ECHO THERAPEUTICS,
INC.
10% Senior Secured Promissory Note
For value
received, ECHO THERAPEUTICS, INC. , a Delaware corporation
(the “ Maker ”), hereby promises to pay to the
order of Platinum Montaur Life Sciences, LLC, a Delaware limited
liability company with an address of 152 West 57
th Street, 54 th Floor, New York, NY 10019 (together with its
successors, representatives, and permitted assigns, the “
Holder ”), in accordance with the terms hereinafter
provided, the principal amount of ONE MILLION NINE HUNDRED AND
NINETY THOUSAND DOLLARS ($1,990,000), together with interest
thereon.
All payments under
or pursuant to this Note shall be made in United States Dollars in
immediately available funds to the Holder at the address of the
Holder first set forth above or at such other place as the Holder
may designate from time to time in writing to the Maker or by wire
transfer of funds to the Holder’s account, as requested by
the Holder. The outstanding principal balance of this Note,
together with all accrued and unpaid interest, shall be due and
payable in full on June 29, 2009 (the “ Maturity
Date ”) or at such earlier time as provided
herein.
Section 1.1
Interest . Beginning on the date of this Note (the “
Issuance Date ”), the outstanding principal balance of
this Note shall bear interest, in arrears, at a rate per annum
equal to ten percent (10%), payable on the Maturity Date. Interest
shall be computed on the basis of a 360-day year of twelve
(12) 30-day months, shall compound monthly and shall accrue
commencing on the Issuance Date. Furthermore, upon the occurrence
of an Event of Default (as defined in Section 2.1 hereof), the
Maker will pay interest to the Holder, payable on demand, on the
outstanding principal balance of and unpaid interest on the Note
from the date of the Event of Default until such Event of Default
is cured at the rate of the lesser of eighteen percent (18%) and
the maximum applicable legal rate per annum. To the extent
permitted by law, if amounts outstanding hereunder are not paid in
full on the Maturity Date hereof, the Maker shall be obligated to
pay to the Holder a late payment fee equal to 10% of the principal
amount then outstanding.
Section 1.2
Payment of Principal; Prepayment . The Principal Amount
hereof shall be paid in full on the earliest of (i) the
Maturity Date, (ii) the due date of any mandatory prepayment
as set forth herein, or (iii) upon acceleration of this Note
in accordance with the terms hereof. Any amount of principal repaid
hereunder may not be reborrowed. The Maker may prepay all or any
portion of the principal amount of this Note upon not less than two
(2) business days’ prior written notice to the Holder
without premium or penalty.
Section 1.3
Security Agreement; Covenants . The obligations of the Maker
hereunder are together with interest thereon and all other charges
as provided herein, and in any
1
other
instrument or document executed in connection herewith, and
together with all other sums due from Maker to Holder
(collectively, the “Obligations”), shall be secured by
the Collateral (as defined below).
(a) The Maker
hereby grants, assigns and pledges to the Holder all of its rights,
title and interest in, and a continuing security interest in all
Inventory (as defined herein), all Accounts from the sale of
Inventory, receivable, contract rights, chattel paper and payment
intangibles, and General Intangibles relating to any of the
foregoing types of property; and all additions, accessions,
accessories, amendments, attachments, modifications, substitutions,
and replacements, proceeds and products of any of the foregoing,
together with all other property which the Maker purchases using
the proceeds of this Note (together referred to as the
“Collateral”). This Note shall serve as a security
agreement securing Holder’s right in and to the Collateral
for the repayment of the Obligations. Maker authorizes Holder to
file such UCC-1 Financing Statements listing Holder as Secured
Party and Maker as Debtor as Holder may require (which financing
statements may describe the collateral as “all
assets”). The terms Inventory, Accounts and General
Intangibles shall have the respective meanings provided under the
Uniform Commercial Code of the State of New York.
(b) Except
for the security interest of the Holder therein (and any security
interest granted to the holders of indebtedness that is to be
repaid with the proceeds of this Note, upon which repayment such
security interest shall terminate), the Maker is, and as to
Collateral acquired after the date hereof the Maker shall and will
be, the owner of all Collateral free from any lien, security
interest, encumbrance or other right, title or interest of any
other person, firm or corporation, and the Maker shall defend the
Collateral against all claims and demands of all persons at any
time claiming the same or any interest therein adverse to the
Holder.
(c) The Maker
will maintain, keep and preserve its business assets in good
working order and condition, ordinary wear and tear excepted. The
Maker agrees to maximize collections on all accounts receivable and
contract rights and to diligently pursue the collection of all sums
due the Maker under any purchase orders placed with Maker and all
account obligors. The Maker shall not sell or license any of its
assets, other than in the ordinary course of business and
consistent with past practices.
(d) The Maker
will not create, incur, assume, or suffer to exist any lien,
mortgage, pledge, encumbrance, security interest, attachment or
charge of any kind upon the Collateral, except:
(i) liens
in favor of the Holder;
(ii) liens
for taxes or assessments or other government charges or levies not
yet due and payable or, if due and payable, that are being
contested in good faith by appropriate proceedings diligently
prosecuted and for which appropriate reserves are maintained;
and
(iii) liens
imposed by law, such as mechanics’, materialmen’s, and
similar liens, securing obligations incurred in the ordinary course
of business which are not past due for more than thirty
(30) days or which are being contested in good faith by
appropriate proceedings diligently prosecuted and for which
appropriate reserves have been established.
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(e) The Maker
will not create, incur, assume, or suffer to exist any debt (as
defined below), except:
(i) debt
of the Maker under this Note; and
(ii) debt
described in Exhibit A attached hereto, but no
renewals, extensions, or refinancings thereof; and
(iii) trade
debt incurred in the ordinary course of business and consistent
with past practices.
As used in this
Section 1.3(e), the term “debt” shall include all
obligations, contingent and otherwise, that in accordance with
generally accepted accounting principles should be classified upon
the obligor’s balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including without
limitation all debt and similar monetary obligations, whether
direct or indirect, all liabilities secured by any mortgage,
pledge, security interest, lien, charge or other encumbrance, and
all guarantees, endorsements and other contingent obligations
whether direct or indirect in respect of indebtedness of
others.
Section 1.4
Payment on Non-Business Days . Whenever any payment to be
made shall be due on a Saturday, Sunday or a public holiday under
the laws of the State of New York, such payment may be due on the
next succeeding business day and such next succeeding day shall be
included in the calculation of the amount of accrued interest
payable on such date.
Section 1.5
Use of Proceeds . The Maker shall use the proceeds of this
Note only for general working capital and to repay outstanding
senior indebtedness of the Maker.
Section 1.6
Term Sheet and Definitive Documentation . The Maker agrees
to negotiate, in good faith, with the Holder to consummate the
transactions described in the Term Sheet, dated the date hereof,
between the Holder and the Maker. The Maker acknowledges that the
Holder’s agreement to extend credit pursuant to this Note is
made in connection with the Holder’s potential investment in
the Maker as described in the Term Sheet, and a failure of the
Maker to act in good faith to negotiate the consummation of the
transactions described in the Term Sheet shall be deemed an Event
of Default hereunder.
ARTICLE II
EVENTS OF DEFAULT; REMEDIES
Section 2.1
Events of Default .
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