TERM LOAN AGREEMENT
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THIS AGREEMENT is made by and between the Company (as herein defined) and
the Lender (as herein defined).
In consideration of the covenants and agreements contained herein, the
Company and the Lender hereby mutually agree as follows:
ARTICLE I. DEFINITIONS
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Section l.l. General. Any accounting term used but not specifically defined
herein shall be construed in accordance with GAAP. The definition of each
agreement, document, and instrument set forth in Section 1.2 hereof shall be
deemed to mean and include such agreement, document, or instrument as amended,
restated, or modified from time to time.
Section 1.2. Defined Terms. As used in this Agreement:
"Lender" shall ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an individual residing at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ and his heirs, successors and assigns.
"Company" shall mean Wellstar International, Inc. and Trillennium Medical
Imaging, Inc., a wholly owned subsidiary of Wellstar International , Inc., with
its principal office located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ and its
successors and assigns.
"Environmental Law" means any federal, state, or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability upon a Person in connection with the use, release or disposal
of any hazardous toxic or dangerous substance, waste or material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" shall mean any one or more of the occurrences described
in ARTICLE VII hereof.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, consistently applied.
"Indebtedness" shall mean for any Person (i) all obligations to repay
borrowed money, direct or indirect, incurred, assumed, or guaranteed, (ii) all
obligations for the deferred purchase price of capital assets excluding trade
payables, (iii) all obligations under conditional sales or other title retention
agreements, and (iv) and all lease obligations which have been or should be
capitalized on the books of such Person.
"Lien" shall mean any mortgage, security interest, lien, charge,
encumbrance on, pledge or deposit of, or conditional sale or other title
retention agreement with respect to any property or asset.
"Loan" or "Loans" shall mean the credit to the Company extended by the
Lender in accordance with Section 2.1(a) hereof.
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"Loan Documents" shall mean this Agreement, the Note, the Security
Instruments, if any, and any other documents relating thereto.
"Margin Rate" shall mean that interest rate established from time to time
by the Lender's Security Firm on it's margin loans against the Lender's security
account as the Lender's Security Firm's Margin Rate, whether or not such rate is
publicly announced; the Margin Rate may not be the lowest interest rate charged
by Lender's Security Firm for commercial or other extensions of credit.
"Margin Stock" shall have the meaning given to it under Regulation U of the
Board of Governors of the Federal Reserve System, as amended from time to time.
"Note" shall mean the promissory note, in the form of Exhibit A attached
hereto, signed and delivered by the Company to evidence its Indebtedness to the
Lender in accordance with Section 2.1 hereof.
"Operating Cash Flow" means net income after taxes, and exclusive of
extraordinary gains, gains on asset sales, and other income, plus depreciation
and amortization, plus interest expense, plus lease expense, less dividends, and
distributions.
"Person" shall mean any natural person, corporation (which shall be deemed
to include business trust), association, partnership, joint venture, political
entity, or political subdivision thereof.
"Plan" shall mean any plan (other than a Multiemployer Plan) defined in
ERISA in which the Company or any Subsidiary is, or has been at any time during
the preceding two (2) years, an "employer" or a "substantial employer" as such
terms are defined in ERISA.
"Potential Default" shall mean any condition, action, or failure to act
which, with the passage of time, service of notice, or both, will constitute an
Event of Default under this Agreement.
"Prime Rate" shall mean that interest rate established from time to time by
the Lender as the Lender's Prime Rate, whether or not such rate is publicly
announced; the Prime Rate may not be the lowest interest rate charged by Lender
for commercial or other extensions of credit.
"Security Instrument(s)" shall mean the written document(s) listed in
Exhibit B attached hereto, signed and delivered from time to time to the Lender
in connection with Indebtedness owed by Company to the Lender.
"Subordinated Debt" shall mean Indebtedness of a Person which is
subordinated, in a manner satisfactory to the Lender, to all Indebtedness owing
to the Lender.
"Subsidiary" shall mean any Person of which more than fifty percent (50%)
of (i) the voting stock entitling the holders thereof to elect a majority of the
Board of Directors, managers, or trustees thereof, or (ii) the interest in the
capital or profits of such Person, which at the time is owned or controlled,
directly or indirectly, by the Company or one or more other Subsidiaries.
"Total Indebtedness" shall mean the total of all items of indebtedness or
liability which in accordance with GAAP would be included in determining total
liabilities on the liability side of the balance sheet as of the date of
determination.
The foregoing definitions shall be applicable to the singulars and plurals
of the foregoing defined terms.
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ARTICLE II. CREDIT FACILITY
Section 2.1. Amount of Term Loan. The Lender hereby agrees, subject to the
terms and conditions of this Agreement, to extend a Loan to the Company.
(a) The Loan shall be in the principal amount of not more than $400,000.00.
The Loan shall be in the form of:
(i) An immediate wire transfer to the Company's order in the amount
of $150,000.00; and
(ii) Immediate issuance from a reputable financial institution of a
letter guaranteeing payment, in a form satisfactory to Company,
to Company's thermal imaging camera supplier, in the amount of
$210,000.00, to be paid at the Company's request no earlier than
thirty (30) days following delivery of equipment to such
locations as Company shall from time to time designate; and
(iii) A wire transfer to the Company's order in the amount of
$40,000.00 to be paid at the Company's request no earlier than
thirty (30) days following delivery of the thermal imaging
cameras referenced in section 2.1 (a) (ii) above for the purchase
of Laptop computers, wiring and other thermal imaging camera
related equipment.
