Execution Copy
THIS NOTE PURCHASE AGREEMENT IS SUBJECT TO THE SUBORDINATION
AGREEMENT DATED AS OF JULY 31, 2012 AMONG THE COMPANY, CERTAIN
AFFILIATES OF THE COMPANY, THE PURCHASER AND SOVEREIGN BANK,
N.A.
DYNASIL CORPORATION OF AMERICA
Note Purchase Agreement
Dated as of July 31, 0000
XXXXXXX XXXXXXXXXXX XX XXXXXXX
Note Purchase Agreement
Dated as of July 31, 2012
INDEX
Page
ARTICLE I 1
PURCHASE, SALE AND TERMS OF NOTES 1
1.01. The Notes 1
1.02. Purchase and Sale of Notes 1
(a) The Closing 1
(b) Use of Proceeds 1
1.03. Payments and Endorsements 2
1.04. Redemptions 2
(a) Required Redemptions 2
(b) Optional Redemptions With Premium 2
(c) Notice of Redemptions; Pro rata Redemptions 2
1.05. Payment on Non-Business Days 3
1.06. Registration, etc 3
1.07. Transfer and Exchange of Notes 3
1.08. Replacement of Notes 3
1.09. Subordination 4
(a) Payment of Senior Debt 4
(b) No Payment on Notes Under Certain Conditions 5
(c) Payments Held in Trust 5
(d) Subrogation 5
(e) Scope of Section 5
(f) Survival of Rights 6
(g) Amendment or Waiver 6
(h) Senior Debt Defined 6
(i) Subordination Agreement 6
1.10. Representations by the Purchaser 6
1.11. Disclosure of Information by the Purchaser 7
ARTICLE II 8
CONDITIONS TO PURCHASER'S OBLIGATION 8
2.01. Representations and Warranties 8
2.02. Documentation at Closing 8
2.03. Other Transactions at Closing 9
ARTICLE III 9
REPRESENTATIONS AND WARRANTIES 9
3.01. Organization and Standing 10
3.02. Corporate Action 10
3.03. Governmental Approvals 10
3.04. Litigation 10
3.05. Compliance with Other Instruments 11
3.06. Federal Reserve Regulations 11
3.07. Title to Assets, Patents 11
3.08. Financial Information 12
3.09. Taxes 12
3.10. ERISA 12
3.11. Transactions with Affiliates 13
3.12. Assumptions or Guaranties of Indebtedness of Other
Persons 13
3.13. Investments in Other Persons 13
3.14. Equal Employment Opportunity 13
3.15. Status of Notes as Qualified Investments 14
3.16. Securities Act 14
3.17. Disclosure 14
3.18. No Brokers or Finders 14
3.19. Other Agreements of Officers 15
3.20. Capitalization; Status of Capital Stock 15
3.21. Labor Relations 15
3.22. Insurance 15
3.23. Books and Records 15
3.24. Foreign Corrupt Practices Act 16
3.25. Solvency, Etc 16
ARTICLE IV 16
COVENANTS OF THE COMPANY 16
4.01. Affirmative Covenants of the Company 16
(a) Punctual Payment 16
(b) Payment of Taxes and Trade Debt 16
(c) Maintenance of Insurance 17
(d) Preservation of Corporate Existence 17
(e) Compliance with Laws 17
(f) Visitation Rights 17
(g) Keeping of Records and Books of Account 17
(h) Maintenance of Properties, etc 17
(i) Compliance with ERISA 18
(j) Maintenance of Consolidated Maximum Leverage Ratio 18
(k) Maintenance of Consolidated Fixed
Charge Coverage Ratio 18
(l) Foreign Corrupt Practices Act 19
(m) Equal Employment Opportunity 19
(n) Status of Notes as Qualified Investments 19
(o) Compensation 19
(p) Compliance with Security Documents 19
(q) Additional Subsidiaries 19
4.02. Negative Covenants of the Company 20
(a) Liens 20
(b) Indebtedness 21
(c) Lease Obligations 21
(d) Assumptions or Guaranties of Indebtedness of Other
Persons 21
(e) Mergers, Sale of Assets, etc 22
(f) Investments in Other Persons 22
(g) Distributions 22
(h) Dealings with Affiliates 23
(i) Maintenance of Ownership of Subsidiaries 23
(j) Change in Nature of Business 23
4.03. Reporting Requirements 23
ARTICLE V 25
EVENTS OF DEFAULT 25
5.01. Events of Default 25
5.02. Annulment of Defaults 26
ARTICLE VI 27
DEFINITIONS AND ACCOUNTING TERMS 27
6.01. Certain Defined Terms 27
6.02. Accounting Terms 31
ARTICLE VII 31
MISCELLANEOUS 31
7.01. No Waiver; Cumulative Remedies 31
7.02. Amendments, Waivers and Consents 32
7.03. Addresses for Notices, etc 32
7.04. Costs, Expenses and Taxes 33
7.05. Binding Effect; Assignment 33
7.06. Survival of Representations and Warranties 33
7.07. Prior Agreements 33
7.08. Severability 33
7.09. Governing Law; Construction; Forum Selection 33
7.10. Headings 34
7.11. Sealed Instrument 34
7.12. Counterparts 34
7.13. Further Assurances 34
EXHIBITS
1.01 Form of Notes
2.02(a) Form of Company Security Agreement
2.02(b) Form of Unconditional Guaranty
2.02(c) Form of Guarantor Security Agreement
2.02(e) Matters to be Covered by Opinion Letter
3.01 Schedule of Subsidiaries
3.05 Schedule of Indebtedness
3.07 Schedule of Mortgages, Pledges, etc.
3.10 Schedule of ERISA Plans
3.11 Schedule of Transactions with Affiliates
3.15 Certificate re "Qualified Investments"
DYNASIL CORPORATION OF AMERICA
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
As of July 31, 2012
Massachusetts Capital Resource Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Notes due 2017
Gentlemen:
Dynasil Corporation of America, a Delaware corporation (the
"Company"), hereby agrees with Massachusetts Capital Resource
Company (the "Purchaser") as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF NOTES
1.01. The Notes. The Company has authorized the issuance
and sale to the Purchaser of the Company's Notes, due 2017, in
the original principal amount of $3,000,000. The Notes shall be
substantially in the form set forth in Exhibit 1.01 hereto and
are herein referred to individually as a "Note" and collectively
as the "Notes", which terms shall also include any notes
delivered in exchange or replacement therefor.
1.02. Purchase and Sale of Notes .
(a) The Closing. The Company agrees to issue and sell
to the Purchaser, and, subject to and in reliance upon the
representations, warranties, terms and conditions of this
Agreement, the Purchaser agrees to purchase, the Notes for an
aggregate purchase price of $3,000,000. Such purchase and sale
shall take place at a closing (the "Closing") to be held at the
Law Office of Xxxxxx X. Xxxxxxxxx, 00 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxxxxx, on July 31, 2012 at 11:00 A.M., or on such
other date and at such time as may be mutually agreed upon. At
the Closing the Company will initially issue one Note, payable to
the order of the Purchaser, in the principal amount of
$3,000,000, against delivery to the Company of the full purchase
price for the Note by receipt of a wire transfer in the amount of
$3,000,000.
(b) Use of Proceeds. The Company agrees to use the
full proceeds from the sale of the Notes solely to repay those
certain promissory notes, each dated as of June 7, 2012, issued
by the Company in favor of the Xxxxxx Xxxxxx 1998 Family Trust,
the Victoria Xxxx Xxxxxx Trust and the Xxxxxx Xxxxxx Entine
Trust, in the original aggregate principal amount of $1,857,546
(collectively, the "Entine Indebtedness"), and for working
capital and agrees that full proceeds from the sale of the Notes
will be utilized for purposes which increase or maintain equal
opportunity employment in the Commonwealth of Massachusetts.
1.03. Payments and Endorsements. Payments of principal,
interest and premium, if any, on the Notes, shall be made
directly by check duly mailed or delivered to the Purchaser at
its address referred to in Section 7.03 hereof or, if requested
by the Purchaser, by wire transfer to an account designated by
the Purchaser, without any presentment or notation of payment,
except that prior to any transfer of any Note, the holder of
record shall endorse on such Note a record of the date to which
interest has been paid and all payments made on account of
principal of such Note.
1.04. Redemptions.
(a) Required Redemptions. Beginning on and with
September 30, 2015, and on the last day of each calendar month
thereafter through and including July 31, 2017, the Company will
redeem, without premium, $130,434.00 in principal amount of the
Notes, or such lesser amount as may be then outstanding, together
with all accrued and unpaid interest then due on the amount so
redeemed. On the stated or accelerated maturity of the Notes,
the Company will pay the principal amount of the Notes then
outstanding together with all accrued and unpaid interest then
due thereon. No optional redemption of less than all of the
Notes shall affect the obligation of the Company to make the
redemptions required by this subsection.
(b) Optional Redemptions With Premium. The Company
may at any time redeem the Notes in whole or in part (in integral
multiples of $50,000) together with interest due on the amount so
redeemed through the date of redemption, and a premium equal to
the percentage of the principal amount of the Notes redeemed
under this subsection applicable to the period in which such
redemption is made, as follows:
Period Ending Premium
July 31, 2013 8.0%
July 31, 2014 6.0%
July 31, 2015 4.0%
thereafter 0%
The foregoing provisions of this subsection 1.04(b) to the
contrary notwithstanding, if the Company raises, on and after the
date of this Agreement and on and prior to January 31, 2013, new
equity of not less than $1,000,000, then, in such event, the
Company may, on or before January 31, 2013, redeem up to
$1,000,000 in principal amount of the Notes, together with
interest due on the amount so redeemed, but without premium.
(c) Notice of Redemptions; Pro rata Redemptions. Notice of
any optional redemptions pursuant to subsection 1.04(b) shall be
given to all registered holders of the Notes at least ten (10)
business days prior to the date of such redemption. Each
redemption of Notes pursuant to subsections 1.04(a) or (b) shall
be made so that the Notes then held by each holder shall be
redeemed in a principal amount which shall bear the same ratio to
the total principal amount of Notes being redeemed as the
principal amount of Notes then held by such holder bears to the
aggregate principal amount of the Notes then outstanding.
1.05. Payment on Non-Business Days. Whenever any payment
to be made shall be due on a Saturday, Sunday or a public holiday
under the laws of the Commonwealth of Massachusetts, such payment
may be made on the next succeeding business day, and such
extension of time shall in such case be included in the
computation of payment of interest due.
1.06. Registration, etc. The Company shall maintain at its
principal office a register of the Notes and shall record therein
the names and addresses of the registered holders of the Notes,
the address to which notices are to be sent and the address to
which payments are to be made as designated by the registered
holder if other than the address of the holder, and the
particulars of all transfers, exchanges and replacements of
Notes. No transfer of a Note shall be valid unless made on such
register for the registered holder or his executors or
administrators or his or their duly appointed attorney, upon
surrender therefor for exchange as hereinafter provided,
accompanied by an instrument in writing, in form and execution
reasonably satisfactory to the Company. Each Note issued
hereunder, whether originally or upon transfer, exchange or
replacement of a Note or Notes, shall be registered on the date
of execution thereof by the Company and shall be dated the date
to which interest has been paid on such Notes or Note. The
registered holder of a Note shall be that Person in whose name
the Note has been so registered by the Company. A registered
holder shall be deemed the owner of a Note for all purposes of
this Agreement and, subject to the provisions hereof, shall be
entitled to the principal, premium, if any, and interest
evidenced by such Note free from all equities or rights of setoff
or counterclaim between the Company and the transferor of such
registered holder or any previous registered holder of such Note.
1.07. Transfer and Exchange of Notes. The registered
holder of any Note or Notes may, prior to maturity or prepayment
thereof, surrender such Note or Notes at the principal office of
the Company for transfer or exchange. Within a reasonable time
after notice to the Company from a registered holder of its
intention to make such exchange and without expense (other than
transfer taxes, if any) to such registered holder, the Company
shall issue in exchange therefor another Note or Note, in such
denominations as requested by the registered holder, for the same
aggregate principal amount as the unpaid principal amount of the
Note or Notes so surrendered, and having the same maturity and
rate of interest, containing the same provisions and subject to
the same terms and conditions as the Note or Notes so
surrendered. Each new Note shall be made payable to such Person
or Persons, or registered assigns, as the registered holder of
such surrendered Note or Notes may designate, and such transfer
or exchange shall be made in such a manner that no gain or loss
of principal or interest shall result therefrom.
1.08. Replacement of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or
mutilation of any Note and, if requested in the case of any such
loss, theft or destruction, upon delivery of an indemnity bond or
other agreement or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender
and cancellation of such Note, the Company will issue a new Note,
of like tenor and amount and dated the date to which interest has
been paid, in lieu of such lost, stolen, destroyed or mutilated
Note; provided, however, if any Note of which Massachusetts
Capital Resource Company, its nominee, or any of its partners is
the registered holder is lost, stolen or destroyed, the affidavit
of the President, Treasurer or any Assistant Treasurer of the
registered holder setting forth the circumstances with respect to
such loss, theft or destruction shall be accepted as satisfactory
evidence thereof, and no indemnification bond or other security
shall be required as a condition to the execution and delivery by
the Company of a new Note in replacement of such lost, stolen or
destroyed Note other than the registered holder's written
agreement to indemnify the Company.
1.09. Subordination. The Company, for itself, its
successors and assigns, covenants and agrees, and the Purchaser
and each successor holder of the Notes by its acceptance thereof,
likewise covenants and agrees, that notwithstanding any other
provision of this Agreement or the Notes, the payment of the
principal of and interest on each and all of the Notes shall be
subordinated in right of payment, to the extent and in the manner
hereinafter set forth, to the prior payment in full of all Senior
Debt (as hereinafter defined) at any time outstanding. The
provisions of this Section 1.09 shall constitute a continuing
representation to all Persons who, in reliance upon such
provisions, become the holders of or continue to hold Senior
Debt, and such provisions are made for the benefit of the holders
of Senior Debt, and such holders are hereby made obligees
hereunder the same as if their names were written herein as such,
and they or any of them may proceed to enforce such provisions
against the Company or against the holder of any Note without the
necessity of joining the Company as a party.
(a) Payment of Senior Debt. In the event of any
insolvency or bankruptcy proceedings, or any receivership,
liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Company or to its property,
or, in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Company or distribution or
marshalling of its assets or any composition with creditors of
the Company, whether or not involving insolvency or bankruptcy,
then and in any such event all Senior Debt shall be paid in full
before any payment or distribution of any character, whether in
cash, securities or other property, shall be made on account of
the Notes; and any such payment or distribution, except
securities which are subordinated and junior in right of payment
to the payment of all Senior Debt then outstanding in terms of
substantially the same tenor as this Section 1.09, which would,
but for the provisions hereof, be payable or deliverable in
respect of the Notes shall be paid or delivered directly to the
holders of Senior Debt (or their duly authorized
representatives), in the proportions in which they hold the same,
until all Senior Debt shall have been paid in full, and every
holder of the Notes by becoming a holder thereof shall have
designated and appointed the holder or holders of Senior Debt
(and their duly authorized representatives) as his or its agents
and attorney-in-fact to demand, xxx for, collect and receive such
Senior Debt holder's ratable share of all such payments and
distributions and to file any necessary proof of claim therefor
and to take all such other action in the name of the holders of
the Notes or otherwise, as such Senior Debt holders (or their
authorized representatives) may determine to be necessary or
appropriate for the enforcement of this Section 1.09. The
Purchaser and each successor holder of the Notes by its or his
acceptance thereof agrees to execute, at the request of the
Company, a separate agreement with any holder of Senior Debt on
the terms set forth in this Section 1.09, and to take all such
other action as such holder or such holder's representative may
request in order to enable such holder to enforce all claims upon
or in respect of such holder's ratable share of the Notes.
(b) No Payment on Notes Under Certain Conditions. In
the event that any default occurs in the payment of the principal
of or interest on any Senior Debt (whether as a result of the
acceleration thereof by the holders of such Senior Debt or
otherwise) and during the continuance of such default for a
period up to one hundred twenty (120) days and thereafter if
judicial proceedings shall have been instituted with respect to
such defaulted payment, or (if a shorter period) until such
payment has been made or such default has been cured or waived in
writing by such holder of Senior Debt then and during the
continuance of such event no payment of principal or interest on
the Notes shall be made by the Company or accepted by any holder
of the Notes who has received notice from the Company or from a
holder of Senior Debt of such events.
(c) Payments Held in Trust. In case any payment or
distribution shall be paid or delivered to any holder of the
Notes before all Senior Debt shall have been paid in full,
despite or in violation or contravention of the terms of this
subordination, such payment or distribution shall be held in
trust for and paid and delivered ratably to the holders of Senior
Debt (or their duly authorized representatives), until all Senior
Debt shall have been paid in full.
(d) Subrogation. Subject to the payment in full of
all Senior Debt and until the Notes shall be paid in full, the
holders of the Notes shall be subrogated to the rights of the
holders of Senior Debt (to the extent of payments or
distributions previously made to such holders of Senior Debt
pursuant to the provisions of subsections (a) and (c) of this
Section 1.09) to receive payments or distributions of assets of
the Company applicable to the Senior Debt. No such payments or
distributions applicable to the Senior Debt shall, as between the
Company and its creditors, other than the holders of Senior Debt
and the holders of the Notes, be deemed to be a payment by the
Company to or on account of the Notes; and for the purposes of
such subrogation, no payments or distributions to the holders of
Senior Debt to which the holders of the Notes would be entitled
except for the provisions of this Section 1.09 shall, as between
the Company and its creditors, other than the holders of Senior
Debt and the holders of the Notes, be deemed to be a payment by
the Company to or on account of the Senior Debt.
(e) Scope of Section. The provisions of this
Section 1.09 are intended solely for the purpose of defining the
relative rights of the holders of the Notes, on the one hand, and
the holders of the Senior Debt, on the other hand. Nothing
contained in this Section 1.09 or elsewhere in this Agreement or
the Notes is intended to or shall impair, as between the Company,
its creditors other than the holders of Senior Debt, and the
holders of the Notes, the obligation of the Company, which is
unconditional and absolute, to pay to the holders of the Notes
the principal of and interest on the Notes as and when the same
shall become due and payable in accordance with the terms
thereof, or to affect the relative rights of the holders of the
Notes and creditors of the Company other than the holders of the
Senior Debt, nor shall anything herein or therein prevent the
holder of any Note from accepting any payment with respect to
such Note or exercising all remedies otherwise permitted by
applicable law upon default under such Note, subject to the
rights, if any, under this Section 1.09 of the holders of Senior
Debt in respect of cash, property or securities of the Company
received by the holders of the Notes.
(f) Survival of Rights. The right of any present or
future holder of Senior Debt to enforce subordination of the
Notes pursuant to the provisions of this Section 1.09 shall not
at any time be prejudiced or impaired by any act or failure to
act on the part of the Company or any such holder of Senior Debt,
including, without limitation, any forbearance, waiver, consent,
compromise, amendment, extension, renewal, or taking or release
of security of or in respect of any Senior Debt or by
noncompliance by the Company with the terms of such subordination
regardless of any knowledge thereof such holder may have or
otherwise be charged with.
(g) Amendment or Waiver. The provisions of this
Section 1.09 may not be amended or waived in any manner which is
detrimental to any Senior Debt without the consent of the holders
of all then existing Senior Debt.
(h) Senior Debt Defined. The term "Senior Debt" shall
mean (i) all Indebtedness of the Company for money borrowed from
banks or other institutional lenders, including without
limitation Sovereign Bank, N.A., including any extension or
renewals thereof, whether outstanding on the date hereof or
thereafter created or incurred, which is not by its terms
subordinate and junior to or on a parity with the Notes and which
is permitted hereby at the time it is created or incurred, and
(ii) all guaranties by the Company which are not by their terms
subordinate and junior to or on a parity with the Notes and which
are permitted hereby at the time they are made, of Indebtedness
of any Subsidiary if such Indebtedness would have been Senior
Debt pursuant to the provisions of clause (i) of this sentence
had it been Indebtedness of the Company. In making any loans
which are (or the guaranties of which are) intended to be Senior
Debt, the lenders or purchasers shall be entitled to rely as to
the fact that such Indebtedness or guaranty is permitted hereby
upon a certificate by the Company's chief financial officer
purporting to show such Indebtedness or guaranty will not result
in the Company's failure to comply with the provisions of
Article IV hereof as of the date of the loan or guarantee.
(i) Subordination Agreement. For as long as there
shall be any outstanding Liabilities (as such term is defined in
that certain Loan and Security Agreement, dated as of July 7,
2010, between Sovereign Bank, N.A. and the Company, as amended,
modified or restated from time to time) or any obligation of any
nature on the part of Sovereign Bank, N.A., or its successors or
assigns, to extend credit, or make loans or advances to the
Company or any Subsidiary, the terms and conditions of the
Subordination Agreement (as hereinafter defined) shall supercede
and replace all of the terms and conditions of this Section 1.09,
except for clause (h) above and this clause (i).
1.10. Representations by the Purchaser. The Purchaser
represents and warrants that:
(a) Accredited Investor. Purchaser is an "accredited
investor," as defined in SEC Rule 501(a).
(b) Notes not Registered. Purchaser acknowledges that
the sale of the Notes has not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") or any state
securities law in reliance on Purchaser's representations herein,
and that no government agency has approved of the offering of the
Notes.
(c) Acquisition for Own Account. Purchaser is
acquiring the Notes solely for its own account for investment and
not with a view to or any present intention of selling, offering
to sell, or otherwise disposing of or distributing the Notes or
any portion thereof.
(d) Availability of Information. Purchaser
understands that the Notes are being sold without any particular
prospectus or offering document, and that no government agency
has approved of the adequacy or accuracy of the information
provided to Purchaser. Purchaser has discussed the Company and
its plans, technology, operations, financial condition, and
prospects with its officers and/or directors. Purchaser has
received satisfactory responses to all its inquiries and all such
information as Purchaser deems necessary and appropriate to
enable it to evaluate the risks inherent in making an investment
in the Notes.
(e) Investment Involves Substantial Risk and
Illiquidity. Purchaser acknowledges that (i) the Company's
technology and business prospects are unproven, (ii) the
acquisition of the Notes is a highly speculative investment
involving substantial risk, (iii) there is not and may never be
any market for the Notes, and (iv) it may be required to hold the
Notes until maturity. Purchaser does not anticipate needing
liquidity for the Notes, and it is able, without impairing its
financial condition, to suffer a complete loss of its investment
in the Notes.
(f) Restrictions on Transfer. Purchaser understands
that it may not sell, pledge or otherwise transfer any Notes
unless the Company registers such Notes under the Securities Act
and applicable state laws or unless an exemption from such
registration requirements is available. Purchaser understands
that the Company is under no obligation to register any transfer
of the Notes by it unless such Notes are registered under the
Securities Act and applicable state laws or unless an exemption
from such registration requirements is available and that
exemptions from registration may not be available or may not
permit it to transfer or resell all or any Notes in the amounts
or at the times proposed by Purchaser.
1.11. Disclosure of Information by the Purchaser. The
Company understands that the Purchaser is a special purpose
limited partnership organized under Chapter 109 of the General
Laws of the Commonwealth of Massachusetts and Chapter 816 of the
Acts and Resolves of 1977 of the Commonwealth of Massachusetts
(the "Capital Resource Company Act"), and as such, in accordance
with such provisions, the Purchaser, in order to obtain certain
benefits for itself and its partners, is required to file certain
reports and otherwise disclose information relating to the
business, financial affairs, and future prospects of the Company
and its affiliates (as defined in the aforesaid legislation) with
the Clerk of the Senate and the Clerk of the House of
Representatives of the General Court of the Commonwealth of
Massachusetts, the Secretary of Manpower Affairs, the
Commissioner of Insurance and the Department of Revenue of the
Commonwealth of Massachusetts, and that such reports and other
information may constitute "public records" within the purview of
Section 7 of Chapter 4 of the General Laws of the Commonwealth of
Massachusetts. In addition, information relating to the
business, financial affairs and future prospects of the Company
and its affiliates must be disclosed to others in order to obtain
independent confirmation that financing on substantially similar
terms to financing provided pursuant to this Agreement was not
elsewhere available to the Company. The Company hereby
authorizes the Purchaser to disclose all such information
relating to the business, financial affairs and future prospects
of the Company and its affiliates as has been or may in the
future be presented to the Purchaser to all such persons as the
Purchaser in good xxxxx xxxxx necessary or appropriate in order
to fulfill its obligations under the Capital Resource Company
Act. The Purchaser understands and has been advised that the
provisions of SEC Regulation FD requires the public announcement
of previously non-public material information if that information
is disclosed to anyone who has not agreed to maintain the
confidentiality of that information, and Purchaser agrees to take
no action that would require the Company to make a public
announcement pursuant to the requirements of Regulation FD,
except as required by law, in which case Purchaser shall use
reasonable efforts to give the Company written notice of the
proposed action a reasonable time in advance of such proposed
action; provided, however, that the Purchaser shall have no
liability for failure to give such notice.
ARTICLE II
CONDITIONS TO PURCHASER'S OBLIGATION
The obligation of the Purchaser to purchase and pay for the
Notes at the Closing is subject to the following conditions:
2.01. Representations and Warranties. Each of the
representations and warranties of the Company set forth in
Article III hereof shall be true in all material respects on the
date of the Closing.
2.02. Documentation at Closing. The Purchaser shall have
received prior to or at the Closing all of the following, each in
form and substance satisfactory to the Purchaser and its counsel:
(a) A Security Agreement, in the form attached as
Exhibit 2.02(a), (the "Company Security Agreement"), and all
related financing statements and other similar instruments and
documents, shall have been executed and delivered to the
Purchaser by a duly authorized officer of the Company.
(b) A Unconditional Guaranty, in the form attached as
Exhibit 2.02(b), (individually, a "Guaranty", and collectively,
the "Guaranties") shall have been executed and delivered to the
Purchaser by a duly authorized officer of each Subsidiary as
indicated and set forth on Exhibit 3.01.
(c) A Guarantor Security Agreement, in the form
attached as Exhibit 2.02(c), (individually, "Guarantor Security
Agreement", and collectively, the "Guarantor Security
Agreements", and, together with the Company Security Agreement,
the Guaranties, the "Security Documents"), and all related
financing statements and other similar instruments and documents,
shall have been executed and delivered to the Purchaser by a duly
authorized officer of each Subsidiary as indicated and set forth
on Exhibit 3.01.
