year first above
written.
WITNESS: USTrust
_________________________ By _______________________________________
James H. Herzog, Jr.
Vice President
Thermodynetics, Inc.
_________________________ By _______________________________________
Robert I. Lieberman
Treasurer and Chief Financial Officer
