Exhibit 10.2

 

ASSISTANCE AGREEMENT BY AND BETWEEN

THE STATE OF CONNECTICUT

 

ACTING BY THE DEPARTMENT OF ECONOMIC AND COMMUNITY

DEVELOPMENT

(An Equal Opportunity Employer)

AND

SEVEN STARS CLOUD GROUP, INC.

 

RE: Seven Stars Cloud Group Relocation Project

 

This ASSISTANCE AGREEMENT (the “Agreement”) is made and entered into by and
between the STATE OF CONNECTICUT, (hereinafter the “State”), acting herein by
Catherine Smith, its Commissioner of Economic and Community Development,
(hereinafter the “Commissioner”), pursuant to Chapter 5881 of the Connecticut
General Statutes and SEVEN STARS CLOUD GROUP, INC. (hereinafter the “Applicant”
or “contractor”) acting herein by Robert Benya its duly authorized President.

 

WITNESSETH:

 

WHEREAS, the governing body of the Applicant has submitted to the State a series
of documents including an acceptance letter in response to a Letter of Intent
submitted to it by the Commissioner dated May 24,2018 (the “Commissioner’s
LOI”), an Application for Financial Assistance, a resolution from the
Applicant’s appropriate organizational body authorizing the Applicant to submit
said Application, a Project Financing Plan and Budget, and exhibits, if any, and
has caused to have submitted an Opinion of Counsel and other documents (all,
together with this Agreement and all other documents and agreements executed by
the Applicant in connection with this Agreement, hereinafter the “Project
Documents”) for a project entitled Seven Stars Cloud Group Relocation Project
(hereinafter the “Project”) and has represented to the State that it can rely
upon the information within the Project Documents as being accurate and
complete;

 

WHEREAS, in reliance upon the information submitted by or caused to be submitted
by the Applicant, the State has approved funding for the Project; and

 

WHEREAS, the State and the Applicant desire to define the terms and conditions
upon which such financial assistance will be made available to the Applicant.

 

NOW THEREFORE, in consideration of the mutual promises of the parties hereto,
and of the mutual benefits to be gained by the performance thereof, the State
and the Applicant hereby agree as follows:

 

ARTICLE 1- STATE OBLIGATIONS

 

Financial Assistance. The State hereby agrees, subject to the terms of this
Agreement and its Exhibits and in reliance upon the facts and representations
set forth in the Project Documents, to provide financial assistance to the
Applicant for the Project in the form of a loan in an amount not to exceed TEN
MILLION AND NO DOLLARS ($10,000,000.00) (the “Loan” or the “Funding”), which
Loan shall be evidenced by a promissory note in the amount of the Loan (the
“Note”); provided, however, that the aggregate principal of the Funding shall
not exceed fifty percent (50%) of the cost of the Project.

 

 

 

 

1.1       Repayment of Loan. The Loan shall be repayable by the Applicant in
accordance with the terms of the Note.

 

ARTICLE 2- APPLICANT WARRANTIES, COVENANTS, AND OBLIGATIONS

 

The Applicant represents, warrants and covenants as follows, and further
covenants that on and after the closing and for so long as this Agreement or any
clause thereof shall remain in effect:

 

2.1       Form of Entity. The Applicant is a corporation duly created and
validly existing, or properly registered to do business, under the laws of the
State of Nevada and the State of Connecticut and each other jurisdiction where
the ownership of its property or the conduct of its business requires
qualification. Further, that the Applicant will preserve and maintain its
existence as a corporation duly organized validly existing, and in good standing
under the laws of Nevada, and will remain (or become) qualified to do business
and in good standing in Connecticut and in each other jurisdiction where the
nature of its business or the ownership of its property makes such qualification
necessary.

 

2.2       Ability to Conduct Business. The Applicant has all franchises,
permits, licenses, and other similar authorizations necessary for the conduct of
its business as now being conducted by it, and it is not aware of any state of
facts that would make it impossible to obtain any similar authorization
necessary for the conduct of its business as planned to be conducted. The
Applicant is not in violation, nor will the transactions contemplated by this
Agreement or the other Project Documents to which it is a party, cause a
violation of the terms or provisions of any such franchise, permit, license, or
similar authorization.

 

2.3       Authorization to Enter Into and Execute Project Documents. The
execution and delivery of the Project Documents and this Assistance Agreement by
the Applicant, and the performance of its obligations thereunder, are within its
power, have been duly authorized by all necessary action on its part, and are
not in contravention of law nor in contravention of its organizational documents
or governing bylaws or of the provisions of any indenture, agreement, or
undertaking to which it, its principals or employees are parties or by which
they are bound.

 

2.4       Other Authorization Unnecessary. No consent, license, or approval from
any governmental authority is or will be necessary for the valid execution and
delivery by the Applicant of the Project Documents. The Applicant agrees that
nothing in this Agreement relieves it from any obligation under law to obtain
any such license, consent, or approval.

 

2.5       Agreement to Undertake Project. The Applicant agrees to undertake and
complete the Project as described in the Commissioner’s LOI.

 

2.6       Obstacles to Entering and Executing Project.

 

(A)       Existing Suit or Other Actions. There is no action, suit, proceeding
or investigation at law, in equity, or before any court, public board,
arbitrator, or body, pending or, to the Applicant’s knowledge, threatened
against or affecting it, which could or might adversely affect the Project, the
State’s security as described in section 2.16 below, any of the transactions
contemplated by the Project Documents or the validity of the Project Documents,
or the Applicant’s ability to discharge its obligations under the Project
Documents.

 

 - 2 - 

 

 

(B)       Default of Existing Orders or Instruments. The Applicant is not in
default beyond any applicable notice and grace periods with respect to any order
of any court, arbitrator, or governmental body which could or might adversely
affect the Project, the State’s security as described in section 2.16 below, or
any of the transactions contemplated by the Project Documents or the validity of
the Project Documents, or the Applicant’s ability to discharge its obligations
under the Project Documents. In addition, the Applicant is not in default beyond
any applicable grace periods in the performance, observance or fulfillment of
any of the terms, obligations, covenants, conditions, or provisions contained in
any agreement or instrument to which the Applicant is a party or to which its
property is subject, which default, together with all such defaults, singularly
or in the aggregate, may have a materially adverse effect on the business,
assets, liabilities, financial condition, results of operations of the
Applicant.

 

(C)       Instance of Default. No Instance of Default (as defined in section 4.1
hereof) has occurred or is continuing, and the Applicant has no knowledge of any
currently existing facts or circumstances which, with the passage of time or the
giving of notice, or both, would constitute an Instance of Default.

 

2.7       Material Adverse Change.

 

(A)       Financial Condition. There has been no material adverse change in the
financial condition of the Applicant or any guarantor of this Agreement, if
applicable, since the date of application for the Funding that has not been
previously disclosed in writing to the Commissioner.

 

(B)       Representations in Documents. All financial statements, including,
without limitation, balance sheets and profit and loss statements, delivered to
the Commissioner are correct and complete, and fairly present the financial
position and results of operations of the Applicant at the times of and for the
periods reflected by such financial statements. The financial statements and all
other written statements furnished by the Applicant in connection with the
Funding do not contain any untrue statement of material fact and do not omit any
material fact whose omission would make the statements contained therein or
herein materially misleading.

 

(C) Other Facts. There is no fact which the Applicant has not disclosed to the
Commissioner in writing, which writing, if any, is attached hereto as Exhibit A,
which materially and adversely affects or, and is reasonably likely to prove to
affect materially and adversely the business, operations, properties, prospects,
profits, or condition of the Applicant. Further, the Applicant will notify the
Commissioner, in writing, promptly of any material adverse change in the
financial condition or business operations of the Applicant or any guarantor of
this Agreement.

 

2.8       Use of State Funding. The Funding shall be used for the Project as set
forth in the Commissioner’s LOI and in accordance with the most recently
approved Project Financing Plan and Budget. The Funding shall be used for that
purpose and for no other purpose.

 

 - 3 - 

 

 

(A)       Additional Costs above Funding. Any amount in excess of the amount of
the Funding that may be necessary to cover the cost of the Project as set forth
in the most recently approved Project Financing Plan and Budget shall be the
responsibility of the Applicant and shall not be covered by the Funding. The
Applicant shall, as a minimum, provide the level and sources of funding as
indicated in the Project Documents, and shall expend those funds in accordance
with the Project Financing Plan and Budget.

 

(B)       Budget. The Project Financing Plan and Budget most recently approved
by the Commissioner shall constitute the budget for the Project. The Project
Financing Plan and Budget may be amended by request of the Applicant if such
request is approved in writing by the Commissioner. Approval by the Commissioner
of any revised Project Financing Plan and Budget shall not constitute or imply a
revision of the amount of the Funding.

