Document:

hgbl-ex102_47.htm

Exhibit 10.2

PURCHASE AND SALE AGREEMENT
(12 Colton Road, East Lyme, CT)

This PURCHASE AND SALE AGREEMENT (the “Agreement”) by and among 12 COLTON ROAD, LLC, a Connecticut limited liability company (the “Seller”), and HG ALT LLC, a Connecticut limited liability company (“Purchaser”) is effective as of August 18, 2021(the “Effective Date”). Seller and Purchaser are sometimes hereinafter collectively referred to as the “Parties” and each, a “Party”. All capitalized terms used herein, but not immediately thereafter defined, shall have the meanings respectively ascribed to them elsewhere in this Agreement.

In consideration of the mutual covenants and provisions herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

ARTICLE I.
DESCRIPTION OF PROPERTY

1.1Purchase and Sale.

Seller hereby agrees to sell, assign, and convey to Purchaser, and Purchaser agrees to purchase from Seller, in accordance with the terms and subject to the conditions contained herein (the “Transaction”):

(a)That certain parcel of real property situated in East Lyme, New London County, Connecticut, having a property address of 12 Colton Road, East Lyme, Connecticut 06333 more particularly described on Exhibit “A” attached hereto and incorporated by reference herein (the “Land”), together with all buildings, structures, parking areas, sidewalks, landscaping and improvements owned by Seller and now located on the Land including, without limitation, that certain 20,135 sq. ft. industrial (manufacturing) building currently situated thereon (collectively, “Improvements”) and all appurtenances, tenements and hereditaments pertaining thereto, and all rights, title and interest of Seller in and to any riparian rights, easements, licenses, privileges, adjacent streets, roads, alleys, strips, gores or rights of ways pertaining to the Land (collectively, the “Appurtenances”); and

(b)All fixtures, fittings, equipment, machinery, signage and other types and items of real and/or personal property located thereon and permanently affixed or attached to or incorporated into the Land and Improvements such that an interest in them arises under applicable real estate law and the same are deemed to be fixtures and accessions to the Land and Improvements and a part thereof, (the “Fixtures”;  the Land, Improvements, Appurtenances and Fixtures are hereinafter collectively referred to as the “Premises”); and

(c)All of Seller’s right, title and interest in the following intangible personal property related to the Premises: all assignable permits, licenses, approvals, certificates of occupancy, utility rights, developmental rights, warranties, guaranties, the plans and specifications and all other architectural and engineering drawings for the Improvements, all surveys, engineering reports and other technical information relating to the Land (collectively, the “Intangibles”).

 

 

 

The Premises and Intangibles are hereinafter sometimes collectively referred to as the “Property”.

1.2Simultaneous Signing and Closing; Closing Contingency.  The Parties intend that the Transaction shall close simultaneously with the signing of this Agreement. This Agreement and the Transaction Documents to be provided hereunder, shall be deemed effective and delivered as of the Closing Date (defined in Article V hereof).  Notwithstanding the foregoing, Seller and Purchaser each acknowledge that Purchaser, and/or an affiliate of Purchaser, intends to acquire all or substantially all of the assets of the business operations currently conducted on or from the Premises (the “Business Assets”) by American Laboratory Trading, Inc. (“ALT”) pursuant to an Asset Purchase Agreement of even date herewith (the “Asset Purchase Agreement”) by and among Purchaser and/or its affiliate, ALT, and certain individual affiliates of ALT.  Accordingly, Seller acknowledges and agrees that Purchaser’s obligation to close its purchase of the Property under this Agreement, and Purchaser acknowledges and agrees that Seller’s obligation to close its sale of the Property under this Agreement, is contingent upon the transactions provided for in the Asset Purchase Agreement closing simultaneously with the Closing of the Transaction provided for in this Agreement. If Purchaser and/or its affiliate is not able to close its acquisition of the Business Assets pursuant to the Asset Purchase Agreement simultaneously with the Closing of Purchaser’s acquisition of the Property on the Closing Date, then Purchaser or Seller may, and shall have the right to, terminate this Agreement by giving written notice to the other party on or before the Closing Date, in which event this Agreement shall terminate, and neither Purchaser nor Seller shall have any further obligation to close the purchase and sale of the Property hereunder.

ARTICLE II.
PURCHASE PRICE

2.1Purchase Price.

The total purchase price for the Property which Purchaser agrees to pay to Seller shall be One Million Three Hundred Thousand and NO/100 Dollars ($1,300,000.00) (the “Purchase Price”).

2.2Payment of Purchase Price.

Purchaser shall pay to Seller at Closing the Purchase Price, subject to pro-rations, adjustments and credits as set forth in this Agreement, by (a) wire transfer of immediately available funds (U.S. Dollars) or (b) such other method as is approved by Seller.  In the event payment is made by wire transfer, sums shall be deemed paid by Purchaser when receipt of the wire transfer is acknowledged by a financial institution designated by Seller as the recipient.