(d) A certified copy of all charter documents of the
Company and each Subsidiary; a certified copy of the resolutions
of the Board of Directors and, to the extent required, the
stockholders of the Company and each Subsidiary evidencing
approval of this Agreement, the Notes, the Security Documents and
other matters contemplated hereby; a certified copy of the By-
laws of the Company and each Subsidiary; and certified copies of
all documents evidencing other necessary corporate or other
action and governmental approvals, if any, with respect to this
Agreement, the Notes and the Security Documents.
(e) A favorable opinion of Xxxxxxx Xxxxxxx Xxxxxx,
LLP, counsel for the Company and its Subsidiaries, as to matters
set forth in Exhibit 2.02(e).
(f) A certificate of the Secretary or an Assistant
Secretary from the Company and each Subsidiary which shall
certify the names of the officers of the Company and such
Subsidiary authorized to sign this Agreement, the Notes, the
Security Documents and the other documents or certificates to be
delivered pursuant to this Agreement or the Security Documents by
the Company and each Subsidiary, or any of its officers, together
with the true signatures of such officers. The Purchaser may
conclusively rely on such certificates until it shall receive a
further certificate of the Secretary or an Assistant Secretary of
the Company or such Subsidiary canceling or amending the prior
certificate and submitting the signatures of the officers named
in such further certificate.
(g) A certificate from a duly authorized officer of
the Company stating that (i) the representations and warranties
of the Company contained in Article III hereof and otherwise made
by the Company and any Subsidiary in writing in connection with
the transactions contemplated hereby are true and correct, (ii)
each of the transactions contemplated in Section 2.03 has been
fully consummated, and (iii) that no condition or event has
occurred or is continuing or will result from execution and
delivery of this Agreement, the Notes or the Security Documents
which constitute an Event of Default or would constitute an Event
of Default but for the requirement that notice be given or time
elapse or both.
(h) A certificate, in the form attached as Exhibit 3.15
hereto, shall have been executed and delivered by a duly
authorized officer of the Company.
(i) Payment for the costs, expenses, taxes and filing
fees identified in Section 7.04 as to which the Purchaser gives
the Company notice prior to the Closing.
2.03. Other Transactions at Closing. Prior to or
simultaneously with the Closing:
(a) The Company, each Subsidiary that is a party to a
Guaranty and/or Guarantor Security Agreement, Sovereign Bank,
N.A. and the Purchaser shall have entered into a mutually
acceptable Subordination Agreement (the "Subordination
Agreement").
(b) The Company shall have paid in full the Entine
Indebtedness.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants as follows:
3.01. Organization and Standing . The Company and each
Subsidiary is a duly organized and validly existing corporation
or limited liability company, as the case may be, in good
standing under the laws of the jurisdiction in which it was
organized and has all requisite power and authority for the
ownership and operation of its properties and for the carrying on
of its business as now conducted and as now proposed to be
conducted. The Company and each Subsidiary is duly licensed or
qualified and in good standing as a foreign corporation or
limited liability company, as the case may be, authorized to do
business in all jurisdictions wherein the character of the
property owned or leased, or the nature of the activities
conducted, by it makes such licensing or qualification necessary,
except where the failure to be so qualified and in good standing
would not reasonably be expected to have a material adverse
effect on the Company and its Subsidiaries, taken as a whole.
Attached hereto as Exhibit 3.01 is a schedule which correctly
identifies all Subsidiaries of the Company as of the date hereof
and shows with respect to each Subsidiary its jurisdiction of
organization. All of the outstanding capital stock or membership
interest of each Subsidiary has been duly authorized and validly
issued, is fully paid and nonassessable, and is owned
beneficially and of record by the Company or by another
Subsidiary as indicated in Exhibit 3.01, free and clear of any
lien, right, encumbrance or restriction of any nature, including,
without limitation, any lien, right, encumbrance or restriction
on transfer, except as is otherwise set forth in Exhibit 3.01.
3.02. Corporate Action. The Company and each Subsidiary
has all necessary corporate power and has taken all corporate
action required to make all the provisions of this Agreement, the
Notes, the Security Documents and any other agreements and
instruments executed by it in connection herewith and therewith
the valid and enforceable obligations they purport to be. The
issuance of the Notes is not subject to preemptive or other
similar statutory or contractual rights and will not conflict
with any provisions of any agreement or instrument to which the
Company or any Subsidiary is a party or by which it is bound.
3.03. Governmental Approvals. No authorization, consent,
approval, license, exemption of or filing or registration with
any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, is or will be
necessary for, or in connection with, the offer, issuance, sale,
execution or delivery by the Company or any Subsidiary of, or for
the performance by it of its obligations under, this Agreement,
the Notes or the Security Documents, except for filings required
in connection with the grant of the security interests pursuant
to the Security Documents .
3.04. Litigation. There is no litigation or governmental
proceeding or investigation pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary
affecting any of its properties or assets, or against any
officer, key employee or principal stockholder of the Company or
any Subsidiary where such litigation, proceeding or
investigation, either individually or in the aggregate, would
have a material adverse effect on the Company and its
Subsidiaries, taken as a whole, nor, to the knowledge of the
Company, has there occurred any event or does there exist any
condition on the basis of which any litigation, proceeding or
investigation might properly be instituted. Neither the Company
nor any Subsidiary, nor, to the knowledge of the Company, any
officer or key employee of the Company or any Subsidiary, or
principal stockholder of the Company or any Subsidiary, is in
default with respect to any order, writ, injunction, decree,
ruling or decision of any court, commission, board or other
government agency affecting the Company or any Subsidiary. There
are no actions or proceedings pending or threatened (or any basis
therefor known to the Company) which might result, either in any
case or in the aggregate, in any material adverse change in the
business, operations, affairs or condition of the Company and its
Subsidiaries, taken as a whole, or in any of its properties or
assets, or which might call into question the validity of this
Agreement, the Notes, the Security Documents or any action taken
or to be taken pursuant hereto or thereto.
3.05. Compliance with Other Instruments. The Company and
each Subsidiary is in compliance in all respects with the terms
and provisions of this Agreement and of its charter, by-laws or
operating agreement, as the case may be, and in all material
respects with the terms and provisions of the mortgages,
indentures, leases, agreements and other instruments and of all
judgments, decrees, governmental orders, statutes, rules and
regulations by which it is bound or to which its properties or
assets are subject. There is no term or provision in any of the
foregoing documents and instruments which materially adversely
affects the business, assets or financial condition of the
Company or any Subsidiary. Except for consent from Sovereign
Bank, N.A. being obtained contemporaneously herewith, neither the
execution and delivery of this Agreement, the Notes or the
Security Documents, nor the consummation of any transactions
contemplated hereby or thereby has constituted or resulted in or
will constitute or result in a default or violation of any term
or provision in any of the foregoing documents or instruments. A
consolidated schedule of Indebtedness of the Company and each
Subsidiary (including lease obligations required to be
capitalized in accordance with applicable Statements of Financial
Accounting Standards), as of the date of this Agreement, is
attached as Exhibit 3.05.
3.06. Federal Reserve Regulations. Neither the Company nor
any Subsidiary is engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of the Notes will be
used to purchase or carry any margin security or to extend credit
to others for the purpose of purchasing or carrying any margin
security or in any other manner which would involve a violation
of any of the regulations of the Board of Governors of the
Federal Reserve System.
3.07. Title to Assets, Patents. Except as is set forth in
Exhibit 3.07, the Company and each Subsidiary has good and clear
record and marketable title in fee to such of its fixed assets as
are real property, and good and merchantable title to all of its
other assets, now carried on its books including those reflected
in the most recent consolidated balance sheet of the Company and
its Subsidiaries which forms a part of Exhibit 3.08 attached
hereto, or acquired since the date of such balance sheet (except
personal property disposed of since said date in the ordinary
course of business) free of any mortgages, pledges, charges,
liens, security interests or other encumbrances. The Company and
each Subsidiary enjoys peaceful and undisturbed possession under
all leases under which it is operating, and all said leases are
valid and subsisting and in full force and effect. The Company
and each Subsidiary owns or has a valid right to use the patents,
patent rights, licenses, permits, trade secrets, trademarks,
trademark rights, trade names or trade name rights or franchises,
copyrights, inventions and intellectual property rights being
used to conduct its business as now operated and as now proposed
to be operated; and the conduct of its business as now operated
and as now proposed to be operated does not and will not conflict
with valid patents, patent rights, licenses, permits, trade
secrets, trademarks, trademark rights, trade names or trade name
rights or franchises, copyrights, inventions and intellectual
property rights of others. Neither the Company nor any
Subsidiary has any obligation to compensate any Person for the
use of any such patents or such rights nor has the Company or any
Subsidiary granted to any Person any license or other rights to
use in any manner any of such patents or such rights of the
Company or any Subsidiary.
3.08. Financial Information. The consolidated financial
statements of the Company and its Subsidiaries set forth in the
Company's Form 10-K for its fiscal year ended September 30, 2011
(the "Form 10-K") and in its Form 10-Q for the quarter ended
March 31, 2012 (the "Form 10-Q"), both as filed with the
Securities and Exchange Commission (the "SEC"), present fairly in
all material respects the consolidated financial position of the
Company and its Subsidiaries as at the dates thereof and its
results of operations for the periods covered thereby and have
been prepared in accordance with GAAP. The consolidated
financial statements included: (i) in the Form 10-K are for the
two years ended September 30, 2010 and September 30, 2011, as
audited by Xxxxxxx, Xxxxxxxx & Co., P.C., and (ii) in the Form 10-
Q are for the six month ended March 31, 2012, being unaudited and
subject to year-end adjustments consisting of normal recurring
items which will not be material in the aggregate. Neither the
Company nor any Subsidiary has any liability contingent or
otherwise not disclosed in the aforesaid financial statements or
in the notes thereto that would reasonably be expected, together
with all such other liabilities, materially affect the financial
condition of the Company or any Subsidiary, nor does the Company
have any reasonable grounds to know of any such liability. Since
the date of said September 30, 2011 audited financial statements,
except as has been disclosed in the Company's reports filed with
the SEC and which are publicly available on the SEC's Electronic
Data Gathering, Analysis, and Retrieval (XXXXX) system (the "SEC
Reports"), (i) there has been no material adverse change in the
business, assets or condition, financial or otherwise, operations
or prospects, of the Company or any Subsidiary; (ii) neither the
business, condition, operations or prospects of the Company or
any Subsidiary nor any of their properties or assets has been
adversely affected as a result of any legislative or regulatory
change, any revocation or change in any franchise, license or
right to do business, or any other event or occurrence, whether
or not insured against; and (iii) neither the Company nor any
Subsidiary has entered into any material transaction or made any
distribution on its capital stock except as is set forth in the
Form 10-K or Form 10-Q.
3.09. Taxes. The Company and each Subsidiary has
accurately prepared in all material respects and filed all
federal, state and other tax returns required by law to be filed
by it, and all taxes shown to be due and all additional
assessments have been paid or provision made therefor. The
Company knows of no additional assessments or adjustments pending
or threatened against the Company or any Subsidiary for any
period, nor of any basis for any such assessment or adjustment.
3.10. ERISA. Except as is set forth in Exhibit 3.10, no
employee benefit plan established or maintained, or to which
contributions have been made, by the Company or any Subsidiary,
which is subject to part 3 of Subtitle B of Title I of The
Employee Retirement Income Security Act of 1974, as amended
("ERISA") had an accumulated funding deficiency (as such term is
defined in Section 302 of ERISA) as of the last day of the most
recent fiscal year of such plan ended prior to the date hereof,
and no material liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any such plan by
the Company or any of its Subsidiaries.
3.11. Transactions with Affiliates. Except as is set forth
in Exhibit 3.11, there are no loans, leases, royalty agreements
or other continuing transactions between the Company or any
Subsidiary and any Person owning five percent (5%) or more of any
class of capital stock of the Company or any Subsidiary or other
entity controlled by such stockholder or a member of such
stockholder's family.
3.12. Assumptions or Guaranties of Indebtedness of Other
Persons. Except for the Guaranties, neither the Company nor any
Subsidiary has assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on (including, without
limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in the debtor or otherwise to assure
the creditor against loss) any Indebtedness of any other Person.
3.13. Investments in Other Persons. Neither the Company
nor any Subsidiary has made any loan or advance to any Person
which is outstanding on the date of this Agreement, nor is the
Company or any Subsidiary obligated or committed to make any such
loan or advance, nor does the Company or any Subsidiary own any
capital stock or assets comprising the business of, obligations
of, or any interest in, any Person.
3.14. Equal Employment Opportunity. The Company has
reviewed its employment practices and policies and those of each
Subsidiary and, to its knowledge, the Company and each Subsidiary
is in full compliance with (a) all applicable laws of the United
States, of the Commonwealth of Massachusetts and of each other
applicable jurisdiction, relating to equal employment opportunity
(including, without limitation, Title VII of the Civil Rights Act
of 1964, as amended (42 U.S.C. Section000e-17), the Age Discrimination
in Employment Act of 1967, as amended (29 U.S.C. SectionSection621-634), the
Equal Pay Act of 1963 (29 U.S.C. Section206(d)), and any rules,
regulations and administrative orders and Executive Orders
relating thereto; Mass. Gen. Laws. c. 151B, Mass. Gen. Laws
c. 149 Section24A et seq. and Section105A et seq., and any rules or
regulations relating thereto; and (b) the applicable terms,
relating to equal employment opportunity, of any contract,
agreement or grant the Company or any Subsidiary has with, from,
or relating (by way of subcontract or otherwise) to any other
contract, agreement or grant of, any federal or state
governmental unit ("Government Contract"), including, without
limitation, any terms required pursuant to Federal Executive
Order No. 11246 and Massachusetts Executive Order No. 74 (both as
amended). To the Company's knowledge, it and each Subsidiary has
kept all records required to be kept, and has filed all reports,
affirmative action plans and forms (including, without limitation
and where applicable, Form EEO-1) required to be filed pursuant
to any such applicable law or the terms of any such Government
Contract. Neither the Company nor any Subsidiary has been
subject to any adverse final determination or order, with respect
to any charge of employment discrimination made against it, by
the United States Equal Employment Opportunity Commission, the
Massachusetts Commission Against Discrimination or any other
governmental unit (including, without limitation, any such
governmental unit with which it has a Government Contract), and
neither the Company nor any Subsidiary is presently, to the
Company's knowledge, subject to any formal proceedings before, or
investigations by, such commissions or governmental units.
3.15. Status of Notes as Qualified Investments. The
Company has duly authorized the execution and delivery to the
Purchaser on behalf of the Company of the certificate attached as
Exhibit 3.15 hereto, setting forth such statements, information
and related data as are necessary to permit the Purchaser to
determine and demonstrate that the Notes issued pursuant to this
Agreement will constitute "qualified investments" within the
meaning of that term as set forth in the Capital Resource Company
Act and that the full proceeds of the Notes will be used for
purposes which will materially increase or maintain equal
opportunity employment in the Commonwealth of Massachusetts. All
such statements, information and related data presented in such
certificate as are not based on estimates and projections of
future events are true and correct as of the date of such
certificate and all such statements, information and related data
based upon estimates or projections of future events have been
carefully considered and prepared on behalf of the Company.
3.16. Securities Act. Neither the Company nor anyone
acting on its behalf has offered any of the Notes or similar
securities, or solicited any offers to purchase or made any
attempt by preliminary conversation or negotiations to dispose of
the Notes or similar securities, to any Person other than the
Purchaser or the institutions described in Exhibit 3.15. Neither
the Company nor anyone acting on its behalf has offered or will
offer to sell the Notes or similar securities to, or solicit
offers with respect thereto from, or enter into any preliminary
conversations or negotiations relating thereto with, any Person,
so as to constitute "general solicitation" within the meaning of
the Securities Act.
3.17. Disclosure. Neither this Agreement, the financial
statements set forth in the Form 10-K and Form 10-Q, the
Certificate set forth as Exhibit 3.15 hereof, nor any other
agreement, document, certificate or written statement furnished
to the Purchaser or its counsel by or on behalf of the Company or
any Subsidiary in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the
statements contained herein or therein in light of the
circumstances in which they were made, not misleading, it being
understood and acknowledged by the Purchaser that the Form 10-K
and the Form 10-Q and any other agreement, document, certificate
or written statement furnished to the Purchaser or its counsel
that provides information as of a previous date will be deemed in
compliance with this Section 3.17 if it does not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein
or therein, in light of the circumstances in which they were
made, not misleading, as of such prior date. There is no fact
within the knowledge of the Company or any of its executive
officers which has not been disclosed herein or in writing by
them to the Purchaser and which materially adversely affects, or
in the future in their opinion would reasonably be expected,
insofar as they can now foresee, materially adversely affect the
business, properties, assets or condition, financial or
otherwise, of the Company and its Subsidiaries, taken as a whole.
3.18. No Brokers or Finders. No Person has or will have,
as a result of the transactions contemplated by this Agreement,
any right, interest or valid claim against or upon the Company or
any Subsidiary for any commission, fee or other compensation as a
finder or broker because of any act or omission by the Company or
any Subsidiary or any agent of the Company or any Subsidiary.
3.19. Other Agreements of Officers. To the knowledge of
the Company, no officer or key employee of the Company or any
Subsidiary is a party to or bound by any agreement, contract or
commitment, or subject to any restrictions, particularly but
without limitation in connection with any previous employment of
any such person, which materially and adversely affects, or in
the future may (so far as the Company can reasonably foresee)
materially and adversely affect, the business or operations of
the Company or any Subsidiary or the right of any such person to
participate in the affairs of the Company or any Subsidiary. To
the knowledge of the Company, no officer or key employee has any
present intention of terminating his employment with the Company
or any Subsidiary and neither the Company nor any Subsidiary has
any present intention of terminating any such agreement.
3.20. Capitalization; Status of Capital Stock. The Company
has a total authorized and issued capitalization of the Company
is set forth in the financial statements filed as part of the
Form 10-Q, subject to changes based on compensatory equity grants
and the exercise of compensatory stock options under the
Company's equity incentive plans. All the outstanding shares of
capital stock of the Company have been duly authorized, are
validly issued and are fully paid and nonassessable. Except as
otherwise indicated in the Form 10-Q, there are no options (other
than compensatory options issued to employees, directors or
consultants since March 31, 2012 under the Company's equity
compensation plans), warrants or rights to purchase shares of
capital stock or other securities of the Company authorized,
issued or outstanding, nor is the Company obligated in any other
manner to issue shares of its capital stock or other securities.
The offer and sale of all shares of capital stock and other
securities of the Company issued before the Closing complied with
or were exempt from all federal and state securities laws.
3.21. Labor Relations. To the knowledge of the Company, no
labor union or any representative thereof has made any attempt to
organize or represent employees of the Company or any Subsidiary.
There are no unfair labor practice charges, pending trials with
respect to unfair labor practice charges, pending material
grievance proceedings or adverse decisions of a Trial Examiner of
the National Labor Relations Board against the Company or any
Subsidiary. Furthermore, to the knowledge of the Company,
relations with employees of the Company and each Subsidiary are
good and there is no reason to believe that any labor
difficulties will arise in the foreseeable future.
3.22. Insurance. The Company and each Subsidiary carries
insurance covering its properties and business adequate and
customary for the type and scope of the properties and business,
but in any event in amounts sufficient to prevent the Company or
any Subsidiary from becoming a co-insurer.
3.23. Books and Records. The books of account, ledgers,
order books, records and documents of the Company and each
Subsidiary accurately and completely reflect all material
information relating to the business of the Company and each
Subsidiary, the nature, acquisition, maintenance, location and
collection of the assets of the Company and each Subsidiary, and
the nature of all transactions giving rise to the obligations or
accounts receivable of the Company and each Subsidiary.
3.24. Foreign Corrupt Practices Act. The Company has
reviewed its practices and policies and that of each Subsidiary
and to its knowledge and belief neither it nor any Subsidiary is
engaged, nor has any officer, director, employee or agent of the
Company or any Subsidiary engaged, in any act or practice which
would constitute a violation of the Foreign Corrupt Practices Act
of 1977, or any rules or regulations promulgated thereunder.
3.25. Solvency, Etc. After giving effect to the
consummation of all of the transactions contemplated in this
Agreement, the Company and its Subsidiaries, taken as a whole,
(a) will be able to pay their debts as they become due, (b) will
have funds and capital sufficient to carry on their business, and
(c) will own property having a value both at fair valuation and
at fair saleable value in the ordinary course of the Company's
and its Subsidiaries' business greater than the amount required
to pay their debts as they become due. The Company will not be
rendered insolvent by the execution and delivery of this
Agreement, the borrowing hereunder and/or the consummation of any
transactions contemplated herein.
ARTICLE IV
COVENANTS OF THE COMPANY
4.01. Affirmative Covenants of the Company. Without
limiting any other covenants and provisions hereof, the Company
covenants and agrees that, as long as any of the Notes are
outstanding, it will perform and observe the following covenants
and provisions and will cause each Subsidiary to perform and
observe such of the following covenants and provisions as are
applicable to such Subsidiary:
(a) Punctual Payment. Pay the principal of, premium,
if any, and interest on each of the Notes at the times and place
and in the manner provided in the Notes and herein.
(b) Payment of Taxes and Trade Debt. Pay and
discharge, and cause each Subsidiary to pay and discharge, all
taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or business, or upon any
properties belonging to it, prior to the date on which penalties
attach thereto, and all lawful claims which, if unpaid, might
become a lien or charge upon any properties of the Company or any
Subsidiary, provided that neither the Company nor the Subsidiary
shall be required to pay any such tax, assessment, charge, levy
or claim which is being contested in good faith and by
appropriate proceedings if the Company or Subsidiary concerned
shall have set aside on its books adequate reserves with respect
thereto. Pay and cause each Subsidiary to pay, when due, or in
conformity with customary trade terms, all lease obligations, all
trade debt, and all other Indebtedness incident to the operations
of the Company or its Subsidiaries, except such as are being
contested in good faith and by appropriate proceedings if the
Company or Subsidiary concerned shall have set aside on its books
adequate reserves with respect thereto.
(c) Maintenance of Insurance. Maintain, and cause
each Subsidiary to maintain, insurance with responsible and
reputable insurance companies or associations in such amounts and
covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same
general areas in which the Company or such Subsidiary operates,
but in any event sufficient to prevent the Company or such
Subsidiary from being a co-insurer.
(d) Preservation of Corporate Existence. Preserve and
maintain, and cause each Subsidiary to preserve and maintain, its
corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain
qualified, and cause each Subsidiary to qualify and remain
qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary or desirable in view of its
business and operations or the ownership of its properties except
where the failure to be so qualified or to remain qualified would
not reasonably be expected to have a material adverse effect on
the Company and its Subsidiaries, taken as a whole; provided,
however, that nothing herein contained shall prevent any merger,
consolidation or transfer of assets permitted by subsection
4.02(e). Preserve and maintain, and cause each Subsidiary to
preserve and maintain, all licenses and other rights to use
patents, processes, licenses, trademarks, trade names,
inventions, intellectual property rights or copyrights owned or
possessed by it and necessary to the conduct of its business
except those licenses or other rights the failure to so preserve
or maintain would not reasonably be expected to have a material
adverse effect on the Company and its Subsidiaries, taken as a
whole.
(e) Compliance with Laws. Comply, and cause each
Subsidiary to comply, with all applicable laws, rules,
regulations and orders of any governmental authority,
noncompliance with which could materially adversely affect its
business or condition, financial or other.
(f) Visitation Rights. At any reasonable time and
from time to time, upon reasonable notice, permit the Purchaser
or any agents or representatives thereof, to examine and make
copies of and extracts from the records and books of account of,
and visit and inspect the properties of, the Company and any
Subsidiary, and to discuss the affairs, finances and accounts of
the Company and any Subsidiary with any of their officers or
directors and independent accountants.
(g) Keeping of Records and Books of Account. Keep,
and cause each Subsidiary to keep, adequate records and books of
account, in which complete entries will be made in accordance
with generally accepted accounting principles consistently
applied, reflecting all financial transactions of the Company and
such Subsidiary, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its
business shall be made.
(h) Maintenance of Properties, etc. Maintain and
preserve, and cause each Subsidiary to maintain and preserve, all
of its properties, necessary or useful in the proper conduct of
its business, in good repair, working order and condition,
ordinary wear and tear excepted.
(i) Compliance with ERISA. Comply, and cause each
Subsidiary to comply, with all minimum funding requirements
applicable to any pension or other employee benefit or employee
contribution plans which are subject to ERISA or to the Internal
Revenue Code of 1986, as amended (the "Code"), and comply, and
cause each Subsidiary to comply, in all other material respects
with the provisions of ERISA and the Code, and the rules and
regulations thereunder, which are applicable to any such plan.
Neither the Company nor any Subsidiary will permit any event or
condition to exist which could permit any such plan to be
terminated under circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to the assets of
the Company or any Subsidiary.
(j) Maintenance of Consolidated Maximum Leverage
Ratio. Maintain at all times a Consolidated Maximum Leverage
Ratio which is equal to or less than (i) 5.0 to 1.00 for each of
the rolling four quarter periods ending on September 30, 2012 and
December 31, 2012, and (ii) 4.5 to 1.00 for each rolling four
quarter period ending on or after March 31, 2013. Company's
compliance with this covenant shall be tested on a rolling four
(4) quarters basis as of the last day of each quarter of each
Fiscal Year of Company. In addition, notwithstanding anything to
the contrary set forth herein, for the purposes of determining
the Consolidated Maximum Leverage Ratio at any time during the
Additional Ramp-up Period, the denominator of such ratio (for the
avoidance of doubt, such denominator includes all items set forth
in clause (ii) of the definition of "Consolidated Maximum
Leverage Ratio") shall be determined as follows: (a) at September
30, 2012, on the basis of the fiscal quarter then ended, times 4;
(b) at December 31, 2012, on the basis of the six (6) months then
ended, times 2; and (c) at March 31, 2013, on the basis of the
nine months then ended, times 4/3. Company and Purchaser hereby
agree that, for purposes of calculating Consolidated Maximum
Leverage Ratio hereunder during the Additional Ramp-up Period,
the amounts set forth in clauses (c), (d), (i), (j) and (k) of
the definition of "Consolidated EBITDA" shall not be annualized
for any period.
