Document:

Exhibit 10.1

 

SETTLEMENT AGREEMENT

 

This
SETTLEMENT AGREEMENT, dated as of June 30, 2010, by and among Ezenia!
Inc., a Delaware corporation (the “Company”), and the individuals and
entities listed on Schedule A hereto (collectively, the “Stockholders”).

 

WHEREAS,
the Stockholders are the beneficial owners of shares of common stock, par value
$0.01 per share, of the Company (“Common Stock”);

 

WHEREAS,
by letter dated December 22, 2009, North & Webster Value
Opportunities Fund, LP (“NW Fund”) provided notice to the Company of its
intention to nominate two (2) nominees (and reserved the right to nominate
additional nominees) for election to the Board of Directors of the Company (the
“Stockholder Nomination”) at the Company’s 2010 annual meeting of
stockholders (the “2010 Annual Meeting”);

 

WHEREAS,
the Company and its Board of Directors (the “Board”) have determined
that the interests of the Company and its stockholders would be best served at
this time by, among other things, avoiding a proxy solicitation contest in
connection with the 2010 Annual Meeting and the substantial expense and
disruption that may result therefrom; and

 

WHEREAS,
subject to this Agreement, NW Fund intends to withdraw the Stockholder
Nomination and refrain from contesting the election of directors at the 2010
Annual Meeting.

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

 

Section 1.                                            Representations.

 

(a)                                            Binding
Agreement; Authority.  The Company
hereby represents and warrants that this Agreement has been duly authorized,
executed and delivered by the Company, and is a valid and binding obligation of
the Company, enforceable against it in accordance with its terms.  Each of the Stockholders represents and
warrants that this Agreement has been duly authorized, executed and delivered
by such Stockholder, and is a valid and binding obligation of such Stockholder,
enforceable against such Stockholder in accordance with its terms.

 

(b)                                           Share Ownership
of Common Stock.  Each of the
Stockholders hereby represents and warrants that, as of the date hereof, it and
its Affiliates and Associates (as such terms are hereinafter defined) are the “beneficial
owners” (as such term is hereinafter defined) of the shares of Common Stock set
forth opposite their respective names on Schedule A hereto (the “Shares”),
and that neither such Stockholder nor such Stockholder’s Affiliates or
Associates beneficially own, or have any rights, options or agreements to
acquire or vote, any other shares of Common Stock.  The Stockholders further represent and
warrant that no Stockholder is a party to any agreement, arrangement or understanding
with any third party with respect to the securities, management or control of
the Company other than as described in the Schedule 13D, as amended through the
date hereof, filed by the Stockholders with the Securities and Exchange
Commission (the “SEC”) with regard to their ownership of the Shares.

 

 

(c)                                            Defined Terms.  For purposes of this Agreement, the terms “Affiliate”
and “Associate” shall have the respective meanings set forth in Rule 12b-2
promulgated by the SEC under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”).  For
purposes of this Agreement, the terms “beneficial owner” and “beneficially
own” shall have the same meanings as set forth in Rule 13d-3
promulgated by the SEC under the Exchange Act, except that a person shall also
be deemed to be the beneficial owner of all shares of Common Stock that such
person has the right to acquire pursuant to the exercise of any rights in
connection with any securities or any agreement, regardless of when such rights
may be exercised and whether they are conditional.

 

Section 2.                                            Information
Rights.

 

(a)                                            Operating Budget and Monthly Reports.  Prior to the execution of this Agreement, the
Company has provided the Stockholders with a copy of the Company’s operating
budget for fiscal year 2010 (the “Operating
Budget”), which such Operating Budget is attached hereto as Schedule B. 
As soon as practicable, but in any event within fifteen (15) days after
the end of each month from June through November 2010, the Company
shall provide to Samuel A. Kidston, on behalf of the Stockholders (the “Stockholder Representative”), a report as of
the last day of such month regarding the progress of the Company against the
Operating Budget for the fiscal year to date (each a “Monthly Report”), which Monthly Report shall be in substantially the
form attached hereto as Schedule C.  The Stockholders acknowledge and agree that
the amounts in any such Monthly Report (i) shall be based solely on the
books and records of the Company as of the last day of such month and (ii) shall
not have been audited and/or reviewed by the Company’s independent auditors
and, therefore, such amounts may be subject to change based upon the completion
of the Company’s quarterly financial reporting processes and review by the
Company’s independent auditors.

 

(b)                                           Year-End Report.  On or before January 10, 2011, the
Company shall provide the Stockholder Representative with a final Monthly
Report comparing the Company’s actual operating performance for fiscal year
2010 against the Operating Budget (the “Year-End
Report”).  The Stockholders
acknowledge and agree that the amounts in the Year-End Report (i) shall be
based solely on the books and records of the Company as of December 31,
2010 and (ii) shall not have been audited and/or reviewed by the Company’s
independent auditors and, therefore, such amounts may be subject to change
based upon the completion of the Company’s year-end financial reporting
processes and the audit of the Company’s financial statements by the Company’s
independent auditors.

 

(c)                                  Performance
Metrics.  The Company and the
Stockholders agree that, for purposes of this Agreement, the Company shall be
deemed to have met the Operating Budget for fiscal year 2010 if the Company has
achieved in good faith both  the  revenue and operating income targets (as
determined in accordance with generally accepted accounting principles applied
on a consistent basis) set forth in the Operating Budget for the full fiscal
year (such revenue and operating income targets are referred to herein as the “Performance
Metrics”).   The determination as to
whether the Company has met the Operating Budget for purposes of Section 3(c) and
Section 5 of this Agreement shall be made based upon the Year-End
Report.  The Company shall promptly
notify the Stockholder Representative of any changes to the Year-End Report
based upon the audit of the Company’s financial statements for fiscal year 2010
to

 

2

 

the extent that such changes
result in (x) the Company not meeting the Operating Budget when the
Year-End Report had indicated that the Operating Budget had been met or (y) the
Company meeting the Operating Budget when the Year-End Report had indicated
that the Operating Budget had not been met (it being understood and agreed that
the calculation of the Performance Metrics based upon the Company’s audited
financial statements shall be final and binding upon all parties).  As promptly as practicable following delivery
of the notice, if any, referenced in clause (x) of the preceding sentence,
the Company shall take the actions in Section 3(c) and Section 5
below; and as promptly as practicable following delivery of the notice, if any,
referenced in clause (y) of the preceding sentence, the Stockholder
Nominee (as defined below) shall resign from the Board.

 

(d)                                           Nature of Information.  Any information provided to the Stockholders
(through the Stockholder Representative or otherwise) pursuant to this Section 2
shall be subject to the non-disclosure agreement, dated as of June 9,
2010, by and among the Company and NW Fund (the “Confidentiality
Agreement”), and each Stockholder agrees to abide by the terms of the
Confidentiality Agreement with respect to such information.  Each Stockholder further acknowledges and agrees
that such Stockholder and its Affiliates and Associates are aware that the
information provided to the Stockholders (through the Stockholder
Representative or otherwise) pursuant to this Section 2, including,
without limitation, the Monthly Reports and the Year-End Report, may contain
material, non-public information about the Company, and such Stockholder hereby
acknowledges and agrees that such Stockholder and its Affiliates and Associates
may not purchase or sell any securities of the Company while in possession of
such information.

 

Section 3.                                            Board
Appointments.

 

(a)                                            Board Expansion
and Appointments.  Promptly
after the execution of this Agreement, the size of the Board shall be increased
from five (5) to seven (7) directors and Peter Janke and Larry Snyder
shall be appointed as Class I directors, to hold office until the Company’s
2011 annual meeting of stockholders (the “2011 Annual Meeting”) and
until their respective successors have been duly elected and qualified or until
their earlier resignation or removal.

