Exhibit 10

TERM NOTE

 

 

Waterbury, Connecticut

$5,000,000.00

January 29, 2010

 

FOR VALUE RECEIVED, THE EASTERN COMPANY, a Connecticut corporation ("Maker"),
promises to pay to the order of PEOPLE'S UNITED BANK, a federally-chartered
savings bank ("Payee"), at its banking office at 255 Bank Street, Waterbury,
Connecticut 06702-2219, or at such other place as may be designated in writing
from time to time by Payee, the principal sum of FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00) in lawful money of the United States and in immediately
available funds, together with interest on the outstanding principal sum, for
the period commencing on the date hereof until the date on which the entire
principal balance hereof has been paid in full, at a fixed rate per annum equal
to four and ninety-eight hundredths percent (4.98%). As more particularly
described in the Agreement (as defined below), interest shall accrue and be
payable in arrears on the first (1st) Business Day (as defined in the Agreement)
of each month hereafter, commencing on March 1, 2010, until the entire principal
balance of this Term Note shall have been paid in full. The principal balance of
this Term Note shall be payable in quarterly installments over a seven (7) year
term, commencing on April 1, 2010 and continuing on the first (1st) Business Day
of each July, October, January and April thereafter through maturity on January
31, 2017, as follows:

 

 

Payment Date

Principal Payment Amount

 

 

April 1, 2010

$178,571.43

 

July 1, 2010

$178,571.43

 

October 1, 2010

$178,571.43

 

January 3, 2011

$178,571.43

 

April 1, 2011

$178,571.43

 

July 1, 2011

$178,571.43

 

October 3, 2011

$178,571.43

 

January 2, 2012

$178,571.43

 

April 2, 2012

$178,571.43

 

July 2, 2012

$178,571.43

 

October 1, 2012

$178,571.43

 

January 2, 2013

$178,571.43

 

April 1, 2013

$178,571.43

 

July 1, 2013

$178,571.43

 

October 1, 2013

$178,571.43

 

January 2, 2014

$178,571.43

 

April 1, 2014

$178,571.43

 

July 1, 2014

$178,571.43

 

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                October 1, 2014$178,571.43

 

January 2, 2015

$178,571.43

 

April 1, 2015

$178,571.43

 

July 1, 2015

$178,571.43

 

October 1, 2015

$178,571.43

 

January 4, 2016

$178,571.43

 

April 1, 2016

$178,571.43

 

July 1, 2016

$178,571.43

 

October 3, 2016

$178,571.43

 

January 31, 2017

Entire remaining principal balance.

 

The aforesaid payments shall be first applied to accrued interest and then to
principal. Interest charged on the principal sum outstanding hereunder shall be
calculated on the basis of the actual number of days elapsed on the basis of a
360 day year. If this Term Note or any payment hereunder becomes due on a day
which is not a Business Day, the due date of this Term Note or such payment
shall be extended to the next succeeding Business Day, and such extension of
time shall be included in computing interest and fees in connection with such
payment.

 

In addition to said principal sum and interest, Maker further promises to pay,
on demand, all reasonable costs and expenses, including, without limitation,
attorneys' fees, incurred by Payee in the collection of this Term Note.

 

This Term Note is issued pursuant to a certain Loan Agreement dated as of the
date hereof (hereinafter referred to as the "Agreement"), by and between Maker
and Payee, a copy of which is on file at the office of Payee at 255 Bank Street,
Waterbury, Connecticut 06702-2219. The terms of the Agreement are incorporated
into this Term Note by reference, and reference is hereby made to the Agreement
for a more particular statement of certain representations, warranties,
covenants and agreements of Maker and providing for Events of Default.

 

Initially capitalized terms used herein shall have the same meanings ascribed to
them in the Agreement, unless otherwise indicated herein.

 

Any prepayment (whether in whole or in part) of this Term Note prior to maturity
shall be subject to a prepayment premium, as more particularly set forth in the
Agreement. Any permitted partial prepayment shall be accompanied by the amount
of accrued interest on the principal sum being prepaid and shall be applied to
the quarterly principal installments due hereunder in the inverse order of
maturity thereof.

 

Upon the occurrence and during the continuance of any Event of Default, or if
any payment required to be made on account of this Term Note shall remain in
arrears and unpaid for a period in excess of ten (10) days after the same shall
become due, in which latter event Maker agrees to pay to Payee the additional
sum of five percent (5.0%) of the amount of such late payment (other than
payments at maturity or after acceleration) to cover the additional expenses of
Payee's handling of such late payment but not as consideration for making such
late payment,

 

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and Payee shall be entitled to demand immediate payment of the outstanding
principal balance of this Term Note and all accrued but unpaid interest hereon,
and the interest rate(s) accruing hereunder shall, from such default, be
increased to a variable rate equal to two percentage points (2.0%) per annum
above the Prime Rate (with a "floor" rate of four percent (4.0%) per annum) in
effect immediately prior to such default, such rate to change when and as said
Prime Rate changes.

