Mortgage And Security Agreement Dated As Of August 1, 2002

EXHIBIT 10.11


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COUNTIES OF WARREN AND WASHINGTON
INDUSTRIAL DEVELOPMENT AGENCY


AND


ANGIODYNAMICS, INC.


TO


KEYBANK NATIONAL ASSOCIATION


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MORTGAGE AND SECURITY AGREEMENT


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DATED AS OF AUGUST 1, 2002


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THIS MORTGAGE AND SECURITY AGREEMENT (A) AFFECTS TANGIBLE AND INTANGIBLE PERSONAL PROPERTY AS WELL AS REAL PROPERTY, (B) CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS, AND (C) IS INTENDED TO CONSTITUTE A SECURITY AGREEMENT UNDER THE UNIFORM COMMERCIAL CODE OF THE STATE OF NEW YORK.


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TABLE OF CONTENTS
Page
---- MORTGAGE AND SECURITY AGREEMENT................................................2 ARTICLE I......................................................................6 DEFINITIONS ARTICLE II....................................................................28 LAND MORTGAGE; GRANTING CLAUSES; SECURITY AGREEMENT; GENERAL COVENANTS
SECTION 2.01. GRANTING CLAUSES.............................................28
SECTION 2.02. SECURITY AGREEMENT...........................................30
SECTION 2.03. INFORMATION UNDER THE UNIFORM COMMERCIAL CODE................30
SECTION 2.04. PERFORMANCE OF COVENANTS.....................................31
SECTION 2.05. PRIORITY OF LIEN OF MORTGAGE; DISCHARGE OF LIENS AND
ENCUMBRANCES.................................................31 ARTICLE III...................................................................32 REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.................32
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................32
SECTION 3.03. PAYMENT OF PRINCIPAL AND INTEREST ON THE BONDS...............33 ARTICLE IV....................................................................34 MAINTENANCE, MODIFICATION, TAXES AND INSURANCE
SECTION 4.01. MAINTENANCE OF AND MODIFICATIONS TO THE MORTGAGED
PROPERTY BY THE COMPANY......................................34
SECTION 4.02. INSURANCE REQUIRED...........................................34
SECTION 4.03. TAXES, ASSESSMENTS AND UTILITY CHARGES.......................34 ARTICLE V.....................................................................36 SPECIAL COVENANTS
SECTION 5.01. RIGHT OF ACCESS TO THE MORTGAGED PROPERTY....................36
SECTION 5.02. INSPECTION OF BOOKS AND RECORDS..............................36
SECTION 5.03. AGREEMENT TO PROVIDE INFORMATION.............................36
SECTION 5.04. BOOKS OF RECORD AND ACCOUNT..................................36
SECTION 5.05. COMPLIANCE WITH APPLICABLE LAWS..............................36
SECTION 5.06. RECORDATION OF MORTGAGE AND FILING OF SECURITY INSTRUMENTS...37
SECTION 5.07. ENFORCEMENT OF DUTIES AND OBLIGATIONS OF THE COMPANY.........37
SECTION 5.08. ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND COVENANTS......37 ARTICLE VI....................................................................40 EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT DEFINED....................................40
SECTION 6.02. ACCELERATION; ANNULMENT OF ACCELERATION......................41


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SECTION 6.03. ENFORCEMENT OF REMEDIES......................................42
SECTION 6.04. APPOINTMENT OF RECEIVERS.....................................43
SECTION 6.05. APPLICATION OF MONEYS........................................44
SECTION 6.06. REMEDIES CUMULATIVE..........................................44
SECTION 6.07. TERMINATION OF PROCEEDINGS...................................44
SECTION 6.08. WAIVER AND NON-WAIVER OF EVENT OF DEFAULT....................44
SECTION 6.09. REPAYMENT AND SECURING OF EXPENSES PAID BY THE BANK..........45
SECTION 6.10. REPAYMENT AND SECURING OF COLLECTION COSTS
INCURRED BY THE BANK.........................................45
SECTION 6.11. OTHER ACTIONS BY THE HOLDER..................................45
SECTION 6.12. SALE IN ONE PARCEL...........................................46 ARTICLE VII...................................................................46 MISCELLANEOUS
SECTION 7.01. LIMITATION OF RIGHTS.........................................46
SECTION 7.02. NOTICES......................................................46
SECTION 7.03. COUNTERPARTS.................................................48
SECTION 7.04. APPLICABLE LAW...............................................49
SECTION 7.05. TABLE OF CONTENTS AND SECTION HEADINGS NOT CONTROLLING.......49
SECTION 7.06. SEVERABILITY.................................................49
SECTION 7.07. COVENANTS RUN WITH THE LAND..................................49
SECTION 7.08. AMENDMENT....................................................49
SECTION 7.09. USURY........................................................49
SECTION 7.10. NO RECOURSE; SPECIAL OBLIGATION..............................49
SECTION 7.11. TAX LAWS.....................................................50
SECTION 7.12. REVENUE STAMPS...............................................51
SECTION 7.13. FURTHER ASSURANCE............................................51
SECTION 7.14. SATISFACTION OF MORTGAGE.....................................51
SECTION 7.15 LIEN LAW.....................................................51 EXHIBIT A.....................................................................54 DESCRIPTION OF THE LAND EXHIBIT B.....................................................................55 DESCRIPTION OF THE EQUIPMENT


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MORTGAGE AND SECURITY AGREEMENT


THIS MORTGAGE AND SECURITY AGREEMENT dated as of August 1, 2002 (the "Mortgage") from the COUNTIES OF WARREN AND WASHINGTON INDUSTRIAL DEVELOPMENT