 

(b)                                           Board Size.  The size of the Board shall not be increased
to more than seven (7) directors at any time before the 2011 Annual
Meeting, except as otherwise provided in Section 3(c) below.  If a vacancy in the Board shall occur and the
Board wishes to appoint a director to fill such vacancy prior to January 10,
2011, then (i) the Stockholder Representative shall have a reasonable
opportunity to interview such director candidate prior to such appointment and (ii) such
director candidate shall not be appointed to the Board without the prior
written consent of the Stockholder Representative, which consent shall not be
unreasonably withheld, conditioned or delayed. 
If a Stockholder Nominee is appointed to the Board in accordance with Section 3(c) below,
then for the period commencing on January 10, 2011 through the date of the
2011 Annual Meeting, (x) the Stockholder Nominee shall have a reasonable
opportunity to interview any director candidate proposed by the Board to fill a
vacancy prior to such appointment and (y) such director candidate shall
not be appointed to the Board without the prior written consent of the
Stockholder Nominee, which consent shall not be unreasonably withheld,
conditioned or delayed.  For the
avoidance of doubt, the parties

 

3

 

acknowledge
and agree that any rights of the Stockholders and the Stockholder
Representative pursuant to this Section 3(b) shall terminate
immediately upon the Company meeting the Operating Budget as set forth in the
Year-End Report.

 

(c)                                            Appointment of
Stockholder Nominee.  If the
Company fails to meet the Operating Budget as set forth in the Year-End Report
and the Stockholders continue to beneficially own at least 500,000 Shares as of
the date of delivery of such Year-End Report (such number of Shares to be
measured without effect of any stock split, reverse stock split or other
recapitalization of the Company which may occur after the date hereof), then no
later than January 10, 2011, the size of the Board shall be increased by
one (1) director and the Board shall appoint Samuel A. Kidston or another
nominee of the Stockholders to fill such vacancy (the “Stockholder Nominee”).  The Stockholder Nominee shall serve as a Class II
director, to hold office until the Company’s 2012 annual meeting of
stockholders and until his successor has been duly elected and qualified or
until his earlier resignation or removal. 
If the Stockholders wish to nominate someone other than Mr. Kidston
to fill this director seat, then the Stockholder Representative shall provide
written notice to the Company no later than December 15, 2010, which
notice shall include the name and address of the potential nominee and
information about such nominee substantially equivalent to that which would be
required in a proxy statement pursuant to the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. 
The Nominating Committee of the Board shall have a reasonable
opportunity to interview such director candidate prior to such appointment, and
such director candidate shall not be appointed to the Board without the
approval of the Nominating Committee, which approval shall not be unreasonably
withheld, conditioned or delayed.  As a
condition to appointment to the Board, the Stockholder Nominee shall agree in
writing to be bound by the terms and conditions of the Company’s policies
applicable to directors generally, including, without limitation, the Company’s
Code of Ethics and Insider Trading Policy.

 

(d)                                           Observer Rights.  During September 2010, representatives
of the Board shall meet with the Stockholder Representative to discuss the
possibility of having the Stockholder Representative attend meetings of the
Board in a non-voting observer capacity through January 10, 2010 (it being
understood and agreed that the decision as to whether to provide the
Stockholder Representative with observer rights shall be in the sole and
absolute discretion of the Board).

 

Section 4.                                            2010 Annual
Meeting.

 

(a)                                            Withdrawal of
Stockholder Nomination. 
Effective as of the execution of this Agreement, NW Fund hereby
withdraws the Stockholder Nomination, and NW Fund will hereafter take all steps
necessary to cease, and to cause the other Stockholders to cease, all efforts
to nominate or elect NW Fund’s nominees to the Board in connection with the
2010 Annual Meeting.

 

(b)                                           Voting.  The Stockholders shall cause all Shares
beneficially owned by them, and/or their Affiliates and Associates, as of the
record date for the 2010 Annual Meeting, to be present for quorum purposes at
the 2010 Annual Meeting and any adjournments or postponements thereof.  The Stockholders agree that, in connection
with the election of directors at the 2010 Annual Meeting, any Shares held by
the Stockholders and/or their Affiliates and

 

4

 

Associates
shall be cast for or withheld from each director nominee in the same proportion
as the votes cast for and withheld by all holders of Shares other than the
Stockholders and/or their Affiliates and Associates.

 

(c)                                            Further
Assurances.  The
Stockholders further agree to take all action reasonably necessary to carry out
the intention of this Section 4, including, without limitation, delivering
to the Company upon its written request executed proxies naming the proxies
appointed by the Company for all shares of Common Stock beneficially owned by
the Stockholders and/or their Affiliates and Associates as of the record date
for the 2010 Annual Meeting to be voted in accordance with this Agreement.

 

(d)                                           Report of
Results.  In accordance with the
requirements of Item 5.07 of Form 8-K under the Exchange Act, the Company
shall report the results of the voting of stockholders at the 2010 Annual
Meeting within two (2) business days following the Annual Meeting,
including a separate tabulation of the votes cast for or withheld for each
director nominee and the number of broker non-votes.

 

Section 5.                                            Board
Initiatives.

 

(a)                                            Discussion of
Fundamentals.  If a
Stockholder Nominee joins the Board in accordance with Section 3(c), then
during the first quarter of fiscal year 2011, the Board shall meet and discuss
the following matters:  (i) the
composition and size of the Board and the terms of the directors; (ii) the
composition of management, including possible terminations and additions; (iii) the
strategic alternatives that may be available to the Company; and (iv) a
three-year strategic operating plan for the Company.  The Stockholder Nominee shall prepare the
agenda for and chair this portion of the applicable Board meeting or
meetings.  If requested by the
Stockholder Nominee, resolutions concerning these matters shall be prepared and
presented to the Board, and the Board shall vote upon such matters if motion is
made by the Stockholder Nominee (it being understood and agreed that the
decision as to whether to approve any such matter shall be in the sole and
absolute discretion of the Board).

 

(b)                                           Strategic
Operating Plan.   Without
limiting the generality of Section 5(a)(iv) above, if a Stockholder
Nominee joins the Board in accordance with Section 3(c), then management
of the Company shall develop a three-year strategic operating plan, which such
plan shall be delivered to the Board for review and discussion in January 2011.  The Board shall meet as promptly as
practicable thereafter to discuss and assess the viability of such strategic
operating plan, with the Stockholder Nominee to chair this portion of the
applicable Board meeting or meetings.  If
requested by the Stockholder Nominee, resolutions concerning such strategic
operating plan shall be prepared and presented to the Board, and the Board
shall vote upon such matters if motion is made by the Stockholder Nominee (it
being understood and agreed that the decision as to whether to approve any such
matter shall be in the sole and absolute discretion of the Board).

 

Section 6.                                            Standstill
Arrangements.  Each of the
Stockholders agrees that, during the period from the date of this Agreement
through January 10, 2011 (the “Standstill Period”) and except as
otherwise expressly provided herein, neither it nor any of its Affiliates or
Associates will, without the written consent of the Company, directly or
indirectly, solicit, request, advise,

 

5

 

assist
or knowingly encourage others to (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or in any
way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in, (i) any acquisition of
any assets of the Company or any of its subsidiaries; (ii) any tender or
exchange offer, merger or other business combination involving the Company or
any of its subsidiaries; (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to the
Company or any of its subsidiaries; or (iv) any “solicitation” of “proxies”
(as such terms are used in the proxy rules of the SEC) or consent to vote
any voting securities of the Company; (b) form, join or in any way
participate in a “group” (as defined under the Exchange Act); (c) seek to
control the management, the Board or policies of the Company; (d) nominate
any persons as a director of the Company or propose any matter to be voted on
by stockholders of the Company; (e) take any action which would reasonably
be expected to force the Company to make a public announcement regarding any of
the types of matters set forth in clause (a) above; or (f) enter into
any discussions or arrangements with any third party with respect to any of the
foregoing.  The Stockholders also agree
during the Standstill Period not to request the Company (or its directors,
officers, employees or agents), directly or indirectly, to amend or waive any
provision of this paragraph (including this sentence).  For the avoidance of doubt, the foregoing
provisions of this paragraph shall not restrict the Stockholders’ ability to
nominate any persons as a director of the Company, or propose any other matter to
be voted on by stockholders of the Company, at the 2011 Annual Meeting.

