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EXHIBIT 10.19
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LINE OF CREDIT NOTE
$50,000.00 Norton, Massachusetts
November 30, 1995
FOR VALUE RECEIVED, the undersigned ("Maker"), hereby promises to pay to the
order of KILBURN ISOTRONICS, INC., with a place of business at 111 South
Worcester Street, Norton, Massachusetts 02712 ("Lender"), the sum of FIFTY
THOUSAND ($50,000.00) DOLLARS, or so much as may have been advanced to Maker,
prior to default. The Maker shall pay minimum installments in the sum of
$4,000.00 per week or the then remaining principal balance, whichever shall be
less, in repayment of all sums borrowed hereunder commencing December 30, 1995.
Loans made hereunder may be repaid and reborrowed. The entire balance of
principal, accrued interest, and other fees and charges shall be due and payable
on the earlier of DEMAND or DEFAULT as set forth herein. The Lender shall have
the right to Demand payment on June 30, 1996 or anytime thereafter upon thirty
(30) days written notice to the Maker.
Interest shall be paid on the unpaid principal balance from time to time
outstanding at the rate of twelve (12%) percent per annum. After Demand or
Default, interest shall be payable on the unpaid principal balance at a rate of
eighteen (18%) percent per annum, until fully paid.
Monthly the Lender shall render invoices for payment of rent, real estate taxes,
utilities and other related services as agreed between the Lender and the Maker;
invoices not paid by the Due Date as defined in Schedule A, attached hereto and
made a part of this agreement, shall become part of the principal balance due
and accrue interest from the Due Date until paid.
Interest and fees shall be calculated on the basis of a 360-day year times the
actual number of days elapsed. At Lender's discretion, all payments will be
applied first to unpaid accrued interest, then to principal, and then any
balance to any charges, costs or expenses. In no event shall interest payable
hereunder exceed the highest rate permitted by applicable law. To the extent any
interest received by Lender exceeds the maximum amount permitted, such payment
shall be credited to principal, and any excess remaining after full payment of
principal shall be refunded to Maker. This Note is secured by and entitled to
instruments or documents executed in connection therewith. The principal of this
note is subject to prepayment without penalty.
Upon the occurrence of an Event of Default as defined herein, this Promissory
Note and all interest accrued hereon shall become due and payable forthwith at
the election of the holder and the payment and acceptance of any sum on account
of this Promissory Note shall not be considered a waiver of such right of
election. No waiver of any default hereunder or under the Agreement shall be
considered a waiver of any other or subsequent default hereunder or under the
Agreement. An Event of Default hereunder shall be:
Failure to pay any of said installments within fifteen (15) days from the date
when the same becomes due, or default in the performance of any condition or
covenant in the security instruments given as security for this note, or
condition of any other agreements of even date between the parties hereto, or
the sale or encumbrance of any
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part or all of the property given as security for this note, without the written
agreement of the Lender.
Maker agrees to pay all costs and expenses, including, without limitation,
reasonable attorney's fees and expenses incurred, or which may be incurred, by
Maker in connection with the negotiation, documentation, administration,
enforcement and collection of this note and any other agreements, instruments
and documents executed in connection herewith.
Maker and all guarantors and endorsers hereby waive presentment, demand, notice,
protest, and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this note, and assent to extensions
of the time and payment or forbearance or other indulgence without notice. No
delay or omission of Holder in exercising any right or remedy hereunder shall
constitute a waiver of any such right or remedy. Acceptance by Holder of any
payment after demand shall not be deemed a waiver of such demand. A waiver of
one occasion shall not operate as a bar to or waiver of such right or remedy on
any future occasion.
This instrument shall be governed by Massachusetts law. For purposes of any
action or proceeding involving this note, Maker hereby expressly submits to the
jurisdiction of all federal and state courts located in the Commonwealth of
Massachusetts and consents that any order, process, notice of motion or other
application to or by any of said courts or a judge thereof may be served within
or without such court's jurisdiction by registered mail or by personal service,
PROVIDED a reasonable time for appearance is allowed (but not less than the time
otherwise afforded by any law or rule), and waives any right to contest the
appropriateness of any action brought in any such court based upon lack of
personal jurisdiction, improper venue or FORUM NON CONVENIENS. MAKER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE EXTENT PERMITTED BY
APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING
UNDER OR RELATING TO THIS NOTE AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY.