(b) The Company shall execute a Note in the form of Exhibit A hereto on
each principal draw hereunder evidencing the amount of each such draw and the
Company's agreement to repay the same in accord with the terms and conditions
hereof. The Company shall repay the principal amount of each Loan actually drawn
by the Company with all accrued interest on or before the 11th day of April
2006, when any remaining principal balance and all accrued interest shall be due
and payable in full.
Section 2.2. Interest Rate and Loan Fees.
(a) All funds actually drawn by the Company shall bear interest at a rate per
annum equal to the Margin Rate plus eight percent (8.00%).
(b) In addition to the payment of interest as set forth in section 2.2 (a)
above, the Company shall pay to Lender Loan Fees as herinafter described.
Lender shall transfer to Lender's order common stock of the Company as
follows:
(i) 1,000,000.00 shares of the Company's existing one year restricted 144
common stock;
(ii) Warrants to purchase 1,000,000.00 shares of the Company's fully
registered, unrestricted common stock at an exercise price of $0.50
per share. Lender understands and acknowledges that the Company is in
the process of compleing its registration of the free trading,
unrestricted stock from which the contemplated by this provision will
be drawn and that this stock is not currently available.
Section 2.3. Prepayment. The Company may prepay, the Loan in whole, or in
part, and in such event the Company shall not be required to pay to the Lender,
at the time of each such prepayment, any Prepayment Premium. Any prepayment
(including any derived from security) shall be applied first to the interest due
hereunder and then to the payment of principal.
Section 2.4. Use of Proceeds. The Loans shall be used to purchase thermal
imaging cameras, related equipment, to refinance existing obligations and for
working capital. Any excess proceeds shall be used by the Company for general
operating purposes consistent with the provisions of this Agreement.
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Section 2.5. Computation of Interest. Interest on Loans shall be computed
on the basis of a year of 360 days and paid for the actual number of days
elapsed.
Section 2.6. Conversion Right. The Company agrees that Lender may, at
Lender's option, choose to forego cash repayment of any sums actually drawn by
Company hereunder and all interest accruing thereupon and choose to convert the
indebtedness arising hereunder, in which event Lender shall be entitled to
convert the indebtedness arising hereunder as if fully drawn, i.e., on the basis
of $400,000.00, plus all interest accrued on the amount actually drawn, for
fully registered, unrestricted common stock of the Company at a conversion price
equal to the market price of the Company's fully registered, unrestricted common
stock on the date of conversion minus 40%. Lender shall have the right of
conversion set forth herein on the date of Prepayment by the Company, if any, or
the due date hereof whichever shall first occur.
Section 2.7. Security. As security for the Loan described hereinabove, the
Company shall provide Lender with a first priority security interest on the
thermal imaging cameras and all related equipment to be purchased with the
proceeds hereof. The Company shall execute any and all documents as may be
reasonably requested by Lender or Lender's counsel to perfect the lien(s)
contemplated hereby. Additionally, commencing on or about January 1st, 2006, the
Company shall establish an escrow account at a financial account of Lender's
choosing into which the Company shall deposit 25% of all gross proceeds
generated by the thermal imaging cameras purchased with the proceeds hereof,
which sums shall remain in escrow for use in paying all sums due and payable to
Lender in accord with the terms of this Agreement.
ARTICLE III. WARRANTIES
The Company represents and warrants to the Lender (which representations
and warranties will survive the delivery of the Note and all extensions of
credit under this Agreement) that:
Section 3.l. Organization; Power.
(a) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction in which it is organized;
(b) The Company has the power and authority to own its properties and
assets and to carry on its business as now conducted;
(c) The Company is qualified to do business in every jurisdiction in which
the ownership or leasing of its property or the doing of business requires such
qualification; and
(d) The Company has the power to execute, deliver, and perform its Loan
Documents and to borrow hereunder.
Section 3.2. Authorization of Borrowing. The execution, delivery, and
performance of the Loan Documents and the Loan by the Company have been duly
authorized by all requisite company action.
Section 3.3. No Conflict. The execution, delivery, and performance of the
Loan Documents will not (a) violate any provision of law, the Articles of
Organization, the Code of Regulations, or By-Laws of the Company, (b) violate
any order of any court or other agency of any federal or state government or any
provision of any indenture, agreement, or other instrument to which the Company
is a party or by which it or any of its properties or assets are bound, (c)
conflict with, result in a breach of, or constitute (with passage of time or
delivery of notice, or both), a default under any such indenture, agreement, or
other instrument, or (d) result in the creation or imposition of any Lien or
other encumbrance of any nature whatsoever upon any of the properties or assets
of the Company except in favor of the Lender.
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Section 3.4. Execution of Loan Documents. The Loan Documents have been duly
executed and are valid and binding obligations of the Company and Co-Borrower
fully enforceable in accordance with their respective terms.