 

2.9       Payment of Other Obligations. The Applicant will pay and discharge
promptly when due and payable all taxes, assessments and governmental charges
levied or imposed upon it, its property, or any part thereof, or upon its income
or profits, or any part thereof, as well as all lawful claims for labor,
materials and supplies, which, if unpaid, might by law become a lien or charge
upon its property, provided that such charges need not be paid while being
contested by the Applicant in good faith and by appropriate legal proceedings so
long as adequate book reserves have been established with respect thereto and
the Applicant’s title to, and its right to use, its property is not materially
and adversely affected thereby. The Applicant also agrees to pay all taxes or
duties levied or assessed upon said sum against the State, the obligation
evidenced hereby or the collateral securing the same and to pay all costs,
expenses, and attorneys’ reasonable fees incurred by the State in any proceeding
for the collection of the obligations evidenced hereby or in any action to
enforce the State’s rights in property granted under the Mortgage the happening
of an Instance of Default as provided for in the Project Documents or in
protecting or sustaining the lien granted in connection with this Agreement or
in the Mortgage or in any litigation or controversy arising from or connected
with the Project Documents.

 

2.10       Compliance with Laws, Regulations, Rules, and Executive Orders. In
the administration and execution of the Project, the Applicant shall comply with
all pertinent provisions of local, State and Federal law applicable to it and/or
its properties and/or its business, and maintain its property in reasonable
condition. Failure to do so shall constitute an Instance of Default by the
Applicant under this Agreement.

 

Specifically, but not by way of limitation, the Applicant agrees to the
following:

 

(A)For the purposes of subsection (B) of this section 2.10, the following terms
are defined as follows:

 

1.“Commission” or “commission” means the Connecticut Commission on Human Rights
and Opportunities;

 

2.“Contract” means this Agreement and any extension or modification of this
Agreement;

 

3.“Contractor” means the Applicant and includes any successors or assigns of the
Applicant;

 

 - 4 - 

 

 

4.“Gender identity or expression” means a person’s gender-related identity,
appearance or behavior, whether or not that gender-related identity, appearance
or behavior is different from that traditionally associated with the person’s
physiology or assigned sex at birth, which gender-related identity can be shown
by providing evidence including, but not limited to, medical history, care or
treatment of the gender-related identity, consistent and uniform assertion of
the gender-related identity or any other evidence that the gender-related
identity is sincerely held, part of a person’s core identity or not being
asserted for an improper purpose;

 

5.“Good faith” means that degree of diligence which a reasonable person would
exercise in the performance of legal duties and obligations;

 

6.“Good faith efforts” shall include, but not be limited to, those reasonable
initial efforts necessary to comply with statutory or regulatory requirements
and additional or substituted efforts when it is determined that such initial
efforts will not be sufficient to comply with such requirements;

 

7.“Intellectual disability” means a significant limitation in intellectual
functioning and deficits in adaptive behavior that originated during the
developmental period before eighteen years of age;

 

8.“Marital status” means being single, married as recognized by the State of
Connecticut, widowed, separated or divorced;

 

9.“Mental disability” means one or more mental disorders, as defined in the most
recent edition of the American Psychiatric Association’s “Diagnostic and
Statistical Manual of Mental Disorders”, or a record of or regarding a person as
having one or more such disorders;

 

10.“Minority business enterprise” means any small contractor or supplier of
materials fifty-one percent or more of the capital stock, if any, or assets of
which is owned by a person or persons: (1) who are active in the daily affairs
of the enterprise, (2) who have the power to direct the management and policies
of the enterprise, and (3) who are members of a minority, as such term is
defined in subsection (a) of Conn. Gen. Stat. section 32-9n; and

 

11.“Public works contract” means any agreement between any individual, firm or
corporation and the State or any political subdivision of the State other than a
municipality for construction, rehabilitation, conversion, extension, demolition
or repair of a public building, highway or other changes or improvements in real
property, or which is financed in whole or in part by the State, including, but
not limited to, matching expenditures, grants, loans, insurance or guarantees.

 

 - 5 - 

 

 

For purposes of subsection (B) of this section 2.10, the term “Contract” does
not include a contract where each contractor is (a) a political subdivision of
the state, including, but not limited to, a municipality unless the contract is
a municipal public works contract or quasi-public agency project contract, (b)
any other state, as defined in Conn. Gen. Stat. section 1-267, (c) the federal
government, (d) a foreign government, or (e) an agency of a subdivision, agency,
state or government described in the immediately preceding items (a), (b), (c),
or (d).

 

(B)(1) (a) The Contractor agrees and warrants that in the performance of the
Contract such Contractor will not discriminate or permit discrimination against
any person or group of persons on the grounds of race, color, religious creed,
age, marital status, national origin, ancestry, sex, gender identity or
expression, intellectual disability, mental disability or physical disability,
including, but not limited to, blindness, unless it is shown by such Contractor
that such disability prevents performance of the work involved, in any manner
prohibited by the laws of the United States or of the State of Connecticut; and
the Contractor further agrees to take affirmative action to insure that
applicants with job-related qualifications are employed and that employees are
treated when employed without regard to their race, color, religious creed, age,
marital status, national origin, ancestry, sex, gender identity or expression,
intellectual disability, mental disability or physical disability, including,
but not limited to, blindness, unless it is shown by the Contractor that such
disability prevents performance of the work involved; (b) the Contractor agrees,
in all solicitations or advertisements for employees placed by or on behalf of
the Contractor, to state that it is an “affirmative action-equal opportunity
employer” in accordance with regulations adopted by the Commission; (c) the
Contractor agrees to provide each labor union or representative of workers with
which such Contractor has a collective bargaining agreement or other contract or
understanding and each vendor with which the Contractor has a contract or
understanding, a notice to be provided by the Commission, advising the labor
union or workers’ representative of the Contractor’s commitments under Conn.
Gen. Stat. section 4a-60 and to post copies of the notice in conspicuous places
available to employees and applicants for employment; (d) the Contractor agrees
to comply with each provision of Conn. Gen. Stat. sections 4a-60, 46a-68e, and
46a-68f and with each regulation or relevant order issued by the Commission
pursuant to Conn. Gen. Stat. sections 46a-56, 46a-68e, 46a-68f, and 46a-86; and
(e) the Contractor agrees to provide the Commission with such information
requested by the Commission, and permit access to pertinent books, records and
accounts, concerning the employment practices and procedures of the Contractor
as relate to the provisions of Conn. Gen. Stat. sections 4a-60 and 46a-56. If
the Contract is a public works contract, municipal public works contract or
contract for a quasi -public agency project, the Contractor agrees and warrants
that it will make good faith efforts to employ minority business enterprises as
subcontractors and suppliers of materials on such public works or quasi-public
agency project.

 

 - 6 - 

 

 

(2)       Determination of the Contractor’s good faith efforts shall include,
but shall not be limited to, the following factors: The Contractor’s employment
and subcontracting policies, and practices; affirmative advertising, recruitment
and training; technical assistance activities and such other reasonable
activities or efforts as the State of Connecticut has prescribed that are
designed to ensure the participation of minority business enterprises in public
works projects.

 

(3)       The Contractor shall develop and maintain adequate documentation, in a
manner prescribed by the Commission, of its Good faith efforts.

 

(4)       The Contractor shall include the provisions of subsection (1) of this
section 2.10(B) in every subcontract or purchase order entered into in order to
fulfill any obligation of a contract with the State and such provisions shall be
binding on a subcontractor, vendor or manufacturer unless exempted by
regulations or orders of the Commission. The Contractor shall take such action
with respect to any such subcontract or purchase order as the Commission may
direct as a means of enforcing such provisions including sanctions for
noncompliance in accordance with Conn. Gen. Stat. section 46a-56; provided if
such Contractor becomes involved in, or is threatened with, litigation with a
subcontractor or vendor as a result of such direction by the Commission, the
Contractor may request the State of Connecticut to enter into any such
litigation or negotiation prior thereto to protect the interests of the State
and the State may so enter.

 

(5)       The Contractor agrees to comply with the statutes and regulations
referred to in this Section as they exist on the date of this Contract and as
they may be adopted or amended from time to time during the term of this
Contract and any amendments thereto.

 

(6)       (a) The Contractor agrees and warrants that in the performance of the
Contract such Contractor will not discriminate or permit discrimination against
any person or group of persons on the grounds of sexual orientation, in any
manner prohibited by the laws of the United States or the State of Connecticut,
and that employees are treated when employed without regard to their sexual
orientation; (b) the Contractor agrees to provide each labor union or
representative of workers with which such Contractor has a collective bargaining
Agreement or other contract or understanding and each vendor with which such
Contractor has a contract or understanding, a notice to be provided by the
Commission advising the labor union or workers’ representative of the
Contractor’s commitments under Conn. Gen. Stat. section 4a-60a, and to post
copies of the notice in conspicuous places available to employees and applicants
for employment; (c) the Contractor agrees to comply with each provision of Conn.
Gen. Stat. section 4a-60a and with each regulation or relevant order issued by
said Commission pursuant to Conn. Gen. Stat. section 46a-56; and (d) the
Contractor agrees to provide the Commission with such information requested by
the Commission, and permit access to pertinent books, records and accounts,
concerning the employment practices and procedures of the Contractor which
relate to the provisions of this Section and Conn. Gen. Stat. sections 4a-60a
and § 46a-56.

