Document:

Exhibit 10.2

 

SECURITY AGREEMENT

 

SECURITY
AGREEMENT,
dated as of March 15, 2005, by and among each of the entities identified
on the signature page hereto under the heading “Grantor” (each a “Grantor”
and, collectively, the “Grantors”) and HSBC
BANK USA, NATIONAL ASSOCIATION, as Administrative Agent for the
ratable benefit of the Lenders from time to time party to the Credit Agreement
referred to below (in such capacity, the “Secured Party”).

 

RECITALS

 

A.                                    Veeco Instruments Inc., a Delaware corporation
(the “Company”), HSBC Bank USA, National Association, as Administrative Agent,
and the Lenders party thereto have entered into a Credit Agreement, dated as of
the date hereof (as the same may be hereafter amended, modified, restated or
supplemented from time to time, the “Credit Agreement”) pursuant to which the
Company will receive loans and other financial accommodations from the Lenders
and will incur Obligations (as hereinafter defined).

 

B.                                    To induce the Credit Parties to extend
credit to the Company on and after the date hereof as provided in the Credit
Agreement, each Grantor desires to grant the Credit Parties security and
assurance in order to secure the payment and performance of all Obligations and
to that effect to grant the Secured Party for the ratable benefit of the Credit
Parties a first priority perfected security interest in its assets and, in
connection therewith, to execute and deliver this Agreement.

 

Accordingly, the
parties hereto hereby agree as follows:

 

DEFINITIONS

 

(a)                                  Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Uniform Commercial Code as in effect in the State of New York (the “UCC”).

 

(b)                                 Capitalized terms used herein and not
otherwise defined shall have the following meanings:

 

“Agreement”: 
this Agreement and shall include all amendments, modifications and
supplements hereto and shall refer to this Agreement as the same may be in
effect at the time such reference becomes operative.

 

“Business Day”: the meaning assigned to such
term in the Credit Agreement.

 

“Collateral”: the following property of each
Grantor, wherever located, and whether now owned or hereafter acquired or
arising:

 

(i)            Accounts;

 

(ii)           Chattel paper, including Electronic Chattel
Paper;

 

(iii)          Goods, including all Inventory and Equipment
and any accessions thereto, subject to the exception set forth below;

 

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(iv)                              Instruments, including Promissory Notes;

 

(v)                                 Investment Property;

 

(vi)                              Documents;

 

(vii)                           Deposit Accounts;

 

(viii)                        Commercial Tort Claims, if any, identified on
Schedule A annexed hereto;

 

(ix)                                Letter-of-Credit Rights;

 

(x)                                   General Intangibles, including Payment
Intangibles and Software;

 

(xi)                                Supporting Obligations;

 

(xii)                             to the extent not listed above, all other
personal property; and

 

(xiii)                          to the extent not listed above as original
collateral, proceeds and products of the foregoing.

 

Notwithstanding anything to
the contrary herein, the term “Collateral” shall not include,  and no Grantor shall be deemed to have
granted a security interest in any of such Grantor’s rights or interests (a) in
any lease, license, contract, property rights or agreement to which any Grantor
is a party or any of its rights or interests thereunder if and for so long as
the grant of such security interest shall constitute or result in (i) the
abandonment, invalidation or unenforceability of any right, title or interest
of any Grantor therein or (ii) in a breach or termination pursuant to the
terms of, or a default under, any such lease, license, contract, property
rights or agreement (other than to the extent that any provision prohibiting
such Grantor from granting a security interest in its rights and interests
thereunder in favor of the Secured Party would be rendered ineffective pursuant
to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision
or provisions) of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, further,
that such security interest shall attach immediately at such time as the
condition causing such abandonment, invalidation or unenforceability shall be
remedied and to the extent severable, shall attach immediately to any portion
of such lease, license, contract, property rights or agreement that does not
result in any of the consequences specified in (i) or (ii) above; or (b) any
Equipment financed by a Grantor with purchase money Debt or Capital Leases
permitted under the Credit Agreement, provided that such exclusion shall only
apply to the extent such Grantor is prohibited from granting a security
interest under the terms of such Debt or Capital Lease and only so long as such
Debt remains outstanding or Capital Lease remains in existence.

 

“Credit Party”: collectively, the
Administrative Agent, the Issuing Lender and each of the Lenders.

 

“Default”: the meaning assigned to such term
in the Credit Agreement.

 

“Event of Default”: the meaning assigned to
such term in the Credit Agreement.

 

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“Liens”: the meaning assigned to such term in
the Credit Agreement.

 

“Loan Documents”: the meaning assigned to
such term in the Credit Agreement.

 

“Loans”: the meaning assigned to such term in
the Credit Agreement.

 

“Obligations”: the meaning assigned to such term in the Credit Agreement.

 

“Person”: the meaning assigned to such term
in the Credit Agreement.

 

(c)                                  Terms Generally.  The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and the neuter.  Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under Generally Accepted Accounting Principles. 
The term “including” shall not be limited or exclusive, unless
specifically indicated to the contrary. 
The word “will” shall be construed to have the same meaning in effect as
the word “shall”.  The words “herein”, “hereof”
and “hereunder” and other words of similar import refer to this Agreement as a
whole, including the exhibits and schedules hereto, all of which are by this
reference incorporated into this Agreement.