Section 3.5. Financial Condition. The Company has furnished to the Lender
true and correct financial statements and the Company's Information Memorandum
which financial statements and Information Memorandum present fairly the
Company's financial condition at such date, and there has been no material
adverse change in the Company's financial condition since that date.
Section 3.6. Liabilities; Liens. The Company has made no investment in,
advance to, or guarantee of, the obligations of any Person nor are the Company's
assets and properties subject to any claims, liabilities, Liens, or other
encumbrances, except as disclosed in the financial statements and related notes
thereto referred to in Section 3.5 hereof.
Section 3.7. Litigation. There is no action, suit, examination, review, or
proceeding by or before any governmental instrumentality or agency now pending
or, to the knowledge of the Company, threatened against the Company or against
any property or rights of the Company, which, if adversely determined, would
materially impair the right of the Company to carry on business as now being
conducted or which would materially adversely affect the financial condition of
the Company, except for the litigation, if any, described in the notes to the
financial statements referred to in Section 3.5 hereof.
Section 3.8. Agreements. Neither Company, nor Co-Borrower is in default in
the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument to which
either is a party, which default materially adversely affects the business,
properties, assets, or financial condition of the Company and/or Co-Borrower.
Section 3.9. Regulatory Status. Neither the making nor the performance of
this Agreement, nor any extension of credit hereunder, requires the consent or
approval of any governmental instrumentality or political subdivision thereof,
any other regulatory or administrative agency, or any court of competent
jurisdiction, except as set forth in section 2.2 (b) (ii) above.
Section 3.l0. Licenses. The Company has all licenses, franchises, consents,
approvals, or authorizations required in connection with the conduct of the
business of the Company, the absence of which would have a material adverse
affect on the conduct of the Company's business, and all such licenses,
franchises, consents, approvals, and authorizations are in full force and
effect.
Section 3.11. ERISA. The Company does not maintain, sponsor, or participate
in any Plan or Multiemployer Plan insured, or required to be insured, by the
Pension Benefit Guaranty Corporation.
Section 3.12. Environmental Matters. The Company is in compliance with all
Environmental Laws and all applicable federal, state and local health and safety
laws, regulations, ordinances or rules, except to the extent that any
non-compliance will not, in the aggregate, have a materially adverse effect on
the Company or the ability of the Company to fulfill its obligations under this
Agreement or the Note.
Section 3.13. Solvency. The Company has received consideration which is the
reasonable equivalent value of the obligations and liabilities that the Company
has incurred to Lender. The Company is not insolvent as defined in any
applicable state or federal statute, nor will the Company be rendered insolvent
by the execution and delivery of this Agreement or the Note to Lender. The
Company is not engaged or about to engage in any business or transaction for
which the assets retained by it shall be an unreasonably small capital, taking
into consideration the obligations to Lender incurred hereunder. The Company
does not intend to, nor does it believe that it will, incur debts beyond its
ability to pay them as they mature.
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ARTICLE IV. CONDITIONS OF LENDING
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Section 4.l. First Loan. The obligation of the Lender to make a Loan shall
be subject to satisfaction of the following conditions, unless waived in writing
by the Lender: (a) all legal matters and Loan Documents incident to the
transactions contemplated hereby shall be satisfactory, in form and substance,
to Lender's counsel; (b) the Lender shall have received (i) certificates by an
authorized officer of the Company, upon which the Lender may conclusively rely
until superseded by similar certificates delivered to the Lender, certifying (1)
all requisite action taken in connection with the transactions contemplated
hereby and (2) the names, signatures, and authority of the Company's authorized
signers executing the Loan Documents, and (ii) such other documents as the
Lender may reasonably require to be executed by, or delivered on behalf of, the
Company; (c) the Lender shall have received the Note with all blanks
appropriately completed, executed by an authorized signer of the Company; (d)
the Lender shall have received written instructions by the Company with respect
to disbursement of the proceeds of the Loan; (e) the Lender shall have received
all Security Instruments duly executed by all parties thereto.
Section 4.2. Each Loan. The obligation of the Lender to make any Loan shall
be subject to compliance with Section 4.l herein and also subject to
satisfaction of the following conditions that at the date of making such Loan,
and after giving effect thereto: (a) no Event of Default or Potential Default
shall have occurred and be then continuing and (b) each representation and
warranty set forth in ARTICLE III above is true and correct as if then made.
ARTICLE V. AFFIRMATIVE COVENANTS
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As long as credit is available hereunder or until all principal of and
interest on the Note have been paid in full:
Section 5.l. Accounting; Financial Statements and Other Information. The
Company will maintain a standard system of accounting, established and
administered in accordance with GAAP consistently followed throughout the
periods involved, and will set aside on its books for each fiscal quarter the
proper amounts or accruals for depreciation, obsolescence, amortization, bad
debts, current and deferred taxes, prepaid expenses, and for other purposes as
shall be required by GAAP
Section 5.2. Insurance; Maintenance of Properties. The Company will
maintain with financially sound and reputable insurers, insurance with coverage
on the thermal imaging cameras and related equipment purchased with the proceeds
of the Loan made herby in limits as may be required by law or as may be
reasonably required by the Lender. The Company will, upon request from time to
time, furnish to the Lender a schedule of all insurance carried by it, setting
forth in detail the amount and type of such insurance. The Company will
maintain, in good repair, working order, and condition, all properties used or
useful in the business of the Company.
