EXHIBIT 10.3
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SECURITY AGREEMENT
The undersigned, CAS MEDICAL SYSTEMS, INC. (the "Debtor" or
"Borrower"), being a
corporation organized and existing under the laws of the State of
Delaware and
having its chief executive office and principal place of business
at 44 East
Industrial Road, Branford, Connecticut 06405, hereby grants to
NEWALLIANCE BANK
,with a place of business at 195 CHURCH STREET, NEW HAVEN,
CONNECTICUT 06510
(the "Bank" or "Secured Party"), a security interest in all of the
Debtor's
present and future right, title and interest in and to any and all
of the
following property, whether now existing or hereafter created (all
of which is
hereinafter called the "COLLATERAL"):
All Equipment and Fixtures, as these terms are defined in the
Uniform Commercial
Code as in effect in Connecticut as amended from time to time and
all machinery,
tools, parts, furniture, furnishings, motor vehicles and other
personal
property, tangible or intangible, presently owned or hereafter
acquired by the
Debtor, together with additions and accessions thereto and
substitutions and
replacements therefor, and the products and Proceeds (including
insurance and
condemnation proceeds) thereof;
All Inventory and Goods, as these terms are defined in the Uniform
Commercial
Code as in effect in Connecticut as amended from time to time,
whether presently
owned or hereafter acquired, including, without limitation, all
Inventory in the
possession of others or in transit, all Goods held for sale or
lease or to be
furnished under contacts for service or which have been so
furnished, raw
materials, work in process, and materials used or consumed or to be
used or
consumed in the business of the Debtor, and completed and unshipped
merchandise,
and the products and Proceeds ( including insurance and
condemnation proceeds)
of the foregoing;
All Accounts, Chattel Paper (whether tangible or electronic),
Instruments,
Documents, Investment Property (including, without limitation,
Certificated
Securities, Uncertificated Securities and Security Entitlements),
Letter of
Credit Rights (including rights to draw under letters of credit, to
effect which
rights a power of attorney is hereby granted by the Debtor to the
Bank) and
General Intangibles (including, without limitation, Payment
Intangibles), as
these terms are defined in the Uniform Commercial Code as in effect
in
Connecticut as amended from time to time, including those now
existing and those
hereafter arising or coming into existence, and including, without
limitation,
all rights of payment for goods sold or leased or services rendered
or to be
rendered, for a policy of insurance issued or to be issued, for a
secondary
obligation incurred or to be incurred, for energy provided or to be
provided,
for the use or hire of a vessel under charter or other contract,
arising out of
the use of a credit card or for information contained on or for use
with the
card, as winnings in a lottery or other game of chance operated or
sponsored by
a state, governmental unit or properly authorized person, or health
care
insurance receivables, all rights of payment under contracts
whether or not
currently due or not yet earned by performance and accounts
receivable arising
or to arise there from, and all rights of the Debtor in and to the
goods
represented thereby including returned and repossessed goods, and
all rights the
Debtor may have or acquire for securing or enforcing the forgoing,
including
without limitation, Supporting Obligations of every nature, the
rights to
reserves, deposits, income tax refunds, choses in action, judgments
or insurance
proceeds, and the products and proceeds of all of the
foregoing;
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All goodwill, trade secrets, computer programs, Software, customer
lists, trade
names, service names or marks, trademarks and trademark
applications, copyrights
and copyright applications, franchises, licenses and patents,
patent licenses
and patent applications, and the proceeds thereof, including,
without limitation
the rights to sue and recover for infringement thereof;
All books and records relating to the conduct of Debtor's
business;
All Deposit Accounts maintained by the Debtor with the Bank or
other bank, trust
company, investment firm or fund or any similar institution or
organization and
the proceeds thereof;
Any deposits, credits, collateral or property of the Debtor at any
time now or
hereafter in the possession, custody, safekeeping or control of the
Bank or any
entity under the control of the Bank or in transit to any of them
and the
proceeds thereof (the "Deposits and Securities");
All licenses, permits and agreements of any kind or nature pursuant
to which (a)
the Debtor operates or has authority to operate; (b) the Debtor
possesses, uses
or has authority to possess or use property (whether tangible or
intangible) of
others; or (c) others possess, use or have authority to possess or
use property
(whether tangible or intangible) of the Debtor to secure the
payment and
performance of all liabilities, obligations, indebtedness, duties,
covenants and
guaranties now or hereafter owing from the Debtor to the Bank of
whatever kind
or nature, whether or not contemplated at the time of this
Agreement, whether
direct or indirect, absolute or contingent or due or to become due,
including
all obligations of the Debtor, actual or contingent, in respect of
letters of
credit or banker's acceptances issued by the Bank for the account
of or
guaranteed by the Debtor and all obligations of any partnership or
joint venture
as to which Debtor is or may become personally liable (the
"OBLIGATIONS", which
term shall also include, without limitation, all accrued interest
and costs,
including reasonable attorney's fees, costs and expenses relating
to the
appraisal and/or valuation of assets and all costs and expenses
incurred or paid
by the Bank in exercising, preserving, defending, enforcing,
collecting,
administrating or protecting any of its rights under the
Obligations or
hereunder or with respect to the Collateral or in any litigation
arising out of
the transactions evidenced by the Obligations). The Bank shall have
the
unrestricted right from time to time to apply (or to change any
application
already made) the proceeds of any of the Collateral to any
Obligations in such
manner and such order of priority as the Bank, in its sole
discretion, may
determine.