Executed as an instrument under seal as of the date first above written.
CERAMICS PROCESS SYSTEMS
WITNESS: CORPORATION
/s/ Peter F. Valentine By: /s/ Grant C. Bennett
- ---------------------- --------------------
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SCHEDULE A
The "Due Date" for the payment of rent, real estate taxes, utilities, and
related services to Kilburn by CPS shall be as follows:
Rent and real estate taxes shall be due on the first day of each month. Until
further notice, rent shall be charged to CPS at a monthly rate of $5,625, and
real estate taxes shall be charged at a monthly rate of 40% of one-sixth of
Kilburn's estimated semi-annual real estate tax bill.
Utilities (including telephone services, electricity, natural gas and nitrogen)
are due on the earliest of the following dates:
a) The "avoid interest date" on the invoice for certain utilities
including electricity and natural gas. CPS will not be assessed
interest charges accrued by utilities for late payment of
invoices by Kilburn.
b) The date the utility invoice is actually paid by Kilburn.
c) 30 days from the receipt of the invoice by CPS from Kilburn.
Until further notice, electricity, natural gas and nitrogen will be charged to
CPS at a rate of 40% of the total of the charges. Telephone will be charged
based on actual usage by CPS.
Ordinary recurring estimated monthly labor costs shall be due from CPS for the
following individuals employed by Kilburn on the 15th day of the current month:
Receptionist - 30% of salary + 15% fringe factor.
Janitor - 50% of salary + 15% fringe factor.
Interest on the line of credit is due on a weekly basis at the close of business
every Friday, based on that day's principal balance owed to Kilburn, as defined
in Schedule A.
All other bonafide charges from Kilburn to CPS are due thirty days from their
respective invoice dates, but in no event earlier than ten days from the date of
receipt of the invoice by CPS from Kilburn.
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SECURITY AGREEMENT
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Date: November 30, 1995
Ceramics Process Systems Corporation, a corporation duly organized and
existing under the laws of the State of Delaware with its principal place of
business located at 111 South Worcester Street, Norton, Massachusetts 02712 (the
"Debtor") for valuable consideration, receipt of which is hereby acknowledged,
hereby grants to Kilburn Isotronics, Inc., a corporation with offices located at
111 South Worcester Street, Norton, Massachusetts 02712 (the "Secured Party"), a
security interest in the following designated property, any and all
substitutions therefor and replacements thereof, and any and all additions and
accessions thereto (the "Collateral"):
FIRST: The Collateral.
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Receivables - now owned or hereafter acquired by the DEBTOR AND IN THE PROCEEDS
THEREOF:
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The term "receivables" shall include any "account" within the meaning of Section
9-106 of the Uniform Commercial Code as the same may from time to time be in
effect in the Commonwealth of Massachusetts (the "Code") and to the extent not
otherwise included therein, all accounts, notes, drafts, acceptances and other
forms of obligations, and receivables from goods sold or services rendered, all
guarantees and securities therefor, all of the Debtor's rights earned or to be
earned hereafter under contract(s) to sell goods or to render services
(including without limitation (A) all moneys due and to become due under any
contract, (B) any damages arising out of or for breach or default in respect of
any such contract or account, (C) all other amounts from time to time paid or
payable under or in connection with any such contract or account and (D) the
right of the Debtor to terminate any such contract or to perform and to exercise
all remedies thereunder).
Inventory - now owned or hereafter acquired by the DEBTOR AND IN PROCEEDS
THEREOF: The term "inventory" shall include "inventory" within the meaning of
Section 9-109 (4) of the Code, and to the extent not otherwise included therein,
all goods, merchandise and other personal property held and intended for sale or
other disposition by Debtor and all goods which are raw materials, work in
process or material used or consumed in a business, as well as all contract
rights with respect thereto and all documents representing the same.