Section 5.3. Existence; Business. The Company will cause to be done all
things necessary to preserve and keep in full force and effect its existence and
rights, to conduct its business in a prudent manner, to maintain in full force
and effect, and renew from time to time, its franchises, permits, licenses,
patents, and trademarks that are necessary to operate its business. The Company
will comply in all material respects with all valid laws and regulations now in
effect or hereafter promulgated by any properly constituted governmental
authority having jurisdiction; provided, however, the Company shall not be
required to comply with any law or regulation which it is contesting in good
faith by appropriate proceedings as long as either the effect of such law or
regulation is stayed pending the resolution of such proceedings or the effect of
not complying with such law or regulation is not to jeopardize any franchise,
license, permit patent, or trademark necessary to conduct the Company's
business.
Section 5.4. Payment of Taxes. The Company will pay all taxes, assessments,
and other governmental charges levied upon any of its properties or assets or in
respect of its franchises, business, income, or profits before the same become
delinquent, except that no such taxes, assessments, or other charges need be
paid if contested by the Company in good faith and by appropriate proceedings
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promptly initiated and diligently conducted and if the Company has set aside
proper amounts, determined in accordance with GAAP, for the payment of all such
taxes, charges, and assessments.
Section 5.5. Litigation; Adverse Changes. The Company will promptly notify
the Lender in writing of (a) any future event which, if it had existed on the
date of this Agreement, would have required qualification of the representations
and warranties set forth in ARTICLE III hereof and (b) any material adverse
change in the condition, business, or prospects, financial or otherwise, of the
Company.
Section 5.6. Notice of Default. The Company will promptly notify the Lender
of any Event of Default or Potential Default hereunder and any demands made upon
the Company by any Person for the acceleration and immediate payment of any
Indebtedness owed to such Person.
Section 5.7. Inspection. The Company will make available for inspection by
duly authorized representatives of the Lender, or its designated agent, the
Company's books, records, and properties when reasonably requested to do so, and
will furnish the Lender such information regarding its business affairs and
financial condition within a reasonable time after written request therefore.
Section 5.8. Environmental Matters. The Company:
(a) Shall comply with all Environmental Laws.
(b) Shall deliver promptly to Lender (i) copies of any documents received
from the United States Environmental Protection Agency or any state, county or
municipal environmental or health agency, and (ii) copies of any documents
submitted by Company or any of its Subsidiaries to the United States
Environmental Protection Agency or any state, county or municipal environmental
or health agency concerning its operations.
ARTICLE VI. NEGATIVE COVENANTS
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As long as credit is available hereunder or until all principal of and
interest on the Note have been paid in full and all stock or warrants delivered
in accord with the terms hereof:
Section 6.l Liens. The Company will not directly or indirectly, create,
incur, assume, or permit to exist any Lien with respect to any property or asset
of the Company to be secured by the terms hereof now owned or hereafter acquired
other than:
(a) Liens for taxes or governmental assessments, charges, or levies the
payment of which is not at the time required by Section 5.4 hereof;
(b) Liens imposed by law, such as Liens of landlords, carriers,
warehousemen, mechanics, and materialmen arising in the ordinary course of
business for sums not yet due or being contested by appropriate proceedings
promptly initiated and diligently conducted, provided the Company has set aside
proper amounts, determined in accordance with GAAP, for the payment of all such
Liens;
(c) Liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance, and other types
of social security, or to secure the performance of tenders, statutory
obligations, and surety and appeal bonds, or to secure the performance and
return of money bonds and other similar obligations, but excluding Indebtedness;
(d) Liens in respect of judgments or awards with respect to which the
Company shall, in good faith, be prosecuting an appeal or proceeding for review
and with respect to which a stay of execution upon such appeal or proceeding for
review shall have been obtained;
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(e) Liens that secure the Company's Indebtedness for the purchase price of
any real or personal property and that only encumber the property purchased; and
(f) Liens in favor of the Lender or any Affiliate Lender.
Section 6.3. Indebtedness. The Company will not, directly or indirectly,
create, incur, or assume Indebtedness, or otherwise become liable with respect
to, any Indebtedness on the property to be acquired with the proceeds hereof
other than:
(a) Indebtedness now or hereafter payable, directly or indirectly, by the
Company to the Lender;
(b) Subordinated Debt of the Company; and
(e) Indebtedness for taxes, assessments, governmental charges, liens, or
similar claims to the extent not yet due and payable.
