EXHIBIT 10.33
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT is made as of this 28th day of February, 2000,
by and between MFIC Corporation, a Delaware corporation (the "Company"), with a
place of business at 00 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 and National
Bank of Canada, a Canadian chartered bank with a place of business at Xxx
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Lender").
WHEREAS, the Company is the legal and beneficial owner of all of the
issued and outstanding shares of each class of the capital stock of each of the
corporations described on Annex A as the same may be amended from time to time
pursuant to the terms hereof (the "Subsidiaries"); and
WHEREAS, the Company has entered into a Revolving Credit and Term Loan
Agreement of even date herewith (as amended and in effect from time to time, the
"Credit Agreement"), with the Lender, pursuant to which the Lender, subject to
the terms and conditions contained herein, is to make loans to the Company; and
WHEREAS, pursuant to a certain Security Agreement (Inventory, Accounts,
Equipment and Other Property) of even date herewith (as amended from time to
time, the "Security Agreement"), the Borrower has granted to the Lender a
security interest in the Borrower's Collateral (as defined in the Security
Agreement) to secure the Liabilities (as defined in the Credit Agreement) of the
Borrower to the Lender;
WHEREAS, it is a condition precedent to the Lender making any loans to the
Company under the Credit Agreement and in order to more fully vest the security
interest granted in the Security Agreement, the Company execute and deliver to
the Lender a pledge agreement in substantially the form hereof; and
WHEREAS, the Company wishes to grant pledges and security interests in
favor of the Lender as herein provided;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ss.1. Pledge of Stock, Etc.
(1) The Company hereby pledges, assigns, grants a security interest
in, and delivers to the Lender, all of the shares of capital stock of the
Subsidiaries of every class, as more fully described on Annex A hereto, to be
held by the Lender subject to the terms and conditions hereinafter set forth.
The certificates for such shares, accompanied by stock powers or other
appropriate instruments of assignment thereof duly executed in blank by the
Company, have been delivered to the Lender.
(2) In case the Company shall acquire any additional Stock of any
Subsidiary not set forth on Annex A or additional shares of the capital stock of
any Subsidiary or corporation which is the successor of any Subsidiary, or any
securities exchangeable for or convertible into shares of such capital stock of
any class of any Subsidiary, by purchase or otherwise, then the Company shall
forthwith deliver to and pledge such shares or other securities to the Lender
under this Agreement. The Company agrees that the Lender may from time to time
attach as Annex A hereto an updated list of the shares of capital stock or
securities at the time pledged with the Lender hereunder.
ss.2. Definitions. The term "Liabilities" and all other capitalized terms
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement. Terms used herein and not defined in the
Credit Agreement or otherwise defined herein that are defined in the Uniform
Commercial Code of Massachusetts have such defined meanings herein, unless the
context otherwise indicated or requires, and the following terms shall have the
following meanings:
Stock. Includes the shares of stock described in Annex A attached (as
amended from time to time pursuant to the terms hereof) hereto and any
additional shares of stock at the time pledged with the Lender hereunder.
Stock Collateral. The property at any time pledged to the Lender hereunder
and all income therefrom, increases therein and proceeds thereof, but excluding
from the definition of "Stock Collateral" any income, increases or proceeds
thereof and any and all substitutions, replacements, and additions thereof.
ss.3. Security for Liabilities. This Agreement and the security interest
in and pledge of the Stock Collateral hereunder are made with and granted to the
Lender as security for the payment and performance in full of all the
Liabilities.
ss.4. Liquidation, Recapitalization, Etc.
Any sums or other property paid or distributed upon or with respect to any
of the Stock, whether by dividend or redemption or upon the liquidation or
dissolution of the issuer thereof or otherwise, shall be paid over and delivered
to the Lender to be held by the Lender as security for the payment and
performance in full of all of the Liabilities and shall be applied in reduction
of the Liabilities in accordance with the terms and conditions of the Credit
Agreement. In case, pursuant to the recapitalization or reclassification of the
capital of the issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of the Stock or
any property shall be distributed upon or with respect to any of the Stock, the
property so distributed shall be delivered to the Lender to be held by Lender as
security for the payment and performance in full of all of the Liabilities and
shall be applied in reduction of the Liabilities in accordance with the terms
and conditions of the Credit Agreement. All sums of money and property paid or
distributed in respect of the Stock, whether as a dividend or upon such a
liquidation, dissolution, recapitalization or reclassification or otherwise,
that are received by the Company shall, until paid or delivered to the Lender,
be held in trust for the Lender as security for the payment and performance in
full of all of the Liabilities.