(k) Maintenance of Consolidated Fixed Charge Coverage
Ratio. Maintain at all times a Consolidated Fixed Charge Coverage
Ratio of not less than (i) .75 to 1.00 for each of the rolling
four quarter periods ending on September 30, 2012 and December
31, 2012, (ii) .80 to 1.00 for each of the rolling four quarter
period ending on March 31, 2013 and June 30, 2013, and (iii) .95
to 1.00 for each rolling four quarter period ending on or after
September 30, 2013. Compliance with this covenant shall be
tested on a rolling four (4) quarters basis as of the last day of
each quarter of each Fiscal Year of Company. In addition,
notwithstanding anything to the contrary set forth herein, for
the purposes of determining the Consolidated Fixed Charge Ratio
at any time on or after September 30, 2012 but prior to June 30,
2013 (the "Additional Ramp-up Period"), the numerator (for the
avoidance of doubt, such numerator includes all items set forth
in clause (i) of the definition of "Consolidated Fixed Charge
Coverage Ratio") and the denominator of such ratio (for the
avoidance of doubt, such denominator includes all items set forth
in clause (ii) of the definition of "Consolidated Fixed Charge
Coverage Ratio") shall be determined as follows: (a) at September
30, 2012, on the basis of the fiscal quarter then ended, times 4;
(b) at December 31, 2012, on the basis of the six (6) months then
ended, times 2; and (c) at March 31, 2013, on the basis of the
nine months then ended, times 4/3. Company and Purchaser hereby
agree that, for purposes of calculating Consolidated Fixed Charge
Ratio hereunder during the Additional Ramp-up Period, the amounts
set forth in clauses (c), (d), (i), (j) and (k) of the definition
of "Consolidated EBITDA" shall not be annualized for any period.
(l) Foreign Corrupt Practices Act. Comply, and cause
each Subsidiary to comply, and cause each officer, director,
employee and agent of the Company and each Subsidiary to comply,
at all times with the prohibitions on certain acts and practices
set forth in the Foreign Corrupt Practices Act of 1977, and any
rules or regulations promulgated thereunder.
(m) Equal Employment Opportunity. Comply, and cause
each Subsidiary to comply, with all applicable laws of the United
States, the Commonwealth of Massachusetts, and of each other
applicable jurisdiction relating to equal employment opportunity,
any rules, regulations, administrative orders and Executive
Orders relating thereto and the applicable terms, relating to
equal employment opportunity, of any Government Contract; and
keep, and cause each Subsidiary to file, all reports, affirmative
action plans and forms required to be filed, pursuant to any such
applicable law or the terms of any such Government Contract;
provided, however, the Company or any Subsidiary shall not be
considered to have failed to comply with the foregoing during any
period that any matter relating to the Company's or such
Subsidiary's employment practices is being contested by the
Company or such Subsidiary in appropriate proceedings, or
thereafter, if the Company or such Subsidiary complies with any
final determination issued in such proceedings.
(n) Status of Notes as Qualified Investments. In the
event that any of the statements, information and related data
provided by or on behalf of the Company or any Subsidiary and
relied upon by the Purchaser in determining that the Notes
constitute "qualified investments" within the meaning of that
term in the Capital Resource Company Act shall be put in issue in
any formal or informal proceedings initiated or conducted by or
on behalf of the Commonwealth of Massachusetts, the Company
shall, upon reasonable notice and at its expense, provide, and,
cause each Subsidiary to provide, such additional information,
witnesses and related data as may be reasonably necessary or
appropriate to support the representations and warranties set
forth in Article III.
(o) Compensation. The Company shall pay to its
management or management of any Subsidiary compensation at a rate
of compensation which is not in excess of that commonly paid to
management in companies of similar size, of similar maturity and
in similar businesses and all management compensation and all
policies relating thereto shall be approved in advance either by
a majority of the members of that Company's Board of Directors or
by a compensation committee composed entirely of independent
directors.
(p) Compliance with Security Documents. Comply, and
cause each Subsidiary, at all times and in all material respects
with all of the terms and conditions of the Security Documents.
(q) Additional Subsidiaries. The Company shall
provide the Purchaser with prompt written notice of the creation
or acquisition of any Subsidiary and, so long as such Subsidiary
is organized in the United States or any State thereof,
immediately upon, and as a condition to, such creation or
acquisition of a Subsidiary, the Company shall cause any such
Subsidiary that is owned by the Company and/or another
Subsidiary, to execute and deliver to the Purchaser a Guaranty, a
Guarantor Security Agreement and a joinder to the Subordination
Agreement which is in form and substance satisfactory to
Sovereign Bank, N.A.
4.02. Negative Covenants of the Company. Without limiting
any other covenants and provisions hereof, the Company covenants
and agrees that, as long as any of the Notes are outstanding, it
will comply with and observe the following covenants and
provisions, and will cause each Subsidiary to comply with and
observe such of the following covenants and provisions as are
applicable to such Subsidiary, and will not:
(a) Liens. Create, incur, assume or suffer to exist,
or permit any Subsidiary to create, incur, assume or suffer to
exist, any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance (including the lien or
retained security title of a conditional vendor) of any nature,
upon or with respect to any of its properties, now owned or
hereinafter acquired, or assign or otherwise convey any right to
receive income, except that the foregoing restrictions shall not
apply to mortgages, deeds of trust, pledges, liens, security
interests or other charges or encumbrances:
(i) for taxes, assessments or governmental
charges or levies on property of the Company or any
Subsidiary if the same shall not at the time be delinquent
or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings;
(ii) imposed by law, such as landlord's,
carriers', warehousemen's and mechanics' liens and other
similar liens arising in the ordinary course of business;
(iii) securing Senior Debt in favor of Sovereign
Bank, N.A. or another holder of Senior Debt;
(iv) arising out of pledges or deposits under
workmen's compensation laws, unemployment insurance, old age
pensions, or other social security or retirement benefits,
or similar legislation;
(v) securing the performance of bids, tenders,
contracts (other than for the repayment of borrowed money),
statutory obligations and surety bonds;
(vi) in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of
real property which do not materially detract from its value
or impair its use;
(vii) arising by operation of law in favor of
the owner or sublessor of leased premises and confined to
the property rented;
(viii) arising from any litigation or proceeding
which is being contested in good faith by appropriate
proceedings, provided, however, that no execution or levy
has been made;
(ix) described in Exhibit 3.07 which secure the
Indebtedness set forth in Exhibit 3.05, provided that no
such lien is extended to cover other or different property
of the Company or any Subsidiary;
(x) arising out of a purchase money mortgage or
security interest on personal property to secure the
purchase price of such property (or to secure Indebtedness
incurred solely for the purpose of financing the acquisition
of any such property), provided that such purchase money
mortgage or security interest does not extend to any other
or different property of the Company or any Subsidiary; and
(xi) now or hereafter granted to the Purchaser
pursuant to the Company Security Agreement and the Guarantor
Security Agreements.
(b) Indebtedness. Create, incur, assume or suffer to
exist, or permit any Subsidiary to create, incur, assume or
suffer to exist, any liability with respect to Indebtedness
except for:
(i) the Notes;
(ii) Indebtedness set forth in Exhibit 3.05;
(iii) Senior Debt owed to Sovereign Bank, N.A.
(iv) Indebtedness for money borrowed, provided
that such Indebtedness for money borrowed does not result in
the Company's failure to comply with all of the other
provisions of Article IV hereof;
(v) Current Liabilities, other than for borrowed
money, which are incurred in the ordinary course of
business; and
(vi) Indebtedness with respect to lease
obligations, provided that such lease obligations do not
violate subsection 4.02(c).
(c) Lease Obligations. Create, incur, assume or
suffer to exist, or permit any Subsidiary to create, incur,
assume or suffer to exist, any obligations as lessee for the
rental or hire of real or personal property in connection with
any sale and leaseback transaction.
(d) Assumptions or Guaranties of Indebtedness of Other
Persons. Except for (i) the Guaranties and (ii) guaranties in
favor of Sovereign Bank, N.A. or another holder of Senior Debt,
assume, guarantee, endorse or otherwise become directly or
contingently liable on, or permit any Subsidiary to assume,
guarantee, endorse or otherwise become directly or contingently
liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds
for payment, to supply funds to or otherwise invest in the debtor
or otherwise to assure the creditor against loss) any
Indebtedness of any other Person, except for guaranties by
endorsement of negotiable instruments for deposit or collection
in the ordinary course of business.
(e) Mergers, Sale of Assets, etc. Merge or
consolidate with, or sell, assign, lease or otherwise dispose of
or voluntarily part with the control of (whether in one
transaction or in a series of transactions) a material portion of
its assets (whether now owned or hereinafter acquired) or sell,
assign or otherwise dispose of (whether in one transaction or in
a series of transactions) any of its accounts receivable (whether
now in existence or hereinafter created) at a discount or with
recourse, to, any Person, or permit any Subsidiary to do any of
the foregoing, except for sales or other dispositions of assets
in the ordinary course of business and except that (1) any
Subsidiary may merge into or consolidate with or transfer assets
to any other Subsidiary, (2) any Subsidiary may merge into or
transfer assets to the Company, and (3) the Company or any
Subsidiary may merge any Person into it or otherwise acquire such
Person as long as the Company or such Subsidiary is the surviving
entity, such merger or acquisition does not result in the
violation of any of the provisions of this Agreement and no such
violation exists at the time of such merger or acquisition, and,
provided that such merger or acquisition does not result in the
issuance (in one or more transactions) of shares of the voting
stock of the Company representing in the aggregate more than
twenty percent (20%) of the total outstanding voting stock of the
Company, on a fully diluted basis, immediately following the
issuance thereof.
(f) Investments in Other Persons. Make or permit any
Subsidiary to make, any loan or advance to any person, or
purchase, otherwise acquire, or permit any Subsidiary to purchase
or otherwise acquire, the capital stock, assets comprising the
business of, obligations of, or any interest in, any Person,
except:
(i) investments by the Company or a Subsidiary
in evidences of indebtedness issued or fully guaranteed by
the United States of America and having a maturity of not
more than one year from the date of acquisition;
(ii) investments by the Company or a Subsidiary
in certificates of deposit, notes, acceptances and
repurchase agreements having a maturity of not more than one
year from the date of acquisition issued by a bank organized
in the United States having capital, surplus and undivided
profits of at least $100,000,000 and whose parent holding
company has long-term debt rated Aa1 or higher, and whose
commercial paper (if rated) is rated Prime 1, by Xxxxx'x
Investors Service, Inc.;
(iii) investments by the Company or a Subsidiary
in the highest-rated commercial paper having a maturity of
not more than one year from the date of acquisition;
(iv) loans or advances from a Subsidiary to the
Company; and
(v) advances made to employees, officers and
directors for travel and other expenses arising in the ordinary
course of business.
(g) Distributions. Declare or pay any dividends,
purchase, redeem, retire, or otherwise acquire for value any of
its capital stock (or rights, options or warrants to purchase
such shares) now or hereafter outstanding, return any capital to
its stockholders as such, or make any distribution of assets to
its stockholders as such, or permit any Subsidiary to do any of
the foregoing (such transactions being hereinafter referred to as
"Distributions"), except that the Subsidiaries may declare and
make payment of cash and stock dividends, return capital and make
distributions of assets to the Company; provided, however, that
nothing herein contained shall prevent the Company from:
(i) effecting a stock split or declaring or
paying any dividend consisting of shares of any class of
capital stock to the holders of shares of such class of
capital stock, or
(ii) redeeming any stock of a deceased
stockholder out of insurance held by the Company on that
stockholder's life,
if in the case of any such transaction there does not exist at
the time of such Distribution an Event of Default or an event
which, but for the requirement that notice be given or time
elapse or both, would constitute an Event of Default and provided
that such Distribution can be made in compliance with the other
terms of this Agreement.
(h) Dealings with Affiliates. Enter or permit any
Subsidiary to enter into any transaction with any holder of 5% or
more of any class of capital stock of the Company, or any member
of their families or any corporation or other entity in which any
one or more of such stockholders or members of their immediate
families directly or indirectly holds five percent (5%) or more
of any class of capital stock except (i) in the ordinary course
of business and on terms not less favorable to the Company or the
Subsidiary than it would obtain in a transaction between
unrelated parties or (ii) compensatory and similar arrangements
with officers and directors of the Company.
(i) Maintenance of Ownership of Subsidiaries. Sell or
otherwise dispose of any shares of capital stock of any
Subsidiary, except to the Company or another Subsidiary, or
permit any Subsidiary to issue, sell or otherwise dispose of any
shares of its capital stock or the capital stock of any
Subsidiary, except to the Company or another Subsidiary,
provided, however, that nothing herein contained shall prevent
any merger, consolidation or transfer of assets permitted by
subsection 4.02(e).
(j) Change in Nature of Business. Make, or permit any
Subsidiary to make, any material change in the nature of its
business as carried on at the date hereof.
4.03. Reporting Requirements. The Company will furnish to
each registered holder of any Note:
(a) as soon as possible and in any event within five
(5) days after the occurrence of each Event of Default or each
event which, with the giving of notice or lapse of time or both,
would constitute an Event of Default, the statement of the chief
financial officer of the Company setting forth details of such
Event of Default or event and the action which the Company
proposes to take with respect thereto;
(b) as soon as available and in any event within forty-
five (45) days after the end of each of the first three quarters
of each fiscal year of the Company, consolidated balance sheets
of the Company and its Subsidiaries as of the end of such quarter
and consolidated statements of income and retained earnings and
of changes in financial position of the Company and its
Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures
for the corresponding period of the preceding fiscal year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer of the Company as
having been prepared in accordance with generally accepted
accounting principles consistently applied;
(c) as soon as available and in any event within
ninety (90) days after the end of each fiscal year of the
Company, a copy of the reviewed report for such year for the
Company and its Subsidiaries, including therein consolidated
balance sheets of the Company and its Subsidiaries as of the end
of such fiscal year and consolidated statements of income and
retained earnings and of changes in financial position of the
Company and its Subsidiaries for such fiscal year, setting forth
in each case in comparative form the corresponding figures for
the preceding fiscal year, all duly reviewed by independent
public accountants of recognized standing acceptable to the
Purchaser;
(d) at the time of delivery of each quarterly and
annual statement, a certificate, executed by the chief executive
officer or chief financial officer in the case of quarterly
statements and the Company's independent public accountants in
the case of annual statements, stating that such officer or
accountants, as the case may be, has caused this Agreement, the
Notes and the Security Documents to be reviewed and has no
knowledge of any default by the Company or any Subsidiary in the
performance or observance of any of the provisions of this
Agreement, the Notes or the Security Documents, if such officer
or accountant has such knowledge, specifying such default and the
nature thereof. Each such certificate shall set forth
computations in reasonable detail demonstrating compliance with
the provisions of subsections 4.01(j) and (k) and subsections
4.02(b) and (c);
(e) promptly upon receipt thereof, any written report
submitted to the Company by independent public accountants in
connection with an annual or interim review of the books of the
Company and its Subsidiaries made by such accountants;
(f) no later than 90-days after the start of each
fiscal year, consolidated capital and operating expense budgets,
cash flow projections and income and loss projections for the
Company and its Subsidiaries in respect of such fiscal year, all
itemized in reasonable detail and prepared on a quarterly basis,
and, promptly after preparation, any revisions to any of the
foregoing;
(g) promptly after the commencement thereof, notice of
all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Company or
any Subsidiary of the type described in Section 3.04; and
(h) promptly after sending, making available, or
filing the same, such reports and financial statements as the
Company or any Subsidiary shall send or make available to the
stockholders of the Company or the Securities and Exchange
Commission and such other information respecting the business,
properties or the condition or operations, financial or
otherwise, of the Company or any of its Subsidiaries as the
Purchaser may from time to time reasonably request.
ARTICLE V
EVENTS OF DEFAULT
5.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Company shall fail to pay any installment of
principal of any of the Notes when due; or
(b) The Company shall fail to pay any interest or
premium on any of the Notes when due and such failure shall
continue for five (5) business days; or
(c) The Company shall default in the performance of
any covenant contained in subsections 4.01(j) or (k) or shall
default for ten (10) days in the performance of any covenant
contained in Section 4.02; or
(d) Any representation or warranty made by the Company
or any Subsidiary in this Agreement or by the Company or any
Subsidiary (or any officers of the Company or any Subsidiary) in
any certificate, instrument or written statement contemplated by
or made or delivered pursuant to or in connection with this
Agreement, the Notes or the Security Documents, shall prove to
have been incorrect when made in any material respect; or
(e) The Company or any Subsidiary shall fail to
perform or observe any other term, covenant or agreement
contained in this Agreement, the Notes or the Security Documents
on its part to be performed or observed and any such failure
remains unremedied for ten (10) business days after written
notice thereof shall have been given to the Company by any
registered holder of the Notes; or
(f) The Company or any Subsidiary shall fail to pay
any Indebtedness for borrowed money in excess of $250,000 in the
aggregate (other than as evidenced by the Notes) owing by the
Company or such Subsidiary (as the case may be), or any interest
or premium thereon, when due (or, if permitted by the terms of
the relevant document, within any applicable grace period),
whether such Indebtedness shall become due by scheduled maturity,
by required prepayment, by acceleration, by demand or otherwise,
or shall fail to perform any material term, covenant or agreement
on its part to be performed under any agreement or instrument
(other than this Agreement or the Notes) evidencing or securing
or relating to any Indebtedness for borrowed money in excess of
$250,000 in the aggregate owing by the Company or any Subsidiary,
as the case may be, when required to be performed (or, if
permitted by the terms of the relevant document, within any
applicable grace period), if the effect of such failure to pay or
perform is to accelerate, or to permit the holder or holders of
such Indebtedness, or the trustee or trustees under any such
agreement or instrument to accelerate, the maturity of such
Indebtedness, unless such failure to pay or perform shall be
waived by the holder or holders of such Indebtedness or such
trustee or trustees; or
(g) The Company or any Subsidiary shall be involved in
financial difficulties as evidenced (i) by its admitting in
writing its inability to pay its debts generally as they become
due; (ii) by its commencement of a voluntary case under Title 11
of the United States Code as from time to time in effect, or by
its authorizing, by appropriate proceedings of its Board of
Directors or other governing body, the commencement of such a
voluntary case; (iii) by its filing an answer or other pleading
admitting or failing to deny the material allegations of a
petition filed against it commencing an involuntary case under
said Title 11, or seeking, consenting to or acquiescing in the
relief therein provided, or by its failing to controvert timely
the material allegations of any such petition; (iv) by the entry
of an order for relief in any involuntary case commenced under
said Title 11 which order is not stayed or dismissed within 60
days from the date of entry; (v) by its seeking relief as a
debtor under any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of
debtors or to the modification or alteration of the rights of
creditors, or by its consenting to or acquiescing in such relief;
(vi) by the entry of an order by a court of competent
jurisdiction (a) finding it to be bankrupt or insolvent, (b)
ordering or approving its liquidation, reorganization or any
modification or alteration of the rights of its creditors, or (c)
assuming custody of, or appointing a receiver or other custodian
for, all or a substantial part of its property; or (vii) by its
making an assignment for the benefit of, or entering into a
composition with, its creditors, or appointing or consenting to
the appointment of a receiver or other custodian for all or a
substantial part of its property; or
(h) Any judgment, writ, warrant of attachment or
execution or similar process shall be issued or levied against a
substantial part of the property of the Company or any Subsidiary
and such judgment, writ, or similar process shall not be
released, vacated or fully bonded within (60) days after its
issue or levy; or
(i) A Change of Control;
then, and in any such event, the Purchaser or any other holder of
the Notes may, by notice to the Company, declare the entire
unpaid principal amount of the Notes, all interest accrued and
unpaid thereon and all other amounts payable under this Agreement
to be forthwith due and payable, whereupon the Notes, all such
accrued interest and all such amounts shall become and be
forthwith due and payable (unless there shall have occurred an
Event of Default under subsection 5.01(g) in which case all such
amounts shall automatically become due and payable), without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Company.
5.02. Annulment of Defaults. Section 5.01 is subject to
the condition that, if at any time after the principal of any of
the Notes shall have become due and payable, and before any
judgment or decree for the payment of the moneys so due, or any
thereof, shall have been entered, all arrears of interest upon
all the Notes and all other sums payable under the Notes and
under this Agreement (except the principal of the Notes which by
such declaration shall have become payable) shall have been duly
paid, and every other default and Event of Default shall have
been made good or cured, then and in every such case the holders
of seventy-five percent (75%) or more in principal amount of all
Notes then outstanding may, by written instrument filed with the
Company, rescind and annul such declaration and its consequences;
but no such rescission or annulment shall extend to or affect any
subsequent default or Event of Default or impair any right
consequent thereon.
ARTICLE VI
DEFINITIONS AND ACCOUNTING TERMS
6.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Additional Ramp-up Period" shall have the meaning assigned
to that term in Section 4.01(k).
"Agreement" means this Note Purchase Agreement as from time
to time amended and in effect between the parties.
"Capital Lease" shall mean any lease of property which, in
accordance with GAAP, should be capitalized on the lessee's
balance sheet.
"Capital Lease Obligation" shall mean the amount of the
liability which, according to GAAP, should be capitalized or
disclosed with respect to a Capital Lease.
"Capital Resource Company Act" shall have the meaning
assigned to that term in Section 1.11.
"Change of Control" shall mean the occurrence of one or more
of the following events:
(a) any Person (or group of related Persons for
the purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended) shall become the
owner, directly or indirectly, beneficially or of
record, of shares representing more than forty
percent (40%) of the voting stock of the Company;
or
(b) the replacement, in any two-year period, of a
majority of the members of the Board of Directors
of the Company from the directors who constituted
the members of the Board of Directors of the
Company at the beginning of such period, and such
replacement shall not have been approved by a vote
of at least a majority of the Board of Directors
of the Company then still in office who were
either members of such Board of Directors at the
beginning of such period or whose election as a
member of such Board of Directors was previously
so approved.
"Code" shall have the meaning assigned to that term in
Section 4.01(i).
"Company" means and shall include Dynasil Corporation of
America and its successors and assigns.
"Company Security Agreement" shall have the meaning assigned
to that term in Section 2.02(a).
"Consolidated" and "consolidating" when used with reference
to any term defined herein mean that term as applied to the
accounts of the Company and its Subsidiaries consolidated in
accordance with generally accepted accounting principles.
"Consolidated EBITDA" shall mean, for the Company and its
Subsidiaries on a consolidated basis, without duplication, with
respect to any fiscal measurement period, the sum of (a) net
income (or loss) for that period, plus (b) the aggregate closing
costs and similar costs and expenses incurred in connection with
the consummation of the transactions contemplated by this
Agreement, plus (c) any other non-recurring or unusual expense or
loss acceptable to Lender in its sole discretion, minus (d) any
non-recurring gain included in such net income, plus (e) Interest
Expense for that period, plus (f) the aggregate amount of
federal, state and foreign taxes on or measured by income for
that period (whether or not payable during that period), plus (g)
depreciation and amortization expense for that period, plus (h)
non-cash stock compensation expenses in an aggregate amount not
exceeding $1,000,000.00 in any fiscal year, plus (i) the
aggregate reasonable transaction costs and expenses incurred in
connection with the consummation of any Permitted Acquisition (as
that term is defined in the Loan and Security Agreement, dated as
of July 7, 2010, and as amended to date, between the Company and
Sovereign Bank, N.A.)(so long as such Permitted Acquisition was
approved by Sovereign Bank, X.X.xx accordance with the terms and
provisions of said Loan and Security Agreement and actually
consummated by the Company), plus (j) the aggregate reasonable
transaction costs and expenses incurred in connection with the
preparation, execution and delivery of the Amendment No. 3 to
Loan and Security Agreement between the Company and Sovereign
Bank, N.A. dated as of June 29, 2012, plus (k) the aggregate
reasonable transaction costs and expenses incurred in connection
with the completion of the transactions contemplated in this
Agreement, and in the case of items (b) - (k), only to the extent
included in determining net income for that period, in each case
as determined in accordance with GAAP.
"Consolidated Fixed Charges" shall mean with respect to the
Company and its Subsidiaries on a consolidated basis, without
duplication, for any fiscal measurement period, the sum of (a)
the Interest Expense for such period, plus (b) the aggregate
principal amount of scheduled payments on any Indebtedness of the
Company or any Subsidiary (including without limitation all
Capital Lease Obligations and the Note but excluding any
principal payments made with respect to the Entine Indebtedness)
made during such period, plus (c) the sum of all cash dividends
and other cash distributions to shareholders or other equity
owners paid by the Company during such period, plus (d) the sum
of all taxes paid in cash by the Company during such period, less
(e) to the extent included in Interest Expense for, or taxes paid
in cash by the Company during, such period, up to $75,000.00 in
the aggregate of interest and penalties paid by the Company
during such period in connection with the late federal income tax
filing made by the Company for the periods ending on September
30, 2008, September 30, 2009 and September 30, 2010.
"Consolidated Fixed Charge Coverage Ratio" shall mean with
respect to the Company and its Subsidiaries on a consolidated
basis, without duplication, for any fiscal measurement period,
the ratio of: (i) Consolidated EBITDA, to (ii) Consolidated Fixed
Charges.
"Consolidated Maximum Leverage Ratio" shall mean with
respect to the Company and its Subsidiaries on a consolidated
basis, without duplication, for any fiscal measurement period,
the ratio of (i) Consolidated Total Funded Debt to (ii)
Consolidated EBITDA.
"Consolidated Total Funded Debt" shall mean with respect to
the Company and its Subsidiaries on a consolidated basis, without
duplication, for any fiscal measurement period, the aggregate
Indebtedness of the Company and its Subsidiaries for borrowed
money (including without limitation all Capital Lease
Obligations, all synthetic lease obligations, all subordinated
debt, and all unreimbursed drawings under letters of credit), or
any other monetary obligation evidenced by a note, bond,
debenture or similar instrument or agreement of the Company, as
determined in accordance with GAAP.
"Current Liabilities" means all liabilities of any
corporation which would, in accordance with generally accepted
accounting principles consistently applied, be classified as
current liabilities of a corporation conducting a business the
same as or similar to that of such corporation, including,
without limitation, all rental payments due under leases required
to be capitalized in accordance with applicable Statements of
Financial Accounting Standards and fixed prepayments of, and
sinking fund payments with respect to, Indebtedness (including
Indebtedness evidenced by the Notes), which payments are required
to be made within one year from the date of determination.
"Distribution" shall have the meaning assigned to that term
in Section 4.02(g).
