EXH10-3
SECURITY AGREEMENT
AGREEMENT, made as of the ____ day of August, 1990, by and between
AUTOMATED LIGHT TECHNOLOGIES, INC., a corporation organized and existing under
the laws of the State of Delaware, having its principal office at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ (the "DEBTOR"), and CONNECTICUT INNOVATIONS
INCORPORATED, a corporation constituted a quasi-public instrumentality of the
State of Connecticut, having its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ in the
Town of Rocky Hill, County of Hartford and State of Connecticut (the "SECURED
PARTY").
W I T N E S S E T H:
To secure the payment of an indebtedness in the total amount of THREE
HUNDRED THOUSAND AND NO/100 ($300,000.00) DOLLARS plus interest, payable in
accordance with the terms of a note of even date herewith from DEBTOR to SECURED
PARTY, a copy of which may be attached hereto as Exhibit A (the "Note") and to
secure the performance or payment of all debts, liabilities and obligations of
any kind, whenever and however incurred, of DEBTOR to SECURED PARTY whether or
not evidenced by any notes or other instrument (the "indebtedness"), DEBTOR
hereby grants and conveys to the SECURED PARTY a security interest in the
property described in Schedule A attached hereto (the "Collateral"), which
Collateral the DEBTOR represents will be used primarily in business, all
proceeds thereof, if any, and all substitutions, replacements and accessions
acquired by the DEBTOR subsequent to the execution of this Agreement and prior
to its termination.
1. Debtor's Covenants: DEBTOR warrants, covenants and agrees as
follows:
a. To pay and perform all of the obligations secured by this
Agreement according to their terms.
b. To defend the title to the Collateral against all other
persons and against all other claims, except claims which are
permitted herein.
c. On demand of SECURED PARTY to do the following: furnish
further assurance of title, execute any written agreement or
do any other acts necessary to effectuate the purposes and
provisions of this Agreement, execute any instrument or
statement required by law or otherwise in order to perfect,
continue or terminate the security interest of SECURED PARTY
in the Collateral and pay all costs of filing in connection
therewith.
d. To retain possession of the Collateral during the existence of
this Agreement and not to sell, exchange, assign, loan,
deliver, lease, mortgage or otherwise dispose of the same,
except for inventory sold in the ordinary course of business,
without the prior written consent of SECURED PARTY, which
consent will not unreasonably be withheld.
e. To keep the Collateral at its present locations and not to
remove same, except for inventory sold in the ordinary course
of business and other assets as permitted herein, without the
prior written consent of SECURED PARTY, which consent will not
unreasonably be withheld.
f. To keep the Collateral free and clear of all liens, charges,
encumbrances, taxes and assessments.
g. To pay, when due, all taxes, assessments and license fees
relating to the Collateral.
h. To keep the Collateral, at DEBTOR's own cost and expense, in
good repair and condition and to use it for the purposes
intended and not to misuse, abuse, waste or allow it to
deteriorate except for normal wear and tear and to make the
same available for inspection by SECURED PARTY during normal
business hours.
i. To keep the Collateral insured against loss by fire, including
extended coverage, theft and other hazards as SECURED PARTY
may require in an amount no less than eighty percent (80%) of
the value of the insurable Collateral. Policies covering the
Collateral shall be obtained from responsible insurers
authorized to do business in Connecticut. Certificates Of
insurance or policies shall have attached thereto a loss
payable clause making loss payable to SECURED PARTY as its
interest may appear, and a copy of such policies and renewal
policies shall be deposited with SECURED PARTY. Each policy or
endorsement shall contain a clause requiring the insurer to
give not less than ten (10) days' written notice to SECURED
PARTY in the event of cancellation of the policy for any
reason whatsoever, and a clause that the interest of SECURED
PARTY shall not be impaired or invalidated by any act or
neglect of DEBTOR or owner of the Collateral nor by the
occupation of the premises where the Collateral is located for
purposes more hazardous than are permitted by said policy.
DEBTOR shall give immediate written notice to SECURED PARTY
and to insurers of loss or damage to the Collateral and shall
promptly file proofs of loss with insurers. DEBTOR hereby
appoints SECURED PARTY an attorney-in-fact of DEBTOR in
obtaining and adjusting any such insurance and endorsing
settlement drafts and hereby assigns to SECURED PARTY all sums
which may become payable under such insurance, including
return premiums and dividends, as additional security for the
indebtedness. In the event of termination or threatened
termination of insurance and provided DEBTOR has not provided
SECURED PARTY with notice no less than thirty (30) days prior
to the termination or threatened termination date, that it is
changing or has changed insurance companies together with
evidence of premium payment or has otherwise replaced the
insurance which is the subject of the termination or
threatened termination, SECURED PARTY has the right to obtain
its own insurance covering the Collateral and to add the costs
of obtaining and maintaining such insurance as an additional
obligation of DEBTOR to SECURED PARTY. Nothing herein shall
relieve
DEBTOR of its duty or obligation to do any act for which
SECURED PARTY may be hereby appointed attorney for DEBTOR.
