Exhibit 10.42
EXHIBIT B
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made the _____ day of October, 2000, by
and between MFIC CORPORATION, a Delaware corporation (the "Borrower"), and X.X.
XXXXX CORPORATION, a New Jersey corporation (the "Secured Party").
ARTICLE 1 GRANT OF A SECURITY INTEREST
Section 1.01 To the extent permitted by law, Borrower hereby grants to the
Secured Party for its benefit a first lien security interest in all of
Borrower's right, title and interest in the following equipment, together with
any and all substitutions therefor and replacements thereof, any and all
additions and accessions thereto, and all proceeds thereof, (such collateral is
collectively referred to herein as the "Collateral"):
Model LV40SST Zinger(R)horizontal media mill Serial No. L2206
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Model LV40SST Zinger(R)horizontal media mill Serial No. L2206200
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Model LV40SST Zinger(R)horizontal media mill Serial No. L2206300
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Model LV40SST Zinger(R)horizontal media mill Serial No. L2206400
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Model LV40SST Zinger(R)horizontal media mill Serial No. L2206500
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Model LV40SST Zinger(R)horizontal media mill Serial No. L2206600
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Model LV40SST Zinger(R)horizontal media mill Serial No. L2206700
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ARTICLE 2 OBLIGATIONS SECURED
Section 2.01 The security interests hereby granted by Borrower are to
secure payment to the Secured Party of the indebtedness of Borrower, incurred by
Borrower in connection with Borrower's purchase of the Collateral from Secured
Party on or about the date hereof, in the principal sum of Three Hundred Fifty
Thousand Dollars ($350,000), with interest thereon evidenced by a secured
purchase money promissory note of even date herewith, made by the Borrower
payable to the Secured Party (the "Note"); and to secure payment to the Secured
Party of all costs, expenses and reasonable attorney's fees incurred by the
Secured Party in the collection or enforcement of any indebtedness or liability
of Borrower secured hereby. Each of the foregoing being hereinafter sometimes
collectively referred to as "Obligations" of the Borrower.
ARTICLE 3 REPRESENTATIONS
Section 3.01 The Borrower represents and warrants to the Secured Party
that:
(a) No Other Encumbrances. Except for the security interests granted by
this Agreement and subordinate security interests granted as part of Borrower's
present lending arrangements on the assets of Borrower, Borrower is the sole
owner of the Collateral free and clear of all liens, claims and encumbrances.
(b) Location of Collateral. The Collateral shall be located at the
Borrower's Xxxxxxxxx-XXXXXX Division's place of business in Fullerton,
California. Borrower will not change the location of the Collateral or cause
such Collateral to be moved, maintained or stored in any other location without
notifying the Secured Party. In no event without the prior written consent of
the Secured Party shall the collateral be shipped to a location outside the
United States unless such shipment is part of the sale of the Collateral.
ARTICLE 4 COVENANTS
Section 4.01 The Borrower covenants and agrees with the Secured Party that:
(a) Inspection of Collateral. The Secured Party or its agents may at any
time and from time to time inspect the Collateral and the books and records of
the Borrower pertaining thereto upon reasonable notice to Borrower and during
regular business hours.
(b) Expenses. Borrower shall be liable for and agree to pay the Secured
Party any and all expenses incurred or paid by the Secured Party in protecting
or enforcing its rights under this Agreement including reasonable attorneys'
fees and legal expenses.
(c) Application of Net Proceeds. Upon an Event of Default, the Secured
Party shall have the right to apply the net proceeds of the sale or other
disposition of the Collateral, first, to the principal indebtedness due under
the Note and then to any other indebtedness of the Borrower owed to the Secured
Party.
(d) Maintenance of Collateral. Borrower will keep all Collateral in good
condition and repair at Borrower's own expense. Any loss or destruction of the
Equipment shall be at Borrower's risk and shall not release Borrower from any
Obligation set forth herein.
Section 4.02 Insurance. Borrower agrees at its expense to insure its
respective Collateral against such risks and hazards. Borrower will use
reasonable efforts to have its policy of insurance contain a clause that in the
event of loss, payments shall be made to the Secured Party as its interest may
appear; that Borrower hereby grants the Secured Party a security interest in the
proceeds of any insurance, whether paid by reason of loss, injury, return
premium or otherwise, and such proceeds may be applied toward the repair or
replacement of the Collateral or payment of the Obligations secured hereby at
Borrower's option.