"ERISA" shall have the meaning assigned to that term in
Section 3.10.
"Events of Default" shall have the meaning assigned to that
term in Section 5.01.
"Entine Indebtedness" shall have the meaning assigned to
that term in Section 1.02(b).
"Fiscal Year" shall mean each twelve (12) month accounting
period of the Company, which ends on September 30 of each year.
"Form 10-Q" shall have the meaning assigned to that term in
Section 3.08.
"Form 10-K" shall have the meaning assigned to that term in
Section 3.08.
"GAAP" shall mean generally accepted accounting principles
in the United States as in effect on the Closing and applied on a
basis consistent with those used in the financial statements
included in the Form 10-K.
"Government Contract" shall have the meaning assigned to
that in Section 3.14.
"Guarantor Security Agreement" or "Guarantor Security
Agreements" shall have the meaning assigned to that in
Section 2.02(c).
"Guaranty" or "Guaranties" shall have the meaning assigned
to that in Section 2.02(b).
"Indebtedness" means all obligations, contingent and
otherwise, which should, in accordance with generally accepted
accounting principles consistently applied, be classified upon
the obligor's balance sheet as liabilities, but in any event
including, without limitation, liabilities secured by any
mortgage on property owned or acquired subject to such mortgage,
whether or not the liability secured thereby shall have been
assumed, and also including, without limitation, (i) all
guaranties, endorsements and other contingent obligations, in
respect of Indebtedness of others, whether or not the same are or
should be so reflected in said balance sheet, except guaranties
by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business and (ii) the present value of any lease payments due
under leases required to be capitalized in accordance with
applicable Statements of Financial Accounting Standards,
determined in accordance with applicable Statements of Financial
Accounting Standards.
"Interest Expense" shall mean, as of any date, with respect
to any Person, for any fiscal measurement period, the sum of (a)
all cash interest, unused commitment fees, letter of credit fees
and similar fees (in each case as such expenses are calculated
according to GAAP) paid or payable for such fiscal period by such
Person (including without limitation, the interest and fees (as
applicable) payable under this Agreement and the net amount
payable in cash under all Hedging Agreements in respect of such
period (or minus the net amount receivable under all Hedging
Agreements in respect of such period)), plus (b) the portion of
rent paid or payable (without duplication) for such fiscal period
by that Person under Capitalized Lease Obligations that should be
treated as interest in accordance with GAAP; provided that all
debt issuance costs, debt discounts or premiums, prepayment
premiums and other financing fees and expenses incurred by
Company and directly related to the consummation of the
transactions contemplated by this Agreement shall be excluded
from the calculation of Interest Expense.
"Notes" shall have the meaning assigned to that term in
Section 1.01.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust,
unincorporated organization, association, corporation, limited
liability company, institution, entity, party or foreign or
United States government (whether federal, state, county, city,
municipal or otherwise), including, without limitation, any
instrumentality, division, agency, body or department thereof.
"Purchaser" means and shall include not only the
Massachusetts Capital Resource Company but also any other holder
or holders of any of the Notes.
"Securities Act" means the Securities Act of 1933 or any
similar Federal statute, and the rules and regulations of the
Securities and Exchange Commission (or of any other Federal
agency then administering the Securities Act) thereunder, all as
the same shall be in effect at the time.
"SEC" shall have the meaning assigned to that term in
Section 3.08.
"SEC Reports" shall have the meaning assigned to that term
in Section 3.08.
"Security Documents" shall have the meaning assigned to that
term in Section 2.02(c).
"Senior Debt" shall have the meaning assigned to that term
in Section 1.09(h).
"Subsidiary" or "Subsidiaries" means shall mean, as to any
Person, any corporation of which more than fifty percent (50%) of
the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class of
such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or
indirectly, owned by such
Person, or any partnership, joint venture or limited liability
company of which more than fifty percent (50%) of the outstanding
equity interests are at the time, directly or indirectly, owned
by such Person or any partnership of which such Person is a
general partner.
"Subordination Agreement" shall have the meaning assigned
to that term in Section 2.03(a).
6.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles consistent with those
applied in preparation of the financial statements attached
hereto as Exhibit 3.08, and all financial data submitted pursuant
to this Agreement and all financial tests to be calculated in
accordance with this Agreement shall be prepared and calculated
in accordance with such principles.
ARTICLE VII
MISCELLANEOUS
7.01. No Waiver; Cumulative Remedies. No failure or delay
on the part of the Purchaser, or any other holder of the Notes in
exercising any right, power or remedy hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
7.02. Amendments, Waivers and Consents. Any provision in
this Agreement, the Notes or the Security Agreement to the
contrary notwithstanding, changes in or additions to this
Agreement may be made, and compliance with any covenant or
provision herein or therein set forth may be omitted or waived,
with the consent of the Company, if the Company shall, in the
case of the Notes, obtain consent thereto in writing from the
holder or holders of at least seventy-five percent (75%) in
principal amount of all Notes then outstanding; provided that no
such consent shall be effective to reduce or to postpone the date
fixed for the payment of the principal (including any required
redemption) or interest payable on any Note, without the consent
of the holder thereof, or to reduce the percentage of the Notes
the consent of the holders of which is required under this
Section. Any waiver or consent may be given subject to
satisfaction of conditions stated therein and any waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given. Written notice of any
waiver or consent effected under this subsection shall promptly
be delivered by the Company to any holders who did not execute
the same.
7.03. Addresses for Notices, etc. All notices, requests,
demands and other communications provided for hereunder shall be
in writing and mailed or delivered by reputable overnight courier
to the applicable party at the addresses indicated below:
If to the Company:
Dynasil Corporation of America
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
If to the Purchaser:
Payments should be mailed to:
Massachusetts Capital Resource Company
P. O. Box 3707
Xxxxxx, Xxxxxxxxxxxxx 00000
and all other deliveries and other communications
made at or sent to:
Massachusetts Capital Resource Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
If to any other holder of the Notes: at such holder's
address for notice as set forth in the register maintained by the
Company, or, as to each of the foregoing, at such other address
as shall be designated by such Person in a written notice to the
other party complying as to delivery with the terms of this
Section. All such notices, requests, demands and other
communications shall, when mailed, be effective when deposited in
the mails or otherwise delivered, addressed as aforesaid.
7.04. Costs, Expenses and Taxes. The Company agrees to pay
on demand all costs and expenses of the Purchaser in connection
with the preparation, execution and delivery of this Agreement,
the Notes, the Security Documents and other instruments and
documents to be delivered hereunder, including the reasonable
fees and out-of-pocket expenses of Xxxxxx X. Xxxxxxxxx, Esq.,
counsel for the Purchaser, with respect thereto, as well as the
reasonable fees and out-of-pocket expenses of legal counsel,
independent public accountants and other outside experts
reasonably retained by the Purchaser in connection with the
amendment or enforcement of this Agreement, the Notes, the
Security Documents and other instruments and documents to be
delivered hereunder or thereunder. In addition, the Company
shall pay any and all stamp and other taxes payable or determined
to be payable in connection with the execution and delivery of
this Agreement, the Notes, the Security Documents and the other
instruments and documents to be delivered hereunder or thereunder
and agrees to save the Purchaser harmless from and against any
and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes and filing fees.
7.05. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the Company and the
Purchaser and their respective successors and assigns, except
that the Company shall not have the right to assign its rights
hereunder or any interest herein without the prior written
consent of the Purchaser.
7.06. Survival of Representations and Warranties. All
representations and warranties made in this Agreement, the Notes,
the Security Documents or any other instrument or document
delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof and the making of the
loans.
7.07. Prior Agreements. This Agreement constitutes the
entire agreement between the parties and supersedes any prior
understandings or agreements concerning the subject matter
hereof.
7.08. Severability. The invalidity or unenforceability of
any provision hereof shall in no way affect the validity or
enforceability of any other provision.
7.09. Governing Law; Construction; Forum Selection. This
Agreement and the other agreements to be executed in connection
herewith are submitted by the Company to the Purchaser for
Purchaser's acceptance or rejection at Purchaser's principal
place of business as an offer by the Company to issue the Notes
to the Purchaser, and shall not be binding upon the Purchaser or
become effective until accepted by the Purchaser, in writing, at
said place of business. If so accepted by the Purchaser, this
Agreement and such other agreements shall be deemed to have been
made at said place of business. THIS AGREEMENT AND SUCH OTHER
AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER
RESPECTS, INCLUDING, WITHOUT LIMITATION, THE LEGALITY OF THE
INTEREST RATE AND OTHER CHARGES, BUT EXCLUDING PERFECTION OF THE
SECURITY INTERESTS IN COLLATERAL LOCATED OUTSIDE OF THE
COMMONWEALTH OF MASSACHUSETTS, WHICH SHALL BE GOVERNED AND
CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION IN WHICH SUCH
COLLATERAL IS LOCATED. If any provision of this Agreement shall
be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or remaining provisions of this Agreement.
To induce the Purchaser to accept this Agreement, the
Company irrevocably agree that, subject to the Purchaser's sole
and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY,
MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS
AGREEMENT, SUCH OTHER AGREEMENTS OR THE COLLATERAL SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE COMMONWEALTH OF
MASSACHUSETTS. THE COMPANY HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN
SAID JURISDICTION. The Company hereby waives personal service of
any and all process upon it and consents that all such service of
process may be made by intentionally recognized overnight courier
or hand delivery directed to the Company at its notice address as
provided for in Section 7.03. THE COMPANY HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY
LITIGATION BROUGHT AGAINST THE COMPANY BY THE PURCHASER IN
ACCORDANCE WITH THIS SECTION.
7.10. Headings. Article, Section and subsection headings
in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement
for any other purpose.
7.11. Sealed Instrument. This Agreement is executed as an
instrument under seal.
7.12. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one and the same instrument, and each of the parties
hereto may execute this Agreement by signing any such
counterpart.
7.13. Further Assurances. From and after the date of this
Agreement, upon the request of the Purchaser, the Company and
each Subsidiary shall execute and deliver such instruments,
documents and other writings as may be necessary or desirable to
confirm and carry out and to effectuate fully the intent and
purposes of this Agreement, the Notes and the Security Documents.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
DYNASIL CORPORATION OF AMERICA
By___________________________________________
Xxxxxxx X. Xxxxxxx, Chief Financial
Officer
MASSACHUSETTS CAPITAL RESOURCE COMPANY
By___________________________________________
Xxxxxxx X. Xxxxx, Vice President
Signature Page to the Note Purchase Agreement
Exhibit 1.01
THIS NOTE IS SUBJECT TO THE SUBORDINATION AGREEMENT DATED AS OF
JULY 31, 2012 AMONG THE COMPANY, CERTAIN AFFILIATES OF THE
COMPANY, THE PAYEE AND SOVEREIGN BANK, N.A.
DYNASIL CORPORATION OF AMERICA
NOTE DUE 2017
$3,000,000 July 31, 2012
For value received, Dynasil Corporation of America, a
Delaware corporation (the "Company"), hereby promises to pay to
Massachusetts Capital Resource Company or registered assigns
(hereinafter referred to as the "Payee"), on or before July 31,
2017, the principal sum of Three Million Dollars ($3,000,000) or
such part thereof as then remains unpaid, to pay interest from
the date hereof on the whole amount of said principal sum
remaining from time to time unpaid at the rate of ten percent
(10%) per annum, such interest to be payable monthly on the last
day of each calendar month in each year, the first such payment
to be due and payable on August 31, 2012, until the whole amount
of the principal hereof remaining unpaid shall become due and
payable, and to pay interest at the rate of fourteen percent
(14%) (so far as the same may be legally enforceable) on all
overdue principal (including any overdue required redemption),
premium and interest. Principal, premium, if any, and interest
shall be payable in lawful money of the United States of America,
in immediately available funds, at the principal office of the
Payee or at such other place as the legal holder may designate
from time to time in writing to the Company. Interest shall be
computed on the basis of a 360-day year and a 30-day month.
This Note is issued pursuant to and is entitled to the
benefits of a certain Note Purchase Agreement, dated as of July
31, 2012, between the Company and Massachusetts Capital Resource
Company (as the same may be amended from time to time,
hereinafter referred to as the "Agreement"), and each holder of
this Note, by his acceptance hereof, agrees to be bound by the
provisions of the Agreement, including, without limitation, that
(i) this Note is subject to prepayment, in whole or in part, as
specified in said Agreement, (ii) the principal of and interest
on this Note is subordinated to Senior Debt, as defined in the
Agreement and (iii) in case of an Event of Default, as defined in
the Agreement, the principal of this Note may become or may be
declared due and payable in the manner and with the effect
provided in the Agreement.
As further provided in the Agreement, upon surrender of this
Note for transfer or exchange, a new Note or new Notes of the
same tenor dated the date to which interest has been paid on the
surrender Note and in an aggregate principal amount equal to the
unpaid principal amount of the Note so surrendered will be issued
to, and registered in the name of, the transferee or transferees.
The Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving
payment and for all other purposes.
This Note is secured by and entitled to the benefits of
certain Security Documents (as that term is defined in the
Agreement), dated July 31, 2012, from the Company and its
Subsidiaries to Massachusetts Capital Resource Company.
In case any payment herein provided for shall not be paid
when due, the Company promises to pay all cost of collection,
including all reasonable attorney's fees.
This Note shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts and shall
have the effect of a sealed instrument.
The Company and all endorsers and guarantors of this Note
hereby waive presentment, demand, notice of nonpayment, protest
and all other demands and notices in connection with the
delivery, acceptance, performance or enforcement of this Note.
DYNASIL CORPORATION OF AMERICA
By______________________________________
Xxxxxxx X. Xxxxxxx, Chief Financial
Officer
Exhibit 2.02(a)
THIS SECURITY AGREEMENT IS SUBJECT TO THE SUBORDINATION AGREEMENT
DATED AS OF JULY 31, 2012 AMONG THE DEBTOR, CERTAIN AFFILIATES OF
THE DEBTOR, THE LENDER AND SOVEREIGN BANK, N.A., AS SET FORTH IN
SECTION 9.10 HEREOF.
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 31, 2012, by and
between Dynasil Corporation of America, a Delaware corporation,
with principal offices located at 00 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000 (the "Debtor") and Massachusetts Capital
Resource Company (the "Lender").
Recitals
The Debtor and the Lender are parties to a certain Note
Purchase Agreement, dated as of the date hereof, (the "Purchase
Agreement"). It is a condition precedent to the agreement of the
Lender to enter into the Purchase Agreement and to extend credit
to the Debtor thereunder that the Debtor execute and deliver this
Security Agreement as security for the payment and performance of
all obligations of the Debtor to the Lender under the Purchase
Agreement, including the Notes issued pursuant thereto.
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:
ARTICLE 1.
GRANT OF SECURITY
Section 1.1 Grant of Security. As security for the
payment of all Obligations now or in the future owed by the
Debtor to the Lender, the Debtor hereby assigns to Lender and
grants to Lender a continuing, valid and, enforceable first
priority (subject to Permitted Liens) lien, charge and security
interest in all assets and property of any kind of Debtor
("Security Interest"), including without limitation, all of the
following property, whether tangible or intangible and whether
now or hereafter owned, existing, acquired, created or arising
and wherever now or hereafter located: (a) all Accounts and all
Goods whose sale, lease or other disposition by Debtor has given
rise to Accounts and have been returned to, or repossessed or
stopped in transit by, Debtor; (b) all Chattel Paper,
Instruments, Documents and General Intangibles (including,
without limitation, all patents, patent applications, trademarks,
trademark applications, trade names, trade secrets, goodwill,
copyrights, copyright applications, registrations, licenses,
software, franchises, customer lists, tax refund claims, claims
against carriers and shippers, guarantee claims, contracts
rights, payment intangibles, security interests, security
deposits and rights to indemnification); (c) all Inventory; (d)
all Goods (other than Inventory), including, without limitation,
all Equipment and Fixtures; (e) all Investment Property; (f) all
Deposit Accounts, bank accounts, deposits and cash; (g) all
Letter-of-Credit Rights; (h) all Commercial Tort Claims; (i) all
Payment Intangibles; (j) all Supporting Obligations; (k) any
other property of Debtor now or hereafter in the possession,
custody or control of Lender or any agent or any parent,
affiliate or subsidiary of Lender, for any purpose (whether for
safekeeping, deposit, collection, custody, pledge, transmission
or otherwise); (l) all additions and accessions to, substitutions
for, and replacements, products and Proceeds of the foregoing
property, including, without limitation, proceeds of all
insurance policies insuring the foregoing property; and (m) all
of Debtor's books and records relating to any of the foregoing
and/or to Debtor's business (all of the foregoing being
collectively referred to as the "Collateral"). Subject to the
Subordination Agreement, Lender may transfer Collateral into its
name or that of its nominee and may receive income and any other
distributions thereon and hold the same as collateral for the
Obligations, or apply the same to any defaulted Obligation
whether or not a Default or an Event of Default has occurred.
Section 1.2 Security for Obligations. This Agreement and
the Security Interest shall secure the payment and performance of
the Obligations.
ARTICLE 2
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Debtor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution
and delivery of this Agreement, as follows:
Section 2.1 Necessary Filings. Subject to the
Subordination Agreement, Debtor will immediately make all
filings, registrations and recordings necessary to create,
preserve and perfect the Security Interest granted by the Debtor
to the Lender hereby in respect of the Collateral, and the
Security Interest granted to the Lender pursuant to this
Agreement in and to the Collateral will constitute, upon
satisfaction of such filings, registrations and recordings, a
perfected security interest therein (to the extent that the same
can be perfected by filing, registration or recording) prior to
the rights of all other Persons therein (other than any such
rights pursuant to Permitted Liens) and subject to no other Liens
(other than Permitted Liens) and is entitled to all the rights,
priorities and benefits afforded by the Uniform Commercial Code
to perfected security interests.
Section 2.2 No Liens. The Debtor is, and as to
Collateral acquired by it from time to time after the date hereof
the Debtor will be, the owner of all Collateral pledged by it
hereunder free from any Lien, security interest, encumbrance or
other right, title or interest of any Person (other than
Permitted Liens), and, subject to the Subordination Agreement,
the Debtor shall defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any
interest therein (other than in connection with Permitted Liens)
adverse to the Lender or any one of them.
Section 2.3 Other Financing Statements. As of the date
hereof, there is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction)
covering or purporting to cover any interest of any kind in the
Collateral (other than financing statements filed in respect of
Permitted Liens), and so long as any Obligations are outstanding,
the Debtor will not execute or authorize to be filed in any
public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or
statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the
Security Interests granted hereby by the Debtor or in connection
with Permitted Liens.
Section 2.4 Chief Executive Office; Jurisdiction;
Records. As of the date hereof, the jurisdiction of
incorporation and the chief executive office of the Debtor are as
indicated on Exhibit A hereto. The Debtor will not change its
jurisdiction of incorporation or move its chief executive office
unless it has provided the Lender at least thirty (30) days prior
written notice of such change. A complete set of books of
account and records of the Debtor relating to the Receivables and
the Contract Rights are, and will continue to be, kept at its
chief executive office.
All Receivables and Contract Rights of the Debtor are, and
will continue to be, maintained at, and controlled and directed
(including, without limitation, for general accounting purposes)
from, the office locations described above or such new location
established in accordance with this Section 2.4.
Section 2.5 Location of Inventory and Equipment. As of
the date hereof, all Inventory and Equipment held by the Debtor
is located at one of the locations shown on Exhibit B hereto.
The Debtor agrees that all Inventory and Equipment now held or
subsequently acquired by it shall be kept at (or shall be in
transport to) any one of the locations shown on Exhibit B hereto,
or such new location as the Debtor may establish in accordance
with the last sentence of this Section 2.5. The Debtor may
establish a new location for material amounts of Inventory and
Equipment provided that it has given the Lender not less than 30
days' prior written notice of its intention so to do, clearly
describing such new location.
Section 2.6 Recourse. This Agreement is made with full
recourse to the Debtor and pursuant to and upon all the
warranties, representations, covenants and agreements on the part
of the Debtor contained herein and in the Purchase Agreement.
Section 2.7 Trade Names; Change of Name. Except as set
forth on Exhibit F hereto, as of the date hereof, the Debtor does
not have or operate in any jurisdiction under, or in the
preceding 12 months had or operated in any jurisdiction under,
any other trade names, fictitious names or other names except its
legal name. The Debtor shall provide the Lender with at least
thirty (30) days prior written notice of a change in its legal
name, any trade name, fictitious name or other name under which
it operates. Any such notice shall clearly describe such new
name and the jurisdictions in which such new name shall be used
and providing such other information in connection therewith as
the Lender may reasonably request. Debtor shall take all action
reasonably requested by the Lender, to maintain the security
interest of the Lender in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect.
ARTICLE 3
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
Section 3.1 Additional Representations and Warranties.
As of the time when each of its Receivables arises, the Debtor
shall be deemed to have represented and warranted that such
Receivable, and all records, papers and documents relating
thereto are what they purport to be in all material respects, and
that such Receivable will, to the best knowledge of the Debtor,
evidence true and valid obligations of the account debtor named
therein.
Section 3.2 Maintenance of Records. The Debtor will keep
and maintain at its own cost and expense, records of its
Receivables and Contracts and the Debtor will make the same
available on the Debtor's premises to any Lender for inspection
in accordance with the terms of the Purchase Agreement. Upon the
occurrence and during the continuance of an Event of Default and
at the reasonable request of the Lender, the Debtor shall, at its
own cost and expense, deliver abstracts of such records to the
Lender or to their representatives. If the Lender so directs,
subject to the Subordination Agreement, upon the occurrence and
during the continuance of an Event of Default, the Debtor shall
legend, in form and manner satisfactory to the Lender, the
Receivables and the Contracts, as well as books, records and
documents of the Debtor evidencing or pertaining to such
Receivables and Contracts with an appropriate reference to the
fact that such Receivables and Contracts have been assigned to
the Lender and that the Lender has a security interest therein.
Section 3.3 Direction to Account Debtors; Contracting
Parties; etc. Subject to the Subordination Agreement, upon the
occurrence and during the continuance of an Event of Default, and
if the Lender so directs the Debtor, the Debtor agrees (a) to
cause all payments on account of the Receivables and Contracts to
be made directly to the Cash Collateral Account, (b) that the
Lender may, at their option, directly notify the obligors with
respect to any Receivables and/or under any Contracts to make
payments with respect thereto as provided in preceding clause (a)
and (c) that the Lender may enforce collection of any such
Receivables and Contracts and may adjust, settle or compromise
the amount of payment thereof, in the same manner and to the same
extent as such Debtor. Without notice to or assent by the
Debtor, subject to the Subordination Agreement, the Lender may
apply any or all amounts then in, or thereafter deposited in, the
Cash Collateral Account which application shall be effected in
the manner provided in Section 7.4 of this Agreement. The
reasonable costs and expenses (including reasonable attorneys'
fees) of collection, whether incurred by the Debtor or the
Lender, shall be borne by the Debtor. The Lender shall deliver a
copy of each notice referred to in the preceding clause (b) to
the Debtor; provided, that the failure by the Lender to so notify
the Debtor shall not affect the effectiveness of such notice or
the other rights of the Lender created by this Section 3.3.
Section 3.4 Modification of Terms; etc. The Debtor shall
not rescind or cancel any indebtedness evidenced by any
Receivable or under any Contract, or modify any term thereof or
make any adjustment with respect thereto, or extend or renew the
same, or compromise or settle any material dispute, claim, suit
or legal proceeding relating thereto, or sell any Receivable or
Contract, or interest therein, without the prior written consent
of the Lender, except in accordance with the Debtor's reasonable
business practices.
Section 3.5 Collection. The Debtor shall, subject at all
times to the Subordination Agreement, endeavor in accordance with
reasonable business practices to cause to be collected from the
account debtor named in each of its Receivables or obligor under
any Contract, as and when due (including, without limitation,
amounts which are delinquent, such amounts to be collected in
accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable
or Contract, and apply forthwith upon receipt thereof all such
amounts as are so collected to the outstanding balance of such
Receivable or under such Contract. The reasonable costs and
expenses (including, without limitation, reasonable attorneys'
fees) of collection, if incurred by the Debtor or the Lender,
shall be borne by the Debtor.
ARTICLE 4
SPECIAL PROVISIONS CONCERNING TRADEMARKS
Section 4.1 Additional Representations and Warranties.
The Debtor represents and warrants that, as of the date hereof,
it is the true and lawful owner of all right, title and interest
to or otherwise has the right to use the registered Marks listed
in Exhibit C hereto for and that, as of the date hereof said
listed Marks constitute all the marks and applications for marks
registered in the United States Patent and Trademark Office that
the Debtor presently owns or uses in connection with its
business. The Debtor represents and warrants that it owns, is
licensed to use or otherwise has the right to use all material
Marks that it uses. The Debtor further warrants that it has no
knowledge of any third party claim that any aspect of the
Debtor's present business operations infringes or will infringe
any trademark, service xxxx or trade name in any respect which
could reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities or
condition (financial or otherwise) of the Debtor and its
Subsidiaries taken as a whole. The Debtor represents and
warrants that except as listed on Exhibit C, as of the date
hereof it is the beneficial and record owner of all trademark
registrations and applications listed in Exhibit C hereto and
that said registrations are valid and subsisting, and that the
Debtor is not aware of any third-party claim that any of said
registrations in respect of any material Xxxx is invalid or
unenforceable. Subject to the Subordination Agreement, the
Debtor hereby grants to the Lender an absolute power of attorney
to sign, upon the occurrence and during the continuance of an
Event of Default, any document which may be required by the
United States Patent and Trademark Office in order to effect an
absolute assignment of all right, title and interest in each
Xxxx, and record the same.
Section 4.2 Infringements. The Debtor agrees, promptly
upon learning thereof, to notify the Lender in writing of the
name and address of, and to furnish such pertinent information
that may be available with respect to, any party who the Debtor
believes is infringing or diluting or otherwise violating in any
material respect any of the Debtor's rights in and to any
material Xxxx, or with respect to any party claiming that the
Debtor's use of any material Xxxx violates in any material
respect any property right of that party. The Debtor further
agrees to prosecute any Person infringing any material Xxxx in
accordance with reasonable business practices.
Section 4.3 Preservation of Marks. The Debtor agrees to
use its Marks as required in each of the applicable jurisdictions
during the time in which this Agreement is in effect,
sufficiently to preserve such Marks (and any registrations
thereto) as trademarks or service marks under the laws of the
United States and any other applicable law; provided, that, prior
to any Default, the Debtor shall not be obligated to preserve any
Xxxx in the event the Debtor determines, in its reasonable
business judgment, that the preservation of such Xxxx is no
longer desirable in the conduct of its business.