j. In the conduct of its business, DEBTOR will comply with all
applicable laws, ordinances, rules and regulations of all
governmental authorities having jurisdiction over DEBTOR
and/or its business.
k. DEBTOR authorizes SECURED PARTY, if DEBTOR fails to do so, to
do all things required of DEBTOR herein and charge all
expenses incurred to DEBTOR and charge interest on the same
until repayment to it at the interest rate provided in the
Note. Failure to repay any said advance with interest upon
demand by SECURED PARTY shall constitute a default hereunder.
l. To provide SECURED PARTY financial statements within
forty-five (45) days of the end of each fiscal quarter of
DEBTOR, and to provide annual financial statements prepared by
DEBTOR'S independent accountant within ninety (90) days of the
end of DEBTOR'S fiscal year, and to make all its books and
records available for inspection by SECURED PARTY during
reasonable business hours.
2. Non-Waiver: Waiver of or acquiescence in any default by DEBTOR
or failure of SECURED PARTY to insist upon strict performance by DEBTOR of any
warranties or agreements in this Security Agreement shall not constitute a
waiver of any subsequent or other default or failure.
3. Default: The following shall constitute a default:
a. Failure to pay any installment of the indebtedness
set forth in the Note within the applicable grace
period.
b. Failure by DEBTOR to comply with any material
provision of this Agreement within fifteen (15) days
of the date for performance or of the Note or other
obligations secured hereby with in any applicable
grace and cure period.
c. Materially false or misleading representations or
warranties made or given by DEBTOR in connection with
this Agreement, the Loan Agreement, the Note or any
other financing document delivered to SECURED PARTY
in connection with the Loan made by SECURED PARTY to
the DEBTOR of even date herewith.
d. Commencement of any bankruptcy or other insolvency
proceeding by or against DEBTOR which is not
withdrawn, dismissed, discharged or removed within
sixty (60) days of commencement.
e. Any act of DEBTOR which SECURED PARTY, in its sole
discretion and in good faith, deems will imperil the
prospect of full performance or satisfaction of
DEBTOR' S obligations to SECURED PARTY .
f. Depreciation (except depreciation as reflected for
tax or accounting purposes) or impairment of the
Collateral, or material adverse change in the
financial status of DEBTOR which jeopardizes the
prospect of repayment of the Loan or of performance
of any of the covenants herein or renders false or
misleading any warranties made herein.
g. Default after expiration of any applicable grace and
cures periods under any other loan agreement,
promissory note, mortgage deed or security agreement
executed by DEBTOR in respect of any debt owed to
SECURED PARTY or to any other person which in the
sole, reasonable opinion of the SECURED PARTY
materially affects the credit of the Borrower.
4. Remedies on Default: Upon any default and upon demand DEBTOR agrees
immediately to assemble the Collateral and make it available to SECURED PARTY at
the place and time designated in the said demand. SECURED PARTY shall be
entitled to immediate possess ion of the Collateral and SECURED PARTY may (i)
enter any premises where any Collateral may be located for the purpose of taking
possession of and removing the same; and (ii) sell, assign, lease or otherwise
dispose of the Collateral or any part thereof, either at public or private sale
acceptable to SECURED PARTY, all at SECURED PARTY's sole option and as it, in
its sole discretion, may deem advisable, and SECURED PARTY may bid or become
purchaser at any such sale, if public, free from any right of redemption which
is hereby expressly waived by DEBTOR. Until such sale, SECURED PARTY may store
the Collateral on the premises where it is located when seized and, if said
premises be the property of DEBTOR, DEBTOR agrees not to charge SECURED PARTY f
or storage thereof for a period of ninety (90) days before or after sale or
disposition of said Collateral. Unless the Collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold in a recognized
market, SECURED PARTY will give DEBTOR reasonable notice of the time and place
of any public sale or the time after which any private sale or other intended
disposition will be made. The requirement of reasonable notice shall be met if
such notice is mailed to DEBTOR at least fifteen (15) business days before the
time of the ;sale or disposition.
The net cash proceeds resulting from the collection, liquidation, sale
or other disposition of the Collateral shall be applied first to the expenses
(including all attorneys' reasonable tees) Of storing, processing and preparing
for sale, selling, collecting, liquidating and the like, and then to the
satisfaction of all liabilities of the DEBTOR to SECURED PARTY, with application
as to particular obligations or against principal or interest under the Note to
be in SECURED PARTY's sole discretion. DEBTOR shall be liable to SECURED PARTY
and shall pay to SECURED PARTY, on demand, any deficiency which may remain after
such sale, disposition, collection or liquidation of Collateral, and SECURED
PARTY in turn agrees to remit to DEBTOR, or other persons as their interests
appear, any surplus remaining after all such liabilities have been paid in full.
To facilitate the exercise by SECURED PARTY of the rights and remedies
set forth in this section in the event of default, DEBTOR hereby constitutes
SECURED PARTY or any other person whom SECURED PARTY may designate, as
attorney-in-fact for the DEBTOR, at DEBTOR's expense, to
exercise all or any of the foregoing powers and other powers incidental to the
foregoing, all of which, being coupled with an interest, shall be irrevocable,
shall continue until all obligations have been paid in full and shall be in
addition to any other rights and remedies that SECURED PARTY may have.