ARTICLE VII. EVENTS OF DEFAULT
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The occurrence of any one or more of the following events shall constitute
an Event of Default under this Agreement:
Section 7.l. Principal or Interest. If the Company fails to pay any
installment of principal of or interest on the Note or any other sums of money
or deliver any stock when due or payable under this Agreement; or
Section 7.2. Misrepresentation. If any representation or warranty made
herein by the Company or in any written statement, certificate, report, or
financial statement at any time furnished by, or on behalf of, the Company in
connection herewith, is incorrect or misleading in any material respect when
made; or
Section 7.3. Failure of Performance of this Agreement. If the Company fails
to perform or observe any covenant or agreement contained in this Agreement,
other than any sums of money payable hereunder, and such failure remains
unremedied for thirty (30) calendar days after the Lender shall have given
written notice thereof to the Company and/or Co-Borrower; or
Section 7.4. Event of Default Under Any Security Instrument. If an event of
default occurs (with passage of time or service of notice, or both) and is
continuing under the terms of any Security Instrument; or
Section 7.5. Insolvency. If the Company shall discontinue business or (a)
is adjudicated bankrupt or insolvent under any law of any existing jurisdiction,
domestic or foreign, or ceases, is unable, or admits in writing its inability,
to pay its debts generally as they mature, or makes a general assignment for the
benefit of creditors, (b) applies for, or consents to, the appointment of any
receiver, trustee, or similar officer for it or for any substantial part of its
property, or any such receiver, trustee, or similar officer is appointed without
the application or consent of the Company, and such appointment continues
thereafter undischarged for a period of thirty (30) days, (c) institutes, or
consents to the institution of any bankruptcy, insolvency, reorganization,
arrangement, readjustment or debt, dissolution, liquidation, or similar
proceeding relating to it under the laws of any jurisdiction, (d) any such
proceeding is instituted against the Company, and remains thereafter undismissed
for a period of thirty (30) days, or (e) any judgment, writ, warrant of
attachment or execution, or similar process is issued or levied against a
substantial part of the property of the Company, and such judgment, writ, or
similar process is not effectively stayed within thirty (30) days after its
issue or levy.
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ARTICLE VIII. REMEDIES UPON DEFAULT
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Section 8.l. Optional Acceleration. In the event that one or more of the
Events of Default set forth in Sections 7.l through 7.5 above occurs and
continues and is not waived by the Lender, then, in any such event, and at any
time thereafter, the Lender may, at its option, terminate its commitment to make
any Loan and declare the unpaid principal of, all accrued interest on, and
Prepayment Premium, if any, in respect of, the Note, and any other liabilities
hereunder, and all other Indebtedness of the Company to the Lender forthwith due
and payable, whereupon the same will forthwith become due and payable without
presentment, demand, protest, or other notice of any kind, all of which the
Company hereby expressly waives, anything contained herein or in the Note to the
contrary notwithstanding.
Section 8.2. Automatic Acceleration. Upon the happening of an Event of
Default referred to in Section 7.5 above, the unpaid principal of, all accrued
interest on, and Prepayment Premium, if any, in respect of, the Note, and all
other Indebtedness of the Company to the Lender then existing will thereupon
become immediately due and payable in full and the commitment, if any, of the
Lender to make any Loan, if not previously terminated, will thereupon
immediately terminate without presentment, demand, protest, or notice of any
kind, all of which are hereby expressly waived by the Company, anything
contained herein or in the Note to the contrary notwithstanding.
Section 8.3. Right of Set Off; Security. Upon the occurrence and
continuation of an Event of Default, the Lender has the right, in addition to
all other rights and remedies available to it, to set off the unpaid balance of
the Note payable to the Lender held by it against any debt owing to the Company
by the Lender.
Section 8.4. No Waiver. The remedies in this ARTICLE VIII are in addition
to, not in limitation of, any other right, power, privilege, or remedy, either
in law, in equity, or otherwise, to which the Lender may be entitled. No failure
or delay on the part of the Lender in exercising any right, power, or remedy
will operate as a waiver thereof, nor will any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right hereunder.
ARTICLE IX. MISCELLANEOUS
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Section 9.l. Amendments. No waiver of any provision of this Agreement or
the Note, or consent to departure therefrom, is effective unless in writing and
signed by the Lender. No such consent or waiver extends beyond the particular
case and purpose involved. No amendment to this Agreement is effective unless in
writing and signed by the Company and the Lender.
Section 9.2. Expenses; Documentary Taxes. The Company shall pay (a) all
out-of-pocket expenses of the Lender, including fees and disbursements of
special counsel for the Lender, in connection with any Event of Default
hereunder and (b) if an Event of Default or Potential Default occurs, all
out-of-pocket expenses incurred by the Lender, including reasonable fees and
disbursements of counsel, in connection with such Event of Default or Potential
Default and collection and other enforcement proceedings resulting therefrom.
The shall reimburse the Lender for its payment of all transfer taxes,
documentary taxes, assessments, or charges made by any governmental authority by
reason of the execution and delivery of this Agreement or the Note.
Section 9.3. Indemnification. The Company shall indemnify and hold the
Lender harmless against any and all liabilities, losses, damages, costs, and
expenses of any kind (including, without limitation, the reasonable fees and
disbursements of counsel in connection with any investigative, administrative or
judicial proceeding, whether or not the Lender shall be designated a party
thereto) which may be incurred by the Lender relating to or arising out of this
Agreement or any actual or proposed use of proceeds of any loan hereunder;
provided, that the Lender shall have no right to be indemnified hereunder for
its own bad faith or willful misconduct as determined by a court of competent
jurisdiction.
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Section 9.4. Construction. This Agreement and the Note will be governed by
and construed in accordance with the laws of the State of Ohio, without regard
to principles of conflict of laws. The Courts in the State of Ohio shall have
exclusive jurisdiction for the resolution of all disputes arising out of or in
any way related to this Agreement. The several captions to different Sections of
this Agreement are inserted for convenience only and shall be ignored in
interpreting the provisions hereof.