Machinery, Equipment and Fixtures - now owned or ACQUIRED BY DEBTOR AND IN THE
PROCEEDS THEREOF:
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The collective term "machinery, equipment and fixtures" means all machinery,
equipment, including automotive equipment, fixtures, furniture, parts, tools,
dies, attachments, supplies and all substitutions therefor and replacements
thereof and any and all additions and accessions thereto.
The individual term "equipment" shall include "equipment" within the meaning of
Section 9-109(2) of the Code and, to the extent not otherwise included therein,
all additions and accessions to, replacements of and substitutions for,
equipment.
The individual term "fixtures" shall include "fixtures" within the meaning of
Section 9-313(l)(a) of the Code and, to the extent not otherwise included
therein, all goods which are so related to particular real estate that an
interest in them arises under real estate law and all additions and accessions
thereto, replacements thereof and substitutions therefor.
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SECOND: POSSESSION OF THE COLLATERAL. Until default, the Debtor may
have possession of the Collateral and use it in any lawful manner not
inconsistent with this Agreement, the terms of any other agreement between the
Debtor and the Secured Party, or with the terms or conditions of any policy of
insurance thereon, and may also sell or otherwise dispose of Inventory in the
ordinary course of business. A sale in the ordinary course of business does not
include a transfer in partial or total satisfaction of debt.
THIRD: THE OBLIGATIONS. The security interest herein granted is to
secure the payment of principal and interest as provided in the promissory note
of the Debtor of even date herewith, if any, and also any and all other
indebtedness, liabilities and obligations of the Debtor to the Secured Party,
including guarantees, whether direct or indirect, absolute or contingent, due or
to become due, secured or unsecured, now existing or hereafter arising (the
"Obligations").
The Secured Party agrees to terminate its security interest as defined
herein upon payment of principal and interest as provided in the promissory note
and all other indebtedness, liabilities and obligations of the Debtor to the
Secured Party.
FOURTH: REPRESENTATIONS, WARRANTIES AND COVENANTS. The Debtor
represents, warrants and covenants as follows:
(A) That except for the security interest granted to Aavid Thermal
Technologies, Inc. and the security interest granted hereby, or otherwise
granted in favor of the Secured Party, the Debtor has, or in the case of
after-acquired Collateral, will have, good and marketable title to the
Collateral free from any adverse lien, security interest or encumbrance except
as permitted by the Loan Agreement; and that the Debtor will defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein;
(B) That all warranties, representations, statements and other
information furnished to the Secured Party by or on behalf of the Debtor are or
will be when the same are made or furnished, accurate and complete in all
material respects;
(C) That the Collateral is or will be kept and located at Debtor's
principal place of business at 111 South Worcester Street, Norton, Massachusetts
and the Debtor will give the Secured Party ten (10) days prior notice in writing
of any change in, addition to or discontinuance of the location where the
Collateral is kept and that the Debtor will not remove any Collateral from any
location without the prior written consent of the Secured Party;
(D) That if the Collateral or any part thereof is attached to real
estate, prior to the perfection of the security interest granted hereby, the
Debtor will, upon demand of the Secured Party, furnish the Secured Party with a
disclaimer or disclaimers satisfactory to the Secured Party and signed by all
persons having an interest in such real estate;
(E) That no financing statement covering any Collateral or any
proceeds thereof, except in favor of Aavid Thermal Technologies, Inc. and the
Secured Party, is on file in any public office and that, at the request of the
Secured Party, the Debtor will join with the Secured Party in executing one or
more financing statements pursuant to the Code in form satisfactory to the
Secured Party and will pay the cost of filing the same in all public offices
wherever filing is deemed by the Secured Party to be necessary or desirable;
(F) That the Debtor will not sell or offer to sell or otherwise
transfer the Collateral or any interest therein, except inventory in the
ordinary course of business, without the prior written consent of the Secured
Party provided, however, that damaged or worn equipment may be disposed of in
the ordinary course of business provided that it is replaced with equipment of
equal or greater value;
(G) That the Debtor shall have and maintain insurance at all times
with respect to all Collateral against risks of fire and such other risks
customarily insured against by others engaged in similar businesses to that of
the Debtor. Such
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insurance shall be payable to the Secured Party as loss payee. The Debtor shall
furnish to the Secured Party certificates or other evidence satisfactory to the
Secured Party of compliance with these insurance requirements. If any proceeds
under any insurance policies are paid to the Secured Party while any Obligations
are outstanding, the Secured Party may apply such proceeds to the payment of
such obligations or release such proceeds to the Debtor for the purpose of
replacing the lost, damaged or destroyed Collateral with respect to which such
proceeds were paid. The Debtor has the right of free choice in the selection of
the agent and insurer through or by which insurance required hereunder is to be
placed;
(H) That the Debtor will keep the Collateral free from any adverse
lien, security interest or encumbrance, except as permitted under the
Obligations, and in good order and repair and will not waste or destroy the
Collateral; and that the Secured Party may examine and inspect the Collateral at
any time, wherever located;
(I) That the Debtor will pay promptly when due all taxes and
assessments upon the Collateral or for its use or operation; and,
(J) That upon ten (10) days notice by the Secured Party, Debtor will
turn over to Secured Party for collection any of Debtor's receivables which the
Secured Party considers to have a material adverse impact on the Debtor's
financial condition, provided the Secured Party deems itself insecure by reason
thereof.
