Exhibit 10.8
LOAN AGREEMENT
This Agreement is entered into by and among ▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"),
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. Loppert ("Loppert"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and Windsortech, Inc., a Delaware
corporation (the "Company"), on and as of April 24, 2002. Sherman, Cummings,
Loppert, ▇▇▇▇▇▇▇▇ and Sheerr are sometimes hereinafter referred to,
individually, as a "Shareholder" or "Lender" and, collectively, as the
"Shareholders" or "Lenders".
WHEREAS, Sherman, Cummings, Loppert, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ severally own an
aggregate of 9,000,000 shares of the capital stock of the Company (the
"Shares"), representing approximately 75% of all outstanding Shares;
WHEREAS, the Company needs additional funds to conduct its business
operations; and
WHEREAS, on the terms and conditions hereafter set forth, the Shareholders
are willing to lend money to the Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
hereby agree as follows:
1. Subject to the terms and conditions hereafter set forth, Sherman,
Cummings, Loppert, ▇▇▇▇▇▇▇▇ and Sheerr each severally agree to lend, $110,000.00
to the Company (individually, a "Loan" and collectively, the "Loans"). The Loans
will be evidenced by the Company's Promissory Notes in the form attached hereto
as Exhibits ▇-▇, ▇-▇, ▇-▇, ▇-▇ and A-5 (individually, a "Note" and collectively,
the "Notes"). The obligation to repay the Loans will be secured by the grant of
a security interest in all of the Company's assets pursuant to a Security
Agreement in the form attached hereto as Exhibit B (the "Security Agreement").
The Lenders have agreed to allocate the collateral covered by the Security
Agreement amongst themselves in accordance with an Intercreditor Agreement in
the form attached hereto as Exhibit C (the "Intercreditor Agreement").
2. Anything herein or in any of the Notes or the Security Agreement to the
contrary notwithstanding, on and after the date hereof, each Lender irrevocably
and unconditionally agrees that at the written request of the Borrower's Board
of Directors, such Lender will promptly execute and deliver to the Borrower or
any other person, firm or entity designated in such written request, all
agreements, documents or instruments required to evidence or give effect to the
subordination of all or such part of Lender's rights hereunder or under any
related Security Agreement as the Borrower's Board of Directors shall request in
order to facilitate or give effect to any other debt or equity financing
proposed to be entered into by the Borrower.
3. This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective heirs, successors and assigns.
4. This Agreement may be entered into any number of counterparts, each of
which shall be deemed to be an original.
5. This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey.
6. This Agreement constitutes the full and complete expression of the
agreement and understanding of the parties hereto with the respect to the
subject matter hereof.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement on and as of the date first above written.
[CORPORATE SEAL] WINDSORTECH, INC.
ATTEST:
/s/ ▇▇▇▇▇ ▇. Loppert
------------------------------- By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
President
WITNESS:
/s/ ▇▇▇▇▇ ▇. Loppert /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- ----------------------------------
WITNESS:
/s/ ▇▇▇▇▇ ▇. Loppert /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------- ----------------------------------
WITNESS:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. Loppert
------------------------------- ----------------------------------
WITNESS:
/s/ ▇▇▇▇▇ ▇. Loppert /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------- ----------------------------------
WITNESS:
/s/ ▇▇▇▇▇ ▇. Loppert /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- ----------------------------------
-2-
EXHIBIT A-1
PROMISSORY NOTE
Borrower: Windsortech, Inc. Lender: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Principal Amount: Interest Rate: Date of Note:
$110,000.00 12.00% April 24, 2002
PROMISE TO PAY. Windsortech, Inc., a Delaware corporation ("Borrower"), promises
to pay to ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ("Lender"), or order, in lawful money of the United
States of America, the principal amount of One Hundred Ten Thousand & 00/100
Dollars ($110,000.00), together with interest at the rate of 12.00% per annum on
the unpaid principal balance from the date set forth above until paid in full.
PAYMENT. Borrower will pay interest on the outstanding principal amount of this
Note monthly in arrears until this Note has been repaid in full. Borrower's
first payment is due May 1, 2002, and all subsequent payments are due on the
same day of each month after that. Unless previously repaid, the full amount of
the outstanding principal amount of this Note, together will all accrued and
unpaid interest thereon will be due and payable on April 23, 2003 (the "Maturity
Date"). Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs and any late charges, then to any
unpaid interest, and any remaining amount to principal. The annual interest rate
for this Note is computed on a 365/365 basis: that is, by applying the ratio of
the annual interest rate over a year of 365 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Anything herein to the
contrary notwithstanding, Borrower shall pay all amounts due hereunder at the
Maturity Date in lawful money of the United States unless Lender shall have
elected to instead be paid by Borrower (in whole or part) with such number of
shares of the Borrower's capital stock as shall equal the result of dividing the
amount not paid in cash by the market value per share of each share of the
Borrower's capital stock as determined by an independent, professional valuation
firm on or about the date hereof.
PREPAYMENT. Borrower may pay in the manner set forth above without penalty all
or a portion of the amount owed earlier than it is due. Early partial payments
will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to pay all amounts due hereunder. Borrower agrees not to send Lender
payments marked "paid in full", "without recourse" or similar language. If
Borrower sends such a payment, Lender may accept it without losing any of
Lenders rights under this Note, and Borrower will remain obligated to pay any
further amount owed to Lender. All written communications concerning disputed
amounts or that is tendered with other conditions or limitations or as full
satisfaction of a disputed amount must be mailed or delivered to: ▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $50.00,
whichever is greater.
A-1-1
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the interest rate on this Note by 5.000 percentage points. In any
event, the interest rate will not exceed the maximum rate permitted by
applicable law. If judgment is entered in connection with this Note, interest
will continue to accrue on this Note after judgment at the existing interest
rate provided for in this Note.
AGREEMENT TO SUBORDINATE. Lender irrevocably acknowledges that he has
irrevocably and unconditionally agreed in a Loan Agreement between Borrower and
Lender dated the date hereof (the "Loan Agreement') to subordinate all or part
of his rights hereunder or under the Security Agreement referred to in the Loan
Agreement as and to the extent contemplated in or required by the Loan
Agreement.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this
Note.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in any
of the related documents or agreements, including a Security Agreement, or
to comply with or to perform any term, obligation, covenant or condition
contained in any other agreement, instrument or document between Lender
and Borrower.
Dissolution or Insolvency. The dissolution or termination of Borrower's
existence as a going business or the insolvency of Borrower, the
appointment of a receiver for any part of Borrower's property, any
assignment for the benefit of creditors, any type of creditor workout, or
the commencement of any proceeding under any bankruptcy or insolvency laws
by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower's accounts. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written
notice of the creditor or forfeiture proceeding and deposits with Lender
monies or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an adequate
reserve or bond for the dispute.