Section 9.5. Extension of Time. Whenever any payment hereunder or under the
Note becomes due on a date which the Lender is not open for the transaction of
business, such payment will be due on the next succeeding business day and such
extension of time will be included in computing interest in connection with such
payment.
Section 9.6. Notices. All written notices, requests, or other
communications herein provided for must be addressed:
to the Company as follows:
Wellstar International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. Antonio, President
to the Lender as follows:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or at such other address as either party may designate to the other in writing.
Such communication will be effective (i) if by telex, when such telex is
transmitted and the appropriate answerback is received, (ii) if given by mail,
72 hours after such communication is deposited in the U.S. mail certified mail
return receipt requested, or (iii) if given by other means, when delivered at
the address specified in this Section 9.6.
Section 9.7. Survival of Agreements; Relationship. All agreements,
representations, and warranties made in this Agreement will survive the making
of the extension of credit hereunder, and will bind and inure to the benefit of
the Company and the Lender, and their respective successors and assigns;
provided, that no subsequent holder of the Note shall by reason of acquiring
that Note become obligated to make any Loan hereunder and no successor to or
assignee of the Company may borrow hereunder without the Lender's written
assent. The relationship between the Company and the Lender with respect to this
Agreement, the Note and any other Loan Document is and shall be solely that of
debtor and creditor, respectively, and the Lender has no fiduciary obligation
toward the Company with respect to any such document or the transactions
contemplated thereby.
Section 9.8. Severability. If any provision of this Agreement or the Note,
or any action taken hereunder, or any application thereof, is for any reason
held to be illegal or invalid, such illegality or invalidity shall not affect
any other provision of this Agreement or the Note, each of which shall be
construed and enforced without reference to such illegal or invalid portion and
shall be deemed to be effective or taken in the manner and to the full extent
permitted by law.
Section 9.9. Entire Agreement. This Agreement, the Note and any other Loan
Document integrate all the terms and conditions mentioned herein or incidental
hereto and supersede all oral representations and negotiations and prior
writings with respect to the subject matter hereof.
10
Section 9.10. JURY TRIAL WAIVER. COMPANY AND LENDER EACH WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE, BETWEEN LENDER AND COMPANY AND/OR CO-BORROWER ARISING OUT OF,
IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS RELATED THERETO. THIS WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE,
LIMIT, AMEND OR MODIFY LENDER'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY
CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT BETWEEN LENDER AND COMPANY.
IN WITNESS WHEREOF, the Company and the Lender have each caused this
Agreement to be executed by their duly authorized officers this ___th day of
October, 2005.
COMPANY: Wellstar International Inc., and Trillennium Medical Imaging,
Inc., a wholly owned subsidiary of Wellstar International, Inc.
By: /s/ ▇▇▇▇ ▇. Antonio
-------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
LENDER: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
EXHIBIT A
COMMERCIAL
COGNOVIT
PROMISSORY NOTE
$150,000.00 Toledo, Ohio
October 11th, 2005
The undersigned (herein collectively referred to as "Borrower" or
"Borrowers") promises to pay to the order of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an individual
residing at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ (herein called
"Lender"), the principal sum of One Hundred Fifty Thousand and no/100 Dollars
($150,000.00) due on April 11th, 2006 ("Maturity Date"), when any remaining
principal balance shall be due and payable, together with interest upon any
unpaid principal balance computed upon a 360 day basis and payable on each date
designated above for principal payments and at maturity, at a rate per annum
equal to the Margin Rate (as that term is defined in the Term Loan Agreement of
even date herewith plus eight percent (8.00%); but in no event shall the
interest rate on this Note after maturity exceed the highest rate permitted by
law on the date of maturity.
Borrower may prepay this Note, in whole or in part, at any time or times
upon not less than three (3) days prior notice made to the Lender.
This Note is made in conjunction with, and subject to a certain Term Loan
Agreement (the "Loan Agreement") executed simultaneously herewith by Borrower
and Lender, with all of its covenants, provisions, terms and conditions being
incorporated herein by reference, and in which Loan Agreement the terms hereof
are incorporated.
This Note and every other obligation, indebtedness, and liability of
Borrower to Lender, whether joint or several, absolute or contingent, due or to
become due, and whether heretofore or hereafter contracted or existing and in
whatsoever manner acquired by or accruing to Lender, whether before or after
maturity and whether the same may have been or shall be participated, in whole
or in part to others, and including all amendments, extensions, and renewals
thereof (all herein called "Obligations"), are secured by: (i) the thermal
imaging cameras to be purchased by the Borrower as evidence by the Security
Agreement executed simultaneously herewith by said Borrower; (ii) the escrow of
gross receipts generated by the thermal imaging cameras as provided in Section
2.7 of the Term Loan Agreement between borrower and Lender of even date
herewith.