 

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The Contractor shall include the provisions of the foregoing subsection (6) of
this section 2.10(B) in every subcontract or purchase order entered into in
order to fulfill any obligation of a contract with the State and such provisions
shall be binding on a subcontractor, vendor or manufacturer unless exempted by
regulations or orders of the Commission. The Contractor shall take such action
with respect to any such subcontract or purchase order as the Commission may
direct as a means of enforcing such provisions including sanctions for
noncompliance in accordance with Conn. Gen. Stat. section 46a-56; provided, if
such Contractor becomes involved in, or is threatened with, litigation with a
subcontractor or vendor as a result of such direction by the Commission, the
Contractor may request the State of Connecticut to enter into any such
litigation or negotiation prior thereto to protect the interests of the State
and the State may so enter.

 

(C)         Executive Order No. Three. This Agreement is subject to the
provisions of Executive Order No. Three of Governor Thomas J. Meskill
promulgated June 16, 1971 and, as such, this Agreement may be cancelled,
terminated or suspended by the State Labor Commissioner for violation or of
noncompliance with said Executive Order No. Three, or any State or Federal Law
concerning nondiscrimination, notwithstanding that the Labor Commissioner is not
a party to this Agreement. The parties to this Agreement, as part of the
consideration hereof, agree that said Executive Order No. Three is incorporated
herein by reference and made a part hereof. The parties agree to abide by said
Executive Order and agree that the State Labor Commissioner shall have
continuing jurisdiction in respect to Agreement performance in regard to
nondiscrimination, until this Agreement is completed or terminated prior to
completion. The Applicant agrees as part consideration hereof, that this
contract is subject to the guidelines and rules issued by the State Labor
Commissioner to implement Executive Order No. Three and that it will not
discriminate in its employment practices or policies, will file all reports as
required, and will fully cooperate with the State and the State Labor
Commissioner.

 

(D)         Executive Order No. Sixteen. This Agreement is subject to, and
Applicant hereby agrees to abide by Executive Order No. Sixteen of Governor John
G. Rowland promulgated August 4, 1999, and, as such, this Agreement may be
cancelled, terminated or suspended by the State for violation or noncompliance
with said Executive Order No. Sixteen.

 

(E)         Executive Order No. Seventeen. This Agreement is subject to the
provisions of Executive Order No. Seventeen of Governor Thomas J. Meskill
promulgated February 15, 1973, and, as such, this Agreement may be cancelled,
terminated or suspended by the Commissioner or the State Labor Commissioner for
violation of or noncompliance with said Executive Order No. Seventeen,
notwithstanding that the Labor Commissioner may not be a party to this
Agreement. The parties to this Agreement, as part of the consideration hereof,
agree that the Executive Order No. Seventeen is incorporated herein by reference
and made a part hereof. The parties agree to abide by said Executive Order and
agree that the contracting agency and the State Labor Commissioner shall have
joint and several continuing jurisdiction in respect to Agreement performance in
regard to listing all employment openings with the Connecticut Employment
Service.

 

 - 8 - 

 

 

(F)         Environmental Laws.

 

(1)  The Applicant hereby agrees to indemnify and hold harmless the State from
and against any liabilities, losses, damages, costs, or expenses, including
attorney’s fees, arising out of or in connection with the presence of hazardous
waste on or in any of the Collateral, as more fully described in section 2.16
below, or any lien or claim under Conn. Gen. Stat. section 22a-452a, as amended,
or other federal, state, or municipal statute, regulation, rule, law, or
proceeding relating to environmental matters, which indemnity shall survive
foreclosure of the Mortgage, as more fully described in section 2.16 below,
realization on any of the Collateral, as more fully described in section 2.16
below, payment in full of the Funding, and termination and/or release of the
Project Documents.

 

(2)  In the event a determination is made that the Funding or a portion of the
Funding is subject to the Connecticut Environmental Policy Act (“CEPA”) than
Disbursement of State funds may be subject to the completion of the appropriate
(“CEPA”) review of Project activities. If Project analysis and review under the
provisions of CEPA is necessary, then DECD will contract a professional
engineering/planning firm experienced in preparing CEPA documents, using funds
appropriated to the Project. Said firm shall work at the direction of the DECD
in assessing the Project activities in accordance with CEPA (C.G.S. Sec. 22a-1
and R.C.S.A. Sec. 22a-1a-1 to 22a-1a-12)

 

(3)  In the event a determination is made that the Funding or a portion thereof
is subject to CEPA DECD, may require an environmental site assessment, survey,
reports and remedial action plans to be prepared for the real estate subject to
Project activities. A professional firm licensed to practice in the State of
Connecticut shall prepare the reports. The scope of investigations and report
shall conform to the applicable Department of Energy and Environmental
Protection laws and regulations, and the applicable American Standards for
Testing Materials document standards. Copies of all reports shall be made
available to DECD.

 

If the Applicant and/or other parties for the subject properties within the
project area have conducted Environmental Site Assessments, copies of such
documents must be submitted to DECD.

 

(G)       Relocation. The Applicant represents and acknowledges that the Project
consists, inter alia, relocating to Connecticut the Applicant’s Global
Headquarters for Technology and Innovation also known as World Tech and
Innovation Headquarters. (the “Headquarters”). The Headquarters shall house the
following: Blockchain Asset Digitalization Tech and Innovation Hub; Fintech
Business Startup Accelerator/Incubator; Education and Programming Center (with
Executive MBA, Bootcamp Style Training Curricula)1 Robotics and Artificial
Intelligence Research and Development Laboratory; Corporate Office for Partner
Companies; Media/News Production and Broadcasting Facility .All of the
Applicant’s Executive Officers (within the meaning of the Securities Act of
1934, as amended), including its Chairman, shall have offices at the
Headquarters in West Hartford, CT. Applicant shall not relocate any of its
Headquarters or other Connecticut operations to a location outside of the State
prior to the date that is ten (10) years after the Agreement Date (as
hereinafter defined) or during the term of the Loan, whichever is longer (the
“Non-Relocation Period”). If the Applicant relocates any of such operations
within the State during such period, it shall offer employment at the new
location to its employees from the original location if such employment is
available. The Applicant shall provide written notification to the Commissioner
of any proposed relocation prior to any public announcement.

 

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(H)       Taxes. The Applicant has filed all federal, state, and municipal
income and other tax returns which are required to be filed, and has paid, or
made provision for the payment of, all taxes which have become due pursuant to
said returns, except such taxes, if any, which are being contested in good faith
and as to which adequate reserves have been provided.

 

(I)         Campaign Contribution and Solicitation Prohibitions. For all State
contracts as defined in C.G.S. sec. 9-612 having a value in a calendar year of
$50,000 or more or a combination or series of such agreements or contracts
having a value of $100,000 or more, the authorized signatory to this Agreement
expressly acknowledges receipt of the State Elections Enforcement Commission’s
notice advising state contractors of state campaign contribution and
solicitation prohibitions, and will inform its principals of the contents of the
notice. This notice is attached hereto as Exhibit C.

 

(J)         General Indemnification. In addition to the specific covenants in
subsection (F) of this section 2.10 above, the Applicant shall and hereby agrees
to indemnify, defend, and hold the State, and its agents, officials, and
employees, harmless from and against any and all suits, damages, claims, causes
of actions, demands, judgments, penalties, costs, expenses, attorneys’ fees, and
any and all injuries to persons or property and all other matters arising out of
or incurred in the performance by Applicant of the terms, conditions, and
covenants of this Agreement or in connection with the operation of the Project.

 

(K)        Whistleblower Protection Law. If any officer, employee or appointing
authority of the Applicant takes or threatens to take any personnel action
against any employee of the Applicant in retaliation for such employee’s
disclosure of information to any employee of the Department of Economic and
Community Development, the Auditors of Public Accounts or the Attorney General
under the provisions of Conn. Gen. Stat. sec. 4-61dd, the Applicant shall be
liable for any civil penalty imposed of not more than five thousand dollars for
each offense, up to a maximum of twenty per cent of the value of this Agreement.
Each violation shall be a separate and distinct offense and in the case of a
continuing violation each calendar day’s continuance of the violation shall be
deemed to be a separate and distinct offense.

 

The Applicant shall post a notice in a conspicuous place which is readily
available for viewing by employees informing employees of the provisions of
Conn. Gen. Stat. sec. 4-61dd relating to large state contractors.

 

(L)       Prevailing Wages. In the event that the Agreement Date shall be after
June 30, 2018, then the following shall apply in accordance with C.G.S.A.
Section 31-53c: The wages paid on an hourly basis to any person performing the
work of any mechanic, laborer or worker on the work herein contracted to be done
and the amount of payment or contribution paid or payable on behalf of each such
person to any employee welfare fund, as defined in subsection (i) of Section
31-53, shall be equal to the rate customary or prevailing for the same work in
the same trade or occupation in the town in which construction, remodeling,
refinishing, refurbishing, rehabilitation, alteration or repair project is being
undertaken, Any contractor who is not obligated by agreement to make payment or
contribution on behalf of such persons to any such employee welfare fund shall
pay to each mechanic, laborer, or worker as part of such person’s wages the
amount of payment or contribution for such person’s classification on each pay
day. The foregoing prevailing wage requirements shall not apply and, therefore,
shall not be required to be implemented by the Applicant and Section 31-53c
shall not apply to the State’s funding of the Project should the Agreement Date
be on or before June 30, 2018.

