EX-10.8
CASH COLLATERAL PLEDGE AGREEMENT
1. GRANT OF PLEDGE., THERMODYNETICS, INC., a Delaware corporation having a
principal place of business at 651 Day Hill Road, Windsor, Connecticut
(the "PLEDGOR"), does hereby pledge, assign, transfer and deliver to
CITIZENS BANK OF MASSACHUSETTS (hereinafter, the "BANK"), a
Massachusetts state chartered bank with offices located at ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and does hereby grant to Bank a
continuing security interest in, the Collateral to secure the Debt
Service Shortfall Obligations (as these terms are hereinafter defined).
2. MODIFICATION AGREEMENT AND DEFINED TERMS. This agreement (hereinafter,
the "CASH COLLATERAL PLEDGE AGREEMENT" or "AGREEMENT") is delivered
pursuant to the terms of that certain Modification Agreement by and
between the Pledgor and the Bank dated April 25, 2006 (the
"MODIFICATION AGREEMENT", together with the all other documents,
instruments and agreements, collectively, the "LOAN DOCUMENTS").
Capitalized terms used herein and not otherwise specifically defined
shall have the same meaning herein as in the Loan Documents.
3. COLLATERAL. The term "Collateral" as utilized herein shall mean and
include: (a) $337,000.00 deposited herewith (hereinafter, the "Cash
Collateral"); (b) that certain account established at the Bank entitled
"Thermodynetics Cash Collateral Account" and having an account number
of 1303814029 (hereinafter, the "Cash Collateral Account") and all
subsequent deposits thereto; and (c) all proceeds and products of any
one or more of the foregoing whether now existing or arising at any
time in the future.
4. WARRANTIES AND REPRESENTATIONS. Pledgor warrants and represent to, and
agrees with, Bank that:
a. Pledgor is and shall be the owner of the Collateral free and
clear of all pledges, liens, security interests and other
encumbrances of every nature whatsoever, except in favor of
Bank;
b. Pledgor has the full right, power and authority to pledge the
Collateral and to grant the security interest in the
Collateral as herein provided;
c. the execution, delivery and performance of this Agreement by
Pledgor does not and shall not result in the violation of any
mortgage, indenture, material contract, instrument, agreement,
judgment, decree, order, statute, rule or regulation to which
Pledgor is subject, or by which it or any of its property is
bound;
d. Pledgor shall not suffer or permit any lien or encumbrance to
exist on or with respect to the Collateral except in favor of
Bank;
e. this Agreement constitutes the legal, valid and binding
obligation of Pledgor in accordance with the terms hereof and
has been duly authorized, executed and delivered; and
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f. there is no material litigation or administrative proceeding
now pending, or to the best of its knowledge threatened,
against Pledgor which if adversely decided could materially
impair the ability of Pledgor to pay or perform Pledgor's
obligations hereunder.
5. ACKNOWLEDGEMENT OF PLEDGOR'S OBLIGATIONS. The parties hereto
acknowledge and agree that the Pledgor is obligated to the bank
pursuant to, among others, the following documents, instruments and
agreements:
a. Security Agreement (Inventory, Accounts, Equipment and other
Personal Property) dated September 4, 1992 between Pledgor and
the Bank;
b. Secured Term Note dated January 23, 2002 (the "TERM NOTE")
made by Pledgor payable to the Bank in the original principal
amount of $2,025,000.00;
c. Commercial Promissory Note dated November 10, 2005 (the
"COMMERCIAL NOTE") made by Pledgor and Turbotec Products, Inc.
payable to the Bank in the original principal amount of
$183,000.00; and
d. Open-End Mortgage dated January 23, 2002 granted by Pledgor to
the Bank and encumbering certain property located on ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, as amended by that certain
Amendment to and Confirmation of Open End Mortgage dated
November 10, 2005.
6. PROCEDURES.
a. CASH COLLATERAL ACCOUNT. Pledgor agrees that the Cash
Collateral paid to Bank and all proceeds thereof shall be held
by Bank in the Cash Collateral Account as security for the
Obligations (as defined in the Modification Agreement).
Payments to the Cash Collateral Account shall be deposited by
Bank into the Cash Collateral Account and such account shall
be subject to withdrawal by order only of such officers and
agents of Bank as Bank may designate from time to time for use
in strict accordance with the provisions of, and for the
purposes stated in, this Agreement and the provisions of the
Loan Documents.
b. PERMITTED INVESTMENTS. Collected funds in the Cash Collateral
Account shall be invested in the Cash Collateral Account. All
interest earned on the Cash Collateral shall remain in the
Cash Collateral Account to be applied in accordance with the
terms of this Agreement.
c. CHARGES. Pledgor shall pay upon billing therefore, or there
shall be deducted from the Cash Collateral Account or the
income therefrom, all regular reasonable and actual service
fees, maintenance fees and transaction charges related
thereto.