ARTICLE III.
REPRESENTATIONS OR WARRANTIES BY SELLER

3.1Seller’s Representations and Warranties.  Seller hereby represents, warrants, and covenants to Purchaser that the following are complete and accurate as of the Effective Date, and such representations and warranties shall be deemed to be remade, complete, and accurate as of the Closing Date:

 

 

 

(a)Seller is duly organized, validly existing and in good standing under the laws of the State of Connecticut. Seller is qualified to transact business in the State of Connecticut.

(b)Seller has all requisite power and authority to (i) sell the Property to Purchaser, (ii) execute and deliver such instruments, documents and agreements as may be necessary or appropriate to effect the Transaction, and (iii) perform and observe the terms and conditions of this Agreement and each of the foregoing instruments, documents and agreements.

(c)The execution, delivery and performance by Seller of this Agreement has been authorized by all necessary company proceedings and does not and will not (i) contravene any of the formation articles, operating agreement, or other organizational documents of Seller, or any amendments thereof, or (ii) conflict with or result in the breach of any judgment, decree, writ, injunction, order or award of any arbitrator, court or governmental authority binding upon Seller, or result in the breach of any term or provision of, or constitute a default, or result in the acceleration of any obligation under any loan agreement, indenture, financing agreement or any other agreement or instrument of any kind to which Seller is a party or to which Seller or the Property is subject.  Upon execution and delivery of the Agreement by Seller, this Agreement is and will be a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.

(d)There are no judgments outstanding against Seller, or petitions, suits, claims, or causes of actions pending or, to Seller’s knowledge, threatened against Seller before any court or other governmental, administrative, regulatory, adjudicatory, or arbitrational body of any kind, which affects the Property or Seller’s ability to perform the obligations of this Agreement.

(e)Seller is not a “foreign person” or “disregarded entity” within the meaning of the Internal Revenue Code of 1986, and in the accompanying resolutions, as amended.

(f)Seller is not an entity with whom Purchaser is prohibited from engaging in this Transaction due to any United States government embargos, sanctions, or terrorism or money laundering laws, including, without limitation, due to Seller or any party that has ownership in or control over Seller being (1) subject to United States government embargos or sanctions, (2) in violation of terrorism or money laundering laws, or (3) listed on a published United States government list (e.g., Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control or other lists of similar import).

(g)No bankruptcy, insolvency, rearrangement or similar action involving Seller, whether voluntary or involuntary, is pending or, to Seller’s knowledge, threatened, and Seller has never: (i) filed a voluntary petition in bankruptcy; (ii) been adjudicated as bankrupt or insolvent or filed a petition or action seeking any reorganization, arrangement, recapitalization, readjustment, liquidation, dissolution or similar relief under any Federal bankruptcy act or any other laws;  (iii) sought or acquiesced in the appointment or any trustee, receiver or liquidator of all or any substantial part of its properties or assets, including, without limitation, the Property or any portion thereof, or (iv) made an assignment for the benefit of creditors or admitted in writing its inability to pay its debts generally as the same become due.

 

 

 

(h)No authorizations, consents or approvals of or filings with any governmental authority or any other person is required with respect to Seller for the execution and delivery of this Agreement and the performance of its obligations hereunder, or, if required, Seller has obtained, or will have obtained prior to the Closing, all such consents and delivered copies thereof to Purchaser.

(i)No broker, financial advisor, finder or investment banker or other Person is entitled to any broker’s, financial advisor’s, finder’s or other fee or commission, or any other payment or other amount, in connection with the Transaction based upon arrangements made by or on behalf of the Seller.

(j)Seller has fully paid all real estate taxes and assessments payable in respect to the Premises when and as due and there are no liens for unpaid taxes or assessments against the Premises.

(k)Except for that certain Commercial Lease for the Premises dated December 30, 2008 by and between Seller, as Lessor, and ALT, as Lessee, as Amended by First Amendment to Lease dated December 21, 2020 (collectively, the “Lease”), which will be terminated as of the Closing Date, there are no leases or other occupancy agreements affecting the Premises. There are no contracts to purchase, purchase options, rights of first refusal, rights of first offer or similar rights to purchase the Property or any portion thereof. The Property will be delivered free of any tenants in possession.

(l)Seller has not received any written notice(s) that the Premises, or the Improvements situated thereon, are in violation of any zoning or land use laws, ordinances and regulations applicable thereto or to the ownership thereof.

(m)To Seller’s knowledge, there are no condemnation, eminent domain, zoning or other land-use regulation proceedings, either instituted or planned to be instituted, which would affect either the use and operation of the Premises for its present use or the value of the Premises, nor has Seller received notice of any special assessment proceedings affecting the Premises.

(n)To Seller’s knowledge, no portion of the Premises has been used as a cemetery or other burial site for the remains of any deceased persons.

(o)Seller has not received any written notice notice(s) from any insurance company which has issued an insurance policy covering the Improvements, or by any board of fire underwriters or other body exercising similar functions, of any defects or inadequacies in the Improvements requiring any repairs, alterations or additions which remain pending or unresolved.

(p)To Seller’s knowledge, electrical, plumbing, HVAC, and other mechanical or utility systems serving the Improvements are in working order and condition, are sufficient to serve the business currently conducted on the Premises.

(q)Seller has not installed any underground storage tanks on the Premises, and to Seller’s knowledge, no underground storage tanks of any kind or nature are located on the Premises.