 

I.                                         SECURITY

 

SECTION 1.01.  Grant of Security.  As
security for the Obligations, each Grantor hereby transfers, assigns and grants
to the Secured Party for the ratable benefit of the Credit Parties a security
interest in the Collateral.

 

SECTION 1.02.  Release and Satisfaction.  Upon
the termination of this Agreement and the indefeasible payment in full of the
Obligations (other than those which by their terms survive the termination of
this Agreement), the Secured Party shall deliver to each Grantor, upon request
therefor and at such Grantor’s expense, releases and satisfactions of all
financing statements, notices of assignment and other registrations of
security.

 

II.                                     REPRESENTATIONS AND
WARRANTIES

 

SECTION 2.01.  Representations and Warranties With
Respect to Security.  Each Grantor hereby represents and warrants
to the Secured Party for the ratable benefit of the Credit Parties as follows:

 

(a)                                  Name.  Each
Grantor’s exact legal name, state of incorporation or organization and
organizational number is set forth on Schedule A annexed hereto.

 

(b)                                 Ownership of Collateral.  Each
Grantor owns all of its personal property and assets, including, without
limitation, the Collateral, free and clear of all Liens, other than the Liens
permitted under Section 7.02 of the Credit Agreement.

 

(c)                                  Trademarks, Patents and
Copyrights.  Annexed hereto as Schedule A is a
complete list of all patents, trademarks, copyrights, applications therefor,
and other similar General Intangibles which each Grantor (i) owns or has
the right to use as of the date of this Agreement and (ii) are material to
the continued operation of such Grantor’s business.  To the knowledge of each Grantor, except as
described in item “(a)” of Schedule 4.06 to the Credit Agreement, (x)
there are no assertions or claims challenging the validity of any of the
foregoing, (y) the business of such Grantor as now conducted does not conflict 

 

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with any patents, patent rights, licenses, trademarks, trademark
rights, trade names, trade name rights or copyrights of others, and (z) there
is no infringement of any General Intangible of any Grantor.

 

(d)                                 Accounts. 
Annexed hereto as Schedule A is a list identifying the chief
executive office or principal place of business of each Grantor and all
addresses at which each Grantor maintains books or records relating to its
Accounts as of the date of this Agreement.

 

(e)                                  Inventory. 
Annexed hereto as Schedule A is a list identifying all addresses
where each Grantor maintains its Inventory as of the date of this
Agreement.  No Grantor’s Inventory is
currently maintained or will be maintained with any bailee that issues
negotiable warehouse receipts or other negotiable instruments therefor.

 

(f)                                    Equipment. 
Annexed hereto as Schedule A is a list identifying all the
addresses where the Equipment of each Grantor is located as of the date hereof.

 

(g)                                 Trade Names. 
Except as set forth on Schedule A annexed hereto, each Grantor has
not done during the five years prior to this Agreement, and does not currently
do, business under fictitious business names or trade names. No Grantor has
been known under any other name during such five year period.

 

(h)                                 Acquired Collateral.   Except as set forth on Schedule A
annexed hereto, the Collateral has been acquired or originated by each Grantor
in the ordinary course of such Grantor’s business and was not acquired pursuant
to any acquisition of all or a portion of the business of any Person whether by
merger, acquisition of assets or otherwise.

 

(i)                                     Third Party Locations. 
Except as set forth on Schedule A annexed hereto, no Collateral is
in the possession of, or under the control of, any Person other than a Grantor
or the Secured Party.

 

(j)                                     Commercial Tort Claims. 
Except to the extent identified under the definition of Collateral
above, no Grantor holds any Commercial Tort Claim, except as described in item “(a)”
of Schedule 4.06 to the Credit Agreement.

 

(k)                                  Enforceability of Security
Interests.  Upon the execution of this Agreement by each
Grantor and the filing of financing statements properly describing the
Collateral and identifying such Grantor and the Secured Party in the applicable
jurisdiction required pursuant to the UCC, security interests and liens granted
to the Secured Party under Section 1.01 hereof shall constitute valid,
perfected and first priority security interests and liens in and to the
Collateral of such Grantor, to the extent such liens can be perfected by filing
under the UCC, and subject to the Liens permitted pursuant to Section 7.02
of the Credit Agreement, in each case enforceable against all third parties and
securing the payment of the Obligations, except to the extent that enforcement
may be limited by applicable bankruptcy, reorganization, moratorium, insolvency
and similar laws affecting creditors’ rights generally or by equitable
principles of general application, regardless of whether considered in a
proceeding in equity or at law.

 

III.                                 COVENANTS OF GRANTORS

 

SECTION 3.01.  Records; Location of Collateral.  So
long as a Grantor shall have any Obligation to the Secured Party, (a) such
Grantor shall not change the jurisdiction of its incorporation or organization
or move its chief executive office, principal place of business or office at
which is kept its books and records (including computer printouts and programs)
from the locations existing on the date hereof and listed on Schedule A
annexed hereto; (b) except as the same may be otherwise permitted 

 

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hereunder or under the Credit Agreement, a Grantor shall not move any
of the Collateral to any location other than those locations existing on the
date hereof and listed on Schedule A annexed hereto; or (c) except as
the same may be otherwise permitted hereunder or under the Credit Agreement, a
Grantor shall not change its corporate name in any respect, unless, in each
case of clauses (a), (b) and (c) above, (i) a Grantor shall have
given the Secured Party ten (10) Business Days’ prior written notice of
its intention to do so, identifying the new location and providing such other
information as the Secured Party deems necessary, and (ii) a Grantor shall
have delivered to the Secured Party such documentation, in form and substance
satisfactory to the Secured Party and as required by the Secured Party, to
preserve the Secured Party’s security interest in the Collateral.