 

Section 7.                                            Press Releases
and Other Public Statements.  During the Standstill Period, the Company and
the Stockholders agree as follows:

 

(a)                                            The Company
agrees, subject to the requirements of applicable federal securities laws, to
provide the Stockholder Representative with an opportunity to review and
comment on any press release, public filing, or letter to the Company’s
stockholders containing statements about the Stockholders, prior to its public
release.

 

(b)                                           The
Stockholders agree, subject to the requirements of applicable federal
securities laws, to provide the Company with an opportunity to review and
comment on any press release, public filing, or letter to the Company’s stockholders
containing statements about the Company, prior to its public release.

 

(c)                                            The initial
press release with respect to the execution of this Agreement shall be a press
release to be reasonably agreed upon by the Company and the Stockholder Representative.

 

(d)                                           Neither the
Company nor any of the Stockholders, nor any of their Affiliates or Associates,
shall directly or indirectly make or issue or cause to be made or issued any
disclosure, announcement or statement (including, without limitation, the
filing of any document or report with the SEC or any other governmental agency
or any disclosure to any journalist, member of the media or securities analyst)
concerning the other party or any of its respective past, present or future
general partners, directors, officers or employees, which disparages or in any
way reflects adversely or detrimentally upon such other party or any of such
other party’s respective past, present or future general partners, directors,
officers or employees

 

6

 

(recognizing
that this provision shall not prohibit any private, confidential comment made
directly to the other party’s officers, directors or counsel).

 

Section 8.                                            Reimbursement
of Expenses.  The Company
will reimburse NW Fund for its reasonable out-of-pocket fees and expenses
actually incurred on or before the date hereof in connection with its planned
proxy solicitation and the negotiation and execution of this Agreement in an
aggregate amount not to exceed $15,000. 
The Company will make such reimbursement payments to NW Fund within ten (10) days
of receiving reasonable documentation evidencing such expenses.  All other fees and expenses incurred by each
of the parties hereto in connection with the matters contemplated by this
Agreement shall be borne by such party.

 

Section 9.                                            Remedies.  Each party hereto hereby acknowledges and
agrees that irreparable harm would occur in the event any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached.  It is
accordingly agreed that the parties shall be entitled to specific relief
hereunder, including, without limitation, an injunction or injunctions to
prevent and enjoin breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any state or federal court in
the State of Delaware, in addition to any other remedy to which they may be
entitled at law or in equity.

 

Section 10.                                      Entire
Agreement.  This
Agreement and the Confidentiality Agreement contain the entire understanding of
the parties with respect to the subject matter hereof and may be amended only
by an agreement in writing executed by the parties hereto.

 

Section 11.                                      Notices.  All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be validly given, made or served, if in writing and shall
be deemed to have been given (a) when delivered by hand, with written
confirmation of receipt, (b) upon sending if sent by facsimile to the
facsimile numbers below, with electronic confirmation of sending, (c) one (1) day
after being sent by nationally recognized overnight carrier to the address set
forth below or (d) when actually delivered if sent by any other method
that results in delivery, with written confirmation of receipt:

 

If
to the Company:

 

Ezenia! Inc.

14
Celina Avenue, Suite 17-18

Nashua,
NH 03063

Attention:  Chief Executive Officer

Facsimile:  (603) 880-4795

 

7

 

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

 

	
  Goodwin
  Procter LLP

  
	
  Exchange
  Place

  
	
  53
  State Street

  
	
  Boston,
  MA 02109

  
	
  Attention:

  	
  Joseph
  L. Johnson III

  
	
   

  	
  Lisa
  R. Haddad

  
	
  Facsimile:

  	
  (617)
  523-1231

  

 

If
to the Stockholder Representative or any Stockholder:

 

North &
Webster, LLC

10 Tower Office Park, Suite 420

Woburn, MA 01801

Attention: 
Samuel A. Kidston

Facsimile:

 

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

 

Olshan
Grundman Frome Rosenzweig & Wolosky LLP

Park
Avenue Tower

65
East 55th Street

New
York, NY 10022

Attention:  Andrew M. Freedman

Facsimile: 
(212) 451-2222

 

Section 12.                                      Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware, without
regard to any conflict of laws provisions thereof.  Each of the parties, on behalf of itself and
its Affiliates and Associates, hereby irrevocably and unconditionally consents
to the exclusive jurisdiction of the courts in the State of Delaware and/or the
courts of the United States of America located in the State of Delaware for any
action, suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby, and agrees not to commence any action, suit
or proceeding related thereto except in such courts.  Each of the parties, on behalf of itself and
its Affiliates and Associates, hereby irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby, in the courts in
the State of Delaware and/or the courts of the United States of America located
in the State of Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding in any such court has been brought in any inconvenient
forum.

 

Section 13.                                      Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

8

 

Section 14.                                      No Presumption
Against Draftsman.  Each of the
undersigned parties hereby acknowledges that the undersigned parties fully
negotiated the terms of this Agreement, that each such party had an equal
opportunity to influence the drafting of the language contained in this
Agreement and that there shall be no presumption against any such party on the
ground that such party was responsible for preparing this Agreement or any part
hereof.

 

Section 15.                                      Assignability.  This Agreement shall not be assignable by
operation of law or otherwise by a party without the consent of the other
parties.  Subject to the foregoing
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the successors and assigns of each party to this
Agreement.

 

Section 16.                                      No Third-Party
Beneficiaries.  This
Agreement is solely for the benefit of the parties hereto and is not
enforceable by any other persons.

 

Section 17.                                      Headings.  The section headings contained in this
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

9

 

IN
WITNESS WHEREOF, each of the parties has executed this Settlement Agreement or
caused the same to be executed by its duly authorized representative as of the
date first above written.

 

 

	
   

  	
  EZENIA!
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas McCann

  
	
   

  	
   

  	
  Name:
  Thomas McCann

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NORTH &
  WEBSTER VALUE OPPORTUNITIES FUND, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  North &
  Webster, LLC,

  
	
   

  	
   

  	
  Its
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Samuel A. Kidston

  
	
   

  	
   

  	
  Name:
  Samuel A. Kidston

  
	
   

  	
   

  	
  Title:
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NORTH &
  WEBSTER, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Samuel A. Kidston

  
	
   

  	
   

  	
  Name:
  Samuel A. Kidston

  
	
   

  	
   

  	
  Title:
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Samuel A. Kidston

  
	
   

  	
  Samuel
  A. Kidston

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  James Bussone

  
	
   

  	
  James
  Bussone

  

 

10

 

 

Schedule A

 

Stockholders and Stock Ownership

 

	
   

  	
   

  	
  Number of Shares

  	
   

  	
  Number of Shares

  	
   

  
	
  Stockholder

  	
   

  	
  Held Beneficially

  	
   

  	
  Held of Record

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North & Webster Value Opportunities Fund,
  LP

  	
   

  	
  598,157

  	
   

  	
  100,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North & Webster, LLC

  	
   

  	
  738,157

  	
  *

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Samuel A. Kidston

  	
   

  	
  738,157

  	
  *

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  James Bussone

  	
   

  	
  0

  	
   

  	
  0

  	
   

  

 

*Includes the 598,157 Shares held by North &
Webster Value Opportunities Fund, LP and 140,000 Shares held in managed
accounts over which North & Webster, LLC has voting and dispositive
power.