 

 

 

As used above, the phrase “to Seller’s knowledge” or words or phrases of a similar nature (including the phrases “actual”, “actual notice,” or “not aware” or words or phrases of a similar nature) will be construed to mean that the representation or warranty is made on the basis of the actual knowledge of Dante LaTerra without investigation.

3.2“As Is” Sale.

Except for the representations in Section 3.1 or in the Transaction Documents (defined in Section 5.4) to be executed in connection herewith, Purchaser acknowledges and agrees that, to the maximum extent permitted by state, local and federal law, the sale of the Property as provided for herein is made on an “AS IS” condition and basis with all faults, in reliance on Purchaser’s own investigation, inspection and analysis of the Property, and no other representations or warranties, express or implied,  have been made or are made by Seller or on behalf of Seller as to (i) the condition or state of repair of the Property; (ii) the compliance or non-compliance of the Property with any applicable laws, regulations or ordinances (including, without limitation, any applicable zoning, building or development codes); (iii) the value of the Property; (iv) any other fact or condition which has or might affect the Property or the condition, state of repair, compliance, or value of the Property or any portion thereof; or (v) as to the environmental condition of the Property.  For clarity, this Agreement does not amend, modify or limit any provision of the Asset Purchase Agreement, or limit or otherwise reduce or restrict any representation or warranty made or remedy provided in the Asset Purchase Agreement.

3.3Survival.

All of the representations and warranties of Section 3.1 shall be deemed remade on the Closing Date and shall survive Closing for a period of twelve (12) months after the Closing Date.

ARTICLE IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS BY PURCHASER

4.1Purchaser’s Representations and Warranties.

(a)Purchaser is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Connecticut, has duly authorized the execution and performance of this Agreement, and such execution, delivery and performance does not and will not contravene any material provisions of law, trust agreement, partnership agreement, operating agreement, any other organizational papers or any amendments thereof or any written agreement or contract to which Purchaser is a party.  Upon execution and delivery of this Agreement by Purchaser, this Agreement will be a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms.

(b)Purchaser is not an entity with whom Seller is prohibited from engaging in this Transaction due to any United States government embargos, sanctions, or terrorism or money laundering laws, including, without limitation, due to Purchaser or any party that has ownership in or control over Purchaser being (1) subject to United States government embargos or sanctions, (2) in violation of terrorism or money laundering laws, or (3) listed on a published United States 

 

 

 

government list (e.g., Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control or other lists of similar import).

(c)No broker, financial advisor, finder or investment banker or other person is entitled to any broker’s, financial advisor’s, finder’s or other fee or commission in connection with the Transaction based upon arrangements made by or on behalf of Purchaser.

4.2Survival.

All of the representations and warranties of Section 4.1 shall be deemed repeated on the Closing Date and shall survive Closing for a period of twelve (12) months after the Closing Date.

ARTICLE V.
TITLE and CLOSING

5.1Closing.  The closing (the “Closing”) shall be held and delivery of all items to be made at the Closing under the terms of this Agreement shall be in escrow through the office of Pullman & Comley LLC, 253 Post Road West, P.O. Box 3179, Westport, CT 06880-8180 (the “Escrow Agent”), as agent of Fidelity National Title Insurance Company (the “Title Company”) located at 2 Corporate Drive, Suite 144, Shelton, CT 06484, on the Effective Date (the “Closing Date”).

5.2Transfer of Title. At the Closing, Seller shall convey to Purchaser good and marketable fee simple title to the Premises by a limited warranty deed with respect to the Property in the form attached hereto as Exhibit C (the “Deed”), free and clear of all liens and encumbrances and subject only to the matters set forth on Exhibit B attached hereto (the “Permitted Exceptions”).

5.3Evidence of Title. At the Closing, the Title Company shall issue its standard pro forma Owner’s American Land Title Association Policy of Title Insurance in the amount of the Purchase Price, in form reasonably satisfactory to Purchaser, and with such endorsements as may be reasonably required by Purchaser, insuring good and marketable fee simple title to the Premises vested in Purchaser, free and clear of all liens and encumbrances and subject only to the Permitted Exceptions ( the “Pro Forma Policy”).

5.4Seller’s Obligations at Closing.

At Closing, Seller shall deliver to Escrow Agent the following. The documents referred to in subsections (a) through (i) of this Section 5.4 shall collectively be known as the “Transaction Documents”:

(a)the Deed executed by Seller conveying good and marketable fee simple title to the Premises to Purchaser subject only to the Permitted Exceptions;

(b)an Assignment and Bill of Sale assigning and conveying the Intangible Property to Purchaser in the form attached hereto as Exhibit “D” (the “Bill of Sale”);

 

 

 

(c)a standard Owner’s Affidavit sufficient to permit the Title Company to remove the standard exceptions from the Pro Forma Policy (other than those requiring a current as-built land survey to do so), including the so-called “gap” exception and exception for mechanics liens;

(d)a Non-Foreign Affidavit stating that Seller is not a foreign entity or person for purposes of the Internal Revenue Code;

(e)documentation evidencing the termination of the Lease as of the Closing Date, which documentation shall be reasonably satisfactory to Purchaser and the Title Company;

(f)payoff letter(s) with respect to any Seller mortgages and/or security instruments affecting the Property;

(g)possession of the Premises;

(h)authority documents and appropriate resolutions of Seller approving the sale of the Property and authorizing the necessary parties to execute and deliver any and all closing documents to effectuate the Closing of the Transaction for and on behalf of the Seller; and

(i)such other documents or instruments as the Purchaser or Title Company may reasonably request in order to effectuate the Transaction.