 

SECTION 3.02.  Commercial Tort Claims.   Each
Grantor shall promptly notify the Secured Party upon obtaining any material
Commercial Tort Claim after the date hereof against any third party and, upon
reasonable request of the Secured Party, shall promptly enter into an amendment
to this Agreement and do such other acts or things as may be reasonably
requested by the Secured Party to give the Secured Party a first priority
perfected security interest in any such Commercial Tort Claim.

 

SECTION 3.03.  Other Collateral.   Each
Grantor shall promptly notify the Secured Party upon acquiring or otherwise
obtaining any Collateral after the date hereof consisting of Deposit Accounts,
Investment Property, Letter-of-Credit Rights, Electronic Chattel Paper,
Documents or Instruments.

 

SECTION 3.04.  Further Actions.

 

(a)                                  Promissory
Notes and Tangible Chattel Paper.  At the request of the Secured
Party, at any time following the occurrence and during the continuance of an
Event of Default, if any Grantor shall at any time hold or acquire any
Promissory Notes or Tangible Chattel Paper, such Grantor shall forthwith
endorse, assign or deliver the same to the Secured Party accompanied by instruments
of transfer or assignment duly executed in blank as the Secured Party may from
time to time specify.

 

(b)                                 Deposit
Accounts.  At the request of the Secured Party, each
Grantor will cause each depository bank where such Grantor maintains a Deposit
Account to execute an agreement pursuant to which the depository bank agrees to
comply, without the further consent of such Grantor, at any time, with
instructions from the Secured Party to such depository bank directing the
disposition of funds from time to time credited to such deposit account or
agree to the Secured Party becoming the customer of the depository bank with
respect to such deposit accounts, with such Grantor being permitted, only with
the consent of the Secured Party, to exercise rights to withdraw funds from
such deposit account. The Secured Party
shall not require any such agreement or give any such instructions or withhold
any withdrawal rights from such Grantor, unless an Event of Default has
occurred and is continuing.

 

(c)                                  Investment
Property.  If any Grantor shall at any time hold or
acquire any Certificated Securities, such Grantor shall forthwith endorse, sign
and deliver the same to the Secured Party accompanied by such instruments of
transfer assignment duly executed in blank as Secured Party may from time to
time specify.  If any security, now or
hereafter acquired by any Grantor, is uncertificated and is issued to the
Grantor or its nominee directly by the issuer thereof, such Grantor shall immediately
notify the Secured Party thereof and at the Secured Party’s request and option,
pursuant to an agreement in form and substance satisfactory to the Secured
Party either (a) cause the issuer to agree to comply without further
consent of such Grantor or such nominee, at any time with instructions from the
Secured Party as to such Securities or (b) arrange for the Secured Party
to become the registered owner of the Securities.  If any Securities, whether certificated or
uncertificated or other Investment Property now or hereafter acquired by the
Grantor are held by any Grantor or its nominee through a Securities
Intermediary or Commodity Intermediary, the Grantor shall immediately notify
the Secured Party thereof and at the Secured Party’s request and option,
pursuant to an agreement in form and substance 

 

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satisfactory to the Secured Party either (i) cause such Securities
Intermediary or Commodity Intermediary, as the case may be, to agree to comply,
in each case, without further consent of such Grantor or such nominee, at any
time with Entitlement Orders or other instructions from the Secured Party to
such Securities Intermediary as to such Securities or other Investment
Property, or to apply any value distributed on account of any Commodity
Contract as directed by the Secured Party to such Commodity Intermediary or (ii) in
the case of Financial Assets or other Investment Property held through a
Securities Intermediary, arrange for this Secured Party to become the
Entitlement Holder with respect to such Investment Property, with such Grantor
being permitted, only with the consent of the Secured Party, to exercise rights
to withdraw or otherwise deal with such Investment Property.  The
Secured Party shall not require that any Guarantor notify the Secured Party of
the existence of Securities or deliver such Securities to the Secured Party or
give any such Entitlement Order or instructions or directions to any such
issuers, Securities Intermediary or Commodity Intermediary and shall not
withhold its consent to the exercise of any withdrawal or dealing rights by the
Grantor, unless an Event of Default has occurred and is continuing.

 

(d)                                 Collateral
in the Possession of Third Parties.   If any Collateral is at any
time in the possession of any person or entity other than a Grantor or the
Secured Party (a “Third Party”), the Grantor shall promptly notify the Secured
Party thereof, and at the Secured Party’s request and option, shall promptly
obtain an acknowledgment from the Third Party, in form and substance
satisfactory to the Secured Party that the Third Party holds such collateral
for the benefit of the Secured Party and such Third Party’s agreement to
comply, without further consent of the Grantor, at any time with the
instructions of the Secured Party as to such Collateral, provided that
the Grantors shall only be required to comply with the foregoing provision, as
it may respect Inventory, if more than twenty five percent (25%) of the
Inventory, in the aggregate, is at any time in the possession of Third Parties
or if more than five percent (5%) of the Collateral, in the aggregate, is at
any time in the possession or any one Third Party, and then the Grantors shall
only be required to an acknowledgment from such Third Party(ies).  The
Secured Party agrees with the Grantor that the Secured Party shall not give any
such instructions unless an Event of Default has occurred and is continuing.