CURE PROVISIONS. If any default, other than a default in payment, is curable, it
may be cured (and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (1) cures
the default within five (5) days; or (2) if the cure requires more than five (5)
days, immediately initiates steps which Lender deems in Lender's sole discretion
to be sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
A-1-2
LENDER'S RIGHTS. Upon default, Lender may, after giving such notices as required
by applicable law, declare the entire unpaid principal balance on this Note and
all accrued unpaid interest immediately due, and then Borrower will pay that
amount.
EXPENSES. If Lender institutes any suit or action to enforce any of the terms of
this Note, Lender shall be entitled to recover such sum as the court may adjudge
reasonable. Whether or not any court action is involved, and to the extent not
prohibited by law, all reasonable expenses Lender incurs that, in Lender's sole
opinion, are necessary at any time for the protection of its interest or the
enforcement of its rights shall become a part of the loan payable on demand and
shall bear interest at the Note rate from the date of the expenditure until
repaid. Expenses covered by this paragraph include, without limitation, however
subject to any limits under applicable law, Lender's expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals, to the extent permitted by applicable law. Borrower
also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with the laws of the State of New Jersey.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of ▇▇▇▇▇▇ County, NJ.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower, to the fullest extent
allowed by law, waives presentment, demand for payment and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note as maker shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan or release any party or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. If any portion of this Note is for any
reason determined to be unenforceable, it will not affect the enforceability of
any other provisions of this Note.
IN WITNESS WHEREOF, Borrower has executed and delivered this Promissory Note on
and as of the date set forth above.
[CORPORATE SEAL] BORROWER:
ATTEST: WINDSORTECH, INC.
By /s/ ▇▇▇▇▇ ▇. Loppert By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ ------------------------------
Authorized Officer President
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
PROMISSORY NOTE
Borrower: Windsortech, Inc. Lender: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Principal Amount: Interest Rate: Date of Note:
$110,000.00 12.00% April 24, 2002
PROMISE TO PAY. Windsortech, Inc., a Delaware corporation ("Borrower"), promises
to pay to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Hundred Ten Thousand &
00/100 Dollars ($110,000.00), together with interest at the rate of 12.00% per
annum on the unpaid principal balance from the date set forth above until paid
in full.
PAYMENT. Borrower will pay interest on the outstanding principal amount of this
Note monthly in arrears until this Note has been repaid in full. Borrower's
first payment is due May 1, 2002, and all subsequent payments are due on the
same day of each month after that. Unless previously repaid, the full amount of
the outstanding principal amount of this Note, together will all accrued and
unpaid interest thereon will be due and payable on April 23, 2003 (the "Maturity
Date"). Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs and any late charges, then to any
unpaid interest, and any remaining amount to principal. The annual interest rate
for this Note is computed on a 365/365 basis: that is, by applying the ratio of
the annual interest rate over a year of 365 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Anything herein to the
contrary notwithstanding, Borrower shall pay all amounts due hereunder at the
Maturity Date in lawful money of the United States unless Lender shall have
elected to instead be paid by Borrower (in whole or part) with such number of
shares of the Borrower's capital stock as shall equal the result of dividing the
amount not paid in cash by the market value per share of each share of the
Borrower's capital stock as determined by an independent, professional valuation
firm on or about the date hereof.
PREPAYMENT. Borrower may pay in the manner set forth above without penalty all
or a portion of the amount owed earlier than it is due. Early partial payments
will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to pay all amounts due hereunder. Borrower agrees not to send Lender
payments marked "paid in full", "without recourse" or similar language. If
Borrower sends such a payment, Lender may accept it without losing any of
Lenders rights under this Note, and Borrower will remain obligated to pay any
further amount owed to Lender. All written communications concerning disputed
amounts or that is tendered with other conditions or limitations or as full
satisfaction of a disputed amount must be mailed or delivered to: ▇▇. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $50.00,
whichever is greater.
A-2-1
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the interest rate on this Note by 5.000 percentage points. In any
event, the interest rate will not exceed the maximum rate permitted by
applicable law. If judgment is entered in connection with this Note, interest
will continue to accrue on this Note after judgment at the existing interest
rate provided for in this Note.
AGREEMENT TO SUBORDINATE. Lender irrevocably acknowledges that he has
irrevocably and unconditionally agreed in a Loan Agreement between Borrower and
Lender dated the date hereof (the "Loan Agreement') to subordinate all or part
of his rights hereunder or under the Security Agreement referred to in the Loan
Agreement as and to the extent contemplated in or required by the Loan
Agreement.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this
Note.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in any
of the related documents or agreements, including a Security Agreement, or
to comply with or to perform any term, obligation, covenant or condition
contained in any other agreement, instrument or document between Lender
and Borrower.
Dissolution or Insolvency. The dissolution or termination of Borrower's
existence as a going business or the insolvency of Borrower, the
appointment of a receiver for any part of Borrower's property, any
assignment for the benefit of creditors, any type of creditor workout, or
the commencement of any proceeding under any bankruptcy or insolvency laws
by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower's accounts. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written
notice of the creditor or forfeiture proceeding and deposits with Lender
monies or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an adequate
reserve or bond for the dispute.
CURE PROVISIONS. If any default, other than a default in payment, is curable, it
may be cured (and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (1) cures
the default within five (5) days; or (2) if the cure requires more than five (5)
days, immediately initiates steps which Lender deems in Lender's sole discretion
to be sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
A-2-2
LENDER'S RIGHTS. Upon default, Lender may, after giving such notices as required
by applicable law, declare the entire unpaid principal balance on this Note and
all accrued unpaid interest immediately due, and then Borrower will pay that
amount.
EXPENSES. If Lender institutes any suit or action to enforce any of the terms of
this Note, Lender shall be entitled to recover such sum as the court may adjudge
reasonable. Whether or not any court action is involved, and to the extent not
prohibited by law, all reasonable expenses Lender incurs that, in Lender's sole
opinion, are necessary at any time for the protection of its interest or the
enforcement of its rights shall become a part of the loan payable on demand and
shall bear interest at the Note rate from the date of the expenditure until
repaid. Expenses covered by this paragraph include, without limitation, however
subject to any limits under applicable law, Lender's expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals, to the extent permitted by applicable law. Borrower
also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of ▇▇▇▇▇▇ County, NJ.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower, to the fullest extent
allowed by law, waives presentment, demand for payment and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note as maker shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan or release any party or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. If any portion of this Note is for any
reason determined to be unenforceable, it will not affect the enforceability of
any other provisions of this Note.
IN WITNESS WHEREOF, Borrower has executed and delivered this Promissory Note on
and as of the date set forth above.
[CORPORATE SEAL] BORROWER:
ATTEST: WINDSORTECH, INC.
By /s/ ▇▇▇▇▇ ▇. Loppert By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- -------------------------------
Authorized Officer President
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
PROMISSORY NOTE
Borrower: Windsortech, Inc. Lender: ▇▇. ▇▇▇▇▇ ▇. Loppert
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Principal Amount: Interest Rate: Date of Note:
$110,000.00 12.00% April 24, 2002
PROMISE TO PAY. Windsortech, Inc., a Delaware corporation ("Borrower"), promises
to pay to ▇▇. ▇▇▇▇▇ ▇. Loppert ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Hundred Ten Thousand &
00/100 Dollars ($110,000.00), together with interest at the rate of 12.00% per
annum on the unpaid principal balance from the date set forth above until paid
in full.