ss.5. Warranty of Title; Authority. The Company hereby represents and
warrants that: (a) the Company has good and marketable title to the Stock
described in ss.1, subject to no pledges, liens, security interests, charges,
options, restrictions or other encumbrances except the pledge and security
interest created by this Agreement, (b) the Company has full power, authority
and legal right to execute, deliver and perform its obligations under this
Agreement and to pledge and grant a security interest in all of the Stock
Collateral pursuant to this Agreement, and the execution, delivery and
performance hereof and the pledge of and granting of a security interest in the
Stock Collateral hereunder have been duly authorized by all necessary corporate
or other action and do not contravene any law, rule or regulation or any
provision of the Company's charter documents or by-laws or of any judgment,
decree or order of any tribunal or of any agreement or instrument to which the
Company is a party or by which it or any of its property is bound or affected or
constitute a default; thereunder, and (c) the information set forth in Annex A
hereto relating to the Stock is true, correct and complete in all respects. The
Company covenants that it will defend the Lender's rights and security interest
in such Stock against the claims and demands of all persons whomsoever. The
Company further covenants that it will have the like title to and right to
pledge and grant a security
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interest in the Stock Collateral hereafter pledged or in which a security
interest is granted to the Lender hereunder and will likewise defend the
Lender's rights, pledge and security interest thereof and therein.
ss.6. Voting, Etc., Prior to Maturity. So long as no Default or Event of
Default shall have occurred and be continuing, the Company shall be entitled to
vote the Stock and to give consents, waivers and ratifications in respect of the
Stock; provided, however, that no vote shall be cast or consent waiver or
ratification given by the Company if the effect thereof would impair any of the
Stock Collateral or be inconsistent with or result in any violation of any of
the provisions of the Credit Agreement. All such rights of the Company to vote
and give consents, waivers and ratifications with respect to the Stock shall, at
the Lender's option, as evidenced by the Lender's notifying the Company of such
election, cease in case a Default or an Event of Default shall have occurred and
be continuing.
ss.7. Remedies
(1) If a Default or an Event of Default shall have occurred and be
continuing, the Lender shall thereafter have the following rights and remedies
(to the extent permitted by applicable law) in addition to the rights and
remedies of a secured party under the Uniform Commercial Code of Massachusetts,
all such rights and remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently, at such time or times as the Lender
deems expedient:
(1) if the Lender so elects and gives notice of such election
to the Company, the Lender may vote any or all shares of the Stock
(whether or not the same shall have been transferred into its name or the
name of its nominee or nominees) for any lawful purpose, including,
without limitation, if the Lender so elects, for the liquidation of the
assets of the issuer thereof, and give all consents, waivers and
ratifications in respect of the Stock and otherwise act with respect
thereto as though it were the outright owner thereof (the Company hereby
irrevocably constituting and appointing the Lender the proxy and
attorney-in-fact of the Company, with full power of substitution, to do
so);
(2) the Lender may demand, xxx for, collect or make any
compromise or settlement the Lender deems suitable in respect of any Stock
Collateral;
(3) the Lender may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Stock Collateral, for cash or
credit or both and upon such terms at such place or places, at such time
or times and to such entities or other persons as the Lender thinks
expedient, all without demand for performance by the Company or any notice
or advertisement whatsoever except as expressly provided herein or as may
otherwise be required by law;
(4) the Lender may cause all or any part of the Stock held by
it to be transferred into its name or the name of its nominee or nominees;
and
(5) the Lender may set off against the Liabilities any and all
sums deposited with it or held by it.
(2) In the event of any disposition of the Stock Collateral as
provided in clause (iii) of ss.7(a), the Lender shall give to the Company at
least ten (10) Business Days prior written notice of the time and place of any
public sale of the Stock Collateral or of the time after which any private sale
or any other intended disposition is to be made. The Company hereby acknowledges
that ten (10) Business Days prior written notice of such sale or sales shall be
reasonable notice. The Lender may enforce its rights hereunder without any other
notice and without compliance with any
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other condition precedent now or hereunder imposed by statute, rule of law or
otherwise (all of which are hereby expressly waived by the Company, to the
fullest extent permitted by law). The Lender may buy any part or all of the
Stock Collateral at any public sale and if any part or all of the Stock
Collateral is of a type customarily sold in a recognized market or is of the
type which is the subject of widely-distributed standard price quotations, the
Lender may buy at private sale and may make payments thereof by any means. The
Lender may apply the cash proceeds actually received from any sale or other
disposition to the reasonable expenses of retaking, holding, preparing for sale,
selling and the like, to reasonable attorneys fees, travel and all other
expenses which may be incurred by the Lender in attempting to collect the
Liabilities or to enforce this Agreement or in the prosecution or defense of any
action or proceeding related to the subject matter of this Agreement, and then
to the Liabilities in the order set forth in such order or preference as the
Lender may determine after proper allowance for Liabilities not then due. Only
after such applications, and after payment by the Lender of any amount required
by ss.9-504(1)(c) of the Uniform Commercial Code of the Commonwealth of
Massachusetts, need the Lender account to the Company for any surplus. To the
extent that any of the Liabilities are to be paid or performed by a person other
than the Company, the Company waives and agrees not to assert any rights or
privileges which it may have under ss.9-112 of the Uniform Commercial Code of
the Commonwealth of Massachusetts.