 

(e)                                  Electronic
Chattel Paper.   At the
request of the Secured Party, at any time following the occurrence and during
the continuance of an Event of Default, if any Grantor at any time holds or
acquires an interest in any Electronic Chattel Paper, such Grantor shall
promptly notify the Secured Party thereof and, at the request and option of the
Secured Party, shall take such action as the Secured Party may reasonably
request to vest in the Secured Party control under Section 9-105 of the
UCC of such Electronic Chattel Paper.

 

(f)                                    Letter-of-Credit
Rights.   At the request of the Secured Party, at any
time following the occurrence and during the continuance of an Event of
Default, if any Grantor is at any time the beneficiary under a Letter of
Credit, such Grantor shall promptly notify the Secured Party thereof and, at
the request and option of the Secured Party, such Grantor shall, pursuant to an
arrangement in form and substance satisfactory to the Secured Party, either (i) arrange
for the Issuer and any confirmed or other nominated person of such Letter of
Credit to consent to an assignment to the Secured Party of the proceeds of the
Letter of Credit or (ii) arrange for the Secured Party to become the
transferee beneficiary of the Letter of Credit, with the Secured Party agreeing
in each case that the proceeds of the Letter of Credit are to be applied to
satisfaction of the Obligations in such order as the Secured Party may
determine.

 

(g)                                 Commercial
Tort Claims.   At the request of the Secured Party, at any time following the
occurrence and during the continuance of an Event of Default, if any Grantor
shall at any time hold or acquire a Commercial Tort Claim, such Grantor shall
immediately notify the Secured Party in a writing signed by the Grantor of the
particulars thereof and grant to the Secured Party in such writing a security 

 

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interest therein and all proceeds thereof, all upon the terms of this
Agreement with such writing to be in form and substance satisfactory to the
Secured Party.

 

(h)                                 General.   Each Grantor further agrees,
upon the request of the Secured Party and at the Secured Party’s option, to
take  any and all other actions as the
Secured Party may determine to be necessary or useful for the attachment,
perfection and first priority of, and the ability of the Secured Party to
enforce, the Secured Party’s security interest in any and all of the
Collateral, including without limitation, (i) executing and delivering (to
the extent that such Grantor’s signature thereon is required therefore) and
filing financing statements and amendments relating thereto under the UCC,
including, without limitation, the filing of financing statements describing
the Collateral described herein, (ii) causing the Secured Party’s name to
be noted as Secured Party on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or the
ability of the Secured Party to enforce, the Secured Party’s security interest
in such Collateral, (iii) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if compliance
with such provision is a condition to attachment, perfection or priority of, or
ability of the Secured Party to enforce the Secured Party’s security interest
in such Collateral, (iv) obtaining governmental and other third party
waivers, consents and approvals in form and substance satisfactory to the
Secured Party, including, without limitation, any consent of any licensor,
lessor or other persons obligated on Collateral and (v) obtaining waivers
from mortgagees and landlords in form and substance satisfactory to the Secured
Party.  Each Grantor further authorizes
the Secured Party to file initial financing statements describing the
Collateral, and any amendments thereto.

 

SECTION 3.05.  Insurance and Assessments.  In the event any Grantor shall fail to
purchase or maintain insurance, or pay any tax, assessment, government charge
or levy, except as the same may be otherwise permitted hereunder or under the
Credit Agreement, or in the event that any lien, encumbrance or security interest
prohibited hereby shall not be paid in full or discharged, or in the event such
Grantor shall fail to perform or comply with any other covenant, promise or
obligation to the Secured Party hereunder, or under the Credit Agreement or any
other Loan Document, the Secured Party may, but shall not be required to,
perform, pay, satisfy, discharge or bond the same for the account of such
Grantor, and all money so paid by the Secured Party, including reasonable
attorney’s fees, shall be deemed to be Obligations.

 

SECTION 3.06.  Inspection.  Subject to Section 6.04(b) of the
Credit Agreement, upon reasonable notice to a Grantor, the Secured Party may,
during such Grantor’s normal business hours, examine and inspect any Collateral
and may examine, inspect and copy all books and records with respect thereto or
relevant to the Obligations.

 

SECTION 3.07.  Personal Property.   The
Collateral shall remain personal property at all times.   No Grantor shall affix any of the Collateral
to real property in any manner which would change its nature from that of
personal property to real property or to a fixture.

 

SECTION 3.08.  Indemnification.  Each
Grantor agrees to indemnify the Secured Party and hold it harmless from and
against any and all injuries, claims, damages, judgments, liabilities, costs
and expenses (including, without limitation, reasonable fees and disbursements
of counsel), charges and encumbrances which may be incurred by or asserted
against the Secured Party in connection with or arising out of any assertion,
declaration or defense of the Secured Party’s rights or security interest under
the provisions of this Agreement or any other Loan Document, permitting it to
collect, settle or adjust Accounts or to deal with account debtors in any way
or in connection with the realization, repossession, safeguarding, insuring or
other protection of the Collateral or in connection with the collecting,
perfecting or protecting the Secured Party’s liens and security interests
hereunder or under any other Loan 

 

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Document, except to the extent caused by the gross negligence or
willful misconduct of the Secured Party, any Credit Party, or any of their
respective representatives.