 

 

Schedule B

 

2010 Operating Budget

 

 

Ezenia! Inc.

2010 Operating Budget

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1st
  Half

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2nd
  Half

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fcst

  	
   

  	
  Fcst

  	
   

  	
  Fcst

  	
   

  	
  Fcst

  	
   

  	
  Fcst

  	
   

  	
  Fcst

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Q1

  	
   

  	
  Q2

  	
   

  	
  FY10

  	
   

  	
  Q3

  	
   

  	
  Q4

  	
   

  	
  FY10

  	
   

  	
  FY10

  	
   

  
	
  Revenues

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Revenues

  	
   

  	
  783,000

  	
   

  	
  973,000

  	
   

  	
  1,756,000

  	
   

  	
  1,319,006

  	
   

  	
  1,660,998

  	
   

  	
  2,980,004

  	
   

  	
  4,736,004

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cost
  of Goods Sold:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Cost of Goods Sold

  	
   

  	
  275,525

  	
   

  	
  285,608

  	
   

  	
  561,133

  	
   

  	
  345,610

  	
   

  	
  419,252

  	
   

  	
  764,863

  	
   

  	
  1,325,996

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gross
  Profit:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Gross Profit

  	
   

  	
  507,475

  	
   

  	
  687,392

  	
   

  	
  1,194,867

  	
   

  	
  973,396

  	
   

  	
  1,241,746

  	
   

  	
  2,215,141

  	
   

  	
  3,410,008

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Operating Expenses

  	
   

  	
  1,152,784

  	
   

  	
  1,035,960

  	
   

  	
  2,188,744

  	
   

  	
  977,310

  	
   

  	
  951,960

  	
   

  	
  1,929,271

  	
   

  	
  4,118,014

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating
  Income/(Loss)

  	
   

  	
  (645,309

  	
  )

  	
  (348,568

  	
  )

  	
  (993,877

  	
  )

  	
  (3,915

  	
  )

  	
  289,785

  	
   

  	
  285,871

  	
   

  	
  (708,006

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest-Other
  Income/(Expense)

  	
   

  	
  6,000

  	
   

  	
  6,000

  	
   

  	
  12,000

  	
   

  	
  6,000

  	
   

  	
  6,000

  	
   

  	
  12,000

  	
   

  	
  24,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Income
  before taxes

  	
   

  	
  $

  	
  (639,309

  	
  )

  	
  $

  	
  (342,568

  	
  )

  	
  $

  	
  (981,877

  	
  )

  	
  $

  	
  2,085

  	
   

  	
  $

  	
  295,785

  	
   

  	
  297,871

  	
   

  	
  $

  	
  (684,006

  	
  )

  
																						

 

 

Schedule C

 

Form of Monthly Report

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fcst

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fcst

  	
   

  	
  Fcst

  	
   

  	
  Year to

  	
   

  	
  Original

  	
   

  
	
   

  	
   

  	
  Month

  	
   

  	
  Quarter

  	
   

  	
  Date

  	
   

  	
  Fcst

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revenues

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Revenues

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  4,736,004

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cost
  of Goods Sold:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Cost of Goods Sold

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1,325,996

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gross
  Profit:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Gross Profit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3,410,008

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating
  Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Operating Expenses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4,118,014

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating Income/(Loss)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (708,006

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest-Other
  Income/(Expense)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  24,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Income before taxes

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  (684,006

  	
  )Exhibit 10.1

 

	
  Banc of America
  Leasing & Capital, LLC

  	
   

  	
  Master Loan and Security
  Agreement Number: 21379-70000

  

 

This Master Loan and Security Agreement, dated as of June 25, 2010
(this “Agreement”), is by and between Banc of America Leasing & Capital, LLC, a Delaware
limited liability company having an office at 2059 Northlake Parkway, 3 North,
Tucker, GA 30084 (together with its successors and assigns, “Lender”), and Stellaris
LLC as “Borrower”, a limited liability
company existing under the laws of the state of Nevada, and having its chief
executive office and any organizational identification number as specified with
its execution of this Agreement below.  Certain defined terms used herein are
identified in bold face and quotation marks throughout this Agreement and in Section 14
below. This Agreement sets forth the terms and conditions for the
financing of Equipment between Lender and Borrower pursuant to one or more “Equipment Notes” incorporating by reference the terms of
this Agreement, together with all exhibits, addenda, schedules, certificates,
riders and other documents and instruments executed and delivered in connection
with such Equipment Note (as amended from time to time, an “Equipment
Note”). Each Equipment Note constitutes a separate, distinct and
independent financing of Equipment and contractual obligation of Borrower. This
Agreement is not an agreement or commitment by Lender or Borrower to enter into
any future Equipment Notes or other agreements, or for Lender to provide any
financial accommodations to Borrower. Lender shall not be obligated under any
circumstances to advance any progress payments or other funds for any Equipment
or to enter into any Equipment Note if there shall have occurred a material
adverse change in the operations, business, properties or condition, financial
or otherwise, of Borrower or any Guarantor. This Agreement and each Equipment
Note shall become effective only upon Lender’s acceptance and execution thereof
at its corporate offices set forth above.

 

1.     Equipment Notes; Grant of Security Interest.. Lender and
Borrower agree to finance Equipment described in one or more Equipment Notes
entered into from time to time, together with all other documentation from
Borrower required by Lender with respect to such Equipment Note. Upon receipt
of any item or group of Equipment intended for financing hereunder, Borrower shall execute an Equipment Note, with
all information fully completed and irrevocably accepting such Equipment for
Equipment Note, and deliver such Equipment Note to Lender for its review and
acceptance. To secure the punctual payment and performance of Borrower’s
Obligations under each Equipment Note and, as a separate grant of security, to
secure the payment and performance of all other Obligations owing to Lender,
Borrower grants to Lender a continuing security interest in all of Borrower’s
right, title and interest in and to all Equipment, together with: (i) all
parts, attachments, accessories and accessions to, substitutions and
replacements for, each item of Equipment; (ii) all accounts, chattel
paper, and general intangibles arising from or related to any sale, lease,
rental or other disposition of any Equipment to third parties, or otherwise
resulting from the possession, use or operation of any Equipment by third
parties, including instruments, investment property, deposit accounts, letter
of credit rights, and supporting obligations arising thereunder or in
connection therewith; (iii) all insurance, warranty and other claims
against third parties with respect to any Equipment; (iv) all software and
other intellectual property rights used in connection therewith; (v) proceeds
of all of the foregoing, including insurance proceeds and any proceeds in the
form of goods, accounts, chattel paper, documents, instruments, general
intangibles, investment property, deposit accounts, letter of credit rights and
supporting obligations; and (vi) all books and records regarding the
foregoing, in each case, now existing or hereafter arising (the “Collateral”).  Provided that there
then exists no Event of Default, Lender’s security interest in Collateral
subject to an Equipment Note shall terminate upon the payment and performance
of all Obligations of Borrower under the applicable Equipment Note.
Notwithstanding the grant of a security interest in any Collateral, Borrower
shall have no right to sell, lease, rent, dispose or surrender possession, use
or operation of any Equipment to any third parties without the prior written
consent of Lender.