Section 4.03 Proceeds from Resale of Collateral. Borrower agrees that all
Net Proceeds (as hereinafter defined) from the sale of the Collateral, or any
part of it, shall be paid as herein provided to the Secured Party as provided in
Section 4.04, it being expressly understood and agreed by the parties that, in
the event a case under the United States Bankruptcy Code is commenced by or
against Borrower, the Net Proceeds (meaning the proceeds from the sale of any of
the collateral, less reasonable transportation costs, storage and reconditioning
costs, and costs of sale including but not limited to commissions and taxes
attributable to the sale of such
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collateral) shall not constitute property of Borrower's bankruptcy estate, but
shall belong to Secured Party.
Section 4.04 Sale and Sale Notice of Collateral. In the event Borrower
sells the Collateral, or any part of it, prior to the satisfaction of the Note,
Borrower shall promptly give notice of the sale to the Secured Party three (3)
business days before Borrower is required to ship the collateral to any buyer.
Prior to the scheduled date for shipping, the Secured Party shall release its
security interest in the portion of the Collateral sold by Borrower. For
purposes of releasing its security therein upon a sale of the Collateral, the
Secured Party hereby appoints the Borrower through any officer designated by the
Borrower, as attorney-in-fact for the Secured Party, with power to act in
Secured Party's name with respect to the release of the Secured Party's security
interest. Within ten (10) business days following such sale(s), the Borrower
shall provide notice ("Sale Notice") of the Net Proceeds to be received from
such sale(s) to Secured Party. Such Sale Notice(s) shall contain: (a) a detailed
description of the sales terms, including, without limitation, a description of
the Collateral being sold, the price received, and a statement setting forth
what portion, if any, of the Collateral remains unsold; (b) a detailed statement
of the following costs actually incurred by Borrower in connection with such
sale(s) (the "Sales Costs"): (i) all transportation costs incurred by Borrower
to ship the Collateral sold from Secured Party's location to Borrower's
Xxxxxxxxx-XXXXXX Division in Fullerton, California; (ii) reasonable storage and
reconditioning costs incurred by Borrower as to the Collateral sold; and (iii)
costs related to the sale of the Collateral sold, including but not limited to
commissions and taxes actually incurred and paid by Borrower; and (c) a
statement of the Net Proceeds, calculated by subtracting the Sales Costs from
the price received in the sale. Borrower shall direct the purchaser(s) of the
Collateral, or any part of it, to pay an amount equal to the Net Proceeds from
each sale of Collateral directly to the Secured Party.
ARTICLE 5 EVENTS OF DEFAULT
Section 5.01 Borrower shall be in default under this Agreement upon the
happening of any of the following events (each is an "Event of Default"):
(a) Occurrence of any Event of Default under the Note or under the terms of
any Obligation secured hereunder.
(b) Default by Borrower in payment or performance of any payment obligation
or other covenant contained or referred to herein or any Obligation secured
hereby or thereby.
(c) Breach by Borrower of any representation or warranty contained herein
or in any other security agreement between the parties or in any Obligation
secured hereby or thereby.
(d) Irreparable loss, theft or destruction of any of the Collateral, unless
Secured Party receives the proceeds from insurance against such event.
(e) Borrower becomes insolvent; or is unable to pay its debts as they
mature, or discontinues business operations; or commits an act of bankruptcy or
makes an assignment for creditors; or files a petition under the federal
Bankruptcy Code or any other federal or state
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bankruptcy, insolvency or other similar law or regulation; or becomes
adjudicated bankrupt or petitions or applies to any tribunal for any receiver or
trustee for Borrower, or any substantial part of Borrower's assets; or commences
any insolvency or other proceedings for the relief of the Borrower, either under
any law now or hereafter in force or otherwise, and whether by arrangement,
reorganization, compromise, extension, or otherwise, or for dissolution or
liquidation; or a proceeding or case is commenced against Borrower under the
federal Bankruptcy Code or any other federal or state bankruptcy, insolvency or
other similar law or regulation, and such proceeding or case is not dismissed or
stayed within 60 days of filing.
ARTICLE 6 REMEDIES
Section 6.01 If the Borrower fails to make a payment on the Note when due
or if any of the Events of Default specified herein shall occur, and Borrower
fails to cure the Event of Default within thirty (30) days from the date of
written notice from the Secured Party in the event of a non-payment Event of
Default, or three (3) business days in the event of a payment Event of Default,
then in such event and at any time thereafter the Secured Party may declare all
Obligations secured hereby to be immediately due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived. The Secured Party in addition to such other rights and
remedies as are or may be set forth in this Agreement and in any other agreement
between the parties or any Obligation secured hereby or thereby may exercise and
shall have the rights and remedies of a Secured Party under the Uniform
Commercial Code in effect in the State of Georgia at the date of this Agreement.
The Secured Party may require and Borrower agrees upon demand to assemble the
Collateral and make it available at a place to be designated by the Secured
Party which is reasonably convenient to the parties or the Secured Party may
enter any premises and take possession of the Collateral or any part thereof.
Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, the Secured Party will
give Borrower reasonable notice of time and place of any public sale thereof or
the time after which any private sale or any other intended disposition thereof
is to be made. The requirement of reasonable notice shall be met if notice is
mailed, postage prepaid to Borrower at its above mentioned address, at least ten
(10) days before the time of sale or disposition of the Collateral. Borrower
shall pay to Secured Party, on demand, any and all expenses, incurred or paid by
the Secured Party in protecting or enforcing its rights, powers and remedies
hereunder or under any other agreement between the parties or any Obligation
secured hereby or thereby or in any way connected with any proceeding or action
by whatsoever initiated concerning the protection or enforcement thereof.
Section 6.02 No delay in taking any action with respect to any Event of
Default shall affect the rights of the Secured Party later to take such action
with respect thereto and no waiver by the Secured Party of any default shall
operate as a waiver of any other default, or the same default on a future
occasion.
ARTICLE 7 MISCELLANEOUS PROVISIONS
Section 7.01 The provisions of this Agreement may be amended, or compliance
with this Agreement waived at any time only by the written agreement of the
Secured Party and the Borrower.
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Section 7.02 The Borrower shall do, make, execute and deliver all such
additional and further acts, things, deeds, assurances and instruments as the
Secured Party may reasonably require for the purpose of more completely vesting
in and assuring to the Secured Party its rights hereunder in or to the
Collateral. Without limiting the foregoing, at its expense, the Borrower shall
defend the title to the Collateral (or any part thereof), and promptly upon
request by Secured Party execute, acknowledge and deliver any financing
statement, continuation statement, security agreement, or other document Secured
Party may require in order to perfect, preserve, maintain, continue, protect
and/or extend the lien or security interest granted to Secured Lender under this
Agreement and its priority.
Section 7.03 Any notice or demand which by any provision of this Agreement
is required or provided to be given shall be deemed to have been sufficiently
given or served for all purposes by being sent by certified mail, return receipt
requested, postage prepaid, and addressed as follows (or such other address as
either party may designate by written notice to the other party):
If to Borrower:
MFIC Corporation
00 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx Xxxx, Esq.
If to Secured Party:
X. X. Xxxxx Corporation
Engineered Materials Division
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx, Esq.
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
0000 XxxXxxxx Xxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. X. Xxxxx, Esq.
Section 7.04 All rights of the Secured Party hereunder shall inure to the
benefit of its successors and assigns and all obligations of the Borrower
hereunder shall bind Borrower's successors and assigns.
Section 7.05 TIME IS OF THE ESSENCE HEREOF.
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Section 7.06 This Agreement may be executed in a number of counterparts,
each of which shall be deemed to be an original, and all of which taken together
shall comprise but a single instrument.
Section 7.07 This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and, other than as contained
in the Note or that certain Settlement Agreement by and between Borrower and the
Secured Party as of the date hereof, there are no understandings or agreements
or representations relative to this Agreement which are not fully expressed in
this Agreement.
Section 7.08 THE BORROWER (A) AND THE SECURED PARTY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT, (B) SUBMITS TO THE NONEXCLUSIVE
PERSONAL JURISDICTION IN XXXXXX COUNTY, GEORGIA, OF THE COURTS THEREOF AND THE
UNITED STATES DISTRICT COURTS FOR THE NORTHERN DISTRICT OF GEORGIA, FOR THE
ENFORCEMENT OF THIS AGREEMENT, AND (C) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER
THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS (INCLUDING, WITHOUT
LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE WITHIN THE STATE OF
GEORGIA FOR THE PURPOSE OF LITIGATION TO ENFORCE THIS AGREEMENT. NOTHING HEREIN
CONTAINED, HOWEVER, SHALL PREVENT THE SECURED PARTY FROM BRINGING ANY ACTION OR
EXERCISING ANY RIGHTS AGAINST ANY COLLATERAL AND AGAINST THE BORROWER
PERSONALLY, AND AGAINST ANY ASSETS OF THE BORROWER, WITHIN ANY OTHER STATE OR
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED OR REQUIRED BY LAW.
Section 7.09 In case one or more provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect under any laws, the
validity, legality and enforceability of the remaining provisions contained
herein shall remain effective and binding on the parties thereto and shall not
be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal by
their duly authorized representatives, as of the date and year first written
above.
MFIC CORPORATION
By:__________________________________________________ Attest:_____________________________________
Name:________________________________________________ Name:_______________________________________
Title:_______________________________________________ Title:______________________________________
[Corporate Seal]
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X.X. XXXXX CORPORATION
By:__________________________________________________ Attest:_____________________________________
Name:________________________________________________ Name:_______________________________________
Title:_______________________________________________ Title:______________________________________
[Corporate Seal]
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