 

IV.                                POWER OF ATTORNEY; NOTICES

 

SECTION 4.01.  Power of Attorney.   Each Grantor hereby irrevocably constitutes
and appoints the Secured Party and any officer or agent thereof, with full
power of substitution, as its true and lawful attorneys-in-fact with full
irrevocable power and authority in the place and stead of such Grantor or in
the Secured Party’s own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or useful to accomplish the
purposes of this Agreement and, without limiting the generality of the
foregoing, hereby give said attorneys the power and right, on behalf of the
Grantor, without notice to or assent by the Grantor, to (a) upon the
occurrence and during the continuance of an Event of Default, endorse the names
of such Grantor on any checks, notes, drafts or other forms of payment or
security that may come into the possession of the Secured Party or any
affiliate of the Secured Party, to sign the Grantor’s name on invoices or
bills-of-lading, drafts against customers, notices of assignment, verifications
and schedules, (b) upon the occurrence and during the continuance of an
Event of Default, sell, transfer, pledge, make any arrangement with respect to
or otherwise dispose of or deal with any of the Collateral consistent with the
UCC and (c) do acts and things which the Secured Party deems necessary or
useful to protect, preserve or realize upon the Collateral and the Secured
Party’s security interest therein.  The
powers granted herein, being coupled with an interest, are irrevocable until
all of the Obligations are indefeasibly paid in full and this Agreement is
terminated.  The powers conferred on the
Secured Party hereunder are solely to protect its and the Credit Parties’
interests in the Collateral and shall not impose any duty upon it to exercise
any such powers.  Neither the Secured
Party nor any attorney-in-fact shall be liable for any act or omission, error
in judgment or mistake of law provided the same is not the result of gross
negligence or willful misconduct.

 

SECTION 4.02.  Notices. Upon the occurrence of an
Event of Default, the Secured Party may notify account debtors and other
persons obligated on any of the Collateral that the Collateral have been
assigned to the Secured Party or of its security interest therein and to direct
such account debtors and other persons obligated on any of the Collateral to
make payment of all amounts due or to become due to a Grantor directly to the
Secured Party and upon such notification and at such Grantor’s expense to
enforce collection of any such Collateral, and to adjust, compromise or settle
for cash, credit or otherwise upon any terms the amount of payment
thereof.  The Secured Party may, at any
time following the occurrence of an Event of Default, notify the Postal Service
authorities to change the address of delivery of mail to an address designated
by the Secured Party.   After making of
such a request or the giving of any such notification, each Grantor shall hold
any proceeds of collection of accounts, Chattel Paper, general intangibles,
instruments and other Collateral received by it as trustee for the Secured
Party and the Credit Parties without commingling the same with any other
property or asset of such Grantor and shall turn the same over to the Secured
Party in the identical form received, together with any necessary endorsements
or assignments.  The Secured Party shall
apply the proceeds of collection of such Collateral received by the Secured
Party to the Obligations, in such order as the Secured Party, in its sole
discretion, shall determine, such proceeds to be immediately credited after
final payment in cash or other immediately available funds of the items giving
rise to them.

 

V. 
REMEDIES OF SECURED PARTY

 

SECTION 5.01.  Enforcement.  Upon the occurrence of an Event of Default,
the Secured Party shall have, in addition to all of its other rights under this
Agreement and the other Loan Documents by operation of law or otherwise (which
rights shall be cumulative), all of the rights and remedies of a secured party
under the UCC and shall have the right, to the extent permitted by law, without
charge, to 

 

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enter any Grantor’s premises, and until it completes the enforcement of
its rights in the Collateral subject to its security interest hereunder and the
sale or other disposition of any property subject thereto, take possession of
such premises without charge, rent or payment therefor (through self help
without judicial process and without having first given notice or obtained an
order of any court), or place custodians in control thereof, remain on such
premises and use the same for the purpose of completing any work in progress,
preparing any Collateral for disposition, and disposition of or collecting any
Collateral.  Without limiting the
foregoing, upon the occurrence of an Event of Default, the Secured Party may,
without demand, advertising or notice, all of which such Grantor hereby waives
(except as the same may be required by law), sell, lease, license or otherwise
dispose of and grant options to a third party to purchase, lease, license or
otherwise dispose of any and all Collateral held by it or for its account at
any time or times in one or more public or private sales or other dispositions,
for cash, on credit or otherwise, at such prices and upon such terms as the
Secured  Party, in its sole discretion,
deems advisable.  At any such sale the
Collateral or any portion thereof may be sold in one lot as an entirety or in
separate parcels as the Secured Party in its sole discretion deems
advisable.  Each Grantor agrees that if
notice of sale shall be required by law such requirement shall be met if such notice
is mailed, postage prepaid, to such Grantor at its address set forth in Section 6.04
below or such other address as it may have, in writing, provided to the Secured
Party, at least ten (10) days before the time of such sale or
disposition.  The Secured Party may
postpone or adjourn any sale of any Collateral from time to time by an
announcement at the time and place of the sale to be so postponed or adjourned,
without being required to give a new notice of sale.  Notice of any public sale shall be sufficient
if it describes the security of the Collateral to be sold in general terms,
stating the amounts thereof, the nature of the business in which such
Collateral was created and the location and nature of the properties covered by
the other security interests or mortgages and the prior liens thereof.  The Secured Party may be the purchaser at any
such sale if it is public, free from any right of redemption, which such
Grantor also waives, and payment may be made, in whole or in part, in respect
of such purchase price by the application of the Obligations by the Secured
Party.  Each Grantor with respect to its
property constituting such Collateral, shall be obligated for, and the proceeds
of sale shall be applied first to, the costs of taking, assembling, finishing,
collecting, refurbishing, storing, guarding, insuring, preparing for sale, and
selling the Collateral, including the fees and disbursements of attorneys,
auctioneers, appraisers and accountants employed by the Secured Party.  Proceeds shall then be applied to the
payment, in whatever order the Secured Party may elect, of all of the
Obligations.  The Secured Party shall
return any excess to such Grantor or to whomever may be fully entitled to
receive the same or as a court of competent jurisdiction may direct.  In the event that the proceeds of any sale or
other disposition of the Collateral are insufficient to pay in full the
Obligations, such Grantor shall remain liable for any deficiency.