5.5Purchaser’s Obligations at Closing.

At Closing, Purchaser shall deliver to Escrow Agent the following:

(a)the Purchase Price in accordance with the provisions of Article II;

(b)the Bill of Sale, executed by Purchaser;

(c)such authority documents and appropriate resolutions required by the Title Company to issue the Pro Forma Policy to Purchaser to insure the Premises at Closing; and

(d)such other documents or instruments as the Title Company may reasonably request in order to effectuate the Transaction.

5.6Mutual Deliveries at Closing.

Purchaser and Seller shall deliver or cause to be delivered the following at Closing:

(a)an executed Closing Statement prepared by the Escrow Agent and approved by the Parties reflecting adjustments made at Closing;

(b)an executed Connecticut Conveyance Tax Return; and

(c)such other instruments as are reasonably required by the Escrow Agent or otherwise required to close the escrow and consummate the purchase and sale of the Property in accordance with the terms hereof.  Purchaser and Seller hereby designate Escrow Agent as the 

 

 

 

“Reporting Person” for the Transaction pursuant to Section 6045(e) of the Internal Revenue Code and the regulations promulgated thereunder.

ARTICLE VI.
CLOSING COSTS: PRORATIONS

6.1Closing Costs; Prorations.

(a)Purchaser and Seller shall each pay their own attorneys’ fees and shall each pay one-half of any escrow fees and Closing costs charged by Escrow Agent in connection with this Transaction.  At Closing, Seller shall pay (i) all costs (including recording costs of any releases) associated with satisfying any requirements set forth on the title commitment issued by the Title Company (the “Title Commitment”) and (ii) all State and local conveyance taxes which become payable by reason of the transfer of the Property.  At Closing, Purchaser shall pay (i) all costs associated with financing the Purchase Price, (ii) the cost of the title search and Title Commitment, (iii) the cost to obtain the Proforma Policy and any endorsements required by Purchaser and (iv) the recording costs for the Deed.

(b)All income and expenses of the Property (other than rent, as the Lease will be terminated as of the Closing Date) shall be apportioned as of 12:01 a.m., on the day of the Closing, as if Purchaser were vested with title to the Property during the entire day upon which Closing occurs.  Such prorated items shall include without limitation the following:

(i)taxes and assessments (including any personal property taxes) levied against the Property (to be adjusted according to local custom);

(ii)utility charges for which Seller is liable, if any, such charges to be apportioned at Closing on the basis of the most recent meter reading occurring prior to Closing (dated not more than fifteen (15) days prior to Closing) or, if unmetered, on the basis of a current bill for each such utility.  Seller will use reasonable efforts to cause a final meter reading to take place as of the date of Closing; and

(iii)any other operating expenses or other items pertaining to the Property which are customarily prorated between a purchaser and a seller of comparable properties in New London County, Connecticut.

(c)All other costs and expenses of the Transaction not allocated above shall be divided between the Parties in accordance with the custom of the jurisdiction where the Property is located; provided, however, if no such custom exists, Seller and Purchaser shall each pay one-half (1/2) of such fees and costs related to the purchase and sale of the Property.

6.2Post-Closing Adjustment.

If final prorations for those items addressed herein cannot be made on the Closing Date, then Purchaser and Seller agree to allocate such items on an accrual basis as soon as invoices or bills are available, but with such final adjustment(s) to be made no later than thirty (30) days (or such longer time as may be required for final adjustment for real estate taxes) after the Closing Date.  Payments in connection with such final adjustments shall be due within fifteen (15) days 

 

 

 

after mutual agreement of the amount(s) due.  Each party shall have reasonable access to, and the right to inspect and audit, the other party’s supporting documentation to confirm the final prorations, provided at least three (3) Business Days’ advance notice is given by the auditing party to the audited party within thirty (30) days after Closing the Parties shall conduct a post-closing reconciliation of those items required to be prorated via electronic mail.

6.3Survival.  All of the provisions of this Article VI shall survive Closing and the execution and delivery of the Deed.

ARTICLE VII.
INDEMNIFICATION

7.1Indemnification.

(a)Each of Seller and Purchaser (as applicable, the “Indemnifying Party”) shall indemnify, defend and hold harmless (i) the other party (as applicable, the “Indemnified Party”), (ii) any director, member, manager, officer, shareholder, general partner, limited partner, employee or agent of the Indemnified Party (or any legal representative, heir, estate, successor or assign of any thereof), (iii) any successor partnership, corporation, limited liability company (or other entity) of the Indemnified Party, or any of its general partners, members or shareholders and (iv) any other affiliates of the Indemnified Party from and against any and all liabilities, losses, damages, costs, expenses (including without limitation reasonable attorneys’ fees and expenses), causes of action, suits, claims, demands or judgments of any nature howsoever caused should any representation or warranty made by the Indemnifying Party set forth herein prove to have been untrue or inaccurate when made or arising from any breach by the Indemnifying Party of any representation or warranty set forth herein or from any breach of this Agreement by the Indemnifying Party.