Borrower represents and warrants that Wellstar International, Inc and its
wholly owned subsidiary, Trillennium Medical Imaging, Inc. are duly-organized
and existing under the laws of their respective states of incorporation, that
the execution and delivery hereof have been duly authorized by appropriate
company action, that there is no prohibition either in law, in its articles of
organization, by-laws, or regulations or in any agreement to which it is a party
which in any way restricts or prevents the execution of this Note and
performance of the Obligations herein in any respect, and that this Note has
been duly executed and is a valid and binding Obligation of Borrower.
Borrower further represents and warrants that the information memorandum
heretofore furnished to Lender, presents fairly the financial projections of the
Company at such date, that there has been no material adverse change in such
financial condition since that date, that the thermal imaging cameras and
related equipment to be purchased pursuant to the Term Loan Agreement are not
subject to any claims, liabilities, liens or encumbrances except as previously
disclosed to Lender, and that there is neither threatened nor pending any
litigation against any Borrower.
Borrower shall be in default hereunder in the event (herein called
"Event(s) of Default") that:
12
(a) Borrower fails to make available for inspection to duly authorized
representatives of Lender any of its books, records, or properties when
requested to do so or fails to furnish Lender any information regarding its
business affairs and financial condition within a reasonable time after written
request therefore, or
(b) Borrower creates or permits the creation or continuance of, any lien
upon any of the thermal imaging cameras or related equipment to be purchased
pursuant to the Term Loan Agreement, including, but not limited to, mortgages,
judgments, security interests, pledges, and liens for taxes, assessments, or
other governmental charges of any kind, other than (1) any lien for taxes,
assessments, or governmental charges which are not yet payable, (2) any lien of
the kind which is incident to and results from the usual operations of the
business in which Borrower is engaged and which secures claims not overdue and
payable, or
(c) Borrowers fail (1) to maintain insurance upon the thermal imaging
cameras and related equipment to be purchased pursuant to the Term Loan
Agreement, of such character and amounts as are usually maintained by companies
engaged in like business, or (2) to furnish to Lender, upon request, a statement
of the insurance coverage, or (3) to obtain other or additional insurance
promptly upon the reasonable request of Lender to the extent that such insurance
may be available, or (4) upon reasonable request of Lender to assign to Lender
as security for their Obligations the proceeds of any property insurance, or
(d) Borrower liquidates, or discontinues or materially reduces its normal
operations with intention to liquidate, or merges or consolidates with any
corporation, partnership or other entity, or sells, leases, transfers, or
otherwise disposes of all or any substantial part of its assets, or any of its
accounts receivable, or
(e) Borrower fails to pay when due any sum payable on account of the
principal or interest of this Note or on account of any other Obligation, or
(f) Any representation or warranty made by Borrower or any officer, member
or representative thereof, herein or in any written statement, certificate or
other document now or later furnished by or for Borrower in connection herewith,
shall prove untrue in any material respect as of the date upon which it was
made, or
(g) Borrower breaches any provision, condition, representation, warranty or
covenant of any Obligation [including, without limitation, any set forth or
contained in or evidenced by (i) this Note or in any other instrument, document,
or writing evidencing any other present or future indebtedness, obligation, or
liability of Borrower owed to Lender, (ii) any security agreement, mortgage
deed, assignment, pledge agreement, or in any other instrument, document, or
writing given as or evidencing security for this Note or any other present or
future indebtedness, obligation, or liability of Borrower owed to Lender, or
(iii) any subordination agreement], or
(h) Borrower becomes insolvent or Bankrupt, or ceases, is unable, or admits
in writing the inability, to pay debts as they mature, or makes a general
assignment for the benefit of, or enters into any composition or arrangement
with, creditors, or
(i) Proceedings for the appointment of a receiver, trustee or liquidator of
Borrower, or of a substantial part of Borrower's assets, are authorized or
instituted by or against any Borrower, or
(j) Proceedings under any Bankruptcy, reorganization, readjustment of debt,
insolvency, dissolution, liquidation or other similar law of any jurisdiction
are authorized or instituted by or against.
If there shall occur any Event of Default set forth in (a) through (j)
above, Lender, by notice given to Borrower, may declare the unpaid principal of
and accrued interest owing upon this Note and all other Obligations to be
immediately due and payable and upon any such declaration such principal and
interest shall become and be forthwith due and payable without any further
notice, presentment, or demand of any kind, all of which are hereby expressly
waived by Borrower
13
Wherever used in this Note, the term "Lender" shall include any holder or
assignee of this Note. Except for the notice required in the immediately
preceding paragraph, Borrower waives presentment, demand, notice, protest, and
all other demands and notices in connection with delivery, acceptance,
performance, default, or enforcement of this Note, assents to any extension or
postponement of the time of payment or any other indulgence, and to the addition
or release of any other person primarily or secondarily liable. Borrower
understands and agrees that this Note is subject to and shall be construed
according to the laws of the State of Ohio, without regard to principles of
conflict of laws. Lender's rights, remedies, and powers that are expressly
specified in this Note are in addition to Lender's rights, remedies, and powers
under any other instrument or agreement or under applicable law.
Any deposits or sums at any time credited by or due from Lender to Borrower
and any securities or other personal property of Borrower in the possession of
Lender may at all times be held and treated as additional security for the
payment of the Obligations. After the occurrence of any Event of Default, Lender
may apply or set off such deposits or other sums against the Obligations at any
time and without further notice.