 

SECTION 5.02.  Standards for Exercising Rights and
Remedies.  To the extent that applicable law imposes
duties on the Secured Party to exercise remedies in a commercially reasonable
manner, each Grantor acknowledges and agrees that it is not commercially
unreasonable for the Secured Party (a) to fail to incur expenses
reasonably deemed significant by the Secured Party to prepare Collateral for
disposition or otherwise to fail to complete raw material or work in process
into finished goods or other finished products for disposition, (b) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental
or third party consents for the collection or disposition of Collateral to be
collected or disposed of, (c) to fail to exercise collection remedies
against account debtors or other persons obligated on Collateral or to fail to
remove liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (e) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (f) to contact other persons,
whether or not in the same business each Grantor, for expressions of interest
in acquiring all or any portion of the Collateral, (g) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the collateral is of a specialized nature, (h) to dispose of 

 

9

 

Collateral by utilizing Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (i) to
dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements to
insure the Secured Party and the Credit Parties against risk of loss,
collection or disposition of Collateral or to provide to the Secured Party and
the Credit Parties a guaranteed return from the collection or disposition of
Collateral, or (l) to the extent deemed appropriate by the Secured Party, to
obtain the services of other brokers, investment bankers, consultants and other
professionals to assist the Secured Party in the collection or disposition of
any of the Collateral.  Each Grantor  acknowledges that the purpose of this Section 5.02
is to provide non-exhaustive indications of what actions or omissions by the
Secured Party would fulfill the Secured Party’s duties under the UCC or the
Uniform Commercial Code as in effect in other relevant jurisdiction in the
Secured Party’s exercise of remedies against the Collateral and that other
actions or omissions by the Secured Party shall not be deemed to fail to
fulfill such duties solely on account of not being indicated in this Section 5.02.  Without limitation upon the foregoing,
nothing contained in this Section 5.02 shall be construed to grant any
rights to each Grantor or to impose any duties on the Secured Party or any
Credit Party that would not have been granted or imposed by this Agreement or
by applicable law in the absence of this Section 5.02.

 

SECTION 5.03.  Waiver.  Each
Grantor waives any right, to the extent applicable law permits, to receive
prior notice of, or a judicial or other hearing with respect to, any action or
prejudgment remedy or proceeding by the Secured Party to take possession,
exercise control over, or dispose of any item of the Collateral in any instance
(regardless of where such Collateral may be located) where such action is
permitted under the terms of this Agreement or any other Loan Document, or by
applicable law, or of the time, place or terms of sale in connection with the
exercise of the Secured Party’s rights hereunder and such Grantor also waives,
to the extent permitted by law, any bond, security or sureties required by any
statute, rule or otherwise by law as an incident to any taking of
possession by the Secured Party of property subject to the Secured Party’s
Lien.  Each Grantor further waives any
damages (direct, consequential or otherwise) occasioned by the enforcement of
the Secured Party’s rights under this Agreement and any other Loan Document
including the taking of possession of any Collateral all to the extent that
such waiver is permitted by law and to the extent that such damages are not
caused by the Secured Party’s gross negligence or willful misconduct.  These waivers and all other waivers provided
for in this Agreement and any other Loan Documents have been negotiated by the
parties and each Grantor acknowledges that it has been represented by counsel
of its own choice and has consulted such counsel with respect to its rights
hereunder.

 

SECTION 5.04.  Other Rights.  Each
Grantor agrees that the Secured Party shall not have any obligation to preserve
rights to any Collateral against prior parties or to proceed first against any
Collateral or to marshall any Collateral of any kind for the benefit of any
other creditors of such Grantor or any other Person.  The Secured Party is hereby granted, to the
extent that such Grantor is permitted to grant a license or right of use, a
license or other right to use, without charge, labels, patents, copyrights,
rights of use, of any name, trade secrets, trade names, trademarks and
advertising matter, or any property of a similar nature of such Grantor as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral, in accordance with the provision of this Section V,
and such Grantor’s rights under all licenses and any franchise, sales or
distribution agreements shall inure to the Secured Party’s benefit.