Section 4.4 Maintenance of Registration. The Debtor
shall, at its own expense, diligently process all documents
required by the Trademark Act of 1946, 15 U.S.C. SectionSection 1051 et seq.
to maintain trademark registrations, including but not limited to
affidavits of use and applications for renewals of registration
in the United States Patent and Trademark Office for all of its
registered Marks pursuant to 15 U.S.C. SectionSection 1058(a), 1059 and 1065,
and shall pay all fees and disbursements in connection therewith
and shall not abandon any such filing of affidavit of use or any
such application of renewal prior to the exhaustion of all
administrative and judicial remedies without prior written
consent of the Lender; provided, that, prior to any Default, the
Debtor shall not be obligated to maintain any Xxxx in the event
that the Debtor determines, in its reasonable business judgment,
that the maintenance of such Xxxx is no longer necessary or
desirable in the conduct of its business.
Section 4.5 Future Registered Marks. If any Xxxx
registration issued hereafter to the Debtor as a result of any
application now or hereafter pending before the United States
Patent and Trademark Office, within 60 days of receipt of such
certificate, the Debtor shall deliver to the Lender a copy of
such certificate, and, subject to the Subordination Agreement,
upon the occurrence and during the continuance of an Event of
Default, upon Lender's request an assignment for security in such
Xxxx, to the Lender and at the expense of the Debtor, confirming
the assignment for security in such Xxxx to the Lender hereunder,
the form of such security to be substantially the same as the
form hereof or in such other form as may be reasonably
satisfactory to the Lender.
Section 4.6 Remedies. If an Event of Default shall occur
and be continuing, the Lender may, subject at all times to the
Subordination Agreement, take any or all of the following
actions: (a) declare the entire right, title and interest of the
Debtor in and to each of the Marks, together with all trademark
rights and rights of protection to the same, vested in the Lender
for the benefit of the Lender, in which event the rights, title
and interest shall immediately vest, in the Lender for the
benefit of the Lender, and the Lender shall be entitled to
exercise the power of attorney referred to in Section 4.1 hereof
to execute, cause to be acknowledged and notarized and record
said absolute assignment with the applicable agency; (b) take and
use or sell the Marks and the goodwill of the Debtor's business
symbolized by the Marks and the right to carry on the business
and use the assets of the Debtor in connection with which the
Marks have been used; and (c) direct the Debtor to refrain, in
which event the Debtor shall refrain, from using the Marks in any
manner whatsoever, directly or indirectly, and, if requested by
the Lender, change the Debtor's corporate name to eliminate
therefrom any use of any Xxxx and execute such other and further
documents that the Lender may request to further confirm this and
to transfer ownership of the Marks and registrations and any
pending trademark application in the United States Patent and
Trademark Office to the Lender.
Section 4.7 Collateral Assignment. This Agreement is
made for collateral security purposes only. This Agreement and
Lender' Security Interest in the Marks shall continue in full
force and effect as long as any Obligations shall be owed to the
Lender (or any one of them). Upon payment in full of the
Obligations, this Agreement shall terminate and Lender shall
promptly execute and deliver to the Debtor, at the Debtor's
expense, all termination statements and other instruments as may
be necessary or proper to terminate Lender's security interest in
the Marks, subject to any disposition thereof which may have been
made by Lender pursuant to this Agreement.
ARTICLE 5
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
Section 5.1 Additional Representations and Warranties.
The Debtor represents and warrants that, as of the date hereof,
it is the true and lawful owner of all rights in (a) all material
Trade Secrets and Proprietary Information necessary to operate
the business of the Debtor, (b) the Patents listed in Exhibit D
hereto for the Debtor and that said Patents constitute all the
patents and applications for patents that the Debtor owns on the
date hereof and (c) the Copyrights listed in Exhibit E hereto and
that said Copyrights constitute all registrations of copyrights
and applications for copyright registrations that such Debtor
owns on the date hereof. The Debtor further warrants that it has
no knowledge of any third party claim that any aspect of the
Debtor's present business operations infringes or will infringe
any patent or any copyright or the Debtor has misappropriated any
Trade Secret or Proprietary Information, in each case in any
respect which could reasonably be expected to have a material
adverse effect on the business, operations, property, assets,
liabilities or condition (financial or otherwise) of the Debtor.
Subject to the Subordination Agreement, the Debtor hereby grants
to the Lender an absolute power of attorney to sign, upon the
occurrence and during the continuance of an Event of Default, any
document which may be required by the United States Patent and
Trademark Office or the United States Copyright Office in order
to effect an absolute assignment of all right, title and interest
in each Patent and Copyright, and to record the same.
Section 5.2 Infringements. The Debtor agrees, promptly
upon learning thereof, to furnish the Lender in writing with all
pertinent information available to the Debtor with respect to any
infringement, contributing infringement or active inducement to
infringe in any material respect any material Patent or Copyright
or to any claim that the practice of any material Patent or the
use of any material Copyright violates in any material respect
any property right of a third party, or with respect to any
misappropriation of any material Trade Secret Right or any claim
that practice of any material Trade Secret Right violates in any
material respect any property right of a third party. The Debtor
further agrees, to the extent consistent with reasonable business
practices, to prosecute any Person infringing any Patent or
Copyright or any Person misappropriating any Trade Secret Right.
Section 5.3 Maintenance of Patents. At its own expense,
the Debtor shall make timely payment of all post-issuance fees
required pursuant to 35 U.S.C. Section 41 to maintain in force rights
under each Patent, absent prior written consent of the Lender;
provided, that the Debtor shall not be obligated to maintain any
Patent in the event the Debtor determines, in its reasonable
business judgment, that the maintenance of such Patent is no
longer necessary or desirable in the conduct of its business.
Section 5.4 Prosecution of Patent Application. At its
own expense, the Debtor shall diligently prosecute all
applications for Patents for the Debtor and shall not abandon any
such application prior to exhaustion of all administrative and
judicial remedies, absent written consent of the Lender;
provided, that the Debtor shall not be obligated to prosecute any
application in the event the Debtor determines, in its
reasonable business judgment, that the prosecuting of such
application is no longer necessary or desirable in the conduct of
its business.
Section 5.5 Other Patents and Copyrights. Within 60 days
of the acquisition or issuance of a Patent, registration of a
Copyright, or acquisition of a registered copyright, the Debtor
shall deliver to the Lender a copy of said Copyright or
certificate or registration of said patents, as the case may be,
and, subject to the Subordination Agreement, upon the occurrence
and during the continuance of an Event of Default, upon Lender's
request an assignment for security as to such Patent or
Copyright, as the case may be, to the Lender and at the expense
of the Debtor, confirming the assignment for security, the form
of such assignment for security to be substantially the same as
the form hereof or in such other form as may be reasonably
satisfactory to the Lender.
Section 5.6 Remedies. Subject to the Subordination
Agreement, if an Event of Default shall occur and be continuing,
the Lender may take any or all of the following actions: (a)
declare the entire right, title, and interest of the Debtor in
each of the Patents and Copyrights vested in the Lender for the
benefit of the Lender, in which event such right, title, and
interest shall immediately vest in the Lender for the benefit of
the Lender, in which case the Lender shall be entitled to
exercise the power of attorney referred to in Section 5.1 hereof
to execute, cause to be acknowledged and notarized and to record
said absolute assignment with the applicable agency; (b) take and
practice or sell the Patents and Copyrights; and (c) direct the
Debtor to refrain, in which event the Debtor shall refrain, from
practicing the Patents and using the Copyrights directly or
indirectly, and the Debtor shall execute such other and further
documents as the Lender may request further to confirm this and
to transfer ownership of the Patents and Copyrights to the Lender
for the benefit of the Lender.
Section 5.7 Collateral Assignment. This Agreement is
made for collateral security purposes only. This Agreement and
Lender's Security Interest in the Patents and Copyrights shall
continue in full force and effect as long as any Obligations
shall be owed to the Lender (or any one of them). Upon payment
in full of the Obligations, this Agreement shall terminate and
Lender shall promptly execute and deliver to the Debtor, at the
Debtor's expense, all termination statements and other
instruments as may be necessary or proper to terminate Lender's
security interest in the Patents and Copyrights, subject to any
disposition thereof which may have been made by Lender pursuant
to this Agreement.
ARTICLE 6
PROVISIONS CONCERNING ALL COLLATERAL
Section 6.1 Protection of Lender's Security. The Debtor
will at all times keep its Inventory and Equipment insured, at
the Debtor's own expense to the extent and in the manner provided
in the Purchase Agreement. If the Debtor shall fail to insure
its Inventory and Equipment in accordance with the preceding
sentence, the Lender shall have the right (but shall be under no
obligation), upon prior written notice to the Debtor, to procure
such insurance and the Debtor agrees to promptly reimburse the
Lender for all reasonable costs and expenses of procuring such
insurance. The Lender shall, subject to the Subordination
Agreement, at the time any proceeds of such insurance are
distributed to the Lender, apply such proceeds in accordance with
Section 7.4 hereof. The Debtor assumes all liability and
responsibility in connection with the Collateral acquired by it
and the liability of the Debtor to pay the Obligations shall in
no way be affected or diminished by reason of the fact that such
Collateral may be lost, destroyed, stolen, damaged or for any
reason whatsoever unavailable to the Debtor.
Section 6.2 Further Actions. Subject to the
Subordination Agreement, the Debtor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the
Lender from time to time such lists, descriptions and
designations of its Collateral, warehouse receipts, receipts in
the nature of warehouse receipts, bills of lading, documents of
title, vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers
of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the
Collateral and other property or rights covered by the security
interest hereby granted, which the Lender deems reasonably
appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
Section 6.3 Financing Statements. The Debtor agrees to
execute and deliver to the Lender such financing statements, in
form reasonably acceptable to the Lender, as the Lender may from
time to time reasonably request or as are necessary or desirable
in the reasonable opinion of the Lender to establish and maintain
a valid, enforceable, first priority perfected security interest
in the Collateral as provided herein (subject to Permitted Liens)
and the other rights and security contemplated hereby all in
accordance with the UCC as enacted in any and all relevant
jurisdictions or any other relevant law. The Debtor will pay any
applicable filing fees, recordation taxes and related expenses
relating to its Collateral. The Debtor hereby authorizes the
Lender to file any such financing statements without the
signature of the Debtor where permitted by law.
ARTICLE 7
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
Section 7.1 Remedies; Obtaining the Collateral Upon
Default. The Debtor agrees that, if an Event of Default shall
have occurred and be continuing, then and in every such case, the
Lender, in addition to any rights now or hereafter existing under
applicable law, shall, subject to the Subordination Agreement,
have all rights as a secured creditor under the UCC in all
relevant jurisdictions and may:
(a) personally, or by agents or attorneys, immediately
take possession of the Collateral or any part thereof, from
the Debtor or any other Person who then has possession of
any part thereof with or without notice or process of law,
and for that purpose may enter upon the Debtor's premises
where any of the Collateral is located and remove the same
and use in connection with such removal any and all
services, supplies, aids and other facilities of the Debtor;
(b) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without
limitation, the Receivables and the Contracts) constituting
the Collateral to make any payment required by the terms of
such agreement, instrument or other obligation directly to
the Lender;
(c) withdraw all monies, securities and instruments in
the Cash Collateral Account and/or in any other cash
collateral account for application to the Obligations in
accordance with Section 7.4 hereof;
(d) sell, assign or otherwise liquidate any or all of
the Collateral or any part thereof in accordance with
Section 7.2 hereof, or direct the Debtor to sell, assign or
otherwise liquidate any or all of the Collateral or any part
thereof, and, in each case, take possession of the proceeds
of any such sale or liquidation;
(e) take possession of the Collateral or any part
thereof, by directing the Debtor in writing to deliver the
same to the Lender at any place or places reasonably
designated by the Lender, in which event the Debtor shall at
its own expense:
(i) forthwith cause the same to be moved to the
place or places so designated by the Lender and there
delivered to the Lender;
(ii) store and keep any Collateral so delivered to
the Lender at such place or places pending further
action by the Lender as provided in Section 7.2 hereof;
and
(iii) while the Collateral shall be so stored
and kept, provide such guards and maintenance services
as shall be necessary to protect the same and to
preserve and maintain them in good condition; and
(f) license or sublicense, whether on an exclusive or
nonexclusive basis, any Marks, Patents or Copyrights
included in the Collateral for such term and on such
conditions and in such manner as the Lender shall in their
reasonable judgment determine;
it being understood that the Debtor's obligation so to deliver
the Collateral is of the essence of this Agreement and that,
accordingly, upon application to a court of equity having
jurisdiction, the Lender shall be entitled to a decree requiring
specific performance by the Debtor of said obligation.
Section 7.2 Remedies: Disposition of the Collateral.
Subject to the Subordination Agreement, any Collateral possessed
by the Lender under or pursuant to Section 7.1 hereof and any
other Collateral whether or not so possessed by the Lender, maybe
sold, assigned, leased or otherwise disposed of under one or more
contracts or as an entirety, and without the necessity of
gathering at the place of sale the property to be sold, and in
general in such manner, at such time or times, at such place or
places and on such terms as the Lender may, in compliance with
any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold,
leased or otherwise disposed of, in the condition in which the
same existed when taken by the Lender or after any overhaul or
repair at the expense of the Debtor which the Lender shall
determine to be commercially reasonable. Any such disposition
which shall be a private sale or other private proceedings
permitted by such requirements shall be made upon not less than
10 days' written notice to the Debtor specifying the time at
which such disposition is to be made and the intended sale price
or other consideration therefor, and shall be subject, for the 10
days after the giving of such notice, to the right of the Debtor
or any nominee of the Debtor to acquire the Collateral involved
at a price or for such other consideration at least equal to the
intended sale price or other consideration so specified, but in
no event in an amount greater than the Obligations then
outstanding and provision for any contingent Obligations
reasonably acceptable to the Lender. Any such disposition which
shall be a public sale permitted by such requirements shall be
made upon not less than 10 days' written notice to the Debtor
specifying the time and place of such sale and, in the absence of
applicable requirements of law, shall be by public auction (which
may, at the Lender's option, be subject to reserve), after
publication of notice of such auction not less than 10 days prior
thereto in two daily newspapers in general circulation in
southeastern, Massachusetts. To the extent permitted by any such
requirement of law, the Lender may bid for and become the
purchaser of the Collateral or any item thereof, offered for sale
in accordance with this Section without accountability to the
Debtor. If, under mandatory requirements of applicable law, the
Lender shall be required to make disposition of the Collateral
within a period of time which does not permit the giving of
notice to the Debtor as hereinabove specified, the Lender need
give the Debtor only such notice of disposition as shall be
reasonably practicable in view of such mandatory requirements of
applicable law.
Section 7.3 Waiver of Claims. Except as otherwise
provided in this Agreement, (a) THE DEBTOR HEREBY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING
IN CONNECTION WITH THE LENDER'S TAKING POSSESSION OR THE AGENT'S
DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT
LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH
DEBTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE
OF THE UNITED STATES OR OF ANY STATE, (b) the Debtor hereby
further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of
possession except any damages which are determined
by a final, non-appealable court order to have
been caused by the Lender's gross negligence or
willful misconduct; and
(ii) all other requirements as to the time, place and
terms of sale or other requirements with respect
to the enforcement of the Lender's rights
hereunder; and
(iii) all rights of redemption, appraisement,
valuation, stay, extension or moratorium now or
hereafter in force under any applicable law in
order to prevent or delay the enforcement of this
Agreement or the absolute sale of the Collateral
or any portion thereof, and the Debtor, for itself
and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives
the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral shall operate to divest all
right, title, interest, claim and demand, either at law or in
equity, of the Debtor therein and thereto, and shall be a
perpetual bar both at law and in equity against the Debtor and
against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part
thereof, from, through and under the Debtor.
Section 7.4 Application of Proceeds. Subject to the
Subordination Agreement:
(a) All moneys collected by the Lender upon any
sale or other disposition of the Collateral, together with
all other moneys received by the Lender hereunder, shall be
applied to the payment of the Obligations.
(b) It is understood and agreed that the Debtor
shall remain liable to the extent of any deficiency between
the amount of the proceeds of the Collateral hereunder and
the aggregate amount of the Obligations.
(c) After payment in full of the amounts
specified in the preceding subparagraphs, to the payment to
or upon the order of the Debtor, or to whomsoever may be
lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
Section 7.5 Remedies Cumulative. Each and every right,
power and remedy hereby specifically given to the Lender shall be
in addition to every other right, power and remedy specifically
given under this Agreement, or now or hereafter existing at law,
in equity or by statute and each and every right, power and
remedy whether specifically herein given or otherwise existing
may be exercised from time to time or simultaneously and as often
and in such order as may be deemed expedient by the Lender. All
such rights, powers and remedies shall be cumulative and the
exercise or the beginning of the exercise of one shall not be
deemed a waiver of the right to exercise any other or others. No
delay or omission of the Lender in the exercise of any such
right, power or remedy and no renewal or extension of any of the
Obligations shall impair any such right, power or remedy or shall
be construed to be a waiver of any Default or Event of Default or
an acquiescence therein. No notice to or demand on the Debtor in
any case shall entitle it to any other or further notice or
demand in similar or other circumstances or constitute a waiver
of any of the rights of the Lender to any other or further action
in any circumstances without notice or demand. In the event that
the Lender shall bring any suit to enforce any of its rights
hereunder and shall be entitled to judgment, then in such suit
the Lender may recover reasonable expenses, including reasonable
attorneys' fees, and the amounts thereof shall be included in
such judgment.
Section 7.6 Discontinuance of Proceedings. In case the
Lender shall have instituted any proceeding to enforce any right,
power or remedy under this Agreement by foreclosure, sale, entry
or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely
to the Lender, then and in every such case the Debtor, the Lender
and each holder of any of the Obligations shall be restored to
their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this
Agreement, and all rights, remedies and powers of the Lender
shall continue as if no such proceeding had been instituted.
Section 7.7
a) Grant of Power of Attorney.
(i) Lender as Attorney-in-Fact. The Debtor hereby
irrevocably appoints the Lender (and any of its attorneys,
officers, employees, or agents) as its true and lawful attorney-
in-fact, said appointment being coupled with an interest, with
full power of substitution, in the name of Debtor, such Lender,
or otherwise, for the sole use and benefit of such Lender in its
sole discretion, but at Debtor's expense, and subject to the
Subordination Agreement, to exercise, to the extent permitted by
law, in its name or in the name of Debtor or otherwise, the
powers set forth herein, following the occurrence of an Event of
Default (except as to clause (C) below, which power may be
exercised at any time), such powers, including, but not limited
to, the power at any time: (A) to endorse the name of Debtor upon
any instruments of payment, invoice, right, or express xxxx, xxxx
of landing, storage, or warehouse receipt relating to the
Collateral; (C) to sign and file one or more financing statements
naming Debtor as debtor and Lender as secured party and
indicating therein the types or describing the types of
Collateral herein specified; (D) to correspond and negotiate
directly with insurance carriers; and (E) to execute any notice,
statement, instrument, agreement, or other paper that Lender may
require to create, preserve, perfect, or validate any security
interest granted pursuant hereto or to enable Lender to exercise
or enforce their right hereunder, under any the Purchase
Agreement, the Notes issued thereunder, or with respect to such
security interest.
(ii) Liability of Lender as Attorney-in-Fact. Neither
the Lender nor any of its attorneys, officer, employees, or
agents shall be liable for acts, omissions, any error in
judgment, or mistake in fact in its/their capacity as attorney-in-
fact, except as a result of gross negligence or willful
misconduct. This power, being coupled with an interest in
irrevocable until the Liabilities have been fully satisfied.
Lender shall not be required to take any steps necessary to
preserve any rights against prior parties with respect to any of
the Collateral.
ARTICLE 8
DEFINITIONS
In addition to terms defined elsewhere herein, the following
terms shall have the meanings herein specified. Such definitions
shall be equally applicable to the singular and plural forms of
the terms defined. Any capitalized term not otherwise defined
herein shall have the meaning set forth in the Purchase
Agreement.
"Account", "Account Debtor", "Certificated Security",
"Chattel Paper", "Commercial Tort Claims", "Control", "Deposit
Accounts", "Documents", "Electronic Chattel Paper", "Equipment",
"Fixtures", "General Intangibles", "Goods", "Instruments",
"Inventory", "Investment Property", "Letter-of-Credit Right",
"Payment Intangible", "Proceeds", "Securities Entitlement",
"Securities Intermediary", "Supporting Obligations", "Tangible
Chattel Paper" and "Uncertificated Security" shall have the
respective meanings assigned to such terms in the Uniform
Commercial Code, as the same may be in effect in the Commonwealth
of Massachusetts from time to time (the "UCC").
"Agreement" shall mean this Security Agreement as the same
may be modified, supplemented or amended from time to time in
accordance with its terms.
"Cash Collateral Account" shall mean a non-interest bearing
cash collateral account maintained with a bank or trust company
designated by the Lender, and in the sole dominion and control
of, the Lender for the benefit of the Lender.
"Contract Rights" shall mean all rights of the Debtor
(including, without limitation, all rights to payment) under each
Contract.
"Copyrights" shall mean any United States copyright owned
(or subject to the rights of ownership) by the Debtor, including
any registrations of any copyright, in the United States
Copyright Office, as well as any application for a copyright
registration now or hereafter made with the United States
Copyright Office by the Debtor.
"Default" shall mean any event which, with giving of notice
or the passage of time, or both, would constitute an Event of
Default.
"Event of Default" shall mean any Event of Default under the
Purchase Agreement.
"Liens" shall mean any security interest, mortgage, pledge,
lien, claim, charge, encumbrance, title retention agreement,
lessor's interest in a financing lease or analogous instrument,
in, of, or on the Debtor's property.
"Marks" shall mean any United States trademarks, service
marks and trade names now owned, subject to a right of ownership
or hereafter acquired by the Debtor, including any registration
of, or application for, any trademarks and service marks in the
United States Patent and Trademark Office, and any trade dress
including logos and/or designs used by the Debtor in the United
States.
"Obligations" shall mean (a) the full and prompt payment
when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations and liabilities of the Debtor now
existing or hereafter incurred under, arising out of or in
connection with the Purchase Agreement or the Notes issued
thereunder and the due performance and compliance by the Debtor
with the terms of the Purchase Agreement and the Notes issued
thereunder; (b) any and all sums advanced by the Lender in
accordance with the terms of this Agreement in order to preserve
the Collateral or preserve its security interest in the
Collateral; and (c) in the event of any proceeding for the
collection or enforcement of any obligations or liabilities
referred to in clause (a), after an Event of Default shall have
occurred and be continuing, the reasonable expenses of re-taking,
holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise
by the Lender of their rights hereunder, together with reasonable
attorneys' fees and court costs.
"Patents" shall mean any United States patent owned, subject
to a right of ownership by or hereafter acquired by the Debtor
and any divisions, continuations, reissues, reexaminations,
extensions or renewals thereof, as well as any application for a
United States patent now or hereafter made by the Debtor or
subject to a right of ownership in such Debtor.
"Person" shall mean any individual, corporation,
partnership, joint venture, trust, or unincorporated
organization, or a government or any agency or political
subdivision thereof.
"Permitted Liens" shall mean Liens set forth on Exhibit G
hereto.
"Proprietary Information" means all information and know-how
worldwide, including, without limitation, technical data,
manufacturing data, research and development data, manufacturing
data, research and development data, data relating to
compositions, processes and formulations, manufacturing and
production know-how and experience, management know-how, training
programs, manufacturing, engineering and other drawings,
specifications, performance criteria, operating instructions,
maintenance manuals, technology, technical information, software,
engineering and computer data and databases, design and
engineering specifications, catalogs, promotional literature and
financial, business and marketing plans, inventions and invention
disclosures.
"Trade Secrets" means any secretly held existing engineering
and other data, information, production procedures and other know-
how relating to the design, manufacture, assembly, installation,
use, operation, marketing, sale and servicing of any products or
business of the Debtor worldwide whether written or not written.
ARTICLE 9
MISCELLANEOUS
Section 9.1 Notices. Except as otherwise specified
herein, all notices, requests, demands or other communications to
or upon the respective parties hereto shall be deemed to have
been duly given or made when delivered to the party to which such
notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as
follows:
(a) if to the Debtor:
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
(b) if to the Lender:
Massachusetts Capital Resource Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
or at such other address as shall have been furnished in writing
by any Person described above to the party required to give
notice hereunder.
Section 9.2 Waiver; Amendment. None of the terms and
conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by
the Debtor and the Lender.
Section 9.3 Obligations Absolute. The obligations of the
Debtor hereunder shall remain in full force and effect without
regard to, and shall not be impaired by, (a) any bankruptcy,
insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of the Debtor except as
required by applicable law; (b) any exercise or non-exercise of
any right, remedy, power or privilege under or in respect of this
Agreement; or (c) any amendment to or modification of the
Purchase Agreement or the Notes issued thereunder or any security
for any of the Obligations, other than amendments or
modifications of this Agreement, whether or not the Debtor shall
have notice or knowledge of any of the foregoing.
Section 9.4 Successors and Assigns. This Agreement shall
be binding upon the Debtor and its successors and assigns and
shall inure to the benefit of the Lender and their respective
successors and assigns. All agreements, statements,
representations and warranties made by the Debtor herein or in
any certificate or other instrument delivered by the Debtor or on
its behalf under this Agreement shall be considered to have been
relied upon by the Lender and shall survive the execution and
delivery of this Agreement and the Purchase Agreement regardless
of any investigation made by the Lender or on their behalf.
Section 9.5 Headings Descriptive. The headings of the
several sections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction
of any provision of this Agreement.
Section 9.6 Governing Law. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE COMMONWEALTH OF
MASSACHUSETTS, WITHOUT REGARD TO THE CONFLICTS LAWS PROVISIONS OF
SUCH COMMONWEALTH.
Section 9.7 Venue; Service of Process. Any action or
proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any
of the parties in the United States District Court for the
District of Massachusetts or any of the state courts in the
Commonwealth of Massachusetts, and each of the parties consents
to the jurisdiction of such court (and of the appropriate
appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or
proceeding referred to in the preceding sentence may be served on
any party anywhere in the world.