(3) If the Lender shall determine to exercise its right to sell any
or all of the Stock pursuant to this ss.7, and if in the opinion of counsel for
the Lender it is necessary, or if in the reasonable opinion of the Lender it is
advisable, to have the Stock, or that portion thereof to be sold, registered
under the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), the Company agrees to use its best efforts to cause the issuer or issuers
of the Stock contemplated to be sold, to execute and deliver, and cause the
directors and officers of such issuer to execute and deliver, all at the
Company's expense, all such instruments and documents, and to do or cause to be
done all such other acts and things as may be necessary or, in the reasonable
opinion of the Lender, advisable to register such Stock under the provisions of
the Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for a period of 9 months from the date
such registration statement became effective, and to make all amendments thereto
or to the related prospectus or both that, in the reasonable opinion of the
Lender, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. The Company agrees to use its best efforts to
cause such issuer or issuers to comply with the provisions of the securities or
"Blue Sky" laws of any jurisdiction which the Lender shall designate and to
cause such issuer or issuers to make available to its security holders, as soon
as practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(4) The Company recognizes that the Lender may be unable to effect a
public sale of the Stock by reason of certain prohibitions contained in the
Securities Act, federal banking laws, and other applicable laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers. The Company agrees that any such private sales may be at prices
and other terms less favorable to the seller than if sold at public sales and
that such private sales shall not by reason thereof be deemed not to have been
made in a commercially reasonable manner. The Lender shall be under no
obligation to delay a sale of any of the Stock for the period of time necessary
to permit the issuer of such securities to register such securities for public
sale under the Securities Act, or such other federal banking or other applicable
laws, even if the issuer would agree to do so. Subject to the foregoing, the
Lender agrees that any sale of the Stock shall be made in a commercially
reasonable manner, and the Company agrees to use its best efforts to cause the
issuer or issuers of the Stock contemplated to be sold, to execute and deliver,
and cause the directors and officers of such issuer to execute and deliver, all
at the Company's expense, all such instruments and documents, and to do or cause
to be done all such other acts and things as may be necessary or, in the
reasonable opinion of the Lender, advisable to exempt such Stock from
registration under the
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provisions of the Securities Act, and to make all amendments to such instruments
and documents which, in the opinion of the Lender, are necessary or advisable,
all in conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. The
Company further agrees to use its best efforts to cause such issuer or issuers
to comply with the provisions of the securities or "Blue Sky" laws of any
jurisdiction which the Lender shall designate and, if required, to cause such
issuer or issuers to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(5) The Company further agrees to do or cause to be done all such
other acts and things as may be reasonably necessary to make any sales of any
portion or all of the Stock pursuant to this ss.7 valid and binding and in
compliance with any and all applicable laws (including, without limitation, the
Securities Act, the Securities Exchange Act of 1934, as amended, the rules and
regulations of the Securities and Exchange Commission applicable thereto and all
applicable state securities or "Blue Sky" laws), regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Company's expense. The Company further agrees
that a breach of any of the covenants contained in this ss.7 will cause
irreparable injury to the Lender, that the Lender has no adequate remedy at law
in respect of such breach and, as a consequence, agrees that each and every
covenant contained in this ss.7 shall be specifically enforceable against the
Company and the Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
ss.8. Marshalling. The Lender shall not be required to marshal any present
or future security for (including but not limited to this Agreement and the
Stock Collateral), or other assurances of payment of, the Liabilities or any of
them, or to resort to such security or other assurances of payment in any
particular order. All of the Lender's rights hereunder and in respect of such
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Company hereby agrees that it will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Lender's rights under this Agreement or under any other instrument
evidencing any of the Liabilities or under which any of the Liabilities is
outstanding or by which any of the Liabilities is secured or payment thereof is
otherwise assured, and to the extent that it lawfully may the Company hereby
irrevocably waives the benefits of all such laws.
ss.9. Company's Liabilities Not Affected. The obligations of the Company
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (a) any exercise or nonexercise, or any waiver, by the Lender of
any right, remedy, power or privilege under or in respect of any of the
Liabilities or any security thereof (including this Agreement); (b) any
amendment to or modification of the Credit Agreement, the other Loan Documents
or any of the Liabilities; (c) any amendment to or modification of any
instrument (other than this Agreement) securing any of the Liabilities; or (d)
the taking of additional security for, or any other assurances of payment of,
any of the Liabilities or the release or discharge or termination of any
security or other assurances of payment or performance for any of the
Liabilities; whether or not the Company shall have notice or knowledge of any of
the foregoing.
ss.10. Transfer, Etc., by Company. Without the prior written consent of
the Lender, the Company will not sell, assign, transfer or otherwise dispose of,
grant any option with respect to, or pledge or grant any security interest in or
otherwise encumber or restrict any of the Stock Collateral or any interest
therein, except for the pledge thereof and security interest therein provided
for in this Agreement.