(b)Notwithstanding any provision to the contrary contained in this Agreement or any documents executed in connection herewith, the maximum aggregate liability of either party hereto, and the maximum aggregate amount which may be awarded to and collected by either Party under Section 7.1(a) for the inaccuracy, untruth or breach of any representation or warranty of such Party in this Agreement for which a claim is timely made as determined under this Agreement shall not exceed $100,000.00. Notwithstanding anything herein to the contrary, the Parties acknowledge and agree that the limitations set forth in this Section 7.1(b) shall in no way limit, qualify, modify or otherwise affect the terms of the Asset Purchase Agreement or the rights and obligations of the parties to the Asset Purchase Agreement, which in all cases shall be enforceable in accordance with the terms of the Asset Purchase Agreement.

(c)The foregoing indemnity obligations shall survive the Closing for a period of twelve (12) months following the Closing Date.

 

 

 

ARTICLE VIII.
MISCELLANEOUS

8.1Entire Agreement.

This Agreement and the Exhibits attached hereto embody the entire agreement between the Parties relative to the subject matter hereof, and there are no oral or written agreements between the Parties, nor any representations made by either Party relative to such subject matter, which are not expressly set forth herein.

8.2Amendment.

This Agreement may be amended only by a written instrument executed by the Party or Parties to be bound thereby.

8.3Headings.

The captions and headings used in this Agreement are for convenience only and do not in any way limit, amplify, or otherwise modify the provisions of this Agreement.

8.4Time of the Essence.

Time is of the essence with respect to this Agreement.  However, if the final date of any period which is set out in any provision of this Agreement falls on a Saturday, Sunday or legal holiday under the laws of the or the State of Connecticut, in such event, the time of such period shall be extended to the next day which is not a Saturday, Sunday or legal holiday.

8.5Governing Law; Jurisdiction and Venue.

This Agreement shall be construed in accordance with and governed by the laws of the State of Connecticut, without reference to principles of conflict of laws. Seller hereby irrevocably submits to the jurisdiction of any federal or state court located in Hartford or New London County, Connecticut in any action or proceeding arising out of or relating to this Agreement, and Seller hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such court.  Seller hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.  Purchaser and Seller agree that the provisions of this Section 8.5 shall survive the Closing.

8.6Invalid Provision.

If any provision of this Agreement is determined by a court of competent jurisdiction  to be illegal, invalid or unenforceable, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; and, the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by such illegal, invalid or unenforceable provision or by its severance from this Agreement.

 

 

 

8.7Attorneys’ Fees.

In the event it becomes necessary for either party hereto to file suit to enforce this Agreement or any provision contained herein, the party prevailing in such suit shall be entitled to recover, in addition to all other remedies or damages as herein provided, reasonable attorneys’, paralegals’, or expert witnesses’ fees and costs incurred in such suit at trial or on appeal or in connection with any bankruptcy or similar proceedings.

8.8Multiple Counterparts and Facsimile and E-mail Transmission.

This Agreement may be executed in a number of identical counterparts, each of which for all purposes is deemed an original, and all of which shall constitute collectively one (1) agreement, but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.  The Parties contemplate that they may be executing counterparts of this Agreement transmitted by facsimile or electronic transmission and agree and intend that a signature by facsimile or electronic transmission shall bind the party so signing with the same effect as though the signature were an original signature.

8.9Non-Merger.

In addition to the specific language of non-merger found in certain sections of this Agreement, any provision hereof which by its terms would be performed after Closing shall survive the Closing and shall not merge in the Closing or in the Deed, except as specifically provided to the contrary herein.

8.10Waiver of Jury Trial.

TO THE EXTENT ALLOWED BY CONNECTICUT LAW, EACH PARTY TO THIS AGREEMENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED UPON THIS AGREEMENT OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER AGREEMENT CONTEMPLATED AND EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF DEALING, COURSE OF CONDUCT, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO.

8.11Confidentiality.

Neither Purchaser, Seller, nor their respective agents shall issue any press releases nor make any public statement, public announcement, or public disclosures of any kind concerning the subject matter hereof, the structure of the Transaction or the status of negotiations conducted hereunder except as may be jointly agreed to by Seller and Purchaser or as either of them may consider necessary in order to satisfy the requirements of applicable law.

8.12Notices.  Any notices required or permitted to be given hereunder shall be given in writing and shall be delivered (a) in person, (b) by a commercial overnight courier that guarantees next day delivery and provides a receipt or (c) by email, and such notices shall be addressed as follows:

 

 

 

To Purchaser:

 

Heritage Global Inc.

12625 High Bluff Drive

Suite #305

San Diego, CA 92130

Attn: General Counsel

 

With a copy to (which shall not constitute notice):

 

Pullman & Comley, LLC

90 State House Square

Hartford, CT 06103-3702

Email: goconnor@pullcom.com

Attn: Gary B. O’Connor, Esq.