The Debtor expressly acknowledges that the security interest
granted hereunder
shall remain as security for payment and performance of the
Obligations, whether
now existing or which may hereafter be incurred by future loans or
otherwise.
The notice of the continuing grant of this security interest
therefor shall not
be required to be stated on the face of any document representing
any such
Obligations, or otherwise identify it as being secured hereby. All
collateral
which the Bank may at any time acquire from the Debtor or any other
source in
connection with any of the Obligations shall constitute collateral
for each and
every Obligation, without apportionment or designation as to
particular
Obligations, and the Bank shall have the right, in its sole
discretion, to
determine the order in which the Bank's rights in, or remedies
against, any
Collateral are to be exercised, and which type or which portions of
Collateral
are to be proceeded
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against and the order of application of any proceeds of collateral
as against
particular Obligations.
The Debtor acknowledges and agrees that this security agreement
grants, and is
intended to grant, a security interest in all assets of the Debtor
and that, in
addition to its other legal rights, the Bank is expressly
authorized to
authenticate and to file or transmit a financing statement or other
record to
perfect such security interest which describes the Collateral as
"all personal
property" or "all assets" of the Debtor.
The Debtor further hereby grants to the Bank a security interest in
and
non-exclusive license and right to use any and all patents,
copyrights,
tradenames, trademarks, service marks, and all applications
therefor, and
licenses to Bank any and all patents, copyrights, tradenames,
trademarks or
service marks that Debtor now owns and/or has the right to use or
may hereafter
own or acquire the right to use. The Bank's security interest and
non-exclusive
license set forth in this paragraph shall specifically include all
rights of the
Debtor which may be necessary in order for the Bank to exercise or
to get the
full benefit and value from the security interest granted in or
under this
Agreement.
I. Representations and Warranties of Debtor
The Debtor hereby represents and warrants that except as set forth
in Schedule A
attached hereto and made a part hereof:
(a) The exact legal name of the Debtor is stated hereinbelow.
Debtor is a
corporation duly organized and validly existing under the laws of
the State of
Delaware and is in good standing under the laws of said State.
Debtor is
qualified to do business in every state in which the nature of its
business
conducted or the character of its property owned in such state
would require
such qualification.
(b) Debtor has the power to execute, deliver and perform this
Agreement and to
borrow from the Bank. The execution, delivery and performance of
this Agreement
and any notes, guaranties or other documents, instruments or
agreements
evidencing Debtor's obligations to the Bank have been duly
authorized, if the
Debtor is a limited liability company, limited liability
partnership,
corporation, partnership, trust or other legal entity, will not
violate the
articles of organization, certificate of incorporation, partnership
agreement,
declaration of trust or other or similar organizational documents
or the bylaws
of the Debtor, if Debtor is a limited liability company, limited
liability
partnership, corporation, partnership, trust or other legal entity,
or any law,
regulation or court order, and with not result in a default under
any agreement
or indenture to which the Debtor is a party.
(c) Debtor has furnished to the Bank such tax returns, financial
statements and
other information about the Debtor's financial condition as the
Bank shall have
requested. These financial statements, tax returns or other
information fairly
present the financial condition of the Debtor in all material
respects. There
has been no material adverse change in the assets, liabilities,
financial
condition or business of Debtor since the date of the last
financial statements,
tax returns or other information delivered to the Bank.
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(d) Debtor has good and marketable title to the property and assets
which are
reflected on its financial statements, tax returns or other
information
furnished to the Bank. All of the Collateral is owned by the Debtor
free and
clear of all liens, pledges, security interests and mortgages,
except for liens,
pledges, security interests or mortgages in favor of the Bank or
liens, pledges,
security interests or mortgages set forth on Schedule I (d)
attached hereto and
incorporated herein (collectively "Permitted Liens"). No effective
financing
statement covering the Collateral or any proceeds thereof is on
file in any
public office, except as set forth on Schedule I(d).