PAYMENT. Borrower will pay interest on the outstanding principal amount of this
Note monthly in arrears until this Note has been repaid in full. Borrower's
first payment is due May 1, 2002, and all subsequent payments are due on the
same day of each month after that. Unless previously repaid, the full amount of
the outstanding principal amount of this Note, together will all accrued and
unpaid interest thereon will be due and payable on April 23, 2003 (the "Maturity
Date"). Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs and any late charges, then to any
unpaid interest, and any remaining amount to principal. The annual interest rate
for this Note is computed on a 365/365 basis: that is, by applying the ratio of
the annual interest rate over a year of 365 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Anything herein to the
contrary notwithstanding, Borrower shall pay all amounts due hereunder at the
Maturity Date in lawful money of the United States unless Lender shall have
elected to instead be paid by Borrower (in whole or part) with such number of
shares of the Borrower's capital stock as shall equal the result of dividing the
amount not paid in cash by the market value per share of each share of the
Borrower's capital stock as determined by an independent, professional valuation
firm on or about the date hereof.
PREPAYMENT. Borrower may pay in the manner set forth above without penalty all
or a portion of the amount owed earlier than it is due. Early partial payments
will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to pay all amounts due hereunder. Borrower agrees not to send Lender
payments marked "paid in full", "without recourse" or similar language. If
Borrower sends such a payment, Lender may accept it without losing any of
Lenders rights under this Note, and Borrower will remain obligated to pay any
further amount owed to Lender. All written communications concerning disputed
amounts or that is tendered with other conditions or limitations or as full
satisfaction of a disputed amount must be mailed or delivered to: ▇▇. ▇▇▇▇▇ ▇.
Loppert, ▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $50.00,
whichever is greater.
A-3-1
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the interest rate on this Note by 5.000 percentage points. In any
event, the interest rate will not exceed the maximum rate permitted by
applicable law. If judgment is entered in connection with this Note, interest
will continue to accrue on this Note after judgment at the existing interest
rate provided for in this Note.
AGREEMENT TO SUBORDINATE. Lender irrevocably acknowledges that he has
irrevocably and unconditionally agreed in a Loan Agreement between Borrower and
Lender dated the date hereof (the "Loan Agreement') to subordinate all or part
of his rights hereunder or under the Security Agreement referred to in the Loan
Agreement as and to the extent contemplated in or required by the Loan
Agreement.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this
Note.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in any
of the related documents or agreements, including a Security Agreement, or
to comply with or to perform any term, obligation, covenant or condition
contained in any other agreement, instrument or document between Lender
and Borrower.
Dissolution or Insolvency. The dissolution or termination of Borrower's
existence as a going business or the insolvency of Borrower, the
appointment of a receiver for any part of Borrower's property, any
assignment for the benefit of creditors, any type of creditor workout, or
the commencement of any proceeding under any bankruptcy or insolvency laws
by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower's accounts. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written
notice of the creditor or forfeiture proceeding and deposits with Lender
monies or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an adequate
reserve or bond for the dispute.
CURE PROVISIONS. If any default, other than a default in payment, is curable, it
may be cured (and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (1) cures
the default within five (5) days; or (2) if the cure requires more than five (5)
days, immediately initiates steps which Lender deems in Lender's sole discretion
to be sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
A-3-2
LENDER'S RIGHTS. Upon default, Lender may, after giving such notices as required
by applicable law, declare the entire unpaid principal balance on this Note and
all accrued unpaid interest immediately due, and then Borrower will pay that
amount.
EXPENSES. If Lender institutes any suit or action to enforce any of the terms of
this Note, Lender shall be entitled to recover such sum as the court may adjudge
reasonable. Whether or not any court action is involved, and to the extent not
prohibited by law, all reasonable expenses Lender incurs that, in Lender's sole
opinion, are necessary at any time for the protection of its interest or the
enforcement of its rights shall become a part of the loan payable on demand and
shall bear interest at the Note rate from the date of the expenditure until
repaid. Expenses covered by this paragraph include, without limitation, however
subject to any limits under applicable law, Lender's expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals, to the extent permitted by applicable law. Borrower
also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with the laws of the State of New Jersey.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of ▇▇▇▇▇▇ County, NJ.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower, to the fullest extent
allowed by law, waives presentment, demand for payment and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note as maker shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan or release any party or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. If any portion of this Note is for any
reason determined to be unenforceable, it will not affect the enforceability of
any other provisions of this Note.
IN WITNESS WHEREOF, Borrower has executed and delivered this Promissory Note on
and as of the date set forth above.
[CORPORATE SEAL] BORROWER:
ATTEST: WINDSORTECH, INC.
By /s/ ▇▇▇▇▇ ▇. Loppert By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- -------------------------------
Authorized Officer President
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
PROMISSORY NOTE
Borrower: Windsortech, Inc. Lender: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Principal Amount: Interest Rate: Date of Note:
$110,000.00 12.00% April 24, 2002
PROMISE TO PAY. Windsortech, Inc., a Delaware corporation ("Borrower"), promises
to pay to ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Hundred Ten Thousand &
00/100 Dollars ($110,000.00), together with interest at the rate of 12.00% per
annum on the unpaid principal balance from the date set forth above until paid
in full.
PAYMENT. Borrower will pay interest on the outstanding principal amount of this
Note monthly in arrears until this Note has been repaid in full. Borrower's
first payment is due May 1, 2002, and all subsequent payments are due on the
same day of each month after that. Unless previously repaid, the full amount of
the outstanding principal amount of this Note, together will all accrued and
unpaid interest thereon will be due and payable on April 23, 2003 (the "Maturity
Date"). Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs and any late charges, then to any
unpaid interest, and any remaining amount to principal. The annual interest rate
for this Note is computed on a 365/365 basis: that is, by applying the ratio of
the annual interest rate over a year of 365 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Anything herein to the
contrary notwithstanding, Borrower shall pay all amounts due hereunder at the
Maturity Date in lawful money of the United States unless Lender shall have
elected to instead be paid by Borrower (in whole or part) with such number of
shares of the Borrower's capital stock as shall equal the result of dividing the
amount not paid in cash by the market value per share of each share of the
Borrower's capital stock as determined by an independent, professional valuation
firm on or about the date hereof.
PREPAYMENT. Borrower may pay in the manner set forth above without penalty all
or a portion of the amount owed earlier than it is due. Early partial payments
will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to pay all amounts due hereunder. Borrower agrees not to send Lender
payments marked "paid in full", "without recourse" or similar language. If
Borrower sends such a payment, Lender may accept it without losing any of
Lenders rights under this Note, and Borrower will remain obligated to pay any
further amount owed to Lender. All written communications concerning disputed
amounts or that is tendered with other conditions or limitations or as full
satisfaction of a disputed amount must be mailed or delivered to: ▇▇. ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $50.00,
whichever is greater.