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ss.11. Further Assurances. The Company will do all such acts, and will
furnish to the Lender all such financing statements, certificates, legal
opinions and other documents and will obtain all such governmental consents and
corporate approvals and will do or cause to be done all such other things as the
Lender may reasonably request from time to time in order to give full effect to
this Agreement and to secure the rights of the Lender hereunder, all without any
cost or expense to the Lender. If the Lender so elects, a photocopy of this
Agreement may at any time and from time to time be filed by the Lender as a
financing statement in any recording office in any jurisdiction.
ss.12. Lender's Exoneration. Under no circumstances shall the Lender be
deemed to assume any responsibility for or obligation or duty with respect to
any part or all of the Stock Collateral of any nature or kind or any matter or
proceedings arising out of or relating thereto, other than [ (a) ] to exercise
reasonable care in the physical custody of the Stock Collateral and (b) after [a
Default or an Event of Default shall have occurred and be continuing to act in a
commercially reasonable manner. The Lender shall not be required to take any
action of any kind to collect, preserve or protect its or the Company's rights
in the Stock Collateral or against other parties thereto. The Lender's prior
recourse to any part or all of the Stock Collateral shall not constitute a
condition of any demand, suit or proceeding for payment or collection of any of
the Liabilities.
ss.13. No Waiver, Etc.. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the party to be charged. No act, failure or delay by
the Lender shall constitute a waiver of its rights and remedies hereunder or
otherwise. No single or partial waiver by the Lender of any default or right or
remedy that it may have shall operate as a waiver of any other default, right or
remedy or of the same default, right or remedy on a future occasion. The Company
hereby waives presentment, notice of dishonor and protest of all instruments,
included in or evidencing any of the Liabilities or the Stock Collateral, and
any and all other notices and demands whatsoever (except as expressly provided
herein or in the Credit Agreement).
ss.14. Notices, Etc. All notices, requests and other communications
hereunder shall be made in the manner set forth in Section 17 of the Credit
Agreement.
ss.15. Termination. Upon final payment and performance in full of the
Liabilities, and the termination of the Credit Agreement, this Agreement shall
terminate and the Lender shall, at the Company's request and expense, return
such Stock Collateral in the possession or control of the Lender as has not
theretofore been disposed of pursuant to the provisions hereof, together with
any moneys and other property at the time held by the Lender hereunder.
ss.16. Overdue Amounts. Until paid, all amounts due and payable by the
Company hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Credit Agreement.
ss.17. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Company
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Company by mail at the address
specified in Section 17 of the Credit Agreement. The Company hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
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ss.18. Waiver of Jury Trial. THE COMPANY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Company waives
any right which it may have to claim or recover against National Bank of Canada
(and not its successors and assigns) in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Company (a)
certifies that neither the Lender nor any representative, agent or attorney of
the Lender has represented, expressly or otherwise, that the Lender would not,
in the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that, in entering into the Credit Agreement [and the other Loan
Documents to which the Lender is a party], the Lender is relying upon, among
other things, the waivers and certifications contained in this ss.18.
ss.19. Miscellaneous. The headings of each section of this Agreement are
for convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Company and its respective successors and assigns, and shall inure to the
benefit of the Lender and its successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall be in no way affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. The Company acknowledges
receipt of a copy of this Agreement.
This Agreement is intended to be supplemental of the Security Agreement.
All provisions of the Security Agreement from the Borrower to the Lender shall
apply to the Stock Collateral and the Lender shall have the same rights with
respect to any and all Stock Collateral granted the Lender to secure the
Liabilities hereunder as thereunder. In the event of a conflict between this
Agreement and the Security Agreement, the terms of this Agreement shall control
with respect to the Security Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Company and the
Lender have caused this Agreement to be executed as of the date first above
written.
MFIC CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
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Title: Chairman and CEO
------------------------
NATIONAL BANK OF CANADA
By: /s/ A. Xxxxx Xxxxxxx
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Title: Vice President
------------------------
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------
Title: Vice President
------------------------
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The undersigned Subsidiaries hereby join in the above Agreement for the
sole purpose of consenting to and being bound by the provisions of ss.ss.4, 6
and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good
faith with the Lender and the Company in carrying out such provisions.
MICROFLUIDICS CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------
Title: Chairman and CEO
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None of the issuers has any authorized, issued or outstanding shares of
its capital stock of any class or any commitments to issue any shares of its
capital stock of any class or any securities convertible into or exchangeable
for any shares of its capital stock of any class except as otherwise stated in
this Annex A.
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
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