 

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2.11       Other Debt. The Applicant will not, either directly or indirectly,
except in the course of its ordinary business and in a manner which will not
have a materially adverse impact on the Applicant’s ability to perform its
obligations pursuant to this Agreement and the Project Documents, guarantee,
endorse, become surety for, or otherwise be or become responsible for the
obligations of any other person, whether by agreement to purchase the
indebtedness of any other person, or agreement for the furnishing of funds to
any other person, directly or indirectly, through the purchase of goods,
supplies, (or by way of stock purchase, capital contribution, advance or loan)
or for the purpose of paying or discharging the indebtedness of any other person
or otherwise, except for the endorsement by the Applicant of negotiable
instruments for collection in the ordinary course of business without the
written consent of the Commissioner.

 

2.12       Conflict of Interest. The Applicant will adopt and enforce measures
appropriate to assure that no member of the Applicant’s governing bodies and
none of its officers or employees shall have or acquire voluntarily an interest
in any agreement or proposed agreement in connection with carrying out of the
Project..

 

2.13       Notification of Instance of Default by Applicant. The Applicant shall
notify the Commissioner promptly of the occurrence of any default hereunder or
under any of the other Project Documents, or any other document, instrument or
agreement to which the Applicant or its properties are subject and of the
actions it intends to take in order to cure such default in a timely manner.

 

2.14       Business Continuation and Transfer of Control.

 

(A)       Except as provided below, the Applicant shall not, either voluntarily
or involuntarily, without the prior written consent of the Commissioner, which
consent shall not be unreasonably withheld, (i) discontinue its business, (ii)
be dissolved or otherwise suffer or permit any termination of its status as a
legal entity as described in section 2.1 above, (iii) transfer, sell or assign
all or a material portion of its assets, (iv) enter into any merger or
consolidation with another entity in which the Applicant is not the surviving
entity; or (v) enter into any merger or consolidation with another entity in
which the current shareholders of the Applicant do not own a majority interest
of the surviving entity (each of (iii), (iv) and (v) shall constitute a
“Transfer” hereunder). The consent of the Commissioner to a proposed Transfer
shall be granted if, the Commissioner determines, in her reasonable discretion,
that the proposed Transfer will not materially impair the prospects of
Applicant’s compliance or its successor’s compliance with the terms and intent
of this Agreement and the other Project Documents, including the job creation
and retention obligations hereunder, and the obligations of the Applicant have
been assumed by the successor or surviving entity to the State’s satisfaction
pursuant to the terms of an assignment and assumption agreement executed by the
parties and in form and substance satisfactory to the State.

 

 - 11 - 

 

 

(B)       Without the Commissioner’s prior written consent, the Applicant shall
not permit the transfer of any shares of its capital stock or issue additional
shares of capital stock. Notwithstanding the foregoing to the contrary, the
Applicant (or its shareholders, members or partners, as applicable) may
transfer, redeem, retire, issue stock options and warrants or purchase shares of
capital stock of the Applicant without the prior written consent of the
Commissioner provided such transfer, redemption, retirement, issuance, or
purchase will not result in the transfer of greater than fifty percent (50%) of
the outstanding shares of capital stock of the Applicant. As used herein,
“capital stock” shall mean and include any ownership interest, including any
limited liability company membership interest or any partnership interest.

 

2.15       Representations in Other Documents. All statements contained in any
certificate, financial statement, legal opinion or other instrument delivered by
or on behalf of the Applicant or any guarantor pursuant to or in connection with
this Agreement shall constitute representations and warranties made under this
Agreement. All representations and warranties made under this Agreement shall be
made at and as of the date of this Agreement.. All representations and
warranties made under this Agreement shall survive the execution and delivery
hereof and shall not be deemed to have been waived by any investigation made or
not made by the State. The Project Documents to which the Applicant is a party,
when delivered, will be legal, valid, and binding obligations of the Applicant,
enforceable against it in accordance with their respective terms.

 

2.16       Security. The Applicant agrees to provide to the State, as security
for the Applicant’s obligations of repayment of the funding, a first position
mortgage on the real estate known as 1700- 18000 Asylum A venue, West Hartford,
CT ( the “Property “) upon acquisition of said Property ( known herein as the
“Mortgage”), under terms and conditions stated infra Until such time as the
Applicant acquires the Property the Applicant shall provide to the State a
Letter of Credit, in the amount of $12,500,000.00 in form and substance
satisfactory to the State, from a U. S. Bank, as security for the Applicant’s
obligations of repayment in respect of the Funding. At such time that the
Applicant shall acquire the Property. Applicant shall provide to the State a
first position mortgage (the “Mortgage”) (hereinafter the “Collateral”) which
shall replace the aforesaid Letter of Credit, provided that the value of the
then “as is” Property shall have a value of at least $20,000.000.00. Upon the
fulfillment of all obligations contained herein or in any of the Project
Documents or upon the termination of the time period as required pursuant to
section 2.10(G) whichever occurs last, and provided that no default has occurred
or is continuing under the terms of this Agreement, any and all security
interests provided to the State with respect to the Funding will be released.

 

2.17       Job Creation and Retention: Job Audit; Penalty; Forgiveness Credit.

 

(A)       The Applicant will create and retain one hundred seventy six (176)
full-time employment positions with combined annual average W-2 compensation of
$105,000.00 in Connecticut on or before December 31, 2021 (the “First Target
Date”, and shall maintain such positions for twenty four (24) months thereafter
(the “First Employment Obligation”). A full-time employment position is defined
as a position that is paid for a minimum of thirty five (35) hours per week. The
twenty-four (24) consecutive month period ending on or before the Target Date
that yields the highest annual average positions will be used to determine
compliance with the First Employment Obligation, provided that no portion of
said twenty-four (24) consecutive months may begin before the Agreement Date.
The Applicant will create an additional one hundred fifty four (154) full-time
employment positions with combined annual average W-2 compensation of
$105,000.00 in Connecticut on or before December 31, 2022 (the “Second Target
Date”, and shall maintain 330 such positions for twenty-four (24) consecutive
months thereafter (the “Second Employment Obligation”) A full-time employment
position is defined as a position that is paid for a minimum of thirty five (35)
hours per week. The twenty-four (24) consecutive month period ending on or
before the Target Date that yields the highest annual average positions will be
used to determine compliance with the First Employment Obligation, provided that
no portion of said twenty-four (24) consecutive months may begin before the
Agreement Date.

 

 - 12 - 

 

 

(B)          No later than sixty (60) days following each of the two (2)
twenty-four-month periods referenced in subsection (A) above, the Applicant
shall furnish to the Commissioner a job audit, performed by a certified public
accountant (“CPA”) in accordance with the DECD Audit Guide located at
http://www.ct.gov/ecd/cwp/view.asp?a=l096&q=249676 (the “Job Audit”). If the
Applicant has met either of its Employment Obligations earlier than required, it
may make a written request for the Commissioner’s consent to have its Job Audits
performed as of such earlier date, which consent shall not be unreasonably
withheld. In such event, the Commissioner shall determine the due date of the
Job Audit referred to herein.

 

(C)          If, as a result of the second Job Audit, the Commissioner
determines that the Applicant has failed to meet its Second Employment
Obligation of 330 full time positions, the Applicant shall immediately repay a
penalty of $30,303.00 per each full-time employment position below the Second
Employment Obligation. The amount repaid will be applied first to any
outstanding fees, penalties or interest due, and then against the outstanding
balance of the Funding. The Commissioner’s determination that a job penalty
shall be imposed and the amount of the penalty shall be final.

 

(D)         The Applicant may be eligible for a credit to be applied against the
outstanding principal balance of the Loan (the “Forgiveness Credit”) in
accordance with the following:

 

(i)       If as a result of the first Job Audit, the Commissioner determines
that the Applicant has met its First Employment Obligation and that the
employment positions created and retained are at an average annual salary of not
less than $99,750.00 (the “Threshold Salary”) (i.e. 95% or more of the “Baseline
Salary” of $105,000.00 the Applicant may receive a credit in the amount of Five
Million and 00/100 Dollars ($5,000,000.00) (the “First Forgiveness Credit”)which
will be applied against the then outstanding principal balance of the Loan. Upon
application of the First Forgiveness Credit, the Commissioner shall recalculate
the monthly payments of principal and interest under the Note such that such
monthly payments shall amortize the then remaining principal balance over the
remaining term of the Note.

 

 - 13 - 

 

 

(ii)       If as a result of the second Job Audit, the Commissioner determines
that the Applicant has met its Second Employment Obligation and that the
employment positions created and retained are at an average annual salary of not
less than $99,750.00 (the “Threshold Salary”) (i.e. 95% or more of the “Baseline
Salary” of $105,000.00 the Applicant may receive an additional credit in the
amount of Five Million and 00/100 Dollars ($5,000,000.00) (the “Second
Forgiveness Credit”) which will be applied against the then outstanding
principal balance of the Loan. Upon application of the Second Forgiveness
Credit, the Commissioner shall recalculate the monthly payments of principal and
interest under the Note such that such monthly payments shall amortize the then
remaining principal balance over the remaining term of the Note.