(e) There is no suit or proceeding at law or in equity affecting
the Debtor or
any of its properties which, if adversely determined, would
materially impair
the rights of the Debtor to carry on its business substantially as
it is now
being conducted or would have a materially adverse effect upon the
assets,
liabilities, financial condition or business of the Debtor. The
Debtor is not a
party to any document, agreement or instrument, and is not subject
to any
charge, order or other restriction, materially and adversely
affecting its
assets, liabilities, financial condition or business, except as
previously
disclosed to the Bank in writing.
(f) Debtor has filed all federal, state and local tax returns and
other reports
it is required by law to file and has paid all taxes and other
charges that are
due and payable.
(g) Debtor is not in default in the performance, observance or
fulfillment of
any of the obligations, covenants or conditions contained in any
document,
agreement or instrument to which Debtor is a party, except for
minor defaults in
purchase or sale orders or other agreements which neither
individually nor in
the aggregate have a materially adverse effect on the Debtor.
(h) Debtor has not, during the preceding five (5) years, changed
its name, been
a party to a merger, or used any other corporate or fictitious name
except as
previously described to the Bank in writing.
(i) The place where Debtor keeps its records concerning the
Collateral, the
Debtor's principal place of business and the Debtor's chief
executive office, or
if the Debtor is an individual with no place of business, its
residence, is the
location set forth at the beginning of this Agreement. The
Collateral is now and
will continue to be kept at such location and at the following
additional
locations until such time as the written consent of the Bank to a
change in
location is received:
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(j) If any of the Collateral is to be attached to real estate,
descriptions of
said real estate have been delivered to the Bank and/or are
attached to this
Agreement and the name and address of each record owner is as
follows:
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(k) Debtor is in compliance in all material respects with all laws,
ordinances,
rules or regulations applicable to it, of all federal, state or
local
governments or any instrumentality or agency thereof, including,
without
limitation, the Employee Retirement Income Security Act of 1974,
the United
States Occupational Safety and Health Act of 1970 and all federal,
state and
municipal laws, ordinances, rules and regulations relating to the
environment,
as such may be amended.
II. Covenants of Debtor
The Debtor hereby agrees and covenants that except as set forth in
SCHEDULE B
attached hereto and incorporated herein:
(a) Debtor will keep the Collateral free from all liens, security
interests and
encumbrances except for the security interest granted herein or
those
specifically permitted in writing by the Bank and will defend the
Collateral
against all demands of all persons at any time claiming any
interest therein.
The Debtor will not sell or otherwise transfer the Collateral or
any interest
therein except in the ordinary course of Debtor's business as
presently
conducted. Debtor acknowledges and agrees that any security
interest, sale or
transfer of Collateral without the express authorization of Bank
will violate
the rights of the Bank and the Bank may note this fact on any
financing
statement, fixture filing or other record filed by the Bank.
(b) Debtor will not change its name without giving the Bank thirty
(30) days
prior written notice in which it sets forth its new name and the
date on which
the new name shall first be used. Debtor shall not change its
principal place of
business and chief executive officefrom that address set forth in
the beginning
of this Agreement, without giving the Bank at least thirty (30)
days prior
written notice of the new address for same, and provided that such
new location
(and address) shall be in the United States of America. Debtor
shall, at all
times, keep the Bank accurately informed in writing of each
location where the
Debtor's assets are kept and of each of its places of business and
Debtor shall
not remove any records to another state or change the location or
open or close,
move or change any existing or new place of business without giving
the Bank at
least thirty (30) days' prior written notice thereof.
(c) Debtor will, at its expense, furnish to the Bank upon its
demand such
further information, will execute and deliver to the Bank such
financing
statements and other agreements, instruments or documents, and will
do all such
acts as the Bank may, at any time or from time to time, reasonably
request, or
as may be necessary or appropriate to establish and maintain a
valid and
enforceable first priority security interest of the Bank in the
Collateral.
Notwithstanding the foregoing, the Bank is hereby authorized to
authenticate and
to file Financing Statements,
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Fixture Filings or similar records naming the Debtor or any other
party being or
becoming bound by this security agreement (whether as a new debtor,
a transferee
of Collateral subject to Bank's security interest or becoming a
party to this
agreement) as the debtor and indicating the Collateral. Debtor
shall not file a
Correction Statement relating to the Collateral or to any Financing
Statement or
Fixture Filing filed by the Bank without the Bank's prior written
consent. If
the Debtor is a corporation, limited liability company, limited
partnership or
other Registered Organization (as that term is defined in Article 9
of the
Uniform Commercial Code as in effect in Connecticut) the Debtor
shall, at its
expense, furnish to Bank a certified copy of D