 

SECTION 5.05.  Expenses. Each Grantor agrees that it shall pay on
demand therefor all costs and expenses incurred in amending, implementing,
perfecting, collecting, defending, declaring and enforcing the Secured Party’s
rights and security interests in the Collateral hereunder or under the Credit
Agreement or any other Loan Document or other instrument or agreement delivered
in connection herewith or therewith, including, but not limited to, searches
and filings, and the Secured Party’s 

 

10

 

reasonable attorneys’ fees (regardless of whether any litigation is
commenced, whether a default is declared hereunder, and regardless of tribunal
or jurisdiction).

 

VI.  GENERAL PROVISIONS

 

SECTION 6.01.  Termination.  This
Agreement shall remain in full force and effect until all the Obligations shall
have been indefeasibly fully paid and satisfied (other than those which by
their terms survive termination of this Agreement) and the Credit Agreement
shall have expired or been terminated and, until such time, the Secured Party
shall retain all security in and title to all existing and future Collateral
held by it hereunder.

 

SECTION 6.02.  Remedies Cumulative.  The
Secured Party’s rights and remedies under this Agreement shall be cumulative
and non-exclusive of any other rights or remedies which it may have under the
Credit Agreement, any other Loan Document or any other agreement or instrument,
by operation of law or otherwise and may be exercised alternatively,
successively or concurrently as the Secured Party may deem expedient.

 

SECTION 6.03.  Binding Effect.  This
Agreement is entered into for the benefit of the parties hereto and their
successors and assigns.  It shall be
binding upon and shall inure to the benefit of the said parties, their
successors and assigns.  No Grantor shall
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Secured Party and any attempted assignment shall be null
and void.

 

SECTION 6.04.  Notices. 
Wherever this Agreement provides for notice to any party (except as
expressly provided to the contrary), it shall be in writing and given in the
manner specified in Section 10.01 of the Credit Agreement.  Such notices to each Grantor shall be
delivered to the address for notices set forth on Schedule A annexed
hereto.

 

SECTION 6.05.  Waiver.  No
delay or failure on the part of the Secured Party in exercising any right,
privilege, remedy or option hereunder shall operate as a waiver of such or any
other right, privilege, remedy or option, and no waiver shall be valid unless
in writing and signed by an officer of the Secured Party (acting with the
requisite consent of the Lenders as provided in the Credit Agreement) and only
to the extent therein set forth.

 

SECTION 6.06.  Modifications and Amendments.  This
Agreement and the other agreements to which it refers constitute the complete
agreement between the parties with respect to the subject matter hereof and may
not be changed, modified, waived, amended or terminated orally, but only by a
writing signed by the party to be charged.

 

SECTION 6.07.  Several Agreements.   This
Agreement shall constitute the several obligations and agreements of each
Grantor and may be amended, restated, supplemented or otherwise modified from
time to time, with respect to any Grantor without the consent or approval of
any other Grantor, and no such amendment, restatement, supplement or  modification shall be deemed to amend,
restate, supplement or modify the obligations of any other Grantor hereunder.

 

SECTION 6.08.  Survival of Representations and
Warranties.  The representations and warranties of each
Grantor made or deemed made herein shall survive the execution and delivery of
this Agreement.

 

SECTION 6.09.  Severability.    Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, in such jurisdiction, be ineffective
to the extent of such invalidity, 

 

11

 

illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.

 

SECTION 6.10.  Applicable Law; Consent to Jurisdiction;
Waiver of Jury Trial.  THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OR CHOICE OF
LAWS.  EACH GRANTOR HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW
YORK, COUNTY OF NEW YORK, COUNTY OF NASSAU OR COUNTY OF SUFFOLK IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED
BY APPLICABLE LAW, EACH GRANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS,
THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT
THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT
OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER
THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS.  TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH GRANTOR AGREES (i) NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY
REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION
WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND (ii) NOT
TO ASSERT ANY COUNTERCLAIM IN ANY SUCH SUIT, ACTION OR PROCEEDING.  EACH GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE
MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET
FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.  EACH GRANTOR AND THE SECURED PARTY EACH
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

SECTION 6.11.  Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original but all of which taken together shall constitute one and
the same agreement.

 

[THE NEXT
PAGE IS THE SIGNATURE PAGE]

 

12

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their officers
thereunto duly authorized as of the day and year first above written.

 

	
   

  	
  HSBC BANK USA,
  NATIONAL ASSOCIATION,

  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Christopher Mendelsohn

  	
   

  
	
   

  	
  Name: 

  	
  Christopher Mendelsohn

  
	
   

  	
  Title:

  	
  First Vice
  President

  
					

 

GRANTORS:

 

	
  VEECO INSTRUMENTS INC.

  	
  VEECO COMPOUND SEMICONDUCTOR INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/ John F. Rein, Jr.

  	
   

  	
  By: 

  	
  /s/ John F. Rein, Jr.

  	
   

  
	
  Name: 

  	
  John F. Rein, Jr.

  	
  Name: 

  	
  John F. Rein, Jr.

  
	
  Title: 

  	
  Executive Vice President/Chief

  Financial Officer

  	
  Title: 

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  VEECO METROLOGY, LLC

  	
  VEECO ION BEAM EQUIPMENT INC.

  
	
   

  	
   

  
	
  By: 

  	
  Veeco Instruments Inc., its Sole Member

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ John F. Rein, Jr.