 

and

Bass Berry & Sims, PLC

150 Third Avenue South, Suite 2800

Nashville, TN  37201

Attn: Curtis Capeling

 

To Seller:

 

12 Colton Road, LLC

c/o Dante LaTerra

7697 Santa Cruz Court

Naples, FL 34109

Email: dante@alt-inc.com

 

With a copy to (which shall not constitute notice):

 

Robinson & Cole LLP

280 Trumbull Street

Hartford, CT 06103

Email: mguanci@rc.com

Attn: Matthew J. Guanci Jr., Esq.

 

or to such other address as either Party may from time to time specify in writing to the other Party.  Any notice shall be deemed delivered when actually delivered, if such delivery is in person, upon deposit with the overnight courier service, if such delivery is by an overnight courier service, and upon transmission, if such delivery is by email.

8.13Assignment; Successors and Assigns. Seller shall not be permitted to assign this Agreement or its rights or obligations hereunder without the prior written consent of Purchaser, as determined in Purchaser’s sole discretion.  Purchaser’s rights and obligations hereunder shall not be assignable without the prior written consent of Seller, in its sole discretion.  Notwithstanding 

 

 

 

the foregoing, Purchaser shall have the right to assign its rights and obligations hereunder to any of its affiliates or a subsidiary of Purchaser; provided that such assignment shall not relieve Purchaser of its obligations under this Agreement.  Subject to the foregoing, this Agreement shall inure to the benefit of, and be binding upon the Parties and their respective successors and permitted assigns.

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, Purchaser and Seller have executed this Agreement as of the Effective Date.

			
	
 
	
 
	
SELLER:

	
 
	
 
	
 

	
 
	
 
	
12 COLTON ROAD, LLC,

a Connecticut limited liability company

	
 

Date Executed: August 18, 2021
	
 
	
 

By: /s/ Dante LaTerra

Name: Dante LaTerra

Its:  Member

 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
PURCHASER:

	
 
	
 
	
 

	
 
	
 
	
HG ALT LLC,

a Connecticut limited liability company

	
 
	
 
	
 

	
Date Executed: August 18, 2021
	
 
	
By: Heritage Global LLC, its sole member

 

By: /s/ James Sklar

Name: James Sklar

Its: Executive Vice President, General Counsel and Secretaryhgbl-ex103_46.htm

Execution Version

Exhibit 10.3

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES OR STATE BLUE SKY LAW, AND MAY NOT BE PLEDGED, HYPOTHECATED, TRANSFERRED, OFFERED FOR SALE OR SOLD EXCEPT PURSUANT TO A REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER SAID ACTS.

 

 

SUBORDINATED PROMISSORY NOTE

 

US $2,000,000.00August 23, 2021

 

 

FOR VALUE RECEIVED, the undersigned, Heritage ALT LLC, a Delaware limited liability company (the “Payor”), hereby promises to pay to the order of American Laboratory Trading, Inc., a Connecticut corporation or its permitted assigns (the “Holder”), the principal amount of $2,000,000.00, together with interest on the unpaid principal balance at the times and at the rate specified in this Subordinated Promissory Note (the “Note”). 

 

This Note has been executed and delivered and issued pursuant to and in accordance with the terms and conditions of that certain Asset Purchase Agreement, dated as of August 18, 2021 (the “Purchase Agreement”), by and among Payor, Holder, Dante LaTerra, an individual resident of the State of Florida (“LaTerra”), and Heritage Global Inc., a Florida corporation (“Guarantor”).  Capitalized terms used in this Note without definition shall have the respective meanings set forth in the Asset Purchase Agreement.

 

1.Interest.  

(a)Except as provided in Section 1(b), interest on the outstanding principal amount of this Note will accrue from the date hereof until all outstanding principal shall be paid in full at the rate of 3.00% per annum (the “Interest Rate”) calculated as simple interest. 

(b)If any amount payable hereunder is not paid when due (without regard to any applicable grace period), including as a result of the subordination provisions of Section 4, and whether at stated maturity, by acceleration, or otherwise, such overdue amount shall bear interest at the Interest Rate plus 3.00% (the “Default Rate”).

2.Payment of Principal and Interest.  (a) On the first day of each month, beginning the next month succeeding the Closing Date, the Payor shall make a monthly payment of principal and interest in the amount of $44,268.65 and (b) all unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder, shall be due and payable on the earlier of: (i) August 23, 2025 (the “Maturity Date”) and (ii) the acceleration of this Note pursuant to Section 5(b).  Any payment on this Note that would otherwise become due and payable on a day that is not a Business Day shall become due and payable on the next succeeding Business Day, with the same force and effect as if made on the date for payment of such principal or interest.  In the event that pursuant to the terms of Section 4 hereof, the Payor is prohibited from making any payment hereunder, such payment shall be deferred until such time as the payment is permitted under Section 4.  