 

(iii)       Notwithstanding the foregoing, if, a result of the Job Audits
conducted in accordance with this Section 2.17, the Commissioner determines that
the Applicant has met its First Employment Obligation and/ or Second Employment
Obligation but that the average annual salary of full-time employees created and
retained in less than $99,750.00, any Forgiveness Credit for which the Applicant
would otherwise be eligible to receive pursuant to Section 2.17(D)(i) and (ii)
above shall be reduced by a number equal to the result of the following formula:
(the difference between the Baseline Salary and the actual average annual salary
of new full-time employees) divided by the Baseline Salary, and multiplied by
the Forgiveness Credit the Applicant is otherwise eligible to receive. For
Example, if the Applicant met its First Employment Obligation of 176 jobs
created and retained for a period of twenty-four (24) consecutive months and,
based on the first Job Audit, it is determined that the Applicant had an actual
annual salary of $90,000.00 per eligible employee, then the following would be
the calculation for the reduction in the First Forgiveness Credit:
($105,000.00-$90,000.00)/$105,000.00 multiplied by $5,000,000.00 = $714,285.71.
Therefore, the actual adjusted First Forgiveness Credit would be $4,285,714,29
(i.e. $5,000,000.00 less $714,285.71). Similar adjustments shall be made with
respect to the Second forgiveness Credit.

 

The First Forgiveness Credit and the Second Forgiveness Credit shall hereinafter
be referred to as the Forgiveness Credit.

 

ARTICLE 3- PROJECT ADMINISTRATION

 

3.1         Records.

 

(A)       Generally. The Applicant shall maintain records in a complete,
businesslike manner, including full, accurate and current minutes and records of
the Project in a form satisfactory to the Commissioner. The Applicant will
furnish to the Commissioner or his/her designee, at such times as the
Commissioner shall reasonably determine, any document, data, and information
relating to the Project in possession of the Applicant which is requested by the
Commissioner. The Commissioner, or his/her designee, shall, for the purpose of
determining the proper disposition of the Funding, have the right upon providing
reasonable advance notice and at a time mutually convenient to the parties
during normal business hours to inspect the minutes, records, books, files,
documents, payrolls, employment contracts and conditions, contracts, and any
other papers or electronic records of the Applicant which are related to the
Loan, or to make inspection of any physical location of the Applicant. The
Applicant shall aid and cooperate with any such inspection.

 

 - 14 - 

 

 

(B)       Connecticut Department of Labor (“DOL”) Employment Data. The Applicant
agrees that the State, acting through the Department of Economic and Community
Development (“DECD”) may obtain directly from the DOL and disclose, as part of
its reporting requirements to the Connecticut State Legislature and Auditors of
Public Accounts, information pertaining to Applicant’s employment levels. The
Applicant shall execute such consents as the Commissioner and/or DOL may require
authorizing the Commissioner to obtain the Applicant’s employment records
directly from DOL, provided Applicant shall not be required to disclose
individuals identifiable information (“III”) regarding any employee or person.
The Applicant acknowledges and agrees that the information so obtained and
disclosed may include employer name, address, and number of employees, by
facility location, for the purpose of fulfilling DECD’s reporting requirements
in accordance with section 32-1m of the Connecticut General Statutes, as may be
amended or modified, provided that such information shall not include any III.
Further, the Applicant agrees that this employment information may be utilized
for purposes of performing employment audits and research-related activities
conducted by DECD.

 

The Applicant also agrees that it will complete any form provided by DECD that
is needed to assist in the completion of DECD’s annual consolidated report to
the General Assembly as required under section 32-1m of the Connecticut General
Statutes, as maybe amended or modified, if applicable.

 

3.2       Payment to Applicant. In order to permit the State to make payment to
the Applicant with respect of the Funding, the Applicant agrees as follows:

 

(A)       Office of the State Comptroller Electronic Fund Transfer Automated
Clearing House (“ACH”)(EFT) Program. Upon the execution of this Agreement, the
Applicant shall provide current, verifiable bank account information for
accounts with Applicant’s bank to the Office of the State Comptroller (“OSC”) by
submitting a completed Electronic Funds Transfer ACH (EFT) Election Form,
available at http://www.osc.ct.gov/apd/eftprogram/ index.html, and such
additional information as the OSC may require.

 

(B)       Requisition Form. In order to bring about the transfer of moneys to
the account designated under subsection (A) above (the “Account”), the Applicant
shall requisition funds on forms provided by the Commissioner and in the manner
prescribed by this Agreement. Payment to the Applicant will be made based upon
said requisition forms.

 

(C)       Pre-agreement Costs. Unless authorized by the Commissioner in writing,
no costs incurred prior to May 18, 2018 are eligible for payment from the
Funding.

 

3.3       Insurance. Applicant shall maintain all required insurance in amounts,
form, substance and quality acceptable to the State, as described more fully in
Exhibit B, attached hereto and made a part hereof. A certificate evidencing such
insurance shall be delivered to the Commissioner at the time of execution of
this Agreement, and annually thereafter for the duration of the Agreement.

 

 - 15 - 

 

 

3.4       Personal Service Contracts. All Project cost items of personal
service, except those to be performed by volunteers and those to be performed by
employees of the Applicant who will not receive extra compensation for such
service, shall be performed pursuant to a written contract, and the Applicant
shall, upon request, provide the Commissioner with copies of all such contracts.

 

3.5       Inspections. The Commissioner shall from time to time, in his/her
discretion, during regular business hours, have the right of making an
inspection of the Collateral, and the Applicant shall assist the Commissioner in
said inspection and shall make available such books and other records as the
Commissioner may reasonably request.

 

3.6       Audit. Each Applicant subject to a federal and/or state single audit
must have an audit of its accounts performed annually. The audit shall be in
accordance with the DECD Audit Guide, located at
http://www.ct.gov/ecd/cwp/view.asp?a=1096&q=249676, and the requirements
established by federal law and state statute. All Applicants not subject to a
federal and/or state single audit shall be subject to a Project-specific audit
of its accounts within ninety (90) days of the completion of the Project or at
such times as required by the Commissioner. Such audit shall be in accordance
with the DECD Audit Guide. An independent public accountant as defined by
generally accepted government auditing standards (GAGAS) shall conduct the
audits. At the discretion and with the approval of the Commissioner, examiners
from the Department of Economic and Community Development may conduct
Project-specific audits.

 

3.7       Repayment to State. (a) Any unspent Funding shall become immediately
due and payable by the Applicant to the State within ninety (90) days of the end
date of the most recently approved Project Financing Plan and Budget. (b) In the
event that an audit referred to in section 3.6 above demonstrates that the
actual expenditures made by the Applicant in connection with the Project are
less than the maximum allowable amounts for disbursement by the State, as set
forth in section 1.1 above, any such excess disbursement made by the State in
respect of the Funding shall become immediately due and payable by the Applicant
to the State.

 

3.8       Yearly Reports. The Applicant shall furnish to the State within ninety
(90) days after filing with the Securities and Exchange Commission, a copy of
its annual Report on Form 10-K, including the financial statements contained
therein

 

     ARTICLE 4- DEFAULT

 

4.1       Instances of Default. The occurrence of any of the following events
shall constitute a default under this Agreement (an “Instance of Default”):

 

(A)       Breach of Agreement. If the Applicant fails to perform any material
act, duty, obligation or other agreement contained herein or in any other
Project Document or fails to forebear from any unpermitted act, or if the
Applicant abandons or terminates the Project or takes such steps that such an
abandonment or termination is imminent.

 

 - 16 - 

 

 

(B)       Misrepresentation. If any representation or warranty made by the
Applicant or caused to be made for the Applicant in any of the Project Documents
prove at any time to be incorrect in any material respect.

 

(C)       Unpaid Judgments. If a judgment or judgments for the payment of money
shall be rendered against Applicant and the amount of such judgment causes or is
likely to cause Applicant to default under any of its obligations hereunder or
jeopardize the Project and such judgment shall remain unpaid, unstayed on
appeal, unbonded, undischarged or undismissed for a period of ninety (90)
consecutive days.

 

(D)       Receivership or Bankruptcy. If the Applicant shall: (i) apply for or
consent to the appointment of a receiver, trustee or liquidator of all or a
substantial part of any of its assets; (ii) be unable or admit in writing its
inability to pay its debts as they mature; (iii) file or permit the filing of
any petition or reorganization or the like under any insolvency or bankruptcy
law, or the adjudication of it as a bankrupt, or make an assignment for the
benefit of creditors or consent to any form of arrangement for the satisfaction,
settlement or delay of debt or the appointment of a receiver for all or any part
of its properties; or (iv) any action shall be taken by Applicant for the
purpose of effecting any of the foregoing.

 

(E)       Change in Business Structure. If the Applicant shall discontinue its
business, dissolve or liquidate, or be dissolved or liquidated, or cease to
legally exist, or merge or consolidate, or be merged or consolidated with and
into any corporation or other business entity without the written consent of the
Commissioner in violation of section 2.14 hereinabove.

 

(F)       Condemnation or Seizure. If any Federal, state or local governmental
instrumentality, body or agency shall condemn, seize or otherwise appropriate,
or take custody or control of all or any substantial portion of the properties
or assets of Applicant.