5. Attorneys' Fees, etc.: Upon any event of default, SECURED PARTY t 8
attorneys' reasonable fees and the legal and other expenses for pursuing,
searching for, receiving, taking, keeping, storing, advertising and selling the
Collateral shall be chargeable to and paid by DEBTOR.
6. Other Rights: In addition to all rights and remedies herein, upon
default, SECURED PARTY shall have such other rights and remedies as are set
forth in the Uniform Commercial Code and the Connecticut General Statutes, as
amended.
7. PREJUDGMENT REMEDIES WAIVER: DEBTOR HEREBY ACKNOWLEDGES THAT THE
TRANSACTION OF WHICH THIS SECURITY AGREEMENT FORMS A PART IS A COMMERCIAL
TRANSACTION AS DEFINED UNDER SECTION 52-278a OF THE CONNECTICUT GENERAL
STATUTES, AS AMENDED, AND HEREBY WAIVES ANY RIGHT TO NOTICE AND A HEARING UNDER
SECTION 52-278a ET SEQ. OF SAID STATUTES AND AUTHORIZES SECURED PARTY'S ATTORNEY
TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER.
8. Binding Effect: The terms, warranties and agreements herein
contained shall be binding upon and inure to the benefit of the respective
parties hereto and their respective legal representatives, successors and
assigns. This Agreement may be assigned only to a permitted assignee of the
Note.
9. Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the parties have respectively signed and sealed
these presents at Hartford, Connecticut the day and year first above written.
WITNESSED BY: CONNECTICUT INNOVATIONS INCORPORATED
___________________________ BY:__________________________________
▇▇▇▇▇-C. DRIVER
Its Executive Director
___________________________
AUTOMATED LIGHT TECHNOLOGIES, INC.
___________________________ BY:__________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Its President
Duly Authorized
STATE OF CONNECTICUT)
) ss. at Rocky Hill
COUNTY OF HARTFORD )
On this ___ day of August, 1990, before me, the undersigned officer,
personally appeared ▇▇▇▇▇ ▇. Driver, who acknowledged himself to be the
Executive Director of CONNECTICUT INNOVATIONS INCORPORATED, a corporation, and
that he as such Executive Director, being authorized so to do, executed the
foregoing instrument for the purposes herein contained, by signing the name of
the corporation by himself as Executive Director.
In Witness Whereof I hereunto set my hand.
-----------------------------
Commissioner of the Superior
Court/Notary Public
STATE OF CONNECTICUT)
) ss. at Hartford
COUNTY OF HARTFORD )
On this 2nd day of August, 1990, before me, the undersigned officer,
personally appeared ▇▇▇▇ ▇. ▇▇▇▇▇▇, who acknowledged himself to be the President
of Automated Light Technologies, Inc., a corporation, and that he as such
President, being authorized so to do, executed the foregoing instrument for the
purposes herein contained, by signing the name of the corporation by himself as
President.
In Witness Whereof I hereunto set my hand.
-----------------------------
Commissioner of the Superior
Court/Notary Public
SCHEDULE A
(a) All goods of Debtor, including without limitation all machinery,
equipment furniture, furnishings, fixtures, t0018, supplies and motor
vehicles of every kind and description now or hereafter owned by the
Debtor or in which the Debtor may have or may hereafter acquire any
interest, together with all customer lists and records of the business
and all improvements thereto;
(b) All inventory of Debtor, including, but not limited to all merchandise,
raw material, parts, supplies, work in process, finished products
intended for sale of every kind and description now or hereafter owned
by and in the custody of or possession, actual or constructive, of
Debtor including such inventory as is temporarily out of Debtor's
custody or possession and including any returns upon any accounts or
other proceeds, includlng insurance proceeds, resulting from the sale
or disposition of any of the foregoing, including, among other things,
but not limited to, raw materials and finished products and including
all other classes of merchandise, materials, parts, supplies, work in
process, inventories and finished products intended for sale by Debtor
including inventory temporarily removed from its customary location;
(c) All contract rights and general intangibles of Debtor, including
without limitation, goodwill, copyrights, trademarks, trade styles,
trade names, patents, patent applications and deposit accounts:
(d) All present and future accounts, accounts receivable and other
receivables and all books and records relating thereto; and
(e) All documents, instruments and chattel paper;
whether any of the foregoing types or items of property referred to in (a)
through (e) above (the "Collateral") shall be acquired or created by Debtor at
any time hereafter, wherever located, and the products and proceeds of the
Collateral and any replacements, additions, accessions, or substitutions of the
Collateral, after acquired property, and the accounts or proceeds arising from
the sale of disposition thereof including any returns thereof, and including,
where applicable, the proceeds of insurance covering the Collateral.
DEBTOR: SECURED PARTY:
Automated Light Technologies, Connecticut Innovations
Inc. Incorporated
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