Section 9.8 Debtor's Duties. It is expressly agreed,
anything herein contained to the contrary notwithstanding, that
the Debtor shall remain liable to perform all of the obligations,
if any, assumed by it with respect to the Collateral and the
Lender shall not have any obligations or liabilities with respect
to any Collateral by reason of or arising out of this Agreement,
nor shall the Lender be required or obligated in any manner to
perform or fulfill any of the obligations of the Debtor under or
with respect to any Collateral.
Section 9.9 Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the
Debtor and the Lender.
Section 9.10 Rights of Senior Lender. The security
interest of the Lender granted hereunder and its rights in
respect thereof shall be subject to and entitled to the benefits
of the terms of the Subordination Agreement. In the event of any
conflict between the terms of the Subordination Agreement and the
terms of this Agreement, the terms of the Subordination Agreement
shall govern. In the event that performance of any affirmative
obligation of the Debtor under this Agreement is impossible due
to a conflict with an obligation of the Debtor in favor of
Sovereign Bank, N.A. (or its successors or assigns), the Debtor
will first comply with its obligations in favor of Sovereign
Bank, N.A. (or its successors or assigns), and then, to the
extent possible, comply with its obligations hereunder, and any
such failure so to comply hereunder shall not be a Default or
Event of Default under the Loan Documents.
[Balance of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
DYNASIL CORPORATION OF AMERICA
By:
Xxxxxxx X. Xxxxxxx, Chief
Financial Officer
MASSACHUSETTS CAPITAL RESOURCE
COMPANY
By:
Xxxxxxx X. Xxxxx, Vice President
Signature Page to Security Agreement
EXHIBIT A
Locations of Chief Executive Office and Jurisdiction of
Organization
Chief Executive Xxxxxx
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Jurisdiction of Organization
State of Delaware
EXHIBIT B
Location of Inventory and Equipment
1. Dynasil Corporation of America
000 Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
2. Radiation Monitoring Devices, Inc.
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
3. RMD Instruments Corp.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
4. Evaporated Metal Films Corp.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
5. Optometrics Corp.
0 Xxxxx Xxx
Xxxx, XX 00000
00 Xxxxx Xxx
Xxxx, XX 00000
6. Xxxxxx Crystals, Ltd.
Xxxx X0 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxx XX0 0XX
Xxxxxx Xxxxxxx
EXHIBIT C
List of Trademarks
None
EXHIBIT D
List of Patents
A. Provisional patents filed:
1. Hypothermia 1- US Provisional Application Number 61/526,375
2. Hypothermia 2 - US Provisional Application Number 61/576,645
3. Tissue sealant - US Provisional Application Number 61/594,898
4. Blood storage - red blood cells (joint with Mayo) US
Provisional Application No. 61/453,455
5. Blood storage - platelets (joint with Mayo) US Provisional
Application No. 61/562,331
B. Pending patents:
1. Thrombin generation - US Patent Application No. 20120178114,
PCT number PCT/US08/72555
2. Rapid detection of Tuberculosis - US Patent Application No.
20090148870, PCT number PCT/US07/11957
C. Patent Application Status and Issued Patents
See Attached Table.
EXHIBIT E
List of Copyrights
None
EXHIBIT F
Trade Names, Change of Name
1. Dynasil Corporation of America
2. Dynasil
3. Dynasil Corp.
4. Dynasil Corporation
5. DCA
6. Dynasil Fused Silica - formal D/B/A
7. Dynasil International
8. Dynasil International, Inc.
9. DCI
10. Dynasil Products - formal D/B/A
11. Xxxxxxxx Corporation
12. Xxxxxxxx Corp.
13. Xxxxxxxx
14. Evaporated Metal Films Corporation
15. Evaporated Metal Films Corp
16. Evaporated Metal Films
17. EMF Corp
18. EMF
19. Optometrics Corporation
20. Optometrics Corp.
21. Optometrics
22. Radiation Monitoring Devices, Inc.
23. Radiation Monitoring Devices
24. RMD Research
25. RMD Acquisition Sub, Inc.
26. RMD Acquisition Sub
27. RMD Sub
28. RMD S
29. RMD, Inc.
30. RMD
31. RMD Instruments Corporation
32. RMD Instruments Corp
33. RMD Instruments
34. RMD I
EXHIBIT G
Permitted Liens
Liens permitted pursuant to Section 4.02(a) of the Purchase
Agreement.
Debtor Secured Party Jurisdiction UCC File Number
Dynasil Sovereign Bank Delaware 2011 1068959
Corporation of
America
Dynasil Sovereign Bank Delaware 2012 1558958
Biomedical Corp.
Optometrics Sovereign Bank Delaware 2011 0604663
Corporation
Radiation Sovereign Bank Delaware 2011 0902281
Monitoring
Devices, Inc.
RMD Instruments Sovereign Bank Delaware 2011 0902273
Corp.
Evaporated Metal Sovereign Bank New York 200809230652651
Films Corp.
Optometrics US Bancorp Delaware 2010 0496053
Corporation
Evaporated Metal US Bank New York 201204105414844
Films Corp. Equipment
Finance
Exhibit 2.02(b)
THIS UNCONDITIONAL GUARANTEE IS SUBJECT TO THE SUBORDINATION
AGREEMENT DATED AS OF JULY 31, 2012 AMONG THE PRINCIPAL DEBTOR
CERTAIN AFFILIATES OF THE PRINCIPAL DEBTOR, THE LENDER AND
SOVEREIGN BANK, N.A.
UNCONDITIONAL GUARANTEE
1. As used in this Unconditional Guarantee (the "Guarantee"),
the following terms shall have the following meanings:
"Person" includes any individual, partnership, corporation,
unincorporated association and any other legal entity.
"Undersigned" means the Person or, if more than one, all of
the Persons by whom or on whose behalf this Guarantee is
executed.
"Lender" means MASSACHUSETTS CAPITAL RESOURCE COMPANY, a
Massachusetts special purpose limited partnership.
"Liabilities" as defined in the Loan Agreement.
"Loan Agreement" means that certain Note Purchase Agreement
by and between Principal Debtor and Lender, dated of even date
herewith, as amended or modified from time to time.
"Principal Debtor" means DYNASIL CORPORATION OF AMERICA, a
Delaware corporation.
"Principal Debtor's Liabilities to Lender" means the
Liabilities and all other undertakings by, and existing and
future liabilities of, Principal Debtor to Lender of every nature
whatsoever, whether presently existing or hereafter arising,
including, but not being limited to, liabilities arising out of
loans, discounts, advances or extensions of credit, and
specifically including, without limitation the obligations
arising under the Loan Agreement, and any documents or
liabilities related thereto.
"Subordination Agreement" means the Subordination Agreement
dated as of July 31, 2012 among the Principal Debtor, certain
affiliates of the Principal Debtor, the Lender and Sovereign
Bank, N.A., as the same may be amended or modified from time to
time.
2. For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the Undersigned hereby unconditionally
guarantees to Lender, subject to the Subordination Agreement, the
due performance, including, but not being limited to, the full
and prompt payment when due, of the Principal Debtor's
Liabilities to Lender. This Guarantee is given to induce Lender
to purchase the Notes and make the loans identified in the Note
Purchase Agreement and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by
the Undersigned. The making of such loans to Principal Debtor by
the Lender is of direct and substantial benefit to the
Undersigned, and it is a precondition to the Lender agreeing to
make the loans that the Undersigned execute and deliver this
Guarantee. This is a guarantee of payment and not of
collectibility. This Guarantee is a continuing one and shall be
effective and binding on the Undersigned regardless of how long
before or after the date hereof Principal Debtor's Liabilities to
Lender were or are incurred.
3. The amount of the Undersigned's liability hereunder shall be
unlimited. This is an unconditional guarantee of payment and of
performance. Upon default in payment or performance of any of
the Principal Debtor's Liabilities to Lender at any time, the
Lender may treat the whole of all of the Principal Debtor's
Liabilities to Lender as being due and payable immediately and,
subject to the Subordination Agreement, collect from the
Undersigned the total amount thereof. The Lender may enforce
this Guarantee, subject to the Subordination Agreement, against
the Undersigned without first pursuing its remedies against any
other entity (including without limitation Principal Debtor or
any other Guarantor (a "Guarantor") who has executed and
delivered to the Lender a guarantee similar to this Guarantee) or
collateral, and notwithstanding the bankruptcy or insolvency of
any other party, including without limitation Principal Debtor.
4. The liability of the Undersigned hereunder is absolute and
unconditional and shall not be affected in any way by reason of
(a) any failure to retain or preserve any rights against any
Person or Persons (including Principal Debtor or any other
Guarantor ) or in any property, (b) the invalidity of any such
rights which may be attempted to be obtained, (c) the invalidity
of any of the Principal Debtor's Liabilities to Lender, (d) the
lack of prior enforcement of any rights against any Person or
Persons (including any Principal Debtor and/or any other
Guarantor) or in any property, or (e) the amendment,
modification, replacement, substitution, renewal or extension of
any of the Principal Debtor's Liabilities to Lender. The
Undersigned hereby waives any right to require, and the benefit
of all laws now or hereafter in effect giving the Undersigned the
right to require, any such prior enforcement, and the Undersigned
agrees that any delay in enforcing or failure to enforce any such
rights shall in no way affect the liability of the Undersigned
hereunder, even if such rights are thereby lost.
5. The Undersigned hereby waives all notices whatsoever with
respect to this Guarantee and any of the Principal Debtor's
Liabilities to Lender, including, but not being limited to,
notice of: (a) Lender's acceptance hereof and intention to act in
reliance hereon, of its reliance hereon, of the present existence
or future incurring of any of the Principal Debtor's Liabilities
to Lender, (b) the amount, terms and conditions thereof, and (c)
any defaults thereon. The Undersigned hereby consents to the
taking of, or failure to take, from time to time without notice
to the Undersigned, any action of any nature whatsoever with
respect to any of the Principal Debtor's Liabilities to Lender
and with respect to any rights against any Person or Persons
(including any Principal Debtor and/or any other Guarantor) or in
any property, including, but not being limited to, any renewals,
extensions, modifications, postponements, compromises,
indulgences, waivers, surrenders, exchanges and releases, and the
Undersigned will remain fully liable hereon notwithstanding any
of the foregoing; provided, however, that the granting of a
release of the liability of a Guarantor to the Lender shall be
effective with respect to the liability of the Guarantor who is
specifically so released but shall in no way affect the liability
of any Guarantor not so released. The dissolution, death or
incapacity of any Guarantor shall in no way affect the liability
to Lender of any other Guarantor. The Undersigned hereby waives
the benefit of all laws now or hereafter in effect in any way
limiting or restricting the liability of the Undersigned
hereunder. To the fullest extent permitted by law, the
Undersigned also waives the right to a fair market value credit
in any action brought by Lender to recover a deficiency judgment
against the Undersigned.
6. As utilized in this paragraph, the term "insolvent" refers
to a Person who either (A) has property which, at a fair
valuation on a going concern basis, is not sufficient in amount
to pay its debts, or (B) is unable, by its available assets or
the honest use of credit, to pay its debts as they become due, or
(C) has debts greater than all of its property, at a fair
valuation on a going concern basis, exclusive of property which
would constitute, under the Bankruptcy Code (as hereinafter
defined), property exempt from a bankrupt's estate. The
Undersigned hereby represents and warrants to Lender that, on the
date hereof, it is not insolvent. The Undersigned is not
engaged, or about to engage, in an activity or transaction for
which the assets remaining in its hands are unreasonably small.
The Undersigned does not intend to, nor believes that it will,
incur debts beyond its ability to pay as they mature. The
Undersigned has no intent to avoid payment of any of its present
or future valid obligations.
7. The Undersigned agrees that, in lieu of any right to
indemnification that it might have against Principal Debtor,
which right is hereby waived, the Undersigned shall be subrogated
to the rights of the Lender solely if the Undersigned fully
satisfies and discharges the Principal Debtor's Liabilities to
Lender. This right of subrogation shall be the Undersigned's
sole remedy against Principal Debtor and, unless and until the
Undersigned fully satisfies and discharges in full the Principal
Debtor's Liabilities to Lender, the Undersigned hereby
subordinates and assigns to Lender, all rights or claims it may
have against Principal Debtor, including, without limitation, all
rights of reimbursement and restitution. Until payment in full
of the Principal Debtor's Liabilities to Lender including
interest accruing thereon after the commencement of a proceeding,
if any, by or against Principal Debtor under the United States
Bankruptcy Code, 11 U.S.C. Sections 101 et seq., and the
regulations adopted and promulgated pursuant thereto
(collectively, the "Bankruptcy Code"), which interest the parties
agree shall remain a claim that is prior and superior to any
claim of the Undersigned notwithstanding any contrary practice,
custom or ruling in cases under the Bankruptcy Code generally,
the Undersigned agrees not to accept any payment or satisfaction
of any kind of indebtedness of Principal Debtor to the
Undersigned and hereby assigns such indebtedness to the Lender,
including the right to file proof of claim and to vote thereon in
connection with any such proceeding under the Bankruptcy Code,
including the right to vote on any plan of reorganization.
8. The aggregate amount payable by the Undersigned hereunder
shall be limited to the largest amount which would not render the
Undersigned's liability hereunder subject to avoidance under
Section 548 of the Bankruptcy Code or to being set aside under
any applicable state fraudulent conveyance law, anything to the
contrary herein notwithstanding.
9. In addition to all other liability of the Undersigned
hereunder, the Undersigned also agrees to pay to Lender, on
demand, all reasonable costs and expenses (including reasonable
counsel fees) which may be incurred in the enforcement of any of
the Principal Debtor's Liabilities to Lender and/or the liability
of the Undersigned hereunder. If any of the Principal Debtor's
Liabilities to Lender is not duly performed, including prompt
payment when due to any amount payable thereon, subject to any
applicable grace periods, all the Principal Debtor's Liabilities
to Lender, shall at Lender's option, be deemed to be forthwith
due and payable for the purposes of this Guarantee and the
liability of the Undersigned hereunder. No delay in making
demand on the Undersigned for performance or payment of the
Undersigned's obligations hereunder shall prejudice the right to
enforce said performance or payment. The Undersigned's liability
shall extend to any and all reasonable attorney's fees and
interest incurred by Lender relating to the Principal Debtor's
Liabilities to Lender post-petition in any bankruptcy proceeding
even if Principal Debtor is relieved of such fees and interest.
10. Notwithstanding the full repayment of the Principal Debtor's
Liabilities to Lender, if the Principal Debtor is the subject of
a proceeding under the Bankruptcy Code, this Guarantee and the
Undersigned's obligations hereunder shall remain in full force
and effect and shall not terminate until the later of (a) the
expiration (without the filing of a claim) of the statutory
period set forth in the Bankruptcy Code, during which a claim may
be filed seeking to have Lender disgorge amounts received
hereunder to the Principal Debtor's estate in bankruptcy, or (b)
full repayment by the Undersigned of any amounts received by
Lender which Lender is required to disgorge to the Principal
Debtor's estate in bankruptcy pursuant to any order of the
Bankruptcy Court.
11. If the Undersigned consists of more than one Person, such
Persons shall be jointly and severally liable hereunder. The
Undersigned shall also be jointly and severally liable hereunder
with any other Persons who have guaranteed or endorsed the
Principal Debtor's Liabilities to Debtor or any of them for the
full amount of the Undersigned's liability hereunder. This
Guarantee shall inure to the benefit of Lender, its successors,
assigns, endorsees and any Person or Persons, including any
banking institution or other institutions, to whom Lender may
grant any interest in the Principal Debtor's Liabilities to
Lender or any of them, and shall be binding upon the Undersigned
and the Undersigned's executors, administrators, successors,
assigns and other legal representatives. No amendment,
modification, termination, or waiver of any provision of this
Guarantee shall be effective unless the same shall be in writing
and signed by the Lender.
12. All written notices and other written communications with
respect to this Guarantee shall be sent by overnight mail, by
facsimile or delivered in person, and in the case of the Lender
shall be sent to it addressed as follows: Massachusetts Capital
Resource Company, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000,
Attention: President, and in the case of the Guarantor shall be
sent to it at its chief executive office set forth beneath its
signature to this Guarantee or as otherwise directed by the
Guarantor in writing. All notices shall be deemed received upon
actual receipt thereof or refusal of delivery.
13. THIS GUARANTEE AND THE PERFORMANCE OF THE UNDERSIGNED'S
OBLIGATIONS HEREUNDER SHALL BE GOVERNED AND CONTROLLED BY THE
INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND
IN ALL OTHER RESPECTS. If any provision of this Agreement shall
be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or remaining provisions of this Guarantee.
14. To induce Lender to accept this Guarantee, the Undersigned
irrevocably agrees that, subject to Lender's sole and absolute
election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR
RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS GUARANTEE
SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE COMMONWEALTH
OF MASSACHUSETTS. THE UNDERSIGNED HEREBY CONSENTS AND SUBMITS TO
THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED
WITHIN SAID JURISDICTION. The Undersigned hereby waives personal
service of any and all process upon it and consents that all such
service of process may be made by intentionally recognized
overnight courier or hand delivery directed to the Undersigned at
its notice address as provided for in Section 12 hereof and
service so made shall be deemed completed (i) in the case of
service made by overnight courier, one (1) Business Day after the
same shall have been delivered to such overnight courier and (ii)
in the case of hand delivery to the Undersigned, on the date so
delivered. THE UNDERSIGNED HEREBY WAIVES ANY RIGHT IT MAY HAVE
TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST
SUCH UNDERSIGNED BY LENDER IN ACCORDANCE WITH THIS SECTION.
15. THE UNDERSIGNED HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO
THIS GUARANTEE, THE PRINCIPAL DEBTOR'S LIABILITIES TO LENDER, ANY
ALLEGED TORTIOUS CONDUCT BY THE UNDERSIGNED OR LENDER OR WHICH,
IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO
THE RELATIONSHIP BETWEEN THE UNDERSIGNED AND LENDER. IN NO EVENT
SHALL LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR
CONSEQUENTIAL DAMAGES.
IN WITNESS WHEREOF, the Undersigned, intending to be legally
bound hereby has duly executed this Guarantee under seal this
31st day of July, 2012.
_________________________
Attest: By:
_________________________
Name:
Name:_______________________
Title:
Title: _______________________
Address: _____________________
_____________________________
[SEAL]
Exhibit 2.02(c)
THIS GUARANTOR SECURITY AGREEMENT IS SUBJECT TO THE
SUBORDINATION AGREEMENT DATED AS OF JULY 31, 2012 AMONG THE
GUARANTOR, CERTAIN AFFILIATES OF THE GUARANTOR, THE LENDER AND
SOVEREIGN BANK, N.A., AS SET FORTH IN SECTION 11 HEREOF.
GUARANTOR SECURITY AGREEMENT
SECURITY AGREEMENT, dated July 31, 2012, from
________________, a [Delaware] corporation (the "Guarantor"), to
MASSACHUSETTS CAPITAL RESOURCE COMPANY, a Massachusetts special
purpose limited partnership (the "Lender").
PRELIMINARY STATEMENT
A. Dynasil Corporation of America, a Delaware corporation
(the "Borrower"), is entering into a Note Purchase Agreement with
the Lender dated as of the date hereof (the "Loan Agreement"),
authorizing the Lender to make certain loans to the Borrower (the
"Loans") to be evidenced by a certain promissory notes described
therein (the "Note"). The term "Notes," as utilized herein,
shall include any extensions, renewals, modifications or
novations of a Note.
B. Pursuant to the terms and provisions of the Loan
Agreement, the Guarantor has executed and delivered to the Lender
an Unconditional Guarantee, dated as of the date hereof (the
"Guarantee"), whereby the Guarantor has guaranteed the payment
and performance of the Liabilities (as such term is defined in
the Loan Agreement) to the Lender.
C. It is a precondition to the execution and delivery by
the Lender of the Loan Agreement that this Agreement be executed
and delivered by the Guarantor and the security contemplated
hereby be provided.
l. Definitions. The following terms, when utilized herein,
shall have the meaning indicated:
Collateral: As defined in paragraph 2 below.
Default : An event which with notice, or lapse of
time, or both, would constitute an Event of Default hereunder.
Equipment: As defined in the Security Agreement granted
to the Lender by the Borrower in connection with the Loan
Agreement.
Events of Default: As defined in paragraph 7 below.
Inventory: As defined in the Security Agreement granted
to the Lender by the Borrower in connection with the Loan
Agreement.
Loan Documents: The Loan Agreement, the Security
Agreement, the Guaranties and the other agreements executed in
connection with the Loan Agreement.
Obligor: As defined in the Security Agreement granted
to the Lender by the Borrower in connection with the Loan
Agreement.
Permitted Liens: As defined in the Security Agreement
granted to the Lender by the Borrower in connection with the Loan
Agreement.
Subordination Agreement: The Subordination Agreement
dated as of July 31, 2012 among the Guarantor, certain affiliates
of the Guarantor, the Lender and Sovereign Bank, N.A., as the
same may be amended or modified from time to time.
2. Grant of Security Interest. As security for (a) the
punctual performance in full by the Borrower and each other
Obligor of its obligations under the Loan Documents (including
without limitation the Notes and the Guarantee), (b) the punctual
payment in full of all Liabilities and other amounts owing or to
be owing under any Loan Document (including without limitation
the Note and the Guarantee), (c) the punctual payment of any
other amounts which at any time may be due and payable from the
Borrower or any other Obligor to the Lender however created,
arising, or evidenced, whether direct or indirect, absolute or
contingent, including without limitation pursuant to swap
agreements (as defined in Section 101 of Title 11 of the United
States Code), future advances, and all costs and expenses
incurred by the Lender to obtain, preserve, perfect, and enforce
the security interests herein granted, and to maintain, preserve
and collect the property subject to such security interests, and
(d) the punctual performance in full by the Guarantor of its
obligations under this Agreement and the Guarantee, in each case
whether presently existing or hereafter arising (collectively,
the "Obligations"), the Guarantor hereby irrevocably grants a
first priority security interest (subject to Permitted Liens) to
the Lender and its successors hereunder in all of its assets and
personal property (whether tangible or intangible) and fixtures,
in each case whether presently existing or hereafter acquired
(collectively, the "Collateral"). The Collateral shall include,
but not be limited to, the following:
I. The Guarantor's inventory, which shall mean, in
addition to the definition thereof contained in the Uniform
Commercial Code of the Commonwealth of Massachusetts, all of the
Guarantor's inventories of materials, supplies, work-in-process
and finished goods, and additions, substitutions, replacements or
otherwise of all the foregoing, whether presently existing or
hereafter acquired.
II. The Guarantor's accounts (including, without
limitation, accounts presently existing or hereafter arising
pursuant to any contract or other commitment with the federal
government (or any agency or department thereof)), which shall
mean, in addition to the definition thereof contained in the
Uniform Commercial Code of the Commonwealth of Massachusetts, any
and all obligations of any kind at any time due and/or owing to
the Guarantor and all rights of the Guarantor to receive payment
or any other consideration (whether classified under the Uniform
Commercial Code of the Commonwealth of Massachusetts or any other
state as accounts, contract rights, chattel paper, general
intangibles, or otherwise), including without limitation
invoices, contract rights, account receivables, leases, chosen-in-
action, tax refunds and rebates, notes, drafts, acceptances,
instruments and all other debts, obligations and liabilities in
whatever form owing to the Guarantor from any person, firm,
governmental authority, corporation or any other entity, all
credit insurance, guaranties, letters of credit and other
security therefor, and all the Guarantor's rights to goods sold
(whether delivered, undelivered, in transit or returned) which
may be represented thereby, all of which whether presently
existing or hereafter arising.
III. The Guarantor's general intangibles (including,
without limitation, to the extent assignable, all rights under
any franchise, license or similar agreement, the Guarantor's
rights as lessor or lessee under any lease or sublease of
property, tax refunds and rebates, and all trade names and
trademarks), all of which whether presently existing or hereafter
arising.
IV. The Guarantor's furniture, fixtures, machinery,
equipment and motor vehicles, and any additions, substitutions,
replacements or otherwise of all of the foregoing, whether
presently existing or hereafter acquired.
V. All claims of the Guarantor against third parties
for loss or damage to, or destruction of any and all of the
foregoing, all proceeds (including insurance proceeds), products,
claims, right, power, privileges and remedies under any and all
of the foregoing, all guarantees, security and liens for payment
of any accounts, and documents of title, policies, certificates
of insurance, securities, chattel paper, and other documents and
instruments evidencing or pertaining thereto, and all files
(including but not limited to books and records), correspondence,
computer programs, tapes, disks and related data processing
software owned by the Guarantor or in which the Guarantor has an
interest which contain information identifying any one or more of
the items in subparagraphs I, II, III, and IV above, or any
account debtor, showing the amounts owed by each, payments
thereon or which are otherwise necessary or helpful in the
rehabilitation or collection thereof, all of which whether
presently existing or hereafter arising.
VI. All of the Guarantor's trade secrets and other
proprietary information, trademarks, service marks and business
names and the goodwill of the business relating thereto,
copyrights and all tangible property embodying the copyrights,
unpatented inventions (whether or not patentable), patent
applications and patents and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part
thereof, whether presently existing or hereafter arising; all
license agreements relating to any of the foregoing and income
therefrom; books, records, computer tapes or disks, flow
diagrams, specification sheets, source codes, object codes, and
other physical manifestations of the foregoing; the right to xxx
for all past, present, and future infringements of the foregoing;
and proceeds of the foregoing; in each case whether presently
existing or hereafter arising.
VII. Any and all moneys, securities, drafts, notes,
tax refunds, contracts, instruments, certificates of deposit,
leases, licenses, general intangibles and other property of the
Guarantor, including customer lists, and all proceeds and
products thereof, now or hereafter held or received, by or in
transit to, the Lender from or for the Guarantor or which may now
or hereafter be in the possession of the Lender, or as to which
the Lender may now or hereafter control possession, by documents
of title or otherwise, and any and all deposits, accounts,
general or special, balances, sums, proceeds, and credits of the
Guarantor and all rights and remedies which the Guarantor might
exercise with respect to any of the foregoing, but for the
execution of this Agreement.
3. Representations. The Guarantor hereby represents,
covenants and warrants to the Lender as follows:
(a) The Guarantor has the corporate power to execute, deliver,
and perform this Agreement and the documents to be delivered
hereunder, each of which has been duly authorized by all
necessary corporate action on the part of the Guarantor. This
Agreement has been duly executed and delivered by the Guarantor
and constitutes a legal, valid, and binding obligation of the
Guarantor enforceable against it in accordance with its terms.