 

(G)       Lack of Adequate Security. If the State, at anytime and in good faith,
deems itself to be insecure. For the purposes of this Agreement, the State shall
be entitled to deem itself insecure when some event occurs, fails to occur or
some objective condition exists, which significantly impairs the value of the
Collateral to the State, . Also included is the actual material waste, removal,
or demolition of any significant part of the Property, which activity falls
outside the plans or purposes of the Project.

 

(H)       Cancellation of Insurance. Failure of the Applicant to keep in force
all insurance required by this Agreement.

 

(I)       Job Creation. Failure of the Applicant to meet its Employment
Obligation and to pay the penalties referred to in Section 2.17 (C) supra ..

 

(J)       Failure to Pay Debts. Failure of the Applicant or guarantor, if any,
to pay its debts as such debts become due if such failure could reasonably be
anticipated to have a material adverse effect on the operations of the Applicant
or on the Applicant’s ability to perform its obligations hereunder or under the
other Project Documents. Failure to pay when due and payable the principal of or
interest on or any other material amount owed with respect to any indebtedness
for borrowed money upon which either the Applicant or guarantor, if any, is
obligated to make payment, or the maturity of any such indebtedness shall have
been accelerated in accordance with the provisions of any agreement or
instrument providing for the creation of or concerning such indebtedness, or any
event shall have occurred and be continuing after any applicable cure period
which would permit any holder or holders of such indebtedness, any trustee or
agency acting on behalf of such holder or holders or any other person so to
accelerate such maturity if such failure could reasonably be anticipated to have
a material adverse effect on the operations of the Applicant or on the
Applicant’s ability to perform its obligations hereunder or under the other
Project Documents.

 

 - 17 - 

 

 

(K)       Violation of Terms in Other Project Documents. The occurrence of a
default or violation under any of the Project Documents.

 

4.2       Events in Instances of Default.

 

(A)       Notice of Default. If the Applicant defaults or shall commit or allow
any breach of the Applicant’s covenants, agreements and other obligations under
this Agreement, material or otherwise, including, without limitation, an
Instance of Default hereunder, the Commissioner shall notify the Applicant of
the default in writing (“Notice of Default”).

 

(B)       Opportunity to Cure. , The Commissioner shall provide the Applicant
thirty (30) days after the Notice of Default, or such longer period of time as
the Commissioner may determine and set forth in writing, to cure or remedy the
default or breach. Said cure or remedy will not be effective unless accepted, in
writing, by the Commissioner.

 

(C)       Remedies. Upon the occurrence of an Instance of Default, and Applicant
has failed to Cure such default as provided herein, the State, acting by the
Commissioner, shall have, to the full extent permitted by law, each and all of
the following remedies in addition to those provided for in other portions of
this Agreement:

 

(1)To suspend all further payments by the State to the Applicant until such
default is cured to the satisfaction of the Commissioner;

 

(2)To proceed to enforce the performance or observance of any obligations,
agreements, or covenants of the Applicant or guarantor, if any, in this
Agreement or the Project Documents;

 

(3)To declare the entire amount of the Funding to be immediately due and payable
and to bring any and all actions at law or in equity as may be necessary to
enforce said obligation of repayment. In such Instances of Default, the
Applicant hereby agrees to repay immediately the entire unpaid principal amount
of the Loan received (including any Forgiveness Credit provided hereunder) with
any accrued and unpaid interest, and the entire amount of the Grant and
liquidated damages equal to five percent (5%) of the total amount of the Funding
received. However, in the event that the Applicant is in default under the terms
of section 2.10(G) hereinabove, such liquidated damages shall be equal to seven
and one-half percent (7-1/2%) of the total amount of the Funding received;

 

 - 18 - 

 

 

(4)The right to a writ of mandamus, injunction or similar relief against the
Applicant or any or all of the members of the Applicant’s governing body, or
against the officers, agents or representatives of the Applicant, as may be
appropriate, because of such default or breach;

 

(5)The right to maintain any and all actions at law or suits in equity,
including receivership or other proper proceedings, to cure or remedy any
defaults or breaches of covenants under this Agreement;

 

(6)The State may collect a “late charge” not to exceed an amount equal to five
percent (5%) of any installment payment due under the Loan which is not paid
within fifteen (15) days of the date on which said payment is due. Late charges
shall be separately charged to and collected from the Applicant and shall be due
upon demand by the State;

 

(7)The State may collect costs associated with collection efforts as outlined in
section 2.9 of this Agreement.

 

     ARTICLE 5 - MISCELLANEOUS PROVISIONS

 

5.1       Non-waiver. If the State does not exercise, or delays in exercising,
or exercises in part any of the State’s rights and remedies set forth in this
Agreement for the curing or remedying of any default or breach of covenant or
condition, or any other right or remedy, in no event shall such non-exercise,
delay or partial exercise be construed as a waiver of full action by the State
or a waiver of any subsequent default or breach of covenant or condition.
Nothing in this Agreement may be construed as a waiver or limitation by the
Commissioner of the State’s sovereign immunity.

 

5.2       Severance. If any court determines any provision or provisions of this
Agreement to be invalid, the remainder of this Agreement shall not be thereby
affected.

 

5.3       Agreement Date. This Agreement shall become effective as of the date
the Commissioner or his/her designee affixes his signature hereto (the
“Agreement Date”).

 

5.4       Originals. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.

 

5.5       Multiple Applicants. If there is more than one Applicant, the
obligations hereunder and under the Project Documents, shall be joint and
several.

 

5.6       Notices. Any notice to the Applicant pursuant hereto or pursuant to
any of the Project Documents may be served in person or by overnight delivery or
United States priority express mail. Any such requirement shall be deemed met by
any written notice personally served at the principal place of business of the
Applicant, or at such other address as the Applicant shall notify the
Commissioner, or mailed by depositing it in any post office station or letter
box enclosed in a postage-paid envelope addressed to the Applicant at 55
Broadway, 19th Floor, New York, New York 10006 or at such other address as
provided above. Any notice to the State, Department, or Commissioner shall be
addressed to the Commissioner at 450 Columbus Boulevard, Suite 5, Hartford,
Connecticut 06103. Any notice served upon the State, Department, or Commissioner
under this Agreement or any other Project Document shall be effective only upon
receipt by the Commissioner.

 

 - 19 - 

 

 

5.7       Waivers by Applicant. The Applicant does hereby waive demand,
presentment for payment, protest, notice of protest and notice of non-payment of
this Agreement and do hereby consent to renewals or extensions of the time of
payment hereof and agree that any such renewals or extensions may be made w and
further consent to the release of any part or parts or all of the security for
the payment hereof , all without affecting the liability of the persons, firms
or corporations liable for the payment of this Agreement.

 

5.8       Gender, Number and Captions. The use of a personal pronoun shall refer
to all persons regardless of the proper grammatical term; the singular includes
the plural; and, captions for sections are included only for reference and do
not modify or effect the terms, conditions and provisions of any document,
agreement or instrument.

 

5.9       Modification. This Agreement may not be modified or amended in any
manner except in a written agreement executed by all of the parties hereto. In
the event that the Applicant seeks modification in the form of a consent or a
subordination to financing required by the Applicant in its normal course of
business, the Applicant shall request such modification in writing to the
Commissioner not less than thirty (30) days prior to the date such modification
is required. The Applicant shall promptly reimburse the State for expenses,
including reasonable attorneys’ fees, incurred in negotiating and entering into
such modification.

 

5.10       Provision of Other Documents. Upon the request of the Commissioner,
the Applicant shall execute and deliver or cause to be executed and delivered
such further documents and instruments and do such further acts and things as
the Commissioner may reasonably request in order to effectuate more fully the
purposes of this Project, to secure more fully the payment of the Funding in
accordance with its terms, and to vest more completely in and assure to the
Commissioner its rights under the Project Documents. Without limiting the
generality of the foregoing, the Applicant will join with the Commissioner in
executing such financing statements, agreements, notices or other documents or
instruments as the Commissioner shall deem necessary or desirable to create,
preserve, protect, maintain or enforce its rights and interests in and its liens
on the property of the Applicant. The Applicant shall pay the cost of filing and
recording, or refiling and re-recording, such documents and instruments in all
public offices in which such filing or recording, or refiling or re-recording,
is deemed by the Commissioner to be necessary or desirable.

 

5.11       Assignment. This Agreement and any of the documents related hereto
and the rights, duties, or obligations thereunder may not be assigned by the
Applicant without the written consent of the Commissioner, which consent shall
not be unreasonably withheld.. Any assignment made without the written consent
of the Commissioner shall be void and of no force or effect.

 

5.12       Survival of Representations, Warranties and Covenants. For the
purposes of this Agreement, the term “Applicant” shall mean and include any
successor or assigns of Applicant including any representative of Applicant
under the provisions of any state or Federal law governing bankruptcy,
insolvency, receivership or reorganization. All representations, warranties, and
covenants made by the Applicant in this Agreement or in any of the other Project
Documents or in any certificate or instruments delivered to the State in
connection with the Funding shall be considered to have been relied upon by the
Commissioner and shall survive until the expiration of the term of this
Agreement in accordance with section 5.19(A) hereof. This Agreement and the
other Project Documents shall be binding upon and inure to the benefit of the
successors and assigns of each of the parties; provided, however, that nothing
in this provision shall imply that the Applicant has the right or authority to
assign its rights, duties or obligations hereunder or under any of the Project
Documents without the written consent of the Commissioner.