A-4-1
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the interest rate on this Note by 5.000 percentage points. In any
event, the interest rate will not exceed the maximum rate permitted by
applicable law. If judgment is entered in connection with this Note, interest
will continue to accrue on this Note after judgment at the existing interest
rate provided for in this Note.
AGREEMENT TO SUBORDINATE. Lender irrevocably acknowledges that he has
irrevocably and unconditionally agreed in a Loan Agreement between Borrower and
Lender dated the date hereof (the "Loan Agreement') to subordinate all or part
of his rights hereunder or under the Security Agreement referred to in the Loan
Agreement as and to the extent contemplated in or required by the Loan
Agreement.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this
Note.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in any
of the related documents or agreements, including a Security Agreement, or
to comply with or to perform any term, obligation, covenant or condition
contained in any other agreement, instrument or document between Lender
and Borrower.
Dissolution or Insolvency. The dissolution or termination of Borrower's
existence as a going business or the insolvency of Borrower, the
appointment of a receiver for any part of Borrower's property, any
assignment for the benefit of creditors, any type of creditor workout, or
the commencement of any proceeding under any bankruptcy or insolvency laws
by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower's accounts. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written
notice of the creditor or forfeiture proceeding and deposits with Lender
monies or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an adequate
reserve or bond for the dispute.
CURE PROVISIONS. If any default, other than a default in payment, is curable, it
may be cured (and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (1) cures
the default within five (5) days; or (2) if the cure requires more than five (5)
days, immediately initiates steps which Lender deems in Lender's sole discretion
to be sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
A-4-2
LENDER'S RIGHTS. Upon default, Lender may, after giving such notices as required
by applicable law, declare the entire unpaid principal balance on this Note and
all accrued unpaid interest immediately due, and then Borrower will pay that
amount.
EXPENSES. If Lender institutes any suit or action to enforce any of the terms of
this Note, Lender shall be entitled to recover such sum as the court may adjudge
reasonable. Whether or not any court action is involved, and to the extent not
prohibited by law, all reasonable expenses Lender incurs that, in Lender's sole
opinion, are necessary at any time for the protection of its interest or the
enforcement of its rights shall become a part of the loan payable on demand and
shall bear interest at the Note rate from the date of the expenditure until
repaid. Expenses covered by this paragraph include, without limitation, however
subject to any limits under applicable law, Lender's expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals, to the extent permitted by applicable law. Borrower
also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with the laws of the State of New Jersey.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of ▇▇▇▇▇▇ County, NJ.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower, to the fullest extent
allowed by law, waives presentment, demand for payment and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note as maker shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan or release any party or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. If any portion of this Note is for any
reason determined to be unenforceable, it will not affect the enforceability of
any other provisions of this Note.
IN WITNESS WHEREOF, Borrower has executed and delivered this Promissory Note on
and as of the date set forth above.
[CORPORATE SEAL] BORROWER:
ATTEST: WINDSORTECH, INC.
By /s/ ▇▇▇▇▇ ▇. Loppert By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- -------------------------------
Authorized Officer President
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
PROMISSORY NOTE
Borrower: Windsortech, Inc. Lender: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Principal Amount: Interest Rate: Date of Note:
$110,000.00 12.00% April 24, 2002
PROMISE TO PAY. Windsortech, Inc., a Delaware corporation ("Borrower"), promises
to pay to ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Hundred Ten Thousand &
00/100 Dollars ($110,000.00), together with interest at the rate of 12.00% per
annum on the unpaid principal balance from the date set forth above until paid
in full.
PAYMENT. Borrower will pay interest on the outstanding principal amount of this
Note monthly in arrears until this Note has been repaid in full. Borrower's
first payment is due May 1, 2002, and all subsequent payments are due on the
same day of each month after that. Unless previously repaid, the full amount of
the outstanding principal amount of this Note, together will all accrued and
unpaid interest thereon will be due and payable on April 23, 2003 (the "Maturity
Date"). Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs and any late charges, then to any
unpaid interest, and any remaining amount to principal. The annual interest rate
for this Note is computed on a 365/365 basis: that is, by applying the ratio of
the annual interest rate over a year of 365 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Anything herein to the
contrary notwithstanding, Borrower shall pay all amounts due hereunder at the
Maturity Date in lawful money of the United States unless Lender shall have
elected to instead be paid by Borrower (in whole or part) with such number of
shares of the Borrower's capital stock as shall equal the result of dividing the
amount not paid in cash by the market value per share of each share of the
Borrower's capital stock as determined by an independent, professional valuation
firm on or about the date hereof.
PREPAYMENT. Borrower may pay in the manner set forth above without penalty all
or a portion of the amount owed earlier than it is due. Early partial payments
will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's
obligation to pay all amounts due hereunder. Borrower agrees not to send Lender
payments marked "paid in full", "without recourse" or similar language. If
Borrower sends such a payment, Lender may accept it without losing any of
Lenders rights under this Note, and Borrower will remain obligated to pay any
further amount owed to Lender. All written communications concerning disputed
amounts or that is tendered with other conditions or limitations or as full
satisfaction of a disputed amount must be mailed or delivered to: ▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $50.00,
whichever is greater.
A-5-1
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the interest rate on this Note by 5.000 percentage points. In any
event, the interest rate will not exceed the maximum rate permitted by
applicable law. If judgment is entered in connection with this Note, interest
will continue to accrue on this Note after judgment at the existing interest
rate provided for in this Note.
AGREEMENT TO SUBORDINATE. Lender irrevocably acknowledges that he has
irrevocably and unconditionally agreed in a Loan Agreement between Borrower and
Lender dated the date hereof (the "Loan Agreement') to subordinate all or part
of his rights hereunder or under the Security Agreement referred to in the Loan
Agreement as and to the extent contemplated in or required by the Loan
Agreement.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this
Note.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in any
of the related documents or agreements, including a Security Agreement, or
to comply with or to perform any term, obligation, covenant or condition
contained in any other agreement, instrument or document between Lender
and Borrower.
Dissolution or Insolvency. The dissolution or termination of Borrower's
existence as a going business or the insolvency of Borrower, the
appointment of a receiver for any part of Borrower's property, any
assignment for the benefit of creditors, any type of creditor workout, or
the commencement of any proceeding under any bankruptcy or insolvency laws
by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower's accounts. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written
notice of the creditor or forfeiture proceeding and deposits with Lender
monies or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an adequate
reserve or bond for the dispute.
CURE PROVISIONS. If any default, other than a default in payment, is curable, it
may be cured (and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (1) cures
the default within five (5) days; or (2) if the cure requires more than five (5)
days, immediately initiates steps which Lender deems in Lender's sole discretion
to be sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
A-5-2
LENDER'S RIGHTS. Upon default, Lender may, after giving such notices as required
by applicable law, declare the entire unpaid principal balance on this Note and
all accrued unpaid interest immediately due, and then Borrower will pay that
amount.