(b) (b) The making and performance by the Guarantor of
this Agreement will not violate any provision of law or of the
Certificate of Incorporation, By-laws, or other constituent
document of the Guarantor, or (other than breaches or defaults
contemporaneously waived) result in the breach of, or constitute
a default under, or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of the Guarantor
pursuant to any indenture, agreement or instrument to which the
Guarantor is a party or by which the Guarantor or the Guarantor's
property may be bound or affected.
(c) The chief executive office and principal place of business
of the Guarantor,
the place where the Guarantor keeps its records pertaining to its
accounts and contract rights, and the place where the Guarantor
keeps the original copies of its instruments and chattel paper,
is located at the address for the Guarantor set forth beneath its
signature to this Agreement.
(d) Except as set forth in the Loan Agreement, the Guarantor
has not utilized any name other than its corporate name in the
conduct of its business for the five year period prior to the
date hereof.
(e) The Guarantor has not utilized any name other than its
proper corporate name in providing a security interest in any of
its personalty, both tangible and intangible.
4. Covenants. The Guarantor hereby warrants and
covenants that, until the termination of this Agreement:
(a) Subject to the Subordination Agreement, the Guarantor will
promptly take all action which in the opinion of the Lender or
its counsel is reasonably necessary or appropriate in order to
perfect the security interests contemplated by this Agreement
(including filing all appropriate financing statements), such
that such security interests shall constitute perfected, first
priority liens subject solely to the prior liens granted to
Sovereign Bank N.A. (or other holders of Senior Debt) and to
Permitted Liens, and the Guarantor will, promptly upon the
request of the Lender, give such evidence thereof as the Lender
may reasonably request, which evidence shall be in form and
substance satisfactory to the Lender and its counsel.
(b) Promptly upon the request of the Lender, the Guarantor will
give to the Lender such information pertaining to the Collateral
as the Lender may reasonably request.
(c) The Guarantor will not sell, exchange, lease, assign,
encumber, pledge, hypothecate or otherwise dispose of any of the
Collateral, other than Permitted Liens, sales of Inventory in the
ordinary course of business and sales or disposals of obsolete or
worn-out Equipment in the ordinary course of business.
(d) The Guarantor will maintain the Collateral in good
condition, repair and order (ordinary wear and tear excepted) and
shall make all necessary repairs to the Equipment and
replacements thereof so that the operating efficiency and the
value thereof shall at all times be preserved and maintained.
(e) The Guarantor shall keep and maintain accurate and current
books and records regarding the Collateral and its business
operations and shall, during normal business hours and upon prior
written notice prior to the occurrence of an Event of Default and
at any time and with no notice required at any time after the
occurrence of an Event of Default, allow the Lender to examine or
inspect said books and records.
(f) The Guarantor will maintain insurance with responsible and
reputable insurance companies in such amounts and covering such
risks as is reasonably satisfactory to the Lender. Without
limiting the foregoing, the Guarantor shall provide and keep in
force insurance on the Collateral required under the terms and
provisions of the Loan Agreement. The Guarantor shall supply the
Lender with certificates evidencing such insurance at such times
as the Lender may request.
(a) (g) The Guarantor will pay when due taxes and assessments
of any nature relating to the Collateral or its use; provided,
that Guarantor shall have the right to contest the payment of
such taxes in good faith by appropriate proceedings so long as
(i) the amount so contested is shown on the financial statements
of Guarantor; (ii) the contesting of any such payment does not
give rise to a lien for taxes; (iii) subject to the Subordination
Agreement, if Lender in the exercise of its sole discretion shall
require, Guarantor keep on deposit with Lender (such deposit to
be held without interest) an amount of money which, in the sole
judgment of Lender, is sufficient to pay such taxes and any
interest or penalties that may accrue thereon; and (iv) if
Guarantor fails to prosecute such contest with reasonable
diligence, Lender may apply the money so deposited in payment of
such taxes.
(h) Subject to the Subordination Agreement, if any of the
Collateral is or becomes evidenced by a promissory note, trade
acceptance or any other instrument for the payment of money or
other instrument (as that term is defined in the Uniform
Commercial Code), the Guarantor will promptly deliver such
instrument to the Lender appropriately endorsed to the Lender's
order. Regardless of the form of such endorsement, the Guarantor
hereby waives presentment, demand, dishonor, notice of dishonor,
protest and notice of protest and all other notices with respect
thereto.
(i) The Guarantor will not change its name, identity or
structure such that any filed financing statement pertaining to
the Collateral becomes seriously misleading, nor will the
Guarantor change the state of situs of (i) any of the Collateral,
(ii) its principal place of business, (iii) its chief executive
office, or (iv) the office where it keeps its records concerning
its accounts and contract rights; without in each case first (A)
notifying the Lender in writing of such a change at least thirty
(30) days prior to such change, (B) taking all action required to
maintain the perfected, first priority status of the security
interests purported to be created hereunder and (C) obtaining the
prior written consent of the Lender to such action.
(j) At any time and from time to time, on the written request
of the Lender, the Guarantor will execute and deliver such
further documents (including without limitation financing and
continuation statements) and, subject to the Subordination
Agreement, do such further acts and things as the Lender may
reasonably request in order to better assure, convey, assign,
transfer, and confirm unto the Lender the property and rights
hereby conveyed or assigned or intended now or hereafter so to
be.
(k) The Guarantor will promptly notify the Lender of the
occurrence of a Default or an Event of Default.
5. INTENTIONALLY OMITTED.
6. Remedies Upon Default; Etc.
(a) During the continuance of an Event of Default and
subject to the Subordination Agreement, the Lender, may at any
time without notice or demand:
(i) At any time and from time to time, with or
without process of law and with or without the aid or assistance
of others, enter upon any premises in which the Collateral or any
part thereof may be located and take possession of, render
unusable or remove the Collateral or any part thereof, and the
Guarantor shall not resist or interfere with such action.
(ii) Require the Guarantor to assemble and make
available to the Lender all or any part of the Collateral at any
place and time designated by the Lender which is reasonably
convenient to the Lender and the Guarantor.
(iii) Sell, resell, lease, assign, deliver or
otherwise dispose of the Collateral or any part thereof in its
existing condition or following any commercially reasonable
preparation or processing, at public or private proceedings, in
such manner and for such terms and at such places and times as
the Lender deems best (subject to any applicable statutory
requirement of reasonableness), and buy any of the Collateral at
a public sale. The Guarantor acknowledges that ten (10) days
notification of any action shall in all cases be deemed
reasonable.
(iv) Collect, in its own name or in the name of
the Guarantor, the accounts, contract rights, instruments, or
obligations under chattel paper forming a part of the Collateral,
or require the proceeds of, or any payments with respect to any
item of, the Collateral to be made directly or indirectly to it
or to its designee (the Lender having the right at any time
following the occurrence of an Event of Default to notify or
require the Guarantor to notify the Guarantor's account debtors
of the security interests created in favor of the Lender
hereunder).
(v) Take any action with respect to the
Collateral that the Guarantor could take.
(vi) Exercise any other right or remedy provided
by law.
(b) Any action or failure to act by the Lender shall in
no manner waive or release any of its respective rights or
remedies. The Lender shall have no duty to act hereunder, and
the Guarantor will in no manner hinder the Lender's actions
hereunder. None of the rights, privileges or powers provided
hereunder shall be exclusive, but each of them shall be
cumulative with and in addition to every other right, remedy,
privilege, and power now or hereafter existing in the respective
favor of the Lender. The Guarantor hereby waives any right it
may have of redemption or to require a marshaling of assets. The
Guarantor hereby further waives any and all rights to notice or
to hearing prior to the Lender's taking immediate possession or
control of any Collateral, and to any bond or security which
might be required by applicable law prior to the exercise of any
of the Lender's remedies against any Collateral.
7. Events of Default. Each of the following shall
constitute an "Event of Default" under this Agreement:
(a) Any material representation, statement or warranty
made by the Guarantor herein or furnished hereunder shall prove
to have been incorrect in any material respect when made; or
(b) The Guarantor shall default in the performance or
observation of any agreement contained herein and such failure
continues for a period of fifteen (15) days; or
(c) An Event of Default, as such term is defined in
any Loan Document, occurs thereunder.
8. Notices. All written notices and other written
communications with respect to this Agreement shall be sent by
overnight mail, by facsimile or delivered in person, and in the
case of the Lender shall be sent to it addressed as follows:
Massachusetts Capital Resource Company, 000 Xxxxxxxx Xxxxxx,
Xxxxxx, XX 00000, Attention: President, and in the case of the
Guarantor shall be sent to it at its chief executive office set
forth beneath its signature to this Agreement or as otherwise
directed by the Guarantor in writing. All notices shall be
deemed received upon actual receipt thereof or refusal of
delivery.
9. Termination and Release. Upon the payment in full of
the Notes and all other Obligations (other than unasserted
contingent obligations) and the payment (or the making of
provision satisfactory to the Lender) of all other sums, if any,
then secured hereby, this Agreement shall terminate and all of
the terms, conditions, and requirements hereof and the security
interests created hereby shall be null and void and of no further
force and effect. In such event, the Lender shall, upon request,
execute and deliver such proper instruments of release and
satisfaction as may reasonably be requested by the Guarantor.
10. Miscellaneous.
(a) The Guarantor agrees to pay, or reimburse the
Lender for, all necessary and reasonable costs and expenses
(including reasonable attorneys' fees) incurred in taking action
in response to an Event of Default hereunder, including the
realization of the Collateral and the collection of amounts due.
(b) If any provision hereof is declared to be in
conflict with any statute or rule of law, then such provision
shall be null and void to the extent that it may conflict
therewith, but without invalidating the other provisions hereof,
which shall remain in full force and effect.
(c) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same instrument. This
Agreement shall be binding upon and inure to the benefit of the
Guarantor and the Lender and their respective successors and
assigns. This Agreement shall be deemed executed and delivered
within Massachusetts and shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts.
(d) The Guarantor irrevocably appoints each and every
officer of the Guarantor as its attorneys upon whom may be
served, by regular or certified mail at the address for the
Guarantor set forth beneath its signature to this Agreement, any
notice, process or pleading in any action or proceeding against
it arising out of or in connection with this Agreement or any
other Loan Document; and the Guarantor hereby consents that any
action or proceeding against it may be commenced and maintained
by service of process on any such officer.
(e) The Guarantor hereby irrevocably and
unconditionally agrees that any suit, action, or other legal
proceeding arising out of or in connection with this Agreement,
or the transactions contemplated hereby, shall be brought in the
courts of record of the Commonwealth of Massachusetts or the
courts of the United States located in said state, consents to
the jurisdiction of each such court in any such suit, action or
proceedings, and waives any objection to the venue of any such
suit, action or proceedings in any of such courts.
11. Subordination Agreement. The security interest of
the Lender granted hereunder and its rights in respect thereof
shall be subject to and entitled to the benefits of the terms of
the Subordination Agreement. In the event of any conflict
between the terms of the Subordination Agreement and the terms of
this Agreement, the terms of the Subordination Agreement shall
govern. In the event that performance of any affirmative
obligation of the Guarantor under Section 4 herein is impossible
due to a conflict with an obligation of the Guarantor in favor of
Sovereign Bank, N.A (or its successors or assigns), Guarantor
will first comply with its obligations in favor of Sovereign
Bank, N.A. (or its successors or assigns), and then, to the
extent possible, comply with its obligations hereunder, and any
such failure so to comply hereunder shall not be a Default or
Event of Default under the Loan Documents.
IN WITNESS WHEREOF, the Guarantor has caused this Agreement
to be executed by its duly authorized officers as of the date
first above written.
_____________________________
Attest:
By:_________________________
Name:
Name:______________________
Title:
Title: _______________________
Address: ____________________
____________________________
[SEAL]
Exhibit 2.02(e)
DYNASIL CORPORATION OF AMERICA
Matters to be Covered by Opinion Letter
July __, 2012
Massachusetts Capital Resource Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
We have acted as special counsel to Dynasil Corporation of
America, a Delaware corporation (the "Company") and Dynasil
Biomedical Corp., a Delaware corporation, ("Biomedical")
Optometrics Corporation, a Delaware corporation ("Optometrics"),
Evaporated Metal Films Corp., a New York corporation ("EMF"),
Radiation Monitoring Devices, Inc., a Delaware corporation
("RMD"), and RMD Instruments Corp., a Delaware corporation ("RMD
Corp." and together with Biomedical, Optometrics, EMF, RMD and
RMD Corp., the "Guarantors" and, together with the Company, the
"Opinion Parties"), in connection with that certain Note Purchase
Agreement, dated as of July __, 2012 (the "Note Purchase
Agreement"), between the Company and Massachusetts Capital
Resource Company (the "Purchaser"). This opinion letter is
furnished to you pursuant to the requirements set forth in
Section 2.02(e) of the Note Purchase Agreement in connection with
the closing thereunder on the date hereof. Capitalized terms
used herein that are defined in the Note Purchase Agreement shall
have the meanings set forth in the Note Purchase Agreement,
unless otherwise defined herein.
As used in this opinion letter, (i) the terms "accounts,"
"as-extracted collateral," "boats", "chattel paper," "consumer
goods", "cooperative interest," "debtor," "deposit account,"
"documents," "equipment," "farm products", "financing statement,"
"fixtures," "general intangible," "inventory," "investment
property," "mobile goods", "proceeds," "registered organization,"
"rolling stock", "secured party," "security interest", "timber to
be cut" and "transmitting utility" have the meanings set forth or
incorporated in the Uniform Commercial Code (the "UCC") as in
effect in the State of Delaware (the "Delaware UCC"), the State
of New York (the "New York UCC") and the Commonwealth of
Massachusetts (the "Massachusetts UCC"), as applicable (in each
case, the "Applicable UCC") and (ii) the term "instrument" has
the meaning set forth in Article 9 of the Applicable UCC.
For purposes of this opinion, we have reviewed copies of the
Applicable Note Documents (as defined in Appendix A hereto). We
have also reviewed the Related Documents (as defined in Appendix
A hereto).
In our examination of the Applicable Note Documents and the
Related Documents (collectively, the "Documents"), we have
assumed the genuineness of all signatures, the legal capacity of
all natural persons, the accuracy and completeness of all of the
Documents, the authenticity of all originals of the Documents and
the conformity to authentic originals of all of the Documents
submitted to us as copies (including telecopies) and the accuracy
of all public records and documents. As to matters of fact
relevant to the opinions expressed herein, we have relied on the
representations and statements of fact made in the Documents and
upon a certificate of an officer of the Company furnished to us
(the "Officer's Certificate"), an unsigned copy of which is
attached hereto as Appendix B, we have not independently
established the facts so relied on, and we have not made any
investigation or inquiry other than our examination of the
Documents. This opinion letter is given, and all statements
herein are made, in the context of the foregoing. When used in
this opinion, the phrase "to our knowledge" or an equivalent
phrase limits the statements it qualifies to the actual knowledge
of those attorneys of this firm responsible for preparing this
opinion after such inquiry as they deemed appropriate.
For purposes of this opinion letter, we have assumed that
(a) each of the parties to the Applicable Note Documents (other
than the Opinion Parties) has all requisite power and authority
under all applicable laws, regulations and governing documents to
execute, deliver and perform its obligations under the Applicable
Note Documents and each of such parties has complied with all
legal requirements pertaining to its status as such status
relates to its rights to enforce the Applicable Note Document(s),
(b) each of the parties to the Applicable Note Documents (other
than the Opinion Parties) has duly authorized the Applicable Note
Document(s) to which it is a party, (c) there has been no mutual
mistake of fact or misunderstanding or fraud, duress or undue
influence in connection with the negotiation, execution or
delivery of the Applicable Note Documents, (d) the conduct of all
parties to the Applicable Note Documents has complied with any
requirements of good faith, fair dealing and conscionability, and
(e) there are and have been no agreements or understandings among
the parties, written or oral, and there is and has been no usage
of trade or course of prior dealing among the parties that would,
in either case, define, supplement or qualify the terms of the
Applicable Note Documents. We have also assumed the validity and
constitutionality of each relevant statute, rule, regulation and
agency action covered by this opinion letter.
For purposes of this opinion, we have made the following
further assumptions: (a) that all orders, judgments, decrees,
agreements and contracts (other than the Applicable Note
Documents) would be enforced as written; (b) that none of the
Opinion Parties will in the future take any discretionary action
(including a decision not to act) permitted under the Applicable
Note Documents that would result in a violation of law or
constitute a breach or default under any order, judgment, decree,
agreement or contract; (c) that the Opinion Parties will obtain
all permits and governmental approvals required in the future,
and take all actions required or relevant subsequent to the
consummation of the transactions contemplated under the
Applicable Note Documents; or performance of the Applicable Note
Documents, as applicable; and (d) that all parties to the
Applicable Note Documents (other than the Opinion Parties) will
act in accordance with, and will refrain from taking any action
that is forbidden by, the terms and conditions of the Applicable
Note Documents.
For purposes of the opinions expressed in paragraph (7)
below, we have made the following additional assumptions:
(a) that none of the collateral described in the
Applicable Note Documents constitutes motor vehicles,
vessels, boats, rolling stock, mobile goods, consumer goods,
farm products or property described in Section 9-311(a) of
the Applicable UCC, fixtures, extracted collateral, or a
cooperative interest or timber to be cut;
(b) that the Financing Statements (as defined in
Appendix A hereto) have been duly filed and properly indexed
in the Filing Office (as defined in Appendix A hereto), in
the form attached hereto as Schedule II, with the
appropriate fees paid;
(c) that the Financing Statements give an address of
each secured party from which information concerning the
security interest in the UCC Collateral (as defined in
Paragraph 6 below) may be obtained;
(d) that the Opinion Parties have, and will have, at
all times relevant to this opinion, rights or the power to
transfer rights (within the meaning of Section 9-203(b)(2)
of the Applicable UCC) in the applicable Collateral;
(e) that the Purchaser has, and will have, at all
times relevant to this opinion, given value (within the
meaning of Section 9-203(b)(1) of the Applicable UCC); and
(f) that the exact legal name of the Opinion Parties
is as set forth in the copy of the organizational documents
certified to us by the Secretary of State of the State of
Delaware or the Secretary of State of the State of New York,
as applicable.
Insofar as our opinion relates to UCC Collateral
constituting proceeds, our opinions in such paragraph (7) is
subject to the limitations set forth in Section 9-315 of the
Applicable UCC.
We also call your attention to the following:
(a) security interests in certain categories of UCC
Collateral may not be subject to perfection by the filing of
a financing statement or may be subject to perfection by
other means in addition to the filing of a financing
statement;
(b) a "buyer in the ordinary course of business" (as
defined in Section 9-320 of the Applicable UCC) takes its
rights free of the security interests under the Applicable
Note Documents;
(c) a "licensee in the ordinary course of business"
(as defined in Section 9-321 of the Applicable UCC) takes
its rights under a license of general intangibles free of
the security interests under the Applicable Note Documents;
and
(d) the security interests granted under the
Applicable Note Documents and the enforcement of the
Purchaser's rights therein are subject to Sections 9-407, 9-
408 and 9-409 of the Applicable UCC.
We express no opinion as to (a) the validity or perfection
of security interests in any collateral other than UCC
Collateral, (b) the priority of any security interests granted
pursuant to any Applicable Note Document, (c) validity,
perfection or priority of security interests in patents,
trademarks, tradenames, service marks, logos, commercial tort
claims or copyrights or other intellectual property and the
proceeds thereof which may constitute a part of the Collateral,
(d) the enforceability against any government or governmental
agency (including, without limitation, the United States of
America or any state thereof or any agency or department of the
United States of America or any State thereof) of any security
interest in any of the Collateral as to which such government or
agency is obligated to the extent the same is excluded from
Article 9 of the UCC; or (e) title to or the existence of any of
the Collateral.
This opinion letter is based as to matters of law solely on
applicable provisions of the following, as currently in effect:
(a) the federal laws of the United States of America (except as
otherwise provided herein), (b) the Delaware General Corporation
Law and the Delaware UCC, (c) the New York General Corporation
Law and the New York UCC (d) the Massachusetts UCC and the laws
of the Commonwealth of Massachusetts; provided, however, that the
laws described in clauses (a), (b), (c) and (d) above shall not
include (and we express no opinion as to) the Employee Retirement
Income Security Act of 1974, as amended, any state securities
laws, rules or regulations or any federal or state antitrust,
environmental, unfair competition or tax laws or any rules or
regulations with respect thereto or any state law governing cable
or communications carriers, and we express no opinion as to any
other laws, statutes, rules or regulations not specifically
identified above (including without limitation the laws of any
foreign country) or otherwise excluded in this opinion letter;
and further provided that, with respect to clauses (a), (b), (c),
and (d) above, the opinions expressed herein are based upon a
review of those laws, statutes and regulations that, in our
experience, are generally recognized as applicable to the
transactions contemplated in the Applicable Note Documents. (The
laws identified in clauses (a), (b), (c), and (d) above, subject
to the exclusions and limitations set forth above and elsewhere
in this letter, are referred to herein as "Applicable Law".)
Based upon, subject to and limited by the foregoing, we are
of the opinion that:
(1) Each of the Company, Biomedical, Optometrics, RMD and
RMD Corp. are duly incorporated and, based solely on the
certificates described in paragraph (h) of Appendix A below,
validly existing and in good standing as of the date of the
applicable certificates described in paragraph (h) of Appendix A
below under the laws of the State of Delaware. EMF is duly
incorporated and, based solely on the certificates described in
paragraph (h) of Appendix A below, validly existing and in good
standing as a corporation as of the date of the applicable
certificate described in paragraph (h) of Appendix A below under
the laws of the State of New York. Based solely on the
certificates described in paragraph (h) of Appendix A below, each
Opinion Party named on Schedule I is in good standing as a
foreign limited liability company or foreign corporation, as the
case may be, under the laws of each state listed opposite the
name of such Opinion Party on Schedule I hereto.
(2) All of the outstanding capital stock of each of
Biomedical, Optometrics, RMD, RMD Corp. and EMF has been duly
authorized and validly issued, is fully paid and nonassessable,
and is owned beneficially and of record by the Company as
indicated in Exhibit 3.01 to the Note Purchase Agreement, free
and clear of any liens, rights, encumbrance or restriction of any
nature, including without limitation, any liens, rights,
encumbrances or restrictions on transfer except as is set forth
in Exhibit 3.01 to the Note Purchase Agreement.
(3) Each Opinion Party has the corporate power to execute,
deliver and perform the Applicable Note Documents to which it is
a party. The execution, delivery and performance by each Opinion
Party of the Applicable Note Documents to which it is a party
have been duly authorized by all necessary corporate action of
such Opinion Party, as applicable.
(4) Each of the Applicable Note Documents to which any
Opinion Party is a party has been duly executed, authorized and
delivered on behalf of such Opinion Party.
(5) Each of the Applicable Note Documents to which any
Opinion Party is a party constitutes a valid and binding
obligation of such Opinion Party, enforceable against such
Opinion Party in accordance with its terms.
(6) Assuming the proceeds of the sale of the Note are used
solely for the purposes set forth in the Note Purchase Agreement,
neither the execution and delivery by the Opinion Parties of the
Applicable Note Documents to which they are parties, nor the
consummation by the Opinion Parties of the transactions
contemplated thereby: (a) violates the certificate of
incorporation or bylaws of such party, (b) violates any provision
of Applicable Law, (c) requires the consent or approval of, or
any filing or registration with, any federal Governmental
Authority, Delaware Governmental Authority, New York Governmental
Authority or Massachusetts Governmental Authority other than (i)
the filing of the Financing Statement, (ii) consents, approvals
or filings which have been obtained, and (iii) any consents,
approvals or filings required in connection with the exercise by
the Purchaser of certain remedies under the Applicable Note
Documents to the extent required pursuant to the terms thereof,
or (d) will result in a default or breach under, or result in the
creation of a lien or a right of acceleration under, any
agreement or instrument filed as an exhibit to, or referenced in
such list of exhibits in, the Company's Annual Report on Form 10-
K for the year ended September 30, 2011, or to any report filed
by the Company with the United States Securities and Exchange
Commission thereafter.
(7) The provisions of the Security Agreement (as defined
below) and the Guarantor Security Agreement (as defined below)
create in favor of the Purchaser security interests in the right,
title and interest of the Opinion Parties in and to the
collateral specified therein of the Opinion Parties, solely to
the extent that (a) such collateral consists of accounts, chattel
paper, deposit accounts, documents, equipment, general
intangibles, instruments, inventory, investment property and
other property in which a security interest may be created under
Article 9 of the Massachusetts UCC and identifiable proceeds of
the foregoing, (b) Article 9 of the Massachusetts UCC applies to
the creation of security interests in such collateral, and (c)
creation of such security interests in such collateral is
permissible under applicable federal law and applicable state law
(to the extent encompassed by the foregoing clauses (a), (b) and
(c) the "UCC Collateral"). To the extent that such security
interests in the right, title and interest of the Opinion Parties
in and to UCC Collateral can be perfected currently under the
Delaware UCC or the New York UCC, as applicable, by the filing of
a financing statement, the filing of the Financing Statements in
the Filing Office is sufficient to perfect such security
interests.
(8) To our knowledge, there is no action, suit or
proceeding before any court, governmental agency or arbitrator,
pending or overtly threatened in writing against any Opinion
Party that calls into question or seeks to enjoin any of the
Applicable Note Documents.
(9) None of the Opinion Parties is an "investment
company" within the meaning of, or subject to regulation under,
the Investment Company Act of 1940, as amended.
(10) Assuming the accuracy of the representations
and warranties of the Purchaser in the Note Purchase Agreement,
the offer and sale of the Note by the Company to the Purchaser in
accordance with the Note Purchase Agreement are not required to
be registered under the Securities Act.
In addition to the qualifications, exceptions and limitations
elsewhere set forth in this opinion letter:
A. The opinions expressed in paragraph (5) above
are subject to the qualification that certain rights, remedies,
waivers and other provisions of the Applicable Note Documents may
not be enforceable in accordance with their terms, but, subject
to the exceptions, qualifications and limitations set forth
elsewhere in this opinion letter, such unenforceability would not
render the Applicable Note Documents invalid as a whole;
provided, however, that we express no opinion regarding the
enforceability of the Applicable Note Documents against any
Opinion Party in the event of or with respect to any election of
remedies, any act or omission by the Purchaser or any agent
thereof with respect to collateral, or any other conduct of the
Purchaser or its agents, that in each case prejudices the Opinion
Parties or constitutes a full or partial release or discharge of
any Opinion under Applicable Law.