 

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5.13       Governing Documents. In the event of any conflict between this
Agreement and any of the Project Documents, this Agreement shall be controlling.

 

5.14       Third Parties. This Agreement is between the State and the Applicant
only and shall not be relied upon by any third party.

 

5.15       Governing Laws. The laws of the State of Connecticut shall govern
this Agreement and the Project Documents.

 

5.16       Jurisdiction. The Applicant agrees that the execution of this
Agreement and the other Project Documents, and the performance of its
obligations hereunder and thereunder, shall be deemed to have a Connecticut
situs, and the Applicant shall be subject to the personal jurisdiction of the
courts of the State of Connecticut with respect to any action the Commissioner,
his/her successors or assigns may commence hereunder or thereunder. Accordingly,
the Applicant hereby specifically and irrevocably consents to the jurisdiction
of the courts of the State of Connecticut with respect to all matters concerning
this Agreement or any of the other Project Documents or the enforcement thereof
in any action initiated by the Commissioner or which the Commissioner
voluntarily joins as a party.

 

5.17       Commercial Transaction and Waiver. THE APPLICANT AGREES THAT THE
TRANSACTION OF WHICH THIS AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION AND
WAIVES ANY RIGHT TO NOTICE, PRIOR HEARING, AND ANY OTHER RIGHTS IT MAY HAVE
UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, AS MAY BE AMENDED, OR
OTHER APPLICABLE LAW WITH RESPECT TO ANY REMEDY WHICH THE STATE MAY DESIRE TO
USE, AND THE COMMISSIONER MAY INVOKE ANY PREJUDGMENT REMEDY AVAILABLE TO HIM,
INCLUDING, BUT NOT LIMITED TO, GARNISHMENT, ATTACHMENT, FOREIGN ATTACHMENT AND
REPLEVIN, WITH RESPECT TO ANY TANGIBLE OR INTANGIBLE PROPERTY (WHETHER REAL OR
PERSONAL) OF THE APPLICANT TO ENFORCE THE PROVISIONS OF THE PROJECT DOCUMENTS,
WITHOUT GIVING THE APPLICANT ANY NOTICE OR OPPORTUNITY FOR A HEARING.

 

5.18       Jury Trial Waiver. THE APPLICANT HEREBY WAIVES TRIAL BY JURY IN ANY
COURT IN ANY SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN CONNECTION WITH
OR IN ANY WAY RELATED TO THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART
AND/OR THE ENFORCEMENT OF ANY OF ITS RIGHTS AND REMEDIES. THE APPLICANT
ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEY.

 

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5.19       Expiration or Termination of Agreement.

 

(A)       The term of this Agreement shall expire upon the later to occur of the
following events: (i) the expiration of the Non-Relocation Period; or (ii)
repayment in full of the Loan in accordance with the terms hereof and in all
other Project Documents.]

 

(B)       Notwithstanding subsection (A) above, the Applicant may terminate this
Agreement prior to the expiration of the Non-Relocation Period so long as it
makes full repayment of the Funding, including any Forgiveness Credit provided
hereunder, less payments of principal paid in respect of the Loan, plus
liquidated damages equal to seven and one-half percent (7.5%) of the total
amount of the Funding received, plus all costs and expenses related thereto.

 

(C)       Notwithstanding any such expiration or termination of this Agreement,
all indemnity rights set forth in Section 2.10(J) and elsewhere in this
Agreement or in any of the other Project Documents shall survive such expiration
or termination

 

ARTICLE 6- SPECIAL CONDITIONS: NONE

 

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IN WITNESS WHEREOF, the parties hereto make and enter into this Agreement.

 

  SEVEN STARS CLOUD GROUP, INC.         By: /s/ Robert Benya     Name:  Robert
Benya     Title:  President     Duly Authorized         Dated:  June 27th 2018  
    STATE OF CONNECTICUT   DEPARTMENT OF ECONOMIC   AND COMMUNITY DEVELOPMENT  
    By: /s/ Catherine H. Smith     Catherine H. Smith     Commissioner     Duly
Authorized         Dated: 6.29.18

 

 - 23 - 

 

 

EXHIBIT A

 

[Applicant’s Writings]

NONE

 

 - 24 - 

 

 

EXHIBIT B

 

INSURANCE REQUIREMENTS FOR NON-PROFIT AND FOR PROFIT ENTITIES

 

(A) Applicant shall procure and maintain for the duration of the Agreement the
following types of insurance, in amounts no less than the stated limits, against
claims for injuries to persons or damages to property which may arise from or in
connection with the performance of the work hereunder; provided however, that if
this project is (i) financial assistance of less than $100,000, (ii) a planning
grant, or (iii) a predevelopment loan, only items 1 and 2 as set forth herein
shall apply:

 

1)Commercial General Liability: $1,000,000 combined single limit per occurrence
for bodily injury, personal injury and property damage. Coverage shall include
Premises and Operation, Independent Contractors, Product and Completed
Operations and Contractual Liability. If a general aggregate is used, the
general aggregate limit shall apply separately to this Agreement or the general
aggregate limit shall be twice the occurrence limit.

 

2)Workers’ Compensation and Employer’s Liability: Statutory coverage in
compliance with compensation laws of the State of Connecticut. Coverage shall
include Employer’s Liability with a minimum limit of $100,000 each accident, and
$500,000 Disease - Policy limit, $100,000 each employee.

 

3)Automobile Liability: $1,000,000 combined single limit per accident for bodily
injury. Coverage extends to owned, hired and non-owned automobiles. If the
vendor/contractor does not own an automobile, but one is used in the execution
of the contract, then only hired and non-owned coverage is required. If a
vehicle is not used in the execution of the contract then automobile coverage is
not required.

 

4)Directors and Officers Liability: $1,000,000 per occurrence limit of
liability; provided, however, that Directors and Officers Liability insurance
shall not be required for limited liability corporations or limited
partnerships.

 

5)Comprehensive Crime Insurance: $100,000 limit for each of the following
coverages: Employee Dishonesty (Form 0), Forgery/Alteration (Form B), and Money
and Securities coverage for Theft, Burglary, Robbery, Disappearance and
Destruction.

 

6)Builders Risk: (Construction Phase) With respect to any work involving the
construction of real property during the construction project, if DECD is taking
a collateral position in the property, the Applicant shall maintain Builder’s
Risk insurance providing coverage for the entire work at the project site.
Coverage shall be on a Completed Value form basis in an amount equal to the
projected value of the project. Applicant agrees to endorse the State of
Connecticut as a Loss Payee.

 

MAA Boilerplate AA – rev 2-02-2016

 

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7)Property Insurance: (Post Construction) If DECD is taking a collateral
position in the property, the Applicant shall maintain insurance covering all
risks of direct physical loss, damage or destruction to real and personal
property and improvements and betterments (including flood insurance if property
is within a duly designated Flood Hazard Area as shown on Flood Insurance Rate
Maps (FIRM) set forth by the Federal Emergency Management Agency (FEMA)) at 100%
of Replacement Value for such real and personal property, improvements and
betterments or the maximum amount available under the National Flood Insurance
Program. The State of Connecticut shall be listed as a Loss Payee.

 

(B)Additional Insurance Provisions

 

1)The State of Connecticut Department of Economic and Community Development, its
officials and employees shall be named as an Additional Insured on the
Commercial General Liability policy. Additional Insured status is not required
for items (A)2 through (A)7 above.

 

2)Described insurance shall be primary coverage and Applicant and Applicant’s
insurer shall have no right of subrogation recovery or subrogation against the
State of Connecticut.

 

3)Applicant shall assume any and all deductibles in the described insurance
policies.

 

4)Without limiting Applicant’s obligation to procure and maintain insurance for
the duration identified in (A) above, each insurance policy shall not be
suspended, voided, cancelled or reduced except after thirty (30) days prior
written notice by certified mail has been given to the State of Connecticut,
with the exception that a ten (10) day prior written notice by certified mail
for non-payment of premium is acceptable.

 

5)Each policy shall be issued by an Insurance Company licensed to do business by
Connecticut Department of Insurance and having a Best Rating of A-, VII, or
equivalent or as otherwise approved by DECD.

 

MAA Boilerplate AA – rev 2-02-2016

 

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Exhibit C

 

NOTICE TO EXECUTIVE BRANCH STATE CONTRACTORS AND PROSPECTIVE STATE

CONTRACTORS OF CAMPAIGN CONTRIBUTION AND SOLICITATION BAN

 

This notice is provided under the authority of Connecticut General Statutes
9-612(g)(2), as amended by P.A. 10-1, and is for the purpose of informing state
contractors and prospective state contractors of the following law (italicized
words are defined below):

 

Campaign Contribution and Solicitation Ban

 

No state contractor, prospective state contractor, principal of a state
contractor or principal of a prospective state contractor, with regard to a
state contract or state contract solicitation with or from a state agency in the
executive branch or a quasi-public agency or a holder, or principal of a holder
of a valid prequalification certificate, shall make a contribution to (i) an
exploratory committee or candidate committee established by a candidate for
nomination or election to the office of Governor, Lieutenant Governor, Attorney
General, State Comptroller, Secretary of the State or State Treasurer, (ii) a
political committee authorized to make contributions or expenditures to or for
the benefit of such candidates, or (iii) a party committee (which includes town
committees).