 

Maker hereby grants to Payee and any Affiliate of Payee, a lien, security
interest and right of set-off as security for all of Maker's liabilities
hereunder, whether now existing or hereafter arising, upon and against all of
Maker's deposits, credits, collateral and other property now or hereafter in the
possession, custody, safekeeping or control of Payee or any Affiliate of Payee
or in transit to it or any of them, except for any payroll account, pension or
profit sharing balances or similar trust fund accounts or balances of Maker. At
any time after the occurrence of and during the continuance of an Event of
Default, without demand or notice, Payee and its Affiliates may setoff the same
or any part thereof and apply the same or any part thereof to any of Maker's
liabilities hereunder, whether or not matured at the time of such application
and regardless of the adequacy of any other collateral securing this Term Note.
Maker shall be given prompt notice after the occurrence of any such set-off and
application. ANY AND ALL RIGHTS TO REQUIRE PAYEE TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY COLLATERAL WHICH SECURES THIS TERM NOTE, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF MAKER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

No delay or failure of Payee in exercising any right, power or privilege
hereunder or under the Agreement shall affect such right, power or privilege,
nor shall any single or partial exercise preclude any further exercise thereof
or the exercise of any other rights, powers or privileges.

 

Payee may at any time pledge all or any portion of its rights under this Term
Note to any of the twelve (12) Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or endorsement
thereof shall release the Payee from its obligations hereunder or under the
Agreement.

 

Upon receipt by Maker of an affidavit of an officer of Payee as to the loss,
theft, destruction or mutilation of this Term Note and upon the cancellation of
this Term Note due to such loss, theft, destruction or mutilation, Maker shall
issue, in lieu thereof, a replacement note to Payee in the same principal amount
thereof and otherwise of like tenor.

 

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               All agreements between Maker and Payee are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of the maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to Payee for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under applicable law. As used herein, the term “applicable law” shall mean the
law in effect as of the date hereof; provided, however, that in the event there
is a change in the law which results in a higher permissible rate of interest,
then this Term Note shall be governed by such new law as of its effective date.
In this regard, it is expressly agreed that it is the intent of Maker and Payee
in the execution, delivery and acceptance of this Term Note to contract in
strict compliance with the laws of the State of Connecticut from time to time in
effect. If, under or from any circumstances whatsoever, fulfillment of any
provision hereof or under the Agreement or the other Loan Documents at the time
of performance of such provision shall be due, shall involve transcending the
limit of such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such validity, and if
under or from circumstances whatsoever Payee shall ever receive as interest an
amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal balance
evidenced hereby and not to the payment of interest. This provision shall
control every other provision of all agreements between Maker and Payee.

 

MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS TERM NOTE IS A PART IS A
COMMERCIAL TRANSACTION, AND HEREBY WAIVES MAKER'S RIGHTS TO: (1) NOTICE AND
HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE
ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH
PAYEE MAY DESIRE TO USE, AND (2) REQUEST THAT PAYEE POST A BOND, WITH OR WITHOUT
SURETY, TO PROTECT MAKER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT
REMEDY SOUGHT OR OBTAINED BY PAYEE BY VIRTUE OF ANY DEFAULT OR PROVISION OF THIS
TERM NOTE OR ANY LOAN DOCUMENT SECURING THIS TERM NOTE, AND MAKER FURTHER WAIVES
DILIGENCE, DEMAND, PROTEST, NOTICE OF NONPAYMENT OR PROTEST, NOTICE OF THE
ACCEPTANCE OF THIS TERM NOTE, NOTICE OF ANY OTHER ACTION TAKEN IN RELIANCE
HEREON AND ALL OTHER DEMANDS AND NOTICES OF ANY DESCRIPTION IN CONNECTION WITH
THIS TERM NOTE OR THE INDEBTEDNESS EVIDENCED HEREBY (OTHER THAN NOTICES
SPECIFICALLY REQUIRED BY THE AGREEMENT).

 

ADDITIONALLY, MAKER HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
DEFENSE, COUNTERCLAIM, CROSSCLAIM AND/OR ANY FORM OF PROCEEDING BROUGHT IN
CONNECTION WITH THIS TERM NOTE OR RELATING TO ANY INDEBTEDNESS EVIDENCED HEREBY.

 

MAKER ACKNOWLEDGES THAT IT HAS MADE THE FOREGOING WAIVERS KNOWINGLY AND
VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF
THESE WAIVERS WITH ITS

 

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ATTORNEYS. MAKER FURTHER ACKNOWLEDGES THAT PAYEE HAS NOT AGREED WITH OR
REPRESENTED TO MAKER THAT THE FOREGOING WAIVERS WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.

 

THIS TERM NOTE HAS BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF CONNECTICUT
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CONNECTICUT.

 

 

THE EASTERN COMPANY

 

 

 

By: /s/Leonard F. Leganza

Leonard F. Leganza

Its President

Duly Authorized

 

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