Any waiver of Lender's rights hereunder must be in writing and signed by
Lender. A waiver on any one occasion shall not be construed as a bar to or
waiver of any such right or remedy on a future occasion. Delay or failure by
Lender to exercise its powers, rights, or remedies, in whole or in part, shall
not be deemed a waiver of any such power, right, or remedy; no single or partial
exercise of any right, power, or remedy hereunder shall preclude the exercise of
any other right, power, or remedy. All agreements, representations, and
warranties made herein will survive the making of the loan evidenced by this
Note and will bind and inure to the benefit of Borrower and its successors and
assigns and Lender and its successors and assigns.
Any notice required or authorized to be given to Borrower pursuant to the
provisions of this Note shall be sufficiently given when such notice is either
delivered, sent by telegram, or mailed (deposited for delivery, postage prepaid,
by U.S. mail) to Borrower either at the address set forth below (as modified by
any change therein which Borrower has supplied in writing to Lender) or at any
other address at which Lender customarily communicates with Borrower.
If any provision of this Note, or any covenant, stipulation, obligation,
agreement, act, or action, or part thereof made, assumed, entered into, or taken
hereunder or any application thereof, is for any reason held to be illegal or
invalid, such illegality or invalidity shall not affect any other provision or
any other covenant, stipulation, obligation, agreement, act, or action or part
thereof, made, assumed, entered into, or taken, each of which shall be construed
and enforced as if such illegal or invalid portion were not contained herein.
Such illegality or invalidity of any application of any provision hereof shall
not affect any legal and valid application thereof, and each such provision,
covenant, stipulation, obligation, agreement, act, or action, or part shall be
deemed to be effective, operative, made, entered into, or taken in the manner
and to the full extent permitted by law.
The relationship between Borrower and Lender with respect to this Note and
any writing executed or delivered in connection herewith is and shall be solely
that of debtor and creditor, respectively, and Lender has no fiduciary
obligation toward Borrower with respect to any such document or the transactions
contemplated thereby.
This Note and any agreement, document or instrument referred to herein or
executed on or as of the date hereof integrate all of the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.
Borrower agrees to promptly reimburse Lender for all costs and expenses,
including attorney's fees, incurred by Lender in connection with any
restructurings of this Note or any documents executed and delivered in
connection herewith and in connection with any collection proceedings as a
result of nonpayment of this Note, as and when due and payable.
Borrower has received consideration which is the reasonable equivalent
value of the obligations and liabilities that Borrower has incurred to Lender.
Borrower is not insolvent as defined in any applicable state or federal statute,
14
nor will Borrower be rendered insolvent by the execution and delivery of this
Note to Lender. Borrower is not engaged or about to engage in any business or
transaction for which the assets retained by it shall be an unreasonably small
capital, taking into consideration the obligations to Lender incurred hereunder.
Borrower does not intend to, nor does it believe that it will, incur debts
beyond its ability to pay them as they mature.
Borrowers authorize any attorney-at-law to appear for each Borrower in any
court of record in the State of Ohio after this Note becomes due and waive the
issuing and service of process and confess judgment against Borrowers in favor
of Lender for the amount then appearing due, together with costs of suit, and
thereupon to waive all errors and all rights of appeal and stay of execution.
The foregoing warrant of attorney shall survive any judgment, and if any
judgment is vacated for any reason, Lender may thereafter use the foregoing
warrant of attorney to obtain any additional judgments against Borrowers.
Borrowers agree that Lender's attorney may confess judgment pursuant to the
foregoing warrant of attorney. Borrowers further agree that the attorney
confessing judgment pursuant to the foregoing warrant of attorney may receive a
legal fee or other compensation from Lender. This is a joint and several warrant
of attorney.
Borrowers, to the extent permitted by law, waive any right to have a jury
---------------------------------------------------------------------------
participate in resolving any dispute, whether sounding in contract, tort, or
--------------------------------------------------------------------------------
otherwise, between Lender and Borrowers arising out of, in connection with,
--------------------------------------------------------------------------------
related to, or incidental to the relationship established between Borrowers and
--------------------------------------------------------------------------------
Lender in connection with this Note or any other agreement, instrument or
--------------------------------------------------------------------------------
document executed or delivered in connection therewith or the transactions
--------------------------------------------------------------------------------
related thereto. This waiver shall not in any way affect, waive, limit, amend or
--------------------------------------------------------------------------------
modify Lender's ability to pursue remedies pursuant to any confession of
--------------------------------------------------------------------------------
judgment or cognovit provision contained in this Note, or any other agreement,
--------------------------------------------------------------------------------
instrument or document related thereto.
---------------------------------------
BORROWERS: Wellstar International Inc., and Trillennium Medical
Imaging, Inc., a wholly owned subsidiary of Wellstar
International, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
▇▇▇▇ ▇. Antonio, President
--------------------------------------------------------------------------------
WARNING: BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
--------------------------------------------------------------------------------
15
EXHIBIT B
SECURITY INSTRUMENTS
Security Agreement, dated April 11th, 2005, by and between Wellstar
International Inc., and Trillennium Medical Imaging, Inc., a wholly owned
subsidiary of Wellstar International, Inc. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
16