 

In addition, no holder or principal of a holder of a valid prequalification
certificate, shall make a contribution to (i) an exploratory committee or
candidate committee established by a candidate for nomination or election to the
office of State senator or State representative, (ii) a political committee
authorized to make contributions or expenditures to or for the benefit of such
candidates, or (iii) a party committee.

 

On and after January 1, 2011, no state contractor, prospective state contractor,
principal of a state contractor or principal of a prospective state contractor,
with regard to a state contract or state contract solicitation with or from a
state agency in the executive branch or a quasi-public agency or a holder, or
principal of a holder of a valid prequalification certificate, shall knowingly
solicit contributions from the state contractor’s or prospective state
contractor’s employees or from a subcontractor or principals of the
subcontractor on behalf of (i) an exploratory committee or candidate committee
established by a candidate for nomination or election to the office of Governor,
Lieutenant Governor, Attorney General, State Comptroller, Secretary of the State
or State Treasurer, (ii) a political committee authorized to make contributions
or expenditures to or for the benefit of such candidates, or (iii) a party
committee.

 

Duty to Inform

 

State contractors and prospective state contractors are required to inform their
principals of the above prohibitions, as applicable, and the possible penalties
and other consequences of any violation thereof.

 

Penalties for Violations

 

Contributions or solicitations of contributions made in violation of the above
prohibitions may result in the following civil and criminal penalties:

 

Civil penalties—$2000 or twice the amount of the prohibited contribution,
whichever is greater, against a principal or a contractor. Any state contractor
or prospective state contractor which fails to make reasonable efforts to comply
with the provisions requiring notice to its principals of these prohibitions and
the possible consequences of their violations may also be subject to civil
penalties of $2000 or twice the amount of the prohibited contributions made by
their principals.

 

Criminal penalties-Any knowing and willful violation of the prohibition is a
Class D felony, which may subject the violator to imprisonment of not more than
5 years, or $5000 in fines, or both.

 

MAA Boilerplate AA – rev 2-02-2016

 

 - 27 - 

 

 

Contract Consequences

 

In the case of a state contractor, contributions made or solicited in violation
of the above prohibitions may result in the contract being voided.

 

In the case of a prospective state contractor, contributions made or solicited
in violation of the above prohibitions shall result in the contract described in
the state contract solicitation not being awarded to the prospective state
contractor, unless the State Elections Enforcement Commission determines that
mitigating circumstances exist concerning such violation.

 

The State shall not award any other state contract to anyone found in violation
of the above prohibitions for a period of one year after the election for which
such contribution is made or solicited, unless the State Elections Enforcement
Commission determines that mitigating circumstances exist concerning such
violation.

 

Additional information may be found on the website of the State Elections
Enforcement Commission, www.ct.gov/seec. Click on the link to
“Lobbyist/Contractor Limitations.”

 

Definitions:

 

“State contractor” means a person, business entity or nonprofit organization
that enters into a state contract. Such person, business entity or nonprofit
organization shall be deemed to be a state contractor until December
thirty-first of the year in which such contract terminates. “State contractor”
does not include a municipality or any other political subdivision of the state,
including any entities or associations duly created by the municipality or
political subdivision exclusively amongst themselves to further any purpose
authorized by statute or charter, or an employee in the executive or legislative
branch of state government or a quasi-public agency, whether in the classified
or unclassified service and full or part-time, and only in such person’s
capacity as a state or quasi-public agency employee.

 

“Prospective state contractor” means a person, business entity or nonprofit
organization that (i) submits a response to a state contract solicitation by the
state, a state agency or a quasi-public agency, or a proposal in response to a
request for proposals by the state, a state agency or a quasi-public agency,
until the contract has been entered into, or (ii) holds a valid prequalification
certificate issued by the Commissioner of Administrative Services under section
4a-100. “Prospective state contractor” does not include a municipality or any
other political subdivision of the state, including any entities or associations
duly created by the municipality or political subdivision exclusively amongst
themselves to further any purpose authorized by statute or charter, or an
employee in the executive or legislative branch of state government or a
quasi-public agency, whether in the classified or unclassified service and full
or part-time, and only in such person’s capacity as a state or quasi-public
agency employee.

 

“Principal of a state contractor or prospective state contractor” means (i) any
individual who is a member of the board of directors of, or has an ownership
interest of five per cent or more in, a state contractor or prospective state
contractor, which is a business entity, except for an individual who is a member
of the board of directors of a nonprofit organization, (ii) an individual who is
employed by a state contractor or prospective state contractor, which is a
business entity, as president, treasurer or executive vice president, (iii) an
individual who is the chief executive officer of a state contractor or
prospective state contractor, which is not a business entity, or if a state
contractor or prospective state contractor has no such officer, then the officer
who duly possesses comparable powers and duties, (iv) an officer or an employee
of any state contractor or prospective state contractor who has managerial or
discretionary responsibilities with respect to a state contract, (v) the spouse
or a dependent child who is eighteen years of age or older of an individual
described in this subsection, or (vi) a political committee established or
controlled by an individual described in this subsection or the business entity
or nonprofit organization that is the state contractor or prospective state
contractor.

 

“State contract” means an agreement or contract with the state or any state
agency or any quasi-public agency, let through a procurement process or
otherwise, having a value of fifty thousand dollars or more, or a combination or
series of such agreements or contracts having a value of one hundred thousand
dollars or more in a calendar year, for (i) the rendition of services, (ii) the
furnishing of any goods, material, supplies, equipment or any items of any kind,
(iii) the construction, alteration or repair of any public building or public
work, (iv) the acquisition, sale or lease of any land or building, (v) a
licensing arrangement, or (vi) a grant, loan or loan guarantee. “State contract”
does not include any agreement or contract with the state, any state agency or
any quasi-public agency that is exclusively federally funded, an education loan
or a loan to an individual for other than commercial purposes or any agreement
or contract between the state or any state agency and the United States
Department of the Navy or the United States Department of Defense.

 

MAA Boilerplate AA – rev 2-02-2016

 

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“State contract solicitation” means a request by a state agency or quasi-public
agency, in whatever form issued, including, but not limited to, an invitation to
bid, request for proposals, request for information or request for quotes,
inviting bids, quotes or other types of submittals, through a competitive
procurement process or another process authorized by law waiving competitive
procurement.

 

“Managerial or discretionary responsibilities with respect to a state contract”
means having direct, extensive and substantive responsibilities with respect to
the negotiation of the state contract and not peripheral, clerical or
ministerial responsibilities.

 

“Dependent child” means a child residing in an individual’s household who may
legally be claimed as a dependent on the federal income tax of such individual.

 

“Solicit” means (A) requesting that a contribution be made, (B) participating in
any fund-raising activities for a candidate committee, exploratory committee,
political committee or party committee, including, but not limited to,
forwarding tickets to potential contributors, receiving contributions for
transmission to any such committee or bundling contributions, (C) serving as
chairperson, treasurer or deputy treasurer of any such committee, or (D)
establishing a political committee for the sole purpose of soliciting or
receiving contributions for any committee. Solicit does not include: (i) making
a contribution that is otherwise permitted by Chapter 155 of the Connecticut
General Statutes; (ii) informing any person of a position taken by a candidate
for public office or a public official, (iii) notifying the person of any
activities of, or contact information for, any candidate for public office; or
(iv) serving as a member in any party committee or as an officer of such
committee that is not otherwise prohibited in this section.

 

“Subcontractor” means any person, business entity or nonprofit organization that
contracts to perform part or all of the obligations of a state contractor’s
state contract. Such person, business entity or nonprofit organization shall be
deemed to be a subcontractor until December thirty first of the year in which
the subcontract terminates. “Subcontractor” does not include (i) a municipality
or any other political subdivision of the state, including any entities or
associations duly created by the municipality or political subdivision
exclusively amongst themselves to further any purpose authorized by statute or
charter, or (ii) an employee in the executive or legislative branch of state
government or a quasi-public agency, whether in the classified or unclassified
service and full or part-time, and only in such person’s capacity as a state or
quasi-public agency employee.

 

“Principal of a subcontractor” means (i) any individual who is a member of the
board of directors of, or has an ownership interest of five per cent or more in,
a subcontractor, which is a business entity, except for an individual who is a
member of the board of directors of a nonprofit organization, (ii) an individual
who is employed by a subcontractor, which is a business entity, as president,
treasurer or executive vice president, (iii) an individual who is the chief
executive officer of a subcontractor, which is not a business entity, or if a
subcontractor has no such officer, then the officer who duly possesses
comparable powers and duties, (iv) an officer or an employee of any
subcontractor who has managerial or discretionary responsibilities with respect
to a subcontract with a state contractor, (v) the spouse or a dependent child
who is eighteen years of age or older of an individual described in this
subparagraph, or (vi) a political committee established or controlled by an
individual described in this subparagraph or the business entity or nonprofit
organization that is the subcontractor.

 

MAA Boilerplate AA– rev 2-02-2016

 

 - 29 -