 

2.     Payments.     Each  Equipment Note shall provide for scheduled “Payments” of principal and interest payable by Borrower to
Lender in the amounts and at the times during the “Equipment
Note Term” through and including the “Maturity
Date”, all as provided in the Equipment Note. If any Payment or
other amount payable hereunder is not paid within 10 days of its due date,
Borrower shall pay an administrative late charge of 5% of the amount not timely
paid. Such amount shall be payable in addition to all amounts payable by
Borrower as a result of the exercise of any of the remedies herein provided.
All Payments and other amounts payable under an Equipment Note shall be made in
immediately available funds at Lender’s address above or such other place as
Lender shall specify in writing. Except as specifically provided in the
applicable Equipment Note, Borrower shall not have a right to prepay any
Equipment Note.  It is the intention of
Lender to comply with all applicable usury laws and, accordingly, it is agreed
that notwithstanding anything to the contrary contained herein or in any
Equipment Note, in no event shall any provision herein or therein require or
permit interest in excess of the maximum amount permitted by applicable
law.  If necessary to give effect to
these provisions, Lender will, at its option, in accordance with applicable
law, either refund any amount to Borrower to the extent in excess of that
allowed by applicable law, or credit such excess amount against the then unpaid
principal balance under the applicable Equipment Note(s).  Unless otherwise provided herein, all amounts
received under any Equipment Note will be applied, first, to accrued
late charges, fees and other costs and expenses due and owing, second,
to accrued interest and, third, to unpaid principal.

 

3.     Unconditional Financing; Disclaimer Of Warranties. Borrower’s
Obligations under each Equipment Note (i) shall be non-cancelable,
absolute and unconditional under all circumstances for the entire Equipment
Note Term, (ii) shall be unaffected by the loss or destruction of any
Equipment, and (iii) shall not be subject to any abatement, deferment, reduction, set-off,
counterclaim, recoupment or defense for any
reason whatsoever. LENDER IS NOT A VENDOR OR AGENT OF THE EQUIPMENT
VENDOR, AND HAS NOT ENGAGED IN THE SALE OR DISTRIBUTION OF ANY EQUIPMENT.
LENDER MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AS TO TITLE,
MERCHANTABILITY, PERFORMANCE, CONDITION, EXISTENCE, FITNESS OR SUITABILITY FOR
BORROWER’S PURPOSES OF ANY EQUIPMENT, PATENT, TRADEMARK OR COPYRIGHT
INFRINGEMENTS, THE CONFORMITY OF THE EQUIPMENT TO THE DESCRIPTION THEREOF IN
ANY EQUIPMENT NOTE OR ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND WITH
RESPECT TO THE EQUIPMENT. If Equipment is not delivered or properly installed,
does not operate as warranted, becomes obsolete, or is unsatisfactory for any
reason, Borrower shall make all claims on account thereof solely against Vendor
and not against Lender. Borrower is solely responsible for the selection,
shipment, delivery and installation of the Equipment and its Vendors, expressly
disclaims any reliance upon any statements or representations made by Lender in
connection therewith, and has received and approved the terms of any purchase
orders, warranties, licenses or agreements with respect to the Equipment.  To
the extent that the manufacturer of Equipment provides any warranties with
respect thereto, Borrower shall enforce such warranties and obtain at its own
expense the customary services furnished by the manufacturer in connection with
the Equipment.

 

1

 

4.     Use; Maintenance; Location; Inspection. Borrower
shall:  (i) use, operate, protect
and maintain the Equipment (a) in good operating order, repair, condition
and appearance, in the same condition as when received, ordinary wear and tear
excepted, (b) consistent with prudent industry practice (but in no event
less than the extent to which Borrower maintains other similar equipment in the
prudent management of its assets and properties), and (c) in compliance
with all applicable insurance policies, laws, ordinances, rules, regulations
and manufacturer’s recommended maintenance and repair procedures, and (ii) maintain
comprehensive books and records regarding the use, operation, maintenance and
repair of the Equipment. The Equipment shall be used only within the 48
contiguous United States, solely for business purposes (and not for any
consumer, personal, home, or family purpose), and shall not be abandoned or
used for any unlawful purpose. Borrower shall not discontinue use of any
Equipment except for normal maintenance nor, through modifications, alterations
or otherwise, impair the current or residual value, useful life, utility or
originally intended function of any Equipment without Lender’s prior consent.
Any replacement or substitution of parts, improvements, upgrades, or additions
to the Equipment during the Equipment Note Term shall be part of the Collateral
subject to Lender’s security interest and subject to the Equipment Note, except
that if no Event of Default exists, Borrower may at its expense remove
improvements or additions provided by Borrower that can be readily removed
without impairing the value, function or remaining useful life of the
Equipment. Borrower shall not change the location or, in the case of
over-the-road vehicles, the base of any Equipment specified in its Equipment
Note without Lender’s prior written consent. Lender shall have the right to
enter any premises where Equipment is located and inspect it (together with
related books and records) at any reasonable time.

 

5.     Loss And Damage. Borrower assumes all risk of
(and shall promptly notify Lender in writing of any occurrence of) any damage
to or loss, theft, confiscation or destruction of any Equipment from any cause
whatsoever (a “Casualty”). If any Equipment suffers
a Casualty which Lender determines is reparable, Borrower shall at its expense
promptly place the same in good repair, condition or working order. If any
Equipment suffers a Casualty which Lender determines is beyond repair or
materially impairs its residual value (a “Total Loss”),
Borrower shall at Lender’s option either (a) promptly replace such
Equipment with a similar item reasonably acceptable to Lender having an
equivalent value, utility and remaining useful life of such Equipment,
whereupon such replacement items shall constitute Equipment and Collateral for
all purposes hereunder and the applicable Equipment Note, or (b) on the
Payment date following such Casualty pay Lender the Prepayment Amount for such
Equipment, together with the Payment scheduled for payment on such date, and
all accrued interest, late charges and other amounts then due and owing under
the Equipment Note. Upon such payment following a Total Loss, the Equipment
Note with respect to the Equipment suffering a Total Loss shall be deemed
discharged, and Lender’s security interest in such Equipment shall terminate.
If less than all Equipment under a Equipment Note suffers a Total Loss, (i) the
Prepayment Amount with respect to any such item of Equipment shall be
calculated by reference to the allocable portion of the unpaid principal
balance of the applicable Equipment Note, as reasonably determined by Lender,
and (ii) the remaining Payments under the Equipment Note shall be
proportionately reduced as reasonably calculated by Lender upon Lender’s
receipt of the payments described above.

 

6.     Insurance. Borrower, at its own
expense, shall keep each item of Equipment insured against all risks for its
replacement value, and in no event less than its Prepayment Amount, and shall
maintain public liability and, with respect to any Equipment that is
over-the-road vehicles, automotive liability insurance against such risks and
for such amounts as Lender may require. All such insurance shall (a) be
with companies rated “A-” or better by A.M. Best Company, in such form as
Lender shall approve, (b) specify Lender and Borrower as insureds and
provide that it may not be canceled or altered in any way that would affect the
interest of Lender without at least 30 days’ prior written notice to Lender (10
days’ in the case of nonpayment of premium), (c) be primary, without right
of contribution from any other insurance carried by Lender and contain waiver
of subrogation and “breach of warranty” provisions satisfactory to Lender, (d) provide
that all amounts payable by reason of loss or damage to Equipment shall be
payable solely to Lender, unless Lender otherwise agrees, and (e) contain
such other endorsements as Lender may reasonably require. Borrower shall provide
Lender with evidence satisfactory to Lender of the required insurance upon the
execution of any Equipment Note and promptly upon any renewal of any required
policy.