B. Our opinions expressed above are also subject to the
effect of: (a) bankruptcy, insolvency, reorganization,
receivership, moratorium, avoidance, arrangement and other laws
affecting creditors' rights generally (including, without
limitation, the effect of statutory and other law regarding
fraudulent conveyances, fraudulent transfers and preferential
transfers); (b) the exercise of judicial discretion and the
application of principles of equity, good faith, fair dealing,
reasonableness, conscionability and materiality (regardless of
whether the applicable agreements are considered in a proceeding
in equity or at law) and the discretion of the court before which
proceedings thereof may be brought; and (c) generally applicable
rules of law that limit or affect the enforceability of
provisions that purport to waive or require waiver of (or that
otherwise purport to have the effect of waiving) procedural,
judicial or substantive rights or defenses.
C. Our opinions expressed in this letter are subject to
the effect of generally applicable rules of law that (a) may
permit a party who has materially failed to render or offer
performance required by the contract to cure that failure unless
(i) permitting a cure would unreasonably hinder the aggrieved
party from making substitute arrangements for performance or (ii)
it was important in the circumstances to the aggrieved party that
performance occur in accordance with the terms of the Applicable
Note Document(s), (b) where less than all of a contract may be
enforceable, limit the enforceability of the balance thereof to
circumstances in which the unenforceable portion is not an
essential part of the agreed exchange, (c) limit the
enforceability of provisions stating that rights or remedies are
not exclusive, that every right and remedy is cumulative and may
be exercised in addition to or with any other right or remedy or
that the election of some particular remedy or remedies does not
preclude recourse to one or more others or that failure to
exercise or delay in exercise of rights or remedies will not
operate as a waiver of any such right or remedy, or (d) limit the
enforceability of provisions regarding future negotiations or
agreements to agree.
D. With respect to our opinions set forth in paragraph (1)
above with respect to existence and good standing, with your
permission, we are relying, solely and without independent
investigation of any kind, on our review and examination of
certificates received from the Secretary of State of Delaware or
the Secretary of State of New York, as applicable, and the
officer's certificates and any documents certified to us thereby.
E. In rendering the opinion set forth in
paragraph (8) above we have, with your permission, made no search
of the dockets of any court or of any filing, recording or other
office of any other Governmental Authority.
F. No opinion is expressed as to (a) the enforceability of
any provision in the Applicable Note Documents that purports to
grant a power of attorney or appoint a Person as attorney-in-fact
for another Person, (b) the enforceability of any provision of
the Applicable Note Documents that requires a Person to cause
another Person to take or to refrain from taking action under
circumstances in which such Person does not control such other
Person, (c) the enforceability of any provision of the Applicable
Note Documents insofar as it purports to effect a waiver of a
right to jury trial or (d) the validity or enforceability of any
provision purporting to establish standards of commercial
reasonableness.
G. No opinion is expressed as to the legality, validity,
or enforceability of any waiver of the right to receive notice or
any provision purporting to define the adequacy of any notice
period, any waiver of any legal or equitable defense, any waiver
of equity, redemption, stay or appraisal or any other waiver,
including, without limitation, any express or implicit waiver of
broad or vaguely stated rights, unknown future rights or defenses
to obligations or rights granted by law.
H. No opinion is expressed as to the enforceability of any
provision of the Applicable Note Documents (a) imposing
penalties, forfeitures, increased interest rates or late payment
charges upon delinquency in payment or the occurrence of a
default or (b) limiting or otherwise governing damages or
entitlement to attorney's fees, trustee's fees and other costs,
in each of the foregoing cases, to the extent the same may be
held to be unenforceable as a penalty, unreasonable or
unconscionable or for any other similar reason as a matter of law
or equity.
I. We express no opinion as to the enforceability of any
agreement or instrument or any right granted thereunder which may
be subject to public policy considerations or court decisions
which may limit rights to obtain indemnification, penalties,
consequential damages or liquidated damages.
We render no opinion on matters except as specifically
stated herein. At your request, we hereby consent to reliance
hereon by any future assignee of your interest(s) in the Note
under the Note Purchase Agreement pursuant to an assignment that
is made in accordance with the express provisions of Section 7.05
of the Note Purchase Agreement, on the condition and
understanding that (a) this letter speaks only as of the date
hereof, (b) we have no responsibility or obligation to update
this letter, to consider its applicability or correctness to any
person other than its addressee(s), or to take into account
changes in law, facts or any other developments of which we may
later become aware, (c) any such reliance by a future assignee is
subject to all of the assumptions, qualifications, limitations
and other statements contained herein, and must be actual and
reasonable under the circumstances existing at the time of
assignment, including any changes in law, facts or any other
developments known to or reasonably knowable by the assignee at
such time, and (d) in no event shall any such assignee have any
greater rights with respect hereto than you have.
No reliance on this opinion letter by any of the foregoing
parties will have any effect on the scope, phrasing or originally
intended use of this opinion letter.
Very truly yours,
XXXXXXX XXXXXXX XXXXXX LLP
APPENDIX A
Applicable Note Documents and Related Documents
i. the Note Purchase Agreement;
ii. the Promissory Note, dated as of the date hereof made by the
Company payable to the order of the Purchaser in the original
principal amount of $3,000,000.00 (the "Note");
iii. the Security Agreement, dated as of the date hereof between
the Company and the Purchaser (the "Security Agreement");
iv. the Guarantor Security Agreements, each dated as of the date
hereof between each Guarantor and the Purchaser (collectively,
the "Guarantor Security Agreement");
v. the Unconditional Guaranties, each dated as of the date
hereof from each Guarantor to the Purchaser (collectively, the
"Guaranty"); and
vi. the Subordination Agreement, dated as of the date hereof
among the Company, Sovereign Bank, N.A. and the Purchaser;
(the documents listed in paragraphs (i) - (vi) are
collectively referred to as the "Applicable Note
Documents").
a) the certificate of incorporation of the Company as certified
of recent date by the Secretary of State of the State of Delaware
and as certified by an officer of the Company on the date hereof
as being complete, accurate and in effect;
b) the certificate of incorporation of Biomedical as certified
of recent date by the Secretary of State of the State of Delaware
and as certified by an officer of Biomedical on the date hereof
as being complete, accurate and in effect;
c) the certificate of incorporation of Optometrics as certified
of recent date by the Secretary of State of the State of Delaware
and as certified by an officer of Optometrics on the date hereof
as being complete, accurate and in effect;
d) the certificate of incorporation of EMF as certified of
recent date by the Secretary of State of the State of New York
and as certified by an officer of EMF on the date hereof as being
complete, accurate and in effect;
e) the certificate of incorporation of RMD as certified of
recent date by the Secretary of State of the State of Delaware
and as certified by an officer of RMD on the date hereof as being
complete, accurate and in effect;
f) the certificate of incorporation of RMD Corp. as certified
of recent date by the Secretary of State of the State of Delaware
and as certified by an officer of RMD Corp. on the date hereof as
being complete, accurate and in effect;
g) the bylaws of each Opinion Party as certified by an officer
of such Opinion Party on the date hereof as being complete,
accurate and in effect;
h) a certificate of legal existence and good standing of the
Company, Biomedical, Optometrics, RMD and RMD Corp issued by the
Secretary of State of the State of Delaware, a certificate of
legal existence and good standing of EMF issued by the Secretary
of State of the State of New York and a certificate of good
standing as a foreign corporation of each Opinion Party named on
Schedule I issued by the Secretary of State or comparable office
of each state listed on Schedule I;
i) certain resolutions of the Board of Directors of each
Opinion Party adopted by unanimous written consent, as certified
by an officer of each Opinion Party on the date hereof as being
complete, accurate and in effect, relating to, among other
things, authorization of the Applicable Note Documents and
arrangements in connection therewith;
j) a copy of the UCC-1 financing statements attached hereto as
Schedule II, naming each Opinion Party, individually, as debtor
and the Purchaser as secured party (the "Financing Statements")
to be filed in the UCC records of the Secretary of State of the
State of Delaware or the Secretary of State of the State of New
York, as applicable (together, the "Filing Office");
k) certificates of an officer of each of the Opinion Parties
dated the date hereof, as to the incumbency and signatures of
certain officers of the Opinion Parties; and
l) such other documents and certificates of officers of the
Opinion Parties as we have deemed appropriate to give the
opinions set forth above in this opinion letter (the documents
listed in paragraphs (a) - (l) are collectively referred to as
the "Related Documents").
APPENDIX B
OFFICER'S CERTIFICATE
July __, 2012
Reference is hereby made to the Note Purchase Agreement
dated as of the date hereof (the "Note Purchase Agreement")
between Dynasil Corporation of America, a Delaware corporation
(the "Borrower"), and Massachusetts Capital Resource Company (the
"Purchaser"). In accordance with Section 2.02(e) of the Note
Purchase Agreement, the Borrower has requested Xxxxxxx Xxxxxxx
Xxxxxx LLP ("EWP") to deliver its legal opinion to the Purchaser
as to certain matters relating to the Note Purchase Agreement.
Capitalized terms used and not otherwise defined herein shall
have the meanings assigned to such terms in the Note Purchase
Agreement.
I, ________________, hereby certify that I am the duly
elected Chief Financial Officer of the Borrower, and that, as
such, I am authorized to execute and deliver this certificate on
behalf of the Borrower. In such capacity, I hereby certify to
EWP (and EWP may rely on this certificate for the purpose of
delivering such legal opinion) as follows:
1. I am familiar with the business of the Borrower.
2. Based on inquiry made by me of the management of the
Borrower, there is no action, suit or proceeding before any
court, governmental agency or arbitrator, pending or overtly
threatened in writing against the Borrower that calls into
question or seeks to enjoin any of the Applicable Note Documents
(as such term is defined in the opinion letter).
3. The Borrower (i) is not and does not hold itself out as
being engaged primarily, nor does it propose to engage primarily,
in the business of investing, reinvesting, or trading in
Securities, (ii) has not and is not engaged in, and does not
propose to engage in, the business of issuing Face Amount
Certificates of the Installment Type and has no such certificate
outstanding, and (iii) does not own or propose to acquire
Investment Securities having a Value exceeding forty percent
(40%) of the Value of the Borrower's total assets (excluding cash
items and Government Securities) on an unconsolidated basis.
4. The Borrower will not apply the proceeds of the sale of
the Note in violation of Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
5. The following terms shall have the following meanings:
"Control" means the power to exercise a controlling
influence over the management or policies of a company, unless
such power is solely the result of an official position with such
company;
"Face Amount Certificate of the Installment Type" means any
certificate, investment contract, or other security which
represents an obligation on the part of its issuer to pay a
stated or determinable sum or sums at a fixed or determinable
date or dates more than twenty-four months after the date of
issuance, in consideration of the payment of periodic
installments of a stated or determinable amount;
"Government Securities" means all Securities issued or
guaranteed as to principal or interest by the United States, or
by a person controlled or supervised by and acting as an
instrumentality of the Government of the United States pursuant
to authority granted by the Congress of the United States; or any
certificate of deposit for any of the foregoing;
"Investment Securities" means all Securities except (A)
Government Securities, (B) Securities issued by employees'
securities companies, (C) Securities issued by Majority-Owned
Subsidiaries of the Borrower which are not engaged and do not
propose to be engaged in activities within the scope of clause
(i), (ii), or (iii) of paragraph 3 of this Certificate and (D)
shares of a registered investment company that holds itself out
as a money market fund and seeks to maintain a stable net asset
value of $1.00 per share;
"Majority-Owned Subsidiary" of a person means a company
fifty percent (50%) or more of the outstanding Voting Securities
of which are owned by such person, or by a company, which, within
the meaning of this paragraph, is a Majority-Owned Subsidiary of
such person. Notwithstanding the foregoing, a company shall not
be considered a Majority-Owned Subsidiary of a person if Control
of such company rests with someone other than such person;
"Security" means any note, stock, treasury stock, security
future, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any profit-sharing agreement,
collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-
trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral
rights, any put, call, straddle, option, or privilege on any
security (including a certificate of deposit) or on any group or
index of securities (including any interest therein or based on
the value thereof), or any put, call straddle, option, or
privilege entered into on a national securities exchange relating
to foreign currency, or, in general, any interest or instrument
commonly known as a "security," or any certificate of interest or
participation in, temporary or interim certificate for, receipt
for, guarantee of, or warrant or right to subscribe to or
purchase, any of the foregoing;
"Value" means (i) with respect to securities owned by the
Borrower as of April 30, 2012, for which market quotations are
readily available, the market value as of April 30, 2012; (ii)
with respect to other securities and assets owned by the Borrower
as of April 30, 2012, the fair value as of April 30, 2012, as
determined in accordance with principles approved in good faith
by the Board of Managers of the Borrower; and (iii) with respect
to securities and other assets acquired by the Borrower after
April 30, 2012, the cost thereof.
"Voting Security" means any security presently entitling the
owner or holder thereof to vote for the election of directors of
a company.
IN WITNESS WHEREOF, I have executed this Officer's
Certificate as of the date first set forth above.
DYNASIL CORPORATION OF AMERICA
By:
SCHEDULE I
Foreign Qualifications
Party Jurisdictions
Optometrics Corporation Massachusetts
Radiation Monitoring Devices, Massachusetts
Inc.
RMD Instruments Corp. Massachusetts
SCHEDULE II
Financing Statements
.
Exhibit 3.01
DYNASIL CORPORATION OF AMERICA
List of Subsidiaries
As of the date of the Agreement to which this Exhibit is
attached, the Company had the following Subsidiaries (as defined
in Section 6.01 of the Agreement):
Jurisdiction of
Name of Subsidiary Incorporation/Organi Ownership
zation
Dynasil International, Inc. New Jersey 100% by
(Inactive) Company
Xxxxxxxx Corporation California 100% by
(Inactive) Company
Optometrics Corporation (*) Delaware 100% by
Company
Evaporated Metal Films New York 100% by
Corp. (*) Company
Radiation Monitoring Delaware 100% by
Devices, Inc. (*) Company
RMD Instruments Corp. (*) Delaware 100% by
Company
Xxxxxx Crystals, Ltd. United Kingdom 100% by
Company
Dynasil Biomedical Corp. Delaware 100% by
(*) Company
(*) To execute and deliver at the Closing an Unconditional
Guaranty and a Guarantor Security Agreement
Exhibit 3.05
DYNASIL CORPORATION OF AMERICA
Schedule of Indebtedness
As of the date of the Agreement to which this Exhibit is
attached, the Company and its Subsidiaries had the following
Indebtedness (as defined in Section 6.01 of the Agreement)
outstanding:
Sovereign Bank
1. Loan and Security Agreement, dated as of July 7, 2010, and
as amended from time to time, between Sovereign Bank, N.A. and
Dynasil Corporation of America.
2. Term Note, dated as of July 7, 2010 from Dynasil Corporation
of America payable to Sovereign Bank, N.A.
Current balance: $6,428,571.59
3. Revolving Credit Note, dated July 7, 2010, in the principal
amount of $3,000,000 from Dynasil Corporation of America, payable
to Sovereign Bank, N.A.
Current balance: $-0-
4. Permitted Acquisition Term Note, dated July 19, 2010, from
Dynasil Corporation of America, payable to Sovereign Bank, N.A.
Current balance: $2,857,142.80
Ithaca Urban Renewal Agency, Ithaca, NY
Note payable for Lease of land in Ithaca, New York for 99
years with the options to purchase said land for $26,640
after May 2008.
Current balance: $9,587.78
Entine Trusts
Promissory Note, dated May 29, 2012 from Dynasil Corporation
of America to Xxxxxx Xxxxxx 1988 Family Trust.
Promissory Note, dated May 29, 2012 from Dynasil Corporation
of America to Xxxxxx Xxxxxx Entine Trust.
Promissory Note, dated May 29, 2012 from Dynasil Corporation
of America to Victoria Xxxx Xxxxxx Trust.
Current aggregate balance: $1,857,546
US Bank Equipment Finance - Evaporated Metal Films Corp. has an
equipment finance arrangement with US Bank Equipment Finance.
US Bancorp - Optometrics Corporation has an equipment finance
arrangement with US Bancorp.
Exhibit 3.07
DYNASIL CORPORATION OF AMERICA
Schedule of Mortgages, Pledges, Etc.
As of the date of the Agreement to which this Exhibit is
attached, the Company and its Subsidiaries had the following
outstanding mortgages, pledges, charges, liens, security interest
and other encumbrances:
Sovereign Bank N.A.
Loan and Security Agreement, dated as of July 7, 2010 and as
amended from time to time, between Sovereign Bank and Dynasil
Corporation of America.
Leasehold Mortgage, Security Agreement and Fixture Filing, dated
as of July 7, 2010 between Evaporated Metal Films Corp. and
Sovereign Bank.
Assignment of Rents and Leases, dated as of July 7, 2010 from
Evaporated Metal Films Corp. to Sovereign Bank.
Guarantor Security Agreement, dated July 7, 2010, from Evaporated
Metal Films Corp. to Sovereign Bank.
Guarantor Security Agreement, dated July 7, 2010, from
Optometrics Corporation to Sovereign Bank.
Guarantor Security Agreement, dated July 7, 2010, from Radiation
Monitoring Devices, Inc. to Sovereign Bank.
Guarantor Security Agreement, dated July 7, 2010, from RMD
Instruments Corp. to Sovereign Bank.
Guarantor Security Agreement, dated May 19, 2011, from Dynasil
Biomedical Corp. to Sovereign Bank.
Collateral Assignment of Agreements Affecting Real Estate, dated
July 7, 2010 from Evaporated Metal Films Corp. to Sovereign Bank.
Ithaca Urban Renewal Agency, Ithaca, NY
Note payable for Lease of land in Ithaca, New York for 99 years
with the options to purchase said land for $26,640 after May
2008.
Entine Trusts
Pledge Agreement, dated as of May 29, 2012 between Dynasil
Corporation of America and Xxxxxx Xxxxxx 1988 Family Trust.
Pledge Agreement, dated as of May 29, 2012 between Dynasil
Corporation of America and Victoria Xxxx Xxxxxx Trust.
Pledge Agreement, dated as of May 29, 2012 between Dynasil
Corporation of America and Xxxxxx Xxxxxx Entine Trust.
Other Security Interests
US Bank Equipment Finance - Evaporated Metal Films Corp. has an
equipment finance arrangement with US Bank Equipment Finance.
US Bancorp - Optometrics Corporation has an equipment finance
arrangement with US Bancorp.
Exhibit 3.10
DYNASIL CORPORATION OF AMERICA
Schedule of ERISA Plans
As of the date of the Agreement to which this Exhibit is
attached, the Company and its Subsidiaries had the following
ERISA Plans
1. Evaporated Metal Films Corporation Defined Benefit Plan
Exhibit 3.11
DYNASIL CORPORATION OF AMERICA
Schedule of Transactions with Affiliates
As of the date of the Agreement to which this Exhibit is
attached, the Company and its Subsidiaries had the following
outstanding transactions with Affiliates:
1. A lease agreement with Optometrics Holdings, LLC in which
Xxxxx Xxxxxxx, Optometrics' COO has a 50% interest.
2. A lease agreement with Xxxxxxx River Realty, dba Xxxxxxxx,
Inc., which is owned by Xxxxxx Xxxxxx and family, the Company's
largest shareholder, former director, and former President of
RMD.
3. A separation agreement pursuant to which Xxxxxx Xxxxxx'x
employment with the Company terminated effective November 30,
2011. In exchange for severance pay equal to Xx. Xxxxxx'x
current annual base salary of $325,000 and the continuation of
health and dental benefits for one year, Xx. Xxxxxx agreed to
certain non-compete and non-solicitation covenants expiring on
December 31, 2012 and a standstill agreement expiring on
September 30, 2012.
4. A separation agreement pursuant to which Xxxxxx Xxxxxxxx'x
employment with the Company as President and Chief Executive
Officer terminated effective July 6, 2012. In exchange for
severance pay equal to three months of Xx. Xxxxxxxx'x current
base salary of $275,000 per annum, the continuation of health and
dental benefits for three months, and the potential of an annual
bonus at a maximum value of 77% of $75,000, if annual bonuses are
awarded to the C-level Staff for the year ending September 30,
2012, Xx. Xxxxxxxx agreed to make himself reasonably available to
the Company to answer questions during the Severance Period.
5. Xxxxx Xxxxxx, a director and holder of a 5% interest in the
Company is currently serving as the Interim Chief Executive
Officer of the Company.
6. Promissory Note, dated May 29, 2012 from Dynasil Corporation
of America to Xxxxxx Xxxxxx 1988 Family Trust.
7. Promissory Note, dated May 29, 2012 from Dynasil Corporation
of America to Xxxxxx Xxxxxx Entine Trust.
8. Promissory Note, dated May 29, 2012 from Dynasil Corporation
of America to Victoria Xxxx Xxxxxx Trust.
Exhibit 3.15
CERTIFICATE
I, Xxxxxxx X. Xxxxxxx, Chief Financial Officer of Dynasil
Corporation of America (the "Company"), a Delaware corporation,
certify that I am fully familiar with the financial and business
affairs of the Company and the terms and conditions of a certain
Note Purchase Agreement, dated as of July 31, 2012, (the
"Purchase Agreement") pursuant to which the Company proposes to
sell to the Massachusetts Capital Resource Company ("MCRC")
$3,000,000 in principal amount of its Notes due July 31, 2017
(the "Notes"). I understand that the commitment of MCRC to
purchase the Notes is in part dependent on MCRC's ability to
determine that such purchase will constitute a "qualified
investment" within the meaning of that term in Section 16 of
Chapter 816 of the Acts and Resolves of 1977 of the Commonwealth
of Massachusetts and that the full proceeds of the Notes will be
utilized for purposes which will materially increase or assist in
maintaining equal opportunity employment in Massachusetts. In
order to assist MCRC in making the foregoing determination, I
hereby certify that I have been authorized to deliver this
certificate on behalf of the Company and that the statements,
information and related data set forth below which are not based
on estimates and projections made with respect to future events
are true and correct as of the date hereof and all such
statements, information and related data as are based on
estimates and projections of future events, have been carefully
considered and prepared on behalf of the Company and represent
the reasonable expectations and belief of the Company as of the
date hereof:
1. Business of Company. The business of the Company
consists primarily of government contract research and the
development, manufacture and sale of detection, sensing and
analysis technology, precision instruments and optical components
for the homeland security, medical and industrial markets. The
Company is not primarily engaged in the development of real
estate, the business of a financial intermediary, construction
contractor, public utility (including refuse and waste
facilities) or the retailing of goods and the Company does not
directly or indirectly own or control ten percent (10%) or more
of the voting securities or otherwise direct the management or
policies of any person engaged in such businesses. The principal
facilities of the Company are located in Massachusetts.
2. Affiliates. To the best of my knowledge, there is:
(i) no person directly or indirectly owning,
holding or otherwise having power to vote ten per cent (10%)
or more of the outstanding voting securities of the Company;
(ii) no person ten per cent (10%) or more of
whose voting securities are directly or indirectly owned,
held or otherwise subject to power to vote, by the Company;
(iii) no person directly or indirectly
possessing the power to direct or cause the direction of the
management and policies of the Company pursuant to the terms
of a contract or contracts entered into for that purpose; or
(iv) any officer, director, partner, co-partner
or employee of such person
who is (A) primarily engaged in the development of real estate or
the business of a financial intermediary, construction contractor
or public utility (including refuse or waste facilities) or (B)
whose senior debt is either rated Baa or above by Xxxxx'x
Investors Services, Inc. or would have the same characteristics
as debt so rated.
3. Use of Proceeds. The proceeds of the sale of the Notes
to MCRC will be used solely for the purposes set forth in Section
1.02(b) of the Purchase Agreement.
4. Alternative Financing. The Company has carefully
considered alternative sources of obtaining funds to meet its
current financing needs and it has attempted to obtain financing
on substantially similar terms to that provided by MCRC. Based
on the foregoing, I hereby certify that the Company has attempted
but was unable to obtain elsewhere financing on substantially
similar terms to that provided or agreed to be provided, subject
to certain conditions, by MCRC.
5. Massachusetts Employment. As of the date of this
Certificate, the Company employs a total of 178 employees who are
located in Massachusetts. The Company forecasts a total
employment by the Company at July 31, 2017 of approximately 206
persons in Massachusetts, an increase over its current employment
in Massachusetts of 28 persons. This estimated increase will be
principally due to activities relating to the growth of the
market or the increased market share for the Company's products.
Based on the foregoing, it is estimated that MCRC's investment
pursuant to the Purchase Agreement will permit the creation of a
minimum of 10 new jobs in Massachusetts by July 31, 2017.
6. Equal Employment Opportunity. The Company has reviewed
its employment practices and policies and those of its
Subsidiaries and, to its knowledge, the Company and each such
Subsidiary is in full compliance with all applicable laws, rules,
regulations and administrative orders of the United States and of
the Commonwealth of Massachusetts relating to equal employment
opportunity, and the provisions relating to equal employment
opportunity of any government contracts, subcontracts or grants
entered into or received by the Company or any Subsidiary. To
the Company's knowledge, it and each Subsidiary has filed all
forms, reports and affirmative action plans required to be filed
and has kept all records required to be kept pursuant to the
aforementioned laws, rules, regulations, and terms of such
government grants, contracts or subcontracts. Neither the
Company nor any Subsidiary has been subject to any adverse final
determination or order, with respect to any charge of employment
discrimination made against it, by the United States Equal
Employment Opportunities Commission, the Massachusetts Commission
Against Discrimination or any other governmental unit (including,
without limitation, any such unit with or through which it has
entered into or received a government contract, subcontract or
grant).
7. Conclusion. Based upon the facts and circumstances set
forth above, the Company has determined and hereby further
certifies that:
(a) the Company has attempted but was unable to
obtain elsewhere financing on substantially similar terms to
the financing being provided by MCRC, and
(b) the full proceeds of the MCRC investment will
be utilized for purposes which will materially increase or
maintain equal opportunity employment in the Commonwealth of
Massachusetts.
DYNASIL CORPORATION OF AMERICA
By______________________________________
Xxxxxxx X. Xxxxxxx, Chief Financial
Officer
Dated: July 31, 2012
Signature Page to 3.15 Certificate