 

3.Prepayments.  Subject to the terms of Section 4 hereof, the Payor may, at its option, at any time or from time to time prepay the outstanding principal sum or any accrued but unpaid interest, in each case in whole or in part, without penalty or premium, provided that any such prepayment of any outstanding principal shall be accompanied by the payment of all accrued but unpaid interest on the principal sum being prepaid.

 

 

 

4.Subordination.  

 

(a)Subject to Section 4(c), the principal of and interest on this Note and all other amounts payable with respect to, and all obligations under, this Note are expressly subordinated in right of payment to all obligations of the Payor constituting Senior Debt (as defined below) in the manner set forth herein.  The term “Senior Debt” as used herein means the principal of, premium, if any, interest on, and all reasonable and customary charges relating to any and all indebtedness of Payor for borrowed money, whether now or hereafter outstanding including after the commencement of any Proceeding under Bankruptcy Law (as defined below), owed to C3bank, National Association (“C3bank”), and any and all extensions, renewals, replacements and refinancings of such indebtedness for borrowed money, owed to C3bank or any replacement bank (C3bank and any such replacement bank, the “Senior Lender”), whether secured or unsecured. Notwithstanding the foregoing, the aggregate principal amount of the Senior Debt that this Note shall be subordinated shall not exceed $10,000,000. 

 

(b)No payment on account of principal of, or interest on, this Note shall be made, either directly or indirectly, by Payor, and Holder shall not be entitled to receive such payment, if there shall have occurred and be continuing or there would be caused by any such payment any Payment Default (as defined below) with respect to the Senior Debt and Holder has received requisite written notice thereof from the Senior Lender prohibiting such payment as a result of such Payment Default (a “Payment Blockage Notice”) for a period ending not more than 180 days after the end of any period for which Payor has a right to cure the Payment Default (a “Payment Blockage Period”).  The Payment Blockage Period shall end earlier if such Payment Blockage Period is terminated (1) by written notice to the Payor from the holder of the Senior Debt who gave such Payment Blockage Notice, (2) because the Payment Default giving rise to such Payment Blockage Notice is cured, waived or otherwise no longer continuing or (3) because such Senior Debt has been discharged or repaid in full in cash.  Notwithstanding the immediately preceding two sentences, unless the holders of such Senior Debt shall have accelerated the maturity of such Senior Debt, the Company shall be entitled to make (and shall make) payments on this Note in accordance with its terms after expiration of such Payment Blockage Period (including all payments that were due but were not made during the Payment Blockage Period).  This Note shall not be subject to more than one Payment Blockage Period in any consecutive 360-day period, irrespective of the number of defaults with respect to Senior Debt during such period. 

 

(c)Nothing herein shall impair the obligation of the Payor, which is absolute and unconditional, to pay the principal of and interest on this Note in accordance with its terms.  

 

5.Default; Remedy.  

 

(a)The occurrence of any one or more of the following events with respect to the Payor shall constitute an event of default (“Event of Default”) hereunder: 

 

(i)the Payor’s failure to pay when due (whether by acceleration or maturity or otherwise) any payment of principal, interest or other amount owing under this Note and such failure continues for five (5) Business Days; provided, however, that such event shall not be an Event of Default to the extent it arises as a result of the operation of the subordination provisions set forth in Section 4;

 

(ii)pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (a “Bankruptcy Law”), the Payor’s (A) commencement of a voluntary case or Proceeding; (B) being the 

 

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subject of any petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Bankruptcy Law if the petition shall remain undismissed for a period of forty-five (45) days; (C) consent to the appointment of a trustee, receiver, assignee, liquidator or similar official; (D) assignment for the benefit of its creditors; or (E) admission, in writing, of its inability to pay its debts as they become due; or 

 

(iii)a Change of Control shall occur.

 

(b)The Payor will promptly notify Holder in writing of the occurrence of any Event of Default hereunder.  Upon the occurrence and during the continuation of an Event of Default hereunder (unless such Event of Default has been cured or waived in writing by Holder), Holder may, at its option, (i) by written notice to Payor, declare the entire unpaid principal balance of this Note, together with all accrued interest thereon, immediately due and payable, and (ii) exercise any and all rights and remedies available to it under applicable law, including, without limitation, the right to collect from Payor all sums due under this Note; provided, however, if an Event of Default described in Sections 5(a)(ii)(A), (C), (D) or (E) and Section 5(a)(iii) shall occur, the entire unpaid principal balance of this Note, together with all accrued interest thereon, shall become immediately due and payable without notice, declaration or other act on the part of Holder.  Payor shall pay all reasonable costs and expenses incurred by or on behalf of Holder in connection with Holder’s collection of amounts due hereunder, including reasonable attorneys’ fees. Notwithstanding the foregoing, this Section 5(b) shall be subject to the subordination provisions set forth in Section 4.

 

6.Offset.  This Note is being issued in connection with the Purchase Agreement, and is subject to (i) the right of Payor under Section 2.8(e)(ii) of the Purchase Agreement to set-off against the Note any amount due to Purchaser under Section 2.8(e)(ii) of the Purchase Agreement, and (ii) the right of the Holder under Section 7.6(e) of the Purchase Agreement to set-offset against the Note the indemnification obligations of the Seller Parties under Article VII of the Purchase Agreement. Any amounts that are properly set-off against such liabilities in accordance with the terms of the Purchase Agreement shall be deemed paid and satisfied in full.