 

7.     Indemnities; Taxes. Borrower’s indemnity and
reimbursement obligations set forth below shall survive the cancellation,
termination or expiration of any Equipment Note or this Agreement.

 

(a) General Indemnity. Borrower shall indemnify, on an
after-tax basis, defend and hold harmless Lender and its respective officers,
directors, employees, agents and Affiliates (“Indemnified Persons”)
against all claims, liabilities, losses and expenses whatsoever (except those
determined by final decision of a court of competent jurisdiction to have been
directly and primarily caused by the Indemnified Person’s gross negligence or
willful misconduct), including court costs and reasonable attorneys’ fees and
expenses (together, “Attorneys’ Fees”), in any way
relating to or arising out of the Equipment or any Equipment Note at any time,
or the ordering, acquisition, rejection, installation, possession, maintenance,
use, ownership, condition, destruction or return of the Equipment, including
any claims based in negligence, strict liability in tort, environmental
liability or infringement.

 

(b) General Tax Indemnity. Borrower shall pay or reimburse
Lender, and indemnify, defend and hold Lender harmless from, on an after-tax
basis, all taxes, assessments, fees and other governmental charges paid or
required to be paid by Lender or Borrower in any way arising out of or related
to the Equipment or any Equipment Note before or during the Equipment Note Term
or after the Equipment Note Term following an Event of Default, including
foreign, Federal, state, county and municipal fees, taxes and assessments, and
property, value-added, sales, use, gross receipts, excise, stamp and
documentary taxes, and all related penalties, fines, additions to tax and
interest charges (“Impositions”), excluding only
Federal and state taxes based on Lender’s net income. Upon Lender’s request,
Borrower shall furnish proof of its payment of any Imposition.

 

8.     Borrower Representations and Agreements. Borrower
represents, warrants and agrees that: (a) Borrower has had for the
previous 5 years (except as previously disclosed to Lender in writing) the
legal name and form of business organization in the state described above; (b) Borrower’s
chief executive office and notice address, taxpayer identification number and
any organizational identification number is as described with its execution of
this Agreement below; (c) Borrower shall notify Lender in writing at least
30 days before changing its legal name, state of organization, chief executive
office location or organizational identification number; (d) Borrower is
duly organized and existing in good standing under the laws of the state
described above and all other jurisdictions where legally required in order to
carry on its business, shall maintain its good standing in all such
jurisdictions, and shall conduct its businesses and manage its properties in
compliance with all applicable laws, rules or regulations binding on
Borrower; (e) the execution, delivery and performance of this Agreement,
each Equipment Note and Related Agreement to which it is a party has been duly
authorized by Borrower, each of which are and will be binding on and
enforceable against Borrower in accordance with their terms, and do not and
will not contravene any other instrument or agreement binding on Borrower; and (f) there
is no pending litigation, tax or environmental claim, proceeding, dispute or
regulatory or enforcement action (and Borrower shall promptly notify Lender of
any of the same that may hereafter arise) that may adversely affect any
Equipment or Borrower’s financial condition or impair its ability to perform
its Obligations.

 

2

 

9.     Title; Personal Property. Borrower shall be the sole
owner of Equipment free and clear of all liens or encumbrances, other than
Lender’s rights under the Equipment Note. Borrower will not create or permit to
exist any lien, security interest, charge or encumbrance on any Equipment
except those in favor of Lender. The Equipment shall remain personal property
at all times, notwithstanding the manner in which it may be affixed to realty.
Borrower shall obtain and record such instruments and take such steps as may be
necessary to (i) prevent any creditor, landlord, mortgagee or other entity
(other than Lender) from having any lien, charge, security interest or
encumbrance on any Equipment, and (ii) ensure Lender’s right of access to
and removal of Equipment in accordance with the terms hereof.

 

10.  Default. Each of the following (a “Default”) shall, with the giving of any notice or passage of
any time period specified, constitute an “Event of Default”
hereunder and under all Equipment Notes:  (1) Borrower
fails to pay any Payments or other amount owing under any Equipment Note within
10 days of its due date; (2) Borrower fails to maintain insurance as
required herein, or sells, leases, assigns, conveys, or suffers to exist any
lien, charge, security interest or encumbrance on, any Equipment without Lender’s
prior consent, or any Equipment is subjected to levy, seizure or attachment; (3) Borrower
fails to perform or comply with any other covenant or obligation under any
Equipment Note or Related Agreement
and, if curable, such failure continues for 30 days after written notice
thereof by Lender to Borrower; (4) any representation, warranty or other
written statement made to Lender by Borrower in connection with this Agreement,
any Equipment Note, Related Agreement or other Obligation, or by any Guarantor pursuant to any Guaranty
(including financial statements) proves to have been incorrect in any material
respect when made; (5) Borrower (w) enters into any merger or
consolidation with, or sells or transfers all or any substantial portion of its
assets to, or enters into any partnership or joint venture other than in the
ordinary course of business with, any entity, (x) dies (if a natural
person), dissolves, liquidates or ceases or suspends the conduct of business,
or ceases to maintain its existence, (y) if Borrower is a privately held
entity, enters into or suffers any transaction or series of transactions as a
result of which Borrower is directly or indirectly controlled by persons or
entities not directly or indirectly controlling Borrower as of the date hereof,
or (z) if Borrower is a publicly held entity, there shall be a change in
the ownership of Borrower’s stock or other equivalent ownership interest such
that Borrower is no longer subject to the reporting requirements of, or no
longer has a class of equity securities registered under, the Securities Act of
1933 or the Securities Exchange Act of 1934; (6) Borrower undertakes any
general assignment for the benefit of creditors or commences any voluntary case
or proceeding for relief under the federal bankruptcy code, or any other law
for the relief of debtors, or takes any action to authorize or implement any of
the foregoing; (7) the filing of any petition or application against
Borrower under any law for the relief of debtors, including proceedings under
the federal bankruptcy code, or for the subjection of property of Borrower to
the control of any court, receiver or agency for the benefit of creditors if
such petition or application is consented to by Borrower or is otherwise not
dismissed within 60 days from the date of filing; (8) any default occurs
under any other lease, credit or other agreement or instrument to which
Borrower and Lender or any Affiliate of Lender are now or hereafter party; (9) any
default occurs under any other agreement or instrument to which Borrower is a
party and under which there is outstanding, owing or committed an aggregate
amount greater than $100,000; (10) any attempted repudiation, breach or
default of any Guaranty; or (11) the occurrence of any event described in
clauses (4) through (9) above with reference to any Guarantor or any
controlling shareholder, general partner or member of Borrower. Borrower shall promptly
notify Lender in writing of any Default or Event of Default.

