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EXHIBIT A
SUBSTITUTE TERM NOTE
$4,000,000 September 15, 1999
Norwich, Connecticut
For value received, the undersigned, ▇▇▇▇▇▇▇ International, Ltd. (the
"Borrower") promises to pay to the order of ▇▇▇▇▇▇▇ PARTNERS, LLC ("Lender")
at the office of its agent, c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Family Interests,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ or at such other place as
Lender may designate, the principal sum of FOUR MILLION DOLLARS ($4,000,000),
together with interest on the unpaid balance of this Note at the rate of
eight percent (8%) per annum, beginning on the date hereof, before or after
maturity or judgment, which interest shall be computed on the basis of a
360-day year and actual days elapsed, together with all taxes levied or
assessed on this Note or the debt evidenced hereby against ▇▇▇▇▇▇, and
together with all costs, expenses and reasonable attorneys' fees incurred in
the collection of this Note, or to enforce or foreclose any security
agreement or other document including, without limitation, the Agreement (as
hereinafter defined), securing or relating to this Note, or in protecting or
defending the lien of said security agreement or other document, or in any
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litigation or matter arising from or connected with said security agreement,
other document, or this Note. This Note is the Term Note referred to in, and
is entitled to the benefits of, that certain Loan and Security Agreement
dated October 2, 1998 between ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ as amended by that certain
Amendment to Loan Agreement and Term Note dated the date hereof (such Loan
and Security Agreement as so modified and as the same may be further amended
from time to time, the "Agreement"). Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement. The Agreement, among other things, contains provisions for (i)
acceleration of the maturity of this Note upon the happening of certain
stated events, (ii) for prepayments on account of principal hereof prior to
the maturity of this Note upon the terms and conditions specified in the
Agreement and (iii) the payment of interest at the Default Rate under certain
circumstances. The Agreement and all other instruments either relating to or
securing the indebtedness evidenced hereby are made a part of this Note and
deemed incorporated in full.
Interest shall be paid on the first day of each calendar quarter
beginning October 1, 1999, and continuing on the first day of each April,
July, October and January thereafter, until the principal balance with
accrued interest thereon is paid in full. Principal shall be paid in nine
payments as follows:
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(a) Two Hundred Thousand Dollars ($200,000) shall be paid on the first day of
each month commencing on October 1, 2001 and continuing to and including April
1, 2002; (b) One Hundred Thousand Dollars ($100,000) shall be paid on May 1,
2002 and (c) the balance together with all accrued and unpaid interest and all
other unpaid amounts due hereunder or under the Financing Agreements, shall be
due and payable on October 1, 2003 or on such earlier date that this Note
becomes due and payable as a result of acceleration as provided in the Agreement
(the "Maturity Date"). Notwithstanding the foregoing, if at any time prior to
October 1, 2001, the Retained Earnings of the Borrower, calculated in accordance
with generally accepted accounting principals, increase to One Million Dollars
($1,000,000) or more above the Borrower's Retained Earnings as of June 30, 1999
(such event herein called the "Triggering Event") then the principal payments
set forth above as being due on October 1, 2001 through May 1, 2002 shall be
accelerated and become due in consecutive monthly installments as set forth
above payable on the 1st day of each month commencing on the 1st day of the
second (2nd) month following the month in which the Triggering Event shall
occur.
Upon the occurrence of an Event of Default under and as defined in the
Agreement, the entire indebtedness, with accrued interest thereon, due under
this Note, shall, at the option of
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Lender, become immediately due and payable without demand or notice of any kind.
If any amount due hereunder is not paid within ten (10) days after the date
it is due, without in any way affecting ▇▇▇▇▇▇'s right to accelerate this Note,
a late charge equal to five percent (5%) of said amount shall be assessed
against Borrower for each month that said amount is late, and shall be
immediately due and payable without demand or further notice of any kind.
Borrower hereby grants to Lender a lien and right of setoff for all of
▇▇▇▇▇▇▇▇'s liabilities to Lender under this Note and the Agreement upon and
against all the deposits, credits, collateral and property of ▇▇▇▇▇▇▇▇, now or
hereinafter in the possession or control of Lender or in transit to it. Lender
may, at any time after the occurrence, and during the continuance, of an Event
of Default, apply or set off the same, or any part thereof, to any liability of
Borrower, whether or not matured or demanded.
Notwithstanding any provisions of this Note to the contrary, the rate of
interest to be paid by Borrower to Lender under this Note shall not exceed the
highest or the maximum rate of interest permitted to be charged by Lender under
applicable laws. Any amounts paid by Borrower to Lender in excess of such
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rate shall be deemed to be partial prepayments of principal hereunder.
No delay or omission by ▇▇▇▇▇▇ in exercising any right hereunder, nor
failure by ▇▇▇▇▇▇ to insist upon the strict performance of any terms herein,
shall operate as a waiver of such right, any other right hereunder, or any terms
herein. No waiver of any right shall be effective unless in writing and signed
by ▇▇▇▇▇▇, nor shall a waiver on one occasion be constituted as a bar to, or
waiver of, any such right on any future occasion.
BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT,
ACTON OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY
RELATED TO THE FINANCING TRANSACTIONS OF WHICH THIS NOTE IS A PART AND/OR THE
ENFORCEMENT OF ANY OF ▇▇▇▇▇▇'S RIGHTS AND REMEDIES. BORROWER ACKNOWLEDGES THAT
IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. NO PARTY
TO THIS NOTE HAS AGREED WITH OR REPRESENTED TO ANY OTHER PARTY HERETO THAT THE
PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
▇▇▇▇▇▇▇▇ ACKNOWLEDGES THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION AND WAIVES ITS RIGHTS TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE
OR FEDERAL LAW WITH RESPECT
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TO ANY PREJUDGMENT REMEDY WHICH BANK MAY DESIRE TO USE, and further waives
diligence, demand, presentment for payment, notice of nonpayment, protest, and
notice of protest, and notice of any renewals or extensions of this Note, and
all rights under any statute of limitations.
This Note shall be governed by and construed in accordance with the
laws of the State of Connecticut.
This Note is delivered in substitution for that certain $4,000,000 Term
Note dated October 2, 1998 made by the Borrower to the order of the Lender.
▇▇▇▇▇▇▇ INTERNATIONAL, LTD.
By:
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Name:
Title:
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