EXPENSES. If Lender institutes any suit or action to enforce any of the terms of
this Note, Lender shall be entitled to recover such sum as the court may adjudge
reasonable. Whether or not any court action is involved, and to the extent not
prohibited by law, all reasonable expenses Lender incurs that, in Lender's sole
opinion, are necessary at any time for the protection of its interest or the
enforcement of its rights shall become a part of the loan payable on demand and
shall bear interest at the Note rate from the date of the expenditure until
repaid. Expenses covered by this paragraph include, without limitation, however
subject to any limits under applicable law, Lender's expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals, to the extent permitted by applicable law. Borrower
also will pay any court costs, in addition to all other sums provided by law.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with the laws of the State of New Jersey.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of ▇▇▇▇▇▇ County, NJ.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower, to the fullest extent
allowed by law, waives presentment, demand for payment and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note as maker shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan or release any party or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. If any portion of this Note is for any
reason determined to be unenforceable, it will not affect the enforceability of
any other provisions of this Note.
IN WITNESS WHEREOF, Borrower has executed and delivered this Promissory Note on
and as of the date set forth above.
[CORPORATE SEAL] BORROWER:
ATTEST: WINDSORTECH, INC.
By /s/ ▇▇▇▇▇ ▇. Loppert By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- -------------------------------
Authorized Officer President
A-5-3
EXHIBIT B
SECURITY AGREEMENT
Borrower: Windsortech, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Secured Parties: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇. Loppert
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Grantor: Windsortech, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THIS SECURITY AGREEMENT dated as of April 24, 2002 is made and executed among
Windsortech, Inc., a Delaware corporation ("Grantor"); Windsortech, Inc., a
Delaware corporation ("Borrower"); and ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. Loppert, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. Sheer (collectively, "Lenders").
GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to
Lenders a Security Interest in the Collateral to secure the Indebtedness and the
Obligations and agrees that Lenders shall have the rights stated in this
Agreement with respect to the Collateral in addition to all other rights which
Lenders may have by law.
COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
all of Grantor's following described property in the possession of Lenders (or
in the possession of a third party subject to the control of Lenders), whether
existing now or later and whether tangible or intangible in character, including
without limitation each and all of the following:
All of the Borrower/Grantor's assets of whatever kind and wherever
located, including without limitation, its accounts, contract rights,
equipment, inventory, and all real, personal and intangible property
In addition, the word "Collateral" includes all of Grantor's above described
property (however owned) derived from or relating to the foregoing, whether or
not in the possession of Lenders (or in the possession of a third party subject
to the control of Lenders), whether now or hereafter existing and whether
tangible or intangible in character, including without limitation each of the
following:
(A) All property to which Lenders acquires title or documents of title.
B-1
(B) All property assigned to Lenders.
(C) All promissory notes, bills of exchange, stock certificates, bonds,
savings passbooks, time certificates of deposit, insurance policies, and
all other Instruments and evidences of an obligation.
(D) All records relating to any of the property described in this
Collateral section, whether in the form of a writing, microfilm,
microfiche, or electronic media.
(E) All Income and Proceeds from the Collateral as defined herein.
CROSS-COLLATERALIZATION. In addition to the Indebtedness, this Agreement secures
all obligations, debts and liabilities, plus interest thereon, of Borrower to
Lenders, or any one or more of them, as well as all claims by Lenders against
Borrower, whether now existing or hereafter arising, whether related or
unrelated to the purpose of the Note or the Loan Agreement, whether voluntary or
otherwise, whether due or not due, direct or indirect, absolute or contingent,
liquidated or unliquidated and whether Borrower may be liable individually or
jointly with others, whether obligated as guarantor, surety, accommodation party
or otherwise, and whether recovery upon such amounts may be or hereafter may
become barred by any statute of limitations, and whether the obligation to repay
such amounts may be or hereafter may become otherwise unenforceable.
BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this
Agreement or by applicable law, (A) Borrower and Grantor agree that Lenders need
not tell Borrower or Grantor about any action or inaction Lenders take in
connection with this Agreement; (B) Borrower and Grantor assume the
responsibility for being and keeping informed about the Collateral; and (C)
Borrower and Grantor waive any defenses that may arise because of any action or
inaction of Lenders, including without limitation any failure of Lenders to
realize upon the Collateral or any delay by Lenders in realizing upon the
Collateral; and Borrower agrees to remain liable under the Notes no matter what
action Lenders take or fail to take under this Agreement.
GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this
Agreement is executed at Borrower's request and not at the request of Lenders;
(B) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lenders; (C) Grantor has established adequate
means of obtaining from Borrower on a continuing basis information about
Borrower's financial condition; and (D) Lenders have made no representation to
Grantor about Borrower or Borrower's creditworthiness.
GRANTOR'S WAIVERS. Grantor waives all requirements of presentment, protest,
demand, and notice of dishonor or non-payment to Grantor, Borrower, or any other
party to the Indebtedness or the Collateral. Lenders may do any of the following
with respect to any obligation of any Borrower, without first obtaining the
consent of Grantor: (A) grant any extension of time for any payment, (B) grant
any renewal, (C) permit any modification of payment terms or other terms, or (D)
exchange or release any Collateral or other security. No such act or failure to
act shall affect Lenders' rights against Grantor or the Collateral.
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL Grantor represents
and warrants to Lenders that:
B-2
Ownership. Grantor is the lawful owner of the Collateral free and clear of
all security interests, liens, encumbrances, registered pledges, adverse
claims, and any other claims of others except as disclosed to and accepted
by Lenders in writing prior to execution of this Agreement.
Right to Pledge. Grantor has the full right, power and authority to enter
into this Agreement and to pledge the Collateral.
Authority; Binding Effect. Grantor has the full right, power and authority
to enter into this Agreement and to grant a security interest in the
Collateral to Lenders. This Agreement is binding upon Grantor as well as
Grantor's successors and assigns, and is legally enforceable in accordance
with its terms. The foregoing representations and warranties, and all
other representations and warranties contained in this Agreement are and
shall be continuing in nature and shall remain in full force and effect
until such time as this Agreement is terminated or cancelled as provided
herein.
No Further Assignment. Grantor has not, and shall not, sell, assign,
transfer, encumber or otherwise dispose of any of Grantor's rights in the
Collateral except as provided in this Agreement.
No Defaults. There are no defaults existing under the Collateral, and
there are no offsets or counterclaims to the same. Grantor will strictly
and promptly perform each of the terms, conditions, covenants and
agreements, if any, contained in the Collateral which are to be performed
by Grantor.
No Violation. The execution and delivery of this Agreement will not
violate any law or agreement governing Grantor or to which Grantor is a
party.
LENDERS'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL. Lenders
may hold the Collateral until all Indebtedness has been paid and satisfied.
Lenders shall have the following rights in addition to all other rights Lenders
may have by law:
Maintenance and Protection of Collateral. Lenders may, but shall not be
obligated to, take such steps as they deem necessary or desirable to
protect, maintain, insure, store, or care for the Collateral, including
paying of any liens or claims against the Collateral. This may include
such things as hiring other people, such as attorneys, appraisers or other
experts. Lenders may charge Grantor for any cost incurred in so doing.