 

11.  Remedies. (a) Upon the occurrence of an Event of
Default, Lender may, in its discretion, exercise any one or more of the
following remedies with respect to any or all Equipment Notes or Equipment: (1) accelerate
the maturity of any Equipment Note and declare the Prepayment Amount thereof to
be immediately due and payable together with any other unpaid principal,
accrued interest or other amounts due and owing thereunder; (2) cause Borrower
to promptly discontinue use of or disable any Equipment, and, at Borrower’s
expense, have the Equipment assembled, prepared and adequately protected for
shipment (together with all related manuals, documents and records, and any
other Collateral), and either surrendered to Lender in place or shipped
(freight and insurance pre-paid) to such location as Lender may designate
within the forty-eight contiguous United States, in the condition required
under Section 4 hereof, qualified for the manufacturer’s (or its
authorized servicing representative’s) then available service contract or
warranty, and able to be put into immediate service and to perform at
manufacturer’s rated levels (if any); (3) remedy such Event of Default or
proceed by court action, either at law or in equity, to enforce performance of
the applicable provisions of any Equipment Note; (4) with or without court
order, enter upon the premises where Equipment is located and repossess and
remove the same, all without liability for damage to such premises or by reason
such entry or repossession, except for Lender’s gross negligence or willful
misconduct; (5) dispose of any Equipment in a public or private
transaction, or hold, use, operate or keep idle the Equipment, free and clear
of any rights or interests of Borrower therein; (6) recover direct,
incidental, consequential and other damages for the breach of any Equipment
Note, including the payment of all unpaid principal, accrued interest and other
amounts payable thereunder, and all costs and expenses incurred by Lender in
exercising its remedies or enforcing its rights thereunder (including all
Attorneys’ Fees); (7) without notice to Borrower, apply or set-off against
any Obligations all security deposits, advance payments, proceeds of letters of
credit, certificates of deposit (whether or not matured), securities or other
additional collateral held by Lender or otherwise credited by or due from
Lender to Borrower; or (8) pursue all other remedies provided under the
UCC or other applicable law. Borrower shall pay interest equal to the lesser of
(a) 12% per annum, or (b) the highest rate permitted by applicable
law (“Default Rate”) on (i) any
amount other than Payments owing under any Equipment Note and not paid when
due, (ii) any Payment not paid within 30 days of its due date, and (iii) any
amount required to be paid upon acceleration of any Equipment Note under this Section 11.
Any payments received by Lender after an Event of Default, including proceeds
of any disposition of Equipment, shall be applied in the following order: (A) to
all of Lender’s costs (including Attorneys’ Fees), charges and expenses
incurred in taking, removing, holding, repairing and selling or leasing the
Equipment or other Collateral or enforcing the provisions hereof; (B) to
the satisfaction of all outstanding Obligations; and (C) the balance, if
any, shall be disbursed to Borrower unless otherwise required by law. Lender
shall account to Borrower for any surplus realized upon such sale or other
disposition, and Borrower shall remain liable for any deficiency with respect
to the Obligations.

 

(b) No remedy referred to in this Section 11 shall be
exclusive, each shall be cumulative (but not duplicative of recovery of any
Obligation) and in addition to any other remedy referred to above or otherwise
available to Lender at law or in equity, and all such remedies shall survive
the acceleration of any Equipment Note. Lender’s exercise or partial exercise
of, or failure to exercise, any remedy shall not restrict Lender from further
exercise of that remedy or any other available remedy. No extension of time for
payment or performance of any Obligation shall operate to release, discharge,
modify, change or affect the original liability of Borrower for any
Obligations, either in whole or in part. Lender may proceed against any
Collateral or Guarantor, or may proceed contemporaneously or in the first
instance against Borrower, in such order and at such times following an Event
of Default as Lender determines in its sole discretion. In any action to
repossess any Equipment or other Collateral, Borrower waives any bonds and any
surety or security required by any applicable laws as an incident to such
repossession. Notices of Lender’s intention to accelerate, acceleration,
nonpayment, presentment, protest, dishonor, or any other notice whatsoever
(other than notices of Default specifically required of Lender pursuant to Section 10
above) are waived by Borrower and any Guarantor. Any notice given by Lender of
any disposition of Collateral or other intended action of Lender which is given
in accordance with this Agreement at least 5 business days prior to such
action, shall constitute fair and reasonable notice of such action.

 

3

 

12. Assignment. Lender and any
Assignee may assign or transfer any of Lender’s interests in any Equipment Note
or Equipment without notice to Borrower,. Borrower agrees that: (i) the
rights of any Assignee shall not be affected by any breach or default of Lender
or any prior Assignee, and Borrower
shall not assert any defense, rights of set-off or counterclaim against any
Assignee, nor hold or attempt to hold such Assignee liable for any such
breach or default; (ii) unless otherwise agreed by Lender and Assignee,
Lender shall have no  duties or
responsibilities as a secured party with respect to the applicable Equipment or
Collateral after such assignment and Lender shall be released from such duties
or responsibilities, and (iii) Borrower shall execute and deliver upon
request such additional documents, instruments and assurances as Lender deems
necessary in order to (y) acknowledge and confirm all of the terms and
conditions of any Equipment Note and Lender’s or such Assignee’s rights with
respect thereto, and Borrower’s compliance with all of the terms and provisions
thereof, and (z) preserve, protect and perfect Lender’s or Assignee’s
right, title or interest hereunder and in any Equipment, including, without
limitation, such UCC financing statements or amendments, control agreements,
corporate or member resolutions, votes, notices of assignment of interests, and
confirmations of Borrower’s obligations and representations and warranties with
respect thereto as of the dates requested. Lender may disclose to any potential
Assignee any information regarding Borrower, any Guarantor and their
Affiliates. Borrower shall not sell, assign, pledge,
hypothecate or in any way dispose of any of its rights or obligations under any
Equipment Note, or enter into any lease of any Equipment, without Lender’s
prior written consent. Any purported sale, assignment, pledge, hypothecation,
disposal or lease by Borrower made without Lender’s prior written consent shall
be null and void.

 

13.  Financial and Other Data.
(a) During any Equipment Note Term, Borrower shall (i) maintain books
and records in accordance with generally accepted accounting principles
consistently applied (“GAAP”) and
prudent business practice; (ii) promptly provide Lender, within 120 days
after the close of each fiscal year, and, upon Lender’s request, within 45 days
of the end of each quarter of Borrower’s and any Guarantor’s fiscal year, a
copy of financial statements for Borrower and each Guarantor requested by
Lender, in each case prepared in accordance with GAAP and (in the case of
annual statements) audited by independent certified public accountants and (in
the case of quarterly statements) certified by the chief financial officer of
Borrower or Guarantor, as applicable; provided, however, that for so
long as Borrower or any such Guarantor is legally and timely filing annual and
quarterly financial reports on Forms 10-K and 10-Q with the Securities and
Exchange Commission which are readily available to the public, the filing of
such reports shall satisfy the foregoing financial statement reporting
requirements for such entity; and (iii) furnish Lender all other financial
information and reports and such other information as Lender may reasonably
request concerning Borrower, any Guarantor and their respective affairs, or the
Equipment or its condition, location, use or operation.

 

(b) Borrower represents and warrants that all information and
financial statements at any time furnished by or on behalf of Borrower or any
Guarantor are accurate and reasonably reflect as of their respective dates,
results of operations and the financial condition of Borrower, such Guarantor
or other entity they purport to cover. Credit and other information regarding
Borrower, any Guarantor or their Affiliates, any Equipment Note or Equipment may
be disclosed by Lender to its Affiliates, agents and potential Assignees,
notwithstanding anything contained in any agreement that may purport to limit
or prohibit such disclosure.

 

14.  Definitions

 

As used herein, the following terms shall have the meanings assigned or
referred to them below:

 

“Affiliate” means any entity
controlling, controlled by or under common control with the referent entity; “control” includes (i) the ownership of 25% or more of
the voting stock or other ownership interest of any entity and (ii) the
status of a general partner of a partnership or managing member of a limited
liability company.

 

“Assignee” means any assignee or transferee of all or any of
Lender’s right, title and interest in any Equipment Note or any Equipment.

 

“Code” means the Internal Revenue Code
of 1986, as amended.

 

“Equipment” means the items, units and groups of personal
property,  licensed materials and
fixtures described in each Equipment Note, together with all replacements,
parts, additions, accessories and substitutions therefor; and “item of Equipment” means a commercial unit of such property
which in commercial usage is treated as a single whole, division of which
materially impairs its character or value on the market or in use, and includes
each functionally integrated and separately marketable group or unit of
Equipment and may be a single article (such as a machine) or a set of articles
(such as a suite of furniture or a line of machinery).