FIFTH: TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES. At its option,
the Secured Party may discharge taxes, liens or security interests or other
encumbrances at any time levied or placed upon the Collateral, may pay for
insurance on the Collateral and may pay for the maintenance and preservation of
the Collateral. Any payment made or expense incurred by the Secured Party
pursuant to this provision shall be payable by the Debtor to the Secured Party
on demand and shall constitute an Obligation secured hereby.
SIXTH: Miscellaneous Provisions.
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(A) 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 Debtor.
(B) The Debtor 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.
(C) 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, to the parties hereto at the addresses for each as
mentioned above.
(D) All rights of the Secured Party hereunder shall inure to the
benefit of its successors and assigns and all Obligations of the Debtor
hereunder shall bind successors and assigns.
(E) This Security Agreement and all of the rights, remedies and
duties of the Secured Party and the Debtor thereunder shall be governed by the
laws of the Commonwealth of Massachusetts.
(F) All agreements, representations and warranties made by the Debtor
herein or in any other document delivered to the Secured Party in connection
herewith shall survive the execution and delivery of the Agreement.
(G) The Debtor hereby appoints the Secured Party and any officer or
agent thereof as its attorney-in-fact and grants to the Secured Party, in the
place and stead of the Debtor or in its own name, the full power to do, in its
discretion, all things and acts necessary to accomplish the purpose of this
Agreement. The Debtor releases the Secured Party from any liability arising from
any good faith act or acts hereunder or in furtherance hereof. This power of
attorney is coupled with an interest and shall be irrevocable.
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SEVENTH: EVENTS OF DEFAULT. Subject to the terms of the Obligations,
and of any other agreement between the Debtor and the Secured Party, the Debtor
shall be in default under this Agreement upon the happening of any of the
following events (the "Events of Default"):
(A) The occurrence of an Event of Default as specified in the
Obligations;
(B) Breach by the Debtor of any representation or warranty contained
herein or in the Obligations;
(C) The acceleration of the maturity of any indebtedness of the Debtor
to others under any indenture, agreement or undertaking, such acceleration
having a material effect on the net worth or financial condition of the Debtor,
the value of the Collateral, or the rights and remedies of the Secured Party
under any agreement with the Debtor;
(D) Substantial loss, theft, damage, destruction or encumbrance of any
Collateral, such loss, theft, damage or destruction not being substantially
insured against or such encumbrance not being discharged within thirty (30)
days;
(E) The entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Debtor in any involuntary case
under the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator,
(or similar official) of the Debtor or for any substantial part of its property,
or ordering the winding-up or liquidation of its affairs and the continuance of
any such decree or order unstayed and in effect for a period of thirty (30)
consecutive days; or
(F) The commencement by the Debtor of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or the
consent by it to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of the Debtor or for any substantial part of its property, or the
making by it of any assignment for the benefit of creditors, or the failure of
the Debtor generally to pay its debts as such debts become due, or the taking of
any action by the Debtor in furtherance of any of the foregoing.