When applicable law provides more than one method of perfection of
Lenders' security interest, Lenders may choose the method(s) to be used.
Income and Proceeds from the Collateral. Lenders may receive all Income
and Proceeds and add it to the Collateral. Grantor agrees to deliver to
Lenders immediately upon receipt, in the exact form received and without
commingling with other property, all Income and Proceeds from the
Collateral which may be received by, paid, or delivered to Grantor or for
B-3
Grantor's account, whether as an addition to, in discharge of, in
substitution of, or in exchange for any of the Collateral.
Application of Cash. At Lenders' option, Lenders may apply any cash,
whether included in the Collateral or received as Income and Proceeds or
through liquidation, sale, or retirement, of the Collateral, to the
satisfaction of the Indebtedness or such portion thereof as Lenders shall
choose, whether or not matured.
Transactions with Others. Lenders may (1) extend time for payment or other
performance, (2) grant a renewal or change in terms or conditions, or (3)
compromise, compound or release any obligation, with any one or more
Obligors or endorsers of the Indebtedness as Lenders deems advisable,
without obtaining the prior written consent of Grantor, and no such act or
failure to act shall affect Lenders' rights against Grantor or the
Collateral.
All Collateral Secures Indebtedness. All Collateral shall be security for
the Indebtedness, whether the Collateral is located at one or more offices
of Lenders.
Collection of Collateral. Lenders at Lenders' option may, but need not,
collect the Income directly from the Obligors. Grantor authorizes and
directs the Obligors, if Lenders decide to collect the Income, to pay and
deliver to Lenders all Income from the Collateral and to accept Lenders'
receipt for the payments.
Power of Attorney. Grantor irrevocably appoints Lenders as Grantor's
attorneys-in-fact, with full power of substitution, (a) to demand,
collect, receive, receipt for, ▇▇▇ and recover all Income and Proceeds and
other sums of money and other property which may now or hereafter become
due, owing or payable from the Obligors in accordance with the terms of
the Collateral; (b) to execute, sign and endorse any and all instruments,
receipts, checks, drafts and warrants issued in payment for the
Collateral; (c) to settle or compromise any and all claims arising under
the Collateral, and in the place and stead of Grantor, execute and deliver
Grantor's release and acquittance for Grantor; (d) to file any claim or
claims or to take any action or institute or take part in any proceedings,
either in Lenders' own names or in the name of Grantor, or otherwise,
which in the discretion of Lenders may seem to be necessary or advisable;
and (e) to execute in Grantor's name and to deliver to the Obligors on
Grantor's behalf, at the time and in the manner specified by the
Collateral, any necessary instruments or documents.
Perfection of Security Interest. Upon Lenders' request, Grantor will
deliver to Lenders any and all of the documents evidencing or constituting
the Collateral. When applicable law provides more than one method of
perfection of Lenders security interest, Lenders may choose the method(s)
to be used. Upon Lenders' request, Grantor will sign and deliver any
writings necessary to perfect Lenders' security interest. Grantor hereby
appoints Lenders as Grantors irrevocable attorneys-in-fact for the purpose
of executing any documents necessary to perfect or to continue the
security interest granted in this Agreement. This is a continuing Security
Agreement and will continue in effect even though all or any part of the
Indebtedness is paid in full or even though for a period of time Borrower
may not be Indebted to Lenders.
B-4
LENDERS' EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lenders' interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lenders on Grantor's behalf may (but shall not be obligated to) take
any action that Lenders deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures incurred or paid by Lenders for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lenders to the date of repayment by Grantor. All such expenses will become a
part of the Indebtedness and, at Lenders' option, will (A) be payable on demand;
(B) be added to the balances of the Notes and be apportioned among and be
payable with any installment payments to become due during either (1) the term
of any applicable insurance policy; or (2) the remaining term of the Notes; or
(C) be treated as a balloon payment which will be due and payable at the earlier
of the Notes' maturities. The Collateral also will secure payment of these
amounts. Such right shall be in addition to all other rights and remedies to
which Lenders may be entitled upon Default.
LIMITATIONS ON OBLIGATIONS OF LENDERS. Lenders shall use ordinary reasonable
care in the physical preservation and custody of the Collateral in Lenders'
possession, but shall have no other obligation to protect the Collateral or its
value. In particular, but without limitation, Lenders shall have no
responsibility for (A) any depreciation in value of the Collateral or for the
collection or protection of any Income and Proceeds from the Collateral, (B)
preservation of rights against parties to the Collateral or against third
persons, (C) ascertaining any maturities, calls, conversions, exchanges, offers,
tenders or similar matters relating to any of the Collateral, or (D) informing
Grantor about any of the above, whether or not Lenders has or is deemed to have
knowledge of such matters. Except as provided above, Lenders shall have no
liability for depreciation or deterioration of the Collateral.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
Payment or Performance Default. Borrower fails to make any payment when
due under the Indebtedness.
Other Defaults. Borrower or Grantor fails to comply with or to perform any
other term, obligation, covenant or condition contained in this Agreement
or in any of the Related Documents or to comply with or to perform any
term, obligation, covenant or condition contained in any other agreement
between Lenders and Borrower or Grantor.
False Statements. Any warranty, representation or statement made or
furnished to Lenders by Borrower or Grantor or on Borrower's or Grantor's
behalf under this Agreement, the Notes, or the Related Documents is false
or misleading in any material respect, either now or at the time made or
furnished or becomes false or misleading at any time thereafter.
B-5
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document) to create a valid and perfected security interest or
lien) at any time and for any reason.
Death or Insolvency. The dissolution or termination of Borrower's
existence as a going business, the insolvency of Borrower or Grantor, the
appointment of a receiver for any part of Borrower's or Grantor's
property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower or Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or Grantor
or by any governmental agency against any collateral securing the
Indebtedness. This includes a garnishment of any of Borrower's or Grantors
accounts, including deposit accounts, with Lenders. However, this Event of
Default shall not apply if there is a good faith dispute by Borrower or
Grantor as to the validity or reasonableness of the claim which is the
basis of the creditor or forfeiture proceeding and if Borrower or Grantor
gives Lenders written notice of the creditor or forfeiture proceeding and
deposits with Lenders monies or a surety bond for the creditor or
forfeiture proceeding, in an amount determined by Lenders, in their sole
discretion, as being an adequate reserve or bond for the dispute.
Cure Provisions. If any default, other than a default in payment, is
curable,it may be cured (and no event of default will have occurred) if
Grantor, after receiving written notice from Lenders demanding cure of
such default: (1) cures the default within five (5) days; or (2) if the
cure requires more than five (5) days, immediately initiates steps which
Lenders deems in Lenders' sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lenders may exercise any one or more of the
following rights and remedies:
Accelerate Indebtedness. Declare all Indebtedness, including any
prepayment penalty which Borrower would be required to pay, immediately
due and payable, without notice of any kind to Borrower or Grantor.