 

“Guarantor”
means any guarantor, surety, endorser, general partner or co-lessee of
Borrower, or other party liable in any capacity, or providing additional
collateral security for, the payment or performance of any Obligations of
Borrower.

 

“Guaranty” means any guaranty, surety
instrument, security, indemnity, “keep-well” agreement or other instrument or
arrangement from or with any Guarantor.

 

“Obligations” means and includes all
obligations of Borrower owing to Lender under this Agreement, any Equipment
Note or Related Agreement, or of any Guarantor owing to Lender under any
Guaranty, together with all other obligations, indebtedness and liabilities of
Borrower to Lender under any other financings, leases, loans, notes, progress
payment agreements, guaranties or other agreements, of every kind and
description, now existing or hereafter arising, direct or indirect, joint or
several, absolute or contingent, whether for payment or performance, regardless
of how the same may arise or by what instrument, agreement or book account they
may be evidenced, including without limitation, any such obligations,
indebtedness and liabilities of Borrower to others which may be obtained by
Lender through purchase, negotiation, discount, transfer, assignment or
otherwise.

 

“Prepayment Amount” means, collectively, the
entire unpaid principal balance of any Equipment Note as of any particular
date, together with (a) all accrued interest and other charges then owing
under such Equipment Note, and (b) the prepayment charge provided in the
applicable Equipment Note, if any.

 

“Related
Agreement” means and includes any Guaranty and any approval
letter or progress payment, assignment, security or other agreement or addendum
related to this Agreement, any Equipment Note or any Collateral to which
Borrower or any Guarantor is a party.

 

“UCC” means the Uniform Commercial Code in effect in the
state specified in Section 15(f) of this Agreement.

 

        “Vendor” means the
manufacturer, distributor, supplier or other seller (whether or not a merchant
or dealer) of the Equipment and any sales representative or agent thereof.

 

15.  Miscellaneous. (a) At Lender’s
request, Borrower shall execute, deliver, file and record such financing
statements and other documents as Lender deems necessary to protect Lender’s
interest in the Equipment and to effectuate the purposes of any Equipment Note
or Related Agreement, and Borrower authorizes, and irrevocably appoints Lender
as its agent and attorney-in-fact, with right of substitution and coupled with
an interest, to (i) execute, deliver, file, and record any such item, and
to take such action for Borrower and in Borrower’s name, place and stead, (ii) make
minor corrections to manifest errors in factual data in any Equipment Note and
any addenda, attachments, exhibits and riders thereto, and (iii) after the
occurrence of an Event of Default, enforce claims relating to the Equipment
against insurers, Vendors or other persons, and to make, adjust, compromise,
settle and receive payment under such claims; but without any obligation to do
so.

 

4

 

(b)   Federal law requires all
financial institutions to obtain, verify and record information that identifies
each entity that obtains a loan or other financial accommodation. The first
time Borrower requests a financial accommodation from Lender, the Lender may
ask for Borrower’s (or any Guarantor’s) legal name, address, tax ID number and
other identifying information. Borrower shall promptly provide copies of
business licenses or other documents evidencing the existence and good standing
of Borrower or any Guarantor requested by Lender.

 

(c) Time is of the essence in the payment and performance of all
of Borrower’s Obligations under any Equipment Note or Related Agreement. This
Agreement, and each Equipment Note or Related Agreement may be executed in one
or more counterparts, each of which shall constitute one and the same
agreement. All demands, notices, requests, consents, waivers and other
communications concerning this Agreement and any Equipment Note or Related
Agreement shall be in writing and shall be deemed to have been duly given when
received, personally delivered or three business days after being deposited in
the mail, first class postage prepaid, or the business day after delivery to an
express carrier, charges prepaid, addressed to each party at the address
provided herein, or at such other address as may hereafter be furnished in
writing by such party to the other.

 

(d) Except as otherwise agreed between Borrower and Lender in
writing, Borrower shall reimburse Lender upon demand for costs and expenses
incurred by Lender in connection with the execution and delivery of this
Agreement, any Equipment Note or Related Agreement. Borrower shall reimburse
Lender on demand for all costs (including Attorneys’ Fees) incurred by Lender in
connection with Borrower’s exercise of any purchase or extension option under
any Equipment Note, or any amendment or waiver of the terms of this Agreement
or any Equipment Note or Related Agreement requested by Borrower.

 

(e) Any provisions of this Agreement or any Equipment Note or
Related Agreement which are unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions thereof, and any such unenforceability
shall not render unenforceable such provisions in any other jurisdiction. Any
requirement for the execution and delivery of any document, instrument or
notice may be satisfied, in Lender’s discretion, by authentication as a record
within the meaning of, and to the extent permitted by, Article 9 of the
UCC.

 

(f) THIS AGREEMENT AND ANY EQUIPMENT NOTE OR RELATED AGREEMENT,
AND THE LEGAL RELATIONS OF THE PARTIES THERETO, SHALL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE
ISLAND, WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES; THE PARTIES CONSENT AND
SUBMIT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS OF SUCH STATE FOR
THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING THEREFROM, AND
EXPRESSLY WAIVE ANY OBJECTIONS THAT IT MAY HAVE TO THE VENUE OF SUCH
COURTS. THE PARTIES EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
BROUGHT ON OR WITH RESPECT THERETO. IN NO EVENT SHALL LENDER HAVE ANY LIABILITY
TO BORROWER FOR INCIDENTAL, GENERAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
DAMAGES. Any cause of action by Borrower against Lender relating to this
Agreement or any Equipment Note or Related Agreement shall be brought within
one year after any such cause of action first arises, and Borrower hereby
waives the benefit of any longer period provided by statute.

 

(g)   EACH EQUIPMENT NOTE,
TOGETHER WITH THIS AGREEMENT AND ANY RELATED AGREEMENTS, (i) CONSTITUTES
THE FINAL AND ENTIRE AGREEMENT BETWEEN THE PARTIES SUPERSEDING ALL CONFLICTING
TERMS OR PROVISIONS OF ANY PRIOR PROPOSALS, APPROVAL LETTERS, TERM SHEETS OR
OTHER AGREEMENTS OR UNDERSTANDINGS BETWEEN THE PARTIES, (ii) MAY NOT
BE CONTRADICTED BY EVIDENCE OF (y) ANY PRIOR WRITTEN OR ORAL AGREEMENTS OR
UNDERSTANDINGS, OR (z) ANY CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OR UNDERSTANDINGS BETWEEN THE PARTIES; and (iii) MAY NOT BE AMENDED,
NOR MAY ANY RIGHTS THEREUNDER BE WAIVED, EXCEPT BY AN INSTRUMENT IN
WRITING SIGNED BY THE PARTY CHARGED WITH SUCH AMENDMENT OR WAIVER.

 

In Witness Whereof, Lender  and Borrower have executed this Agreement
as of the date first above written.

 

	
  BANC OF AMERICA
  LEASING & CAPITAL, LLC (Lender)

  	
   

  	
  STELLARIS
  LLC (Borrower)

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Cristina Foley

  	
   

  	
   

  	
  By:

  	
  Primoris Services Corporation (fka Primoris Corporation),

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  its Member

  
	
  Print Name:

  	
  Cristina
  Foley

  	
   

  	
   

  	
  By:

  	
  /s/ Alfons Theeuwes

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  	
   

  	
  Print Name:

  	
  Alfons Theeuwes

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Sr. Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Executive Office:

  
	
   

  	
   

  	
   

  	
  26000 Commercentre Drive

  
	
   

  	
   

  	
   

  	
  Lake Forest, California 92630

  
							

 

5

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