EIGHTH: REMEDIES. If any Event of Default shall occur, then in such
event and at any time thereafter the Secured Party may declare all obligations
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 the
Obligations, this Agreement, and in any other agreement between the parties or
in any note secured hereby or thereby, may exercise and shall have the rights
and remedies of a Secured Party under the Code including the right to collect
receivables. The rights and remedies hereunder provided are cumulative and may
be exercised singly or concurrently, and are not exclusive of any rights and
remedies provided at law.
The Secured Party may exercise its rights hereunder without giving the
Debtor any opportunity for hearing to be held before the Secured Party, through
judicial process or otherwise, takes possession of the Collateral upon the
occurrence of any Event of Default and the Debtor expressly waives the right, if
any, to such prior hearing.
The Secured Party may require the Debtor to assemble the Collateral and
to make it available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to both parties.
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 the Debtor reasonable notice of time and place of any public sale
thereof or the time
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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 the Debtor at its above-mentioned address, at least ten (10)
days before the time of sale or disposition of the Collateral.
The Debtor shall pay to the Secured Party, on demand, any and all
expenses including all reasonable attorneys' fees, and other expenses, incurred
or paid by Secured Party in protecting or enforcing its rights, powers and
remedies hereunder or under any other agreement between the parties or under any
note secured hereby or thereby, or in any way connected with any proceeding or
action by whomsoever initiated concerning the protection or enforcement thereof.
No delay in taking any action with respect to any Event of Default nor
any course of action by the Secured Party shall affect the rights of the Secured
Party to take later 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
of the same default on a future occasion.
This security interest to Secured Party is subject to a prior security
interest granted by the Debtor to Aavid Thermal Technologies, Inc.
Executed and delivered as an instrument under seal of the date first
above written.
ATTEST: CERAMICS PROCESS SYSTEMS CORPORATION
/s/ Peter F. Valentine By:/s/ Grant C. Bennett
- -------------------------- ------------------------------
Its:
KILBURN ISOTRONICS, INC.
/s/ A. Arnold Waterman By:/s/ Donald A. Roach
- -------------------------- ------------------------------
President Its: Chairman
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Schedule A
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Schedule A to a Patent Assignment of Security Agreement date December 30, 1995
by and between Ceramics Systems Corporation and Kilburn Isotronics, Inc.
Issue
Patent Number Title Date
- --------------------------------------------------------------------------------
4,769,294 Alumina Material for Low 9/6/88
Temperature Co-Sintering
with Refractory Metallization
4,781,671 Systems for Classification of 11/1/88
Particulate Materials
4,788,046 Method for Producing Material 11/29/88
for Co-Sintering
4,816,182 Liquefaction of Highly Loaded 3/28/89(CPS/MPS)
Particulate Suspensions
4,835,039 Tungsten Paste for Co-Sintering 5/30/89
with Pure Alumina and Method for
Producing same
4,861,641 Substrate with Dense Metal Visa 8/29/89
4,861,646 Co-Fired Metal-Ceramic 8/29/89
Package
4,882,088 Slurry for Centrifugal Classification 11/21/89
for Colloidal Particles
4,882,304 Liquification of Highly Loaded 11/21/89(CPS/MPS)
Composite Systems
4,888,313 Refractory Ceramic for Contact 12/19/89
with Molten Metals
4,894,273 Bonding Additives for Refractory 1/16/90
Metallization Inks
4,904,411 Highly Loaded, Pourable 2/27/90(CPS/MPS)
Suspensions of Particulate Materials
4,983,157 Centrifugation System Using 1/8/91
Static Layer
5,011,726 Substrates with Dense Metal Visa 4/30/91
Produced as CO-Sintered and
Porous Back-Filled Visa
5,047,181 Forming of Complex High 9/10/91(CPS/MPS)
Performance Ceramic and
Metallic Shapes
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6,047,182 Complex Ceramic and Metallic 9/10/91(CPS/MPS)
Shapes by Low Pressure Forming
and Sublimative Drying
5,062,891 Metallic Inks for Co-Sintering 11/5/91
Process
The patents designated as "CPS/MPS" are co-owned by Ceramic Process
Systems and Metals Process Systems, a French Societe Anonyme of which CPS is a
40% shareholder.
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