d. USE OF CASH COLLATERAL. The Collateral, including, without
limitation, the Cash Collateral and the Cash Collateral
Account, shall be held by Bank pursuant to the
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terms of this Agreement and the Modification Agreement until
the Obligations under the Term Note and the Commercial Note
have been satisfied in full. Upon and After the occurrence of
an Event of Default, that Bank may apply funds out the Cash
Collateral Account in a manner determined in its sole
discretion.
e. RELEASE. In the event that the Obligations under the Term Note
have been satisfied in full, and the Obligations under the
Commercial Note remain due and owing, a portion the Cash
Collateral Account, except for an amount equal to $37,000.00,
shall be paid to Pledgor within five (5) Business Days of
Pledgor's written request. In the event that the Obligations
under the Commercial Note have been satisfied in full, and the
Obligations under the Term Note remain due and owing, a
portion of the Cash Collateral Account, except for an amount
equal to $300,000.00, shall be paid to Pledgor within five (5)
Business Days of Pledgor's written request. At such time as
the Obligations under both the Term Note and the Commercial
Note have been satisfied in full, the remaining balance in the
Cash Collateral Account, if any, shall be paid to Pledgor
within five (5) Business Days of Pledgor's written request.
Notwithstanding the foregoing, provided that no Event of
Default exists, Pledgor may request from Bank in connection
with Pledgor's payment in full of the Obligations at Maturity,
the release of the Collateral in order to assist the Pledgor
in the payment in full of the Obligations and Bank shall
release such Collateral provided that (i) such Collateral is
solely utilized to pay the Obligations, and (ii) the
Obligations are paid in full at the time of such release.
7. CONSENTS AND WAIVERS. Pledgor hereby consents to the extension,
renewal, amendment, modification or recasting from time to time of the
obligations, or the other Loan Documents, or of any instrument,
document or agreement evidencing or securing any of the same, and
Pledgor specifically waives any notice of the creation or existence of
any of such obligations and of any such extension, renewal, amendment,
modification or recasting. Pledgor also agrees that Bank may enforce
its rights as against Pledgor, Pledgor, the Collateral, or as against
any other party liable for the Obligations, or as against any other
collateral given for any of the obligations, in any order or in such
combination as Bank may in its sole discretion determine, and Pledgor
hereby expressly waives all suretyship defenses and defenses in the
nature thereof, agrees to the release or substitution of any collateral
hereunder or otherwise, waives any defense based upon the invalidity or
unenforceability of any of the Loan Document, and consents to each and
all of the terms, provisions and conditions of this Pledge and Security
Agreement and the other Loan Documents. Upon an Event of Default, Bank
may, at its option, from time to time, and notwithstanding any waiver
at that time or at any other time, exercise any one or more of the
rights and remedies of a secured party afforded by the Uniform
Commercial Code, as from time to time in effect in the Commonwealth of
Massachusetts or afforded by other applicable law. Requirement of
reasonable notice with respect to any sale or disposition shall be made
if such notice is given in any manner permitted for notices under the
Modification Agreement at least ten (10) days before the time of the
sale or other disposition or as otherwise required by applicable law.
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8. EXPENSES. The reasonable and actual expenses of enforcing Bank's rights
hereunder and Bank's reasonable attorneys' fees and other reasonable
legal expenses together with interest thereon shall be payable by
Pledgor and shall be secured hereby and by the Loan Documents.
9. SUCCESSORS AND ASSIGNS. All of the agreements, obligations,
undertakings, representations and warranties herein made by Pledgor or
Bank shall inure to the benefit of the other party, and their
respective successors and assigns, and shall bind Pledgor and Bank and
their respective successors and assigns.
10. FURTHER ASSURANCES. Pledgor agrees to execute such further assurances
and other instruments as Bank may deem necessary or desirable to
effectuate the purposes of this Agreement.
11. NO LIENS OR TRANSFERS BY PLEDGOR. Pledgor agrees that until Pledgor is
entitled to a return of the Collateral, or so much thereof as remains,
Pledgor shall not, without the express prior written consent of Bank in
each instance, transfer the Collateral or any interest therein or enter
into any agreement for the transfer of such Collateral, or permit or
suffer any other liens, whether or not junior to the lien created
hereby, to be created or to exist with respect to the Collateral. The
foregoing shall not by implication relieve the Pledgor from the
restrictions upon liens set forth in the other Loan Documents.
12. NOTICES. Any notices given in connection with this Agreement shall be
in writing and shall be effective only if given according to the
provisions of the Modification Agreement.
13. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which when executed and delivered is an original, but all of
which together shall constitute one instrument. In making proof of this
Agreement, it shall not be necessary to produce or account for more
than one such counterpart which is executed by the party against whom
enforcement of such agreement is sought.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
an instrument under seal on the dated as of April 25, 2006.
PLEDGOR: THERMODYNETICS, INC.
By:_________/s/_____________________
Name:____________________________
Title:_____________________________
BANK: CITIZENS BANK OF MASSACHUSETTS
By:_______/s/_______________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
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