Collect the Collateral. Collect any of the Collateral and, at Lenders'
option and to the extent permitted by applicable law, retain possession of
the Collateral while suing on the Indebtedness.
Sell or distribute the Collateral. Sell the Collateral, at Lenders'
discretion, as a unit or in parcels, at one or more public or private
sales or distribute the Collateral as otherwise provided in this Agreement
or the Loan Agreement. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Lenders shall give or mail to Grantor, or any of them, notice at
B-6
least ten (10) days in advance of the time and place of any public sale,
or of the date after which any private sale may be made. Notwithstanding
the foregoing, no such or other notice shall be required if Lenders
determine to distribute the Collateral to themselves as provided in this
Agreement or the Loan Agreement. Grantor agrees that any requirement of
reasonable notice is satisfied if Lenders malls notice by ordinary mail
addressed to Grantor, or any of them, at the last address Grantor has
given Lenders in writing. If a public sale is held, there shall be
sufficient compliance with all requirements of notice to the public by a
single publication in any newspaper of general circulation in the county
where the Lenders are located, setting forth the time and place of sale
and a brief description of the property to be sold. Lenders may be a
purchaser at any public sale.
Foreclosure. Maintain a judicial suit for foreclosure and sale of the
Collateral.
Transfer Title. Effect transfer of title upon sale or distribution of all
or part of the Collateral. For this purpose, Grantor irrevocably appoints
Lenders as Grantor's attorneys-in-fact to execute endorsements,
assignments and instruments in the name of Grantor and each of them (if
more than one) as shall be necessary or reasonable.
Other Rights and Remedies. Have and exercise any or all of the rights and
remedies of a secured creditor under the provisions of the Uniform
Commercial Code, at law, in equity, or otherwise.
Application of Proceeds. Apply any cash which is part of the Collateral,
or which is received from the collection or sale of the Collateral, to
reimbursement of any expenses, including any costs for registration of
securities, commissions incurred in connection with a sale, permissible
fees and court costs, whether or not there is a lawsuit and including any
fees on appeal, incurred by Lenders in connection with the collection and
sale of such Collateral and to the payment of the Indebtedness of Borrower
to Lenders, with any excess funds to be paid to Grantor as the interests
of Grantor may appear. Borrower agrees, to the extent permitted by law, to
pay any deficiency after application of the proceeds of the Collateral to
the Indebtedness.
Election of Remedies. Except as may be prohibited by applicable law, all
of Lenders' rights and remedies, whether evidenced by this Agreement, the
Related Documents, or by any other writing, shall be cumulative and may be
exercised singularly or concurrently. Election by Lenders to pursue any
remedy will not bar any other remedy, and an election to make expenditures
or to take action to perform an obligation of Grantor under this
Agreement, after Grantor's failure to perform, shall not affect Lenders'
right to declare a default and exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
B-7
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
Expenses. If Lenders institute any suit or action to enforce any of the
terms of this Agreement, Lenders shall be entitled to recover such sum as
the court may adjudge reasonable. Whether or not any court action is
involved, and to the extent not prohibited by law, all reasonable expenses
Lenders incurs that in Lenders' opinion are necessary at any time for the
protection of its interest or the enforcement of its rights shall become a
part of the Indebtedness payable on demand and shall bear interest at the
Notes' rates from the date of the expenditure until repaid. Expenses
covered by this paragraph include, without limitation, however subject to
any limits under applicable law, Lenders' expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection
services, to the extent permitted by applicable law. Grantor also will pay
any court costs, in addition to all other sums provided by law.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Governing Law. This Agreement will be governed by, construed and enforced
in accordance with federal law and the laws of the State of New Jersey.
Choice of Venue. If there is a lawsuit, Grantor agrees upon Lenders'
request to submit to the jurisdiction of the courts of ▇▇▇▇▇▇ County,
State of New Jersey.
No Waiver by Lenders. Lenders shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and
signed by Lenders. No delay or omission on the part of Lenders in
exercising any right shall operate as a waiver of such right or any other
right. A waiver by Lenders of a provision of this Agreement shall not
prejudice or constitute a waiver of Lenders' right otherwise to demand
strict compliance with that provision or any other provision of this
Agreement. No prior waiver by Lenders, nor any course of dealing between
Lenders and Grantor, shall constitute a waiver of any of Lenders' rights
or of any of Grantor' obligations as to any future transactions. Whenever
the consent of Lenders is required under this Agreement, the granting of
such consent by Lenders in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in all
cases such consent may be granted or withheld in the sole discretion of
Lenders.
Notices. Unless otherwise provided by applicable law, any notice required
to be given under this Agreement shall be given in writing, and shall be
effective when actually delivered, when actually received by telefacsimile
(unless otherwise required by law), when deposited with a nationally
recognized overnight courier, or, if mailed, when deposited In the United
States mail, as first class, certified or registered mail postage prepaid,
directed to the addresses shown near the beginning of this Agreement. Any
party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of
B-8
the notice is to change the party's address. For notice purposes, Grantor
agrees to keep Lenders informed at all times of Grantor's current address.
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified,
it shall be considered deleted from this Agreement. Unless otherwise
required by law, the illegality, invalidity, or unenforceability of any
provision of this Agreement shall not affect the legality, validity or
enforceability of any other provision of this Agreement.
Successor Interests. The terms of this Agreement shall be binding upon
Grantor, and upon Grantor's successors and assigns, and shall be
enforceable by Lenders and their heirs, successors and assigns.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to any
jury trial in any action, proceeding, or counterclaim brought by any party
against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:
Agreement. The word "Agreement" means this Security Agreement, as this
Security Agreement may be amended or modified from time to time, together
with all exhibits and schedules attached to this Security Agreement from
time to time.
Borrower. The word "Borrower" means Windsortech, Inc., a Delaware
corporation, and its successors and assigns.
Collateral. The word "Collateral" means all of Grantor's right, title and
interest in and to all the Collateral as described in the Collateral
Description section of this Agreement.
Default. The word "Default" means the Default set forth in this Agreement
in the section titled "Default".
Event of Default. The words "Event of Default" mean any of the Events of
Default set forth in this Agreement in the Default section of this
Agreement.
Grantor. The word "Grantor" means Windsortech, Inc., a Delaware
corporation.
B-9
Income and Proceeds. The words "Income and Proceeds" mean all present and
future income, proceeds, earnings, increases, and substitutions from or
for the Collateral of every kind and nature, including without limitation
all payments, interest, profits, distributions, benefits, rights, options,
warrants, dividends, stock dividends, stock splits, stock rights,
regulatory dividends, subscriptions, monies, claims for money due and to
become due, proceeds of any insurance on the Collateral, shares of stock
of different par value or no par value issued in substitution or exchange
for shares included in the Collateral, whether voluntary or involuntary,
by agreement or by operation of law, and all other property Grantor is
entitled to receive on account of such Collateral, including accounts,
documents, instruments, chattel paper, and general intangibles.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Notes (or any Related Documents), including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents. The liens and security interests created pursuant to this
Agreement covering the Indebtedness which may be created in the future
shall relate back to the date of this Agreement. In addition, and without
limitation, the term "Indebtedness" includes all amounts identified in the
Cross-Collateralization and Future Advances paragraphs as contained in one
or more of the Related Documents.