  	
   

  	
  By: 

  	
  /s/ John F. Rein, Jr.

  	
   

  
	
  Name: 

  	
  John F. Rein, Jr.

  	
  Name: 

  	
  John F. Rein, Jr.

  
	
  Title: 

  	
  Executive Vice President/Chief

  Financial Officer

  	
  Title: 

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  VEECO
  SLIDER PROCESS

  EQUIPMENT INC.

  	
  VEECO TUCSON INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/ John F. Rein, Jr. 

  	
   

  	
  By: 

  	
  /s/ John F. Rein, Jr.

  	
   

  
	
  Name: 

  	
  John F. Rein, Jr.

  	
  Name: 

  	
  John F. Rein, Jr.

  
	
  Title: 

  	
  Vice President

  	
  Title: 

  	
  Vice President

  
																			

 

 

13Exhibit 10.1

 

ALBANY MOLECULAR RESEARCH, INC.

 

INCENTIVE BONUS
PLAN

 

Purpose:

 

The purpose of this plan
is to enable the Company to attract and retain in its employ persons of
outstanding competence, and to establish a means whereby employees’
compensation will be a factor of both Company and individual performance.

 

Definitions
& Administration:

 

1.
Participant:

 

Participants will be active full time personnel who
have a hire date prior to October 1 in the calendar year and on the active
payroll at the time the bonus is paid to all eligible participants.

 

2.
Incentive Bonus Calculation:

 

Management
will align positions into “clusters” based upon job responsibility and
pay.  Each of these clusters will be
assigned a bonus base which will be used to calculate individual bonus
payments.  Bonuses will be calculated as
a percentage of the annualized bonus base salary for each cluster as of December 31
of the bonus year.  Employees with less
than one year of service in the bonus year will have their bonus pro-rated
considering their date of hire and total service in the calendar year.

 

3.
Payment of Bonuses:

 

Incentive bonus payments shall be paid to participants
at the discretion of the Company’s Compensation Committee. Payments will be
made in a lump sum by March 15 of the calendar year following the bonus
year and will be subject to all mandatory withholdings.

 

4. Bonus
Amount:

 

The
availability of a bonus pool for distribution under this program will be
determined annually based upon the Company’s performance against preset
performance objectives for the business. 
These business objectives will be established in the beginning of the
business year and approved by the Company’s Compensation Committee.

 

 

Three
levels of business performance will be defined and will be used to calculate
the funding of the annual bonus pool. 
These levels are as follow:

 

•                  Threshold – Minimum
business performance objectives that must be met to initiate the funding of
bonus pool and bonus payment.

•                  Target – Business
performance which meets but does not exceed budgeted objectives.

•                  Exceeds – Business
performance which exceeded budgeted objectives.

 

Individual bonus eligibility will be determined
annually considering the employee’s performance during the bonus year.  Annual performance reviews of the plan
participant will be a major component in determining the size of each
individual annual incentive bonus.

 

Example:

 

First Quarter - AMRI Business Goals Established:

i.e. - Operating Margin, Total Revenue &
Safety Incident Rate,

 

12/31 - Business Performance in the above will determine the funding size
of Bonus Pool –

i.e. - Threshold, Target or Exceeds

 

First Quarter following bonus plan year: 
Individual Bonus Calculated.

Business Performance + Individual Performance =
Individual Bonus Payment.

 

ADMINISTRATIVE
GUIDELINES

 

Adjustments
in Financial Performance Measurements

 

In order to effectuate
the purpose of the Plan, the Compensation Committee may make adjustments in the
criteria established for any Plan Year which reflect any extraordinary changes
that may have occurred during the Plan Year or which significantly alter the
basis upon which such performance levels are determined.  Such changes may include, without limitation,
changes in accounting practices, tax, regulatory or other laws or regulations,
acquisitions, divestitures, or economic changes in the ordinary course of
business cycles.  Any adjustments made by
the Compensation Committee can be made at any time and in any manner that the
Compensation Committee in its sole discretion deems appropriate, and any and
all such adjustments shall be inclusive and binding upon all parties concerned.

 

 

GENERAL
RULES

 

The Plan has been adopted
by the Board of Directors of AMRI and may be amended from time to time, in any
respect, by the Board.  Any such
amendment may add to, amend, reduce or cancel any and all rights in regard to
the Plan.

 

AMRI reserves the right,
in its sole discretion, to determine the nature and amount of all accruals that
are to be recorded on the books of the Subsidiaries at the end of a Plan Year.

 

The Albany Molecular
Research Compensation Committee shall be responsible for the general operation
and administration of the Plan and shall have the authority to interpret the
Plan and to adopt administrative rules and regulations governing its operation.

 

The Plan may be
terminated at any time by the Board of Directors.  Upon such termination, all rights of a
Participant to amounts not then awarded to Participants shall be null and void.  However, amount previously awarded but unpaid
as of the date of the Plan termination shall not be affected.

 

Participation in the Plan
shall not give any employee any right to remain in the employment of AMRI or
any Subsidiary.  The Plan is not to be
construed as a contract of employment for any period and does not alter the “employee-at-will”
employment status of any Participant.

 

Award payments under the
Plan shall be treated as wages and shall be subject to income, FICA and any
other applicable withholding taxes at the time received.

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