 

7.Waiver of Demand.  Demand, presentment, dishonor, protest and notice of demand, dishonor or protest are hereby waived by the Payor.  

 

8.Binding Effect.  This Note shall be binding upon and inure to the benefit of the Holder hereof and its successors and permitted assigns.  This Note shall be binding upon the Payor and their successors and permitted assigns, provided, however, that the Payor may not assign either this Note or any of its rights, interests, or obligations hereunder to any Person that is not an Affiliate of Payor without the prior written consent of Holder. Any purported assignment or delegation by the Payor in contravention of this section shall be null and void.  No assignment by Payor of this Note shall relieve the Payor of its obligations hereunder.  The Holder shall be permitted to assign this Note or any of its rights or interests hereunder, in whole or in part, to LaTerra or any Affiliate of the Holder or LaTerra, upon prior written notice to the Payor.  The Holder shall not be deemed to waive any of its rights hereunder unless such waiver be in writing and signed by the Holder and no indulgence, delay or omission by the Holder in exercising any of its rights shall operate as a waiver of such rights and a waiver in writing on one occasion shall not be construed as a consent to or a waiver of any right or remedy on any future occasion.

 

9.Governing Law; Venue.  This Note shall be governed by, and construed in accordance with, the Law of the State of New York without regard to any conflicts of law principles that would require the application of any other Law.  Payor and Holder each agree to personal jurisdiction in any action brought in any Court, Federal or State, within the State of New York having subject matter jurisdiction over the matters 

 

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arising under this Note.  Any Proceeding arising out of or relating to this Note shall only be instituted in the State of New York.  Payor and Holder each waive any objection that it may have now or hereafter to the laying of the venue of such Proceeding and irrevocably submits to the exclusive jurisdiction of any such Court in any such suit, action or Proceeding.

 

10.Waiver of Jury Trial.  EACH OF PAYOR AND HOLDER AND ANY THIRD PARTY BENEFICIARY HEREOF HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION RELATED TO OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

11.Miscellaneous. This Note is not intended to confer any rights or remedies upon any person except Payor, Holder, and the Senior Lender, it being agreed and understood that Senior Lender is an intended third party beneficiary entitled to enforce the terms hereof.  This Note may be executed in one or more counterparts (including by electronic transmission in portable document format (.pdf)), which when taken together shall constitute one and the same agreement.

 

12.Certain Definitions.  The following defined terms used in this Note shall have the following meanings:

 

“Business Day” means any day other than a Saturday, Sunday or day on which national banking institutions are permitted or required to close in the State of New York.

“Change of Control” means: (a) a change in the beneficial ownership of an aggregate of more than 50% of the outstanding shares of stock of Payor or Guarantor, in one or more transactions, compared to the ownership of outstanding shares of stock of Payor or Guarantor in effect on the date hereof; (b) a transaction in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Payor or Guarantor ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of Payor or Guarantor, who did not have such power before such transaction; or (c) a sale of all or substantially all of the assets of Payor or Guarantor, in one or more transactions to a Person that is not an Affiliate of Payor or Guarantor.

“Payment Default” means that (i) a payment default under Senior Debt shall have occurred and be continuing at the time any payment is due on this Note, or (ii) any other default under the Senior Debt shall have occurred and be continuing and, in the case of clause (ii), the maturity of such Senior Debt shall have been accelerated in accordance with its terms.

“Proceeding” means any cause of action, charge, arbitration, audit, hearing, investigation, litigation, or lawsuit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private).

[Signature Pages Follow]

 

 

 

 

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IN WITNESS WHEREOF, the Payor and Guarantor have executed this Note as of the date first above written.

 

 

HERITAGE ALT LLC

 

 

By: /s/ James Sklar

Name: James Sklar

Title: Executive Vice President, General Counsel and Secretary

 

 

GUARANTY

 

For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and in order to induce the Holder to enter into the Purchase Agreement and accept this Note, the undersigned Guarantor hereby unconditionally and irrevocably guarantees to the Holder, and its successors and permitted assigns, the full, prompt and complete payment when due, whether by lapse of time, by acceleration, maturity or otherwise, of all principal, interest (including interest accruing after the commencement of any bankruptcy or insolvency proceeding by or against Payor, whether or not allowed in such proceeding), costs, expenses and other amounts now or hereafter due and owing, or which Payor is obligated to pay, pursuant to the terms of this Note, as the same may from time to time be amended, supplemented, restated or otherwise modified.  This guaranty is a continuing guarantee of payment and not a guaranty of collection.

HERITAGE GLOBAL INC. 

 

 

By: /s/ James Sklar

Name: James Sklar

Title: Executive Vice President, General Counsel and Secretary

 

 

 

ACKNOWLEDGED, ACCEPTED AND AGREED BY HOLDER:

 

 

AMERICAN LABORATORY TRADING, INC.

 

 

By: /s/ Dante LaTerra

      Name: Dante LaTerra

      Title: CEO

 

[Signature Page to Subordinated Promissory Note and Guaranty]

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