Lenders. The word "Lenders" means ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. Loppert, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and their heirs,
personal representatives, successors and assigns.
Loan. The word "Loan" shall have the meaning given to it in the Loan
Agreement.
Loan Agreement. The word "Loan Agreement" means the Loan Agreement dated
April 24, 2002 by and among Borrower, Grantor and Lenders, to which this
Agreement is an exhibit.
Notes. The word "Notes" means the Notes executed by Borrower in the
individual principal amounts of $110,000.00 dated April 24, 2002, together
with all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement.
Obligor. The word "Obligor" means without limitation any and all persons
obligated to pay money or to perform some other act under the Collateral.
Related Documents. The words "Related Documents" mean the Loan Agreement,
the Notes and all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages,
deeds of trust, security deeds, collateral mortgages, and all other
instruments, agreements and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.
BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED APRIL 24,
2002. THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT
B-10
IS AND SHALL CONSTIITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO
LAW.
GRANTOR:
WINDSORTECH, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
President
BORROWER:
WINDSORTECH, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
President
B-11
EXHIBIT C
INTERCREDITOR AGREEMENT
Intercreditor Agreement (this "Intercreditor Agreement" or this
"Agreement") dated as of April 24, 2002, by, between, and among ▇▇▇▇ ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. Loppert ("Loppert"), ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and Windsortech, Inc., a
Delaware corporation (the "Company" or the "Borrower"), with an address at ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Sherman, Cummings, Loppert, ▇▇▇▇▇▇▇▇ and
Sheerr are sometimes hereinafter referred to, individually, as a "Shareholder"
or "Lender" and, collectively, as the "Shareholders" or "Lenders".
Recitals
Whereas, pursuant to a Loan Agreement dated as of the date hereof,
Borrower proposes to borrow from Lenders an aggregate of Five Hundred Fifty
Thousand Dollars ($550,000.00) (the "Loan"), which Loan is to be evidenced by
five separate Promissory Notes delivered by Borrower to the Lenders
(individually, a "Note" and collectively, the "Notes"), a Security Agreement
dated as of the date hereof (the "Security Agreement") and UCC-1 financing
statements (collectively, the "Loan Documents").
Whereas, Borrower's obligations under the Loan Documents are secured by
the Collateral referred to in the Security Agreement ("Collateral").
Whereas, Lenders have filed UCC-1 financing statements against assets of
Borrower.
NOW THEREFORE, in order to induce the Lenders to make the Loan to Borrower
under the Loan Documents and for other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the Lenders and Borrower, each
intending to be legally bound, agree as follows:
1. Definition. "Liabilities" means all liabilities, whether primary,
secondary, direct, contingent, sole, joint or several, similar or dissimilar,
related, or unrelated, and interest thereon, heretofore, now, or hereafter owed
by Borrower to Lenders.
2. Lenders' Rights. With respect to any of the Liabilities, Lenders may at
any time:
(a) renew or extend the time for payment of all or any part thereof;
(b) accept additional or replacement Collateral therefor;
(c) add or replace any party primarily or secondarily obligated thereon;
and
(d) release all or any part of the Collateral.
3. Intercreditor of Lien Priorities.
C-1
Until all Liabilities have been paid in full, any payments made by
Borrower in respect of the Loan shall be made in equal amounts to and among the
Lenders, who agree to apportion all amounts so paid to any of them in accordance
with this sentence so that, without his consent, no Lender receives any payments
from Borrower before or in preference to any other Lender. Without limiting the
generality of the foregoing, Lenders agree that no action will be taken by any
of them in respect of the Loan or the Collateral to the detriment or
disadvantage of any other Lender.
4. Bankruptcy.
If Borrower becomes a debtor in a case under the United States Bankruptcy
Code or any similar Federal or State statute, or Borrower or its property
becomes subject to any other kind of insolvency, receivership, liquidation, or
dissolution proceeding:
(a) All Lenders shall be treated equally to the fullest extent possible
and
(b) All distributions of property in such case or proceeding on account of
the Loan shall be distributed equally to Lenders until all Liabilities
(including, without limitation, interest accrued on this Liabilities (after the
initiation of any case under the United States Bankruptcy Code or any other such
case or proceeding, whether or not such interest is an allowed claim against the
debtor in such case or proceeding) have been paid in full.
5. Restrictions on Assignment.
Lenders have not heretofore sold, transferred or assigned, and shall not,
without the agreement of the buyer, transferee or assignee to this Agreement,
sell, transfer or assign, in whole or in part, any of the Indebtedness evidenced
by any of the Notes.
6. Notices.
All notices, requests, demands and other communications required or
permitted under this Agreement or by law shall be in writing and shall be deemed
to have been duly given, made a received only when delivered against receipt or
when deposited in the United States mails, certified or registered mail, return
receipt requested, postage prepaid, addressed as set forth below, and actually
presented at the address of the noticed party.
If to any of the Lenders:
[Name of Lender]
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇. ▇▇▇▇▇ ▇. Loppert
Windsortech, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
C-2
If to Borrower:
Windsortech, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
Any addressee may alter the address to which communications are to be sent by
giving notice of such change of address in conformity with the provisions of
this paragraph for the giving of notice.
7. Counterparts.
This Agreement may be executed simultaneously in one or more counterparts,
including by fax, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8. Entire Agreement.
This Agreement constitutes the entire understanding between the parties
hereto concerning the subject matter of this Agreement. This Agreement may not
be amended, except by an instrument in writing duly executed by all the parties
hereto. All representations, warranties, covenants, terms, conditions and
provisions of this Agreement shall be binding upon and inure to the benefit of
the respective representatives, successors and permitted assigns of the parties
hereto.
9. Further Actions.
At any time and from time to time after the date of execution of this
Agreement, each party shall, without further consideration, take such actions
and execute and deliver such documents as the other party may reasonably request
to carry out the transactions contemplated by this Agreement.
10. Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have set their hand and seal the
day and year first written above.
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LENDERS:
WITNESS:
/s/ ▇▇▇▇▇ ▇. Loppert /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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WITNESS:
/s/ ▇▇▇▇▇ ▇. Loppert /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------ ------------------------------------
WITNESS:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. Loppert
------------------------------------ ------------------------------------
WITNESS:
/s/ ▇▇▇▇▇ ▇. Loppert /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------ ------------------------------------
WITNESS:
/s/ ▇▇▇▇▇ ▇. Loppert /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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BORROWER:
[CORPORATE SEAL] WINDSORTECH, INC.
ATTEST:
/s/ ▇▇▇▇▇ ▇. Loppert
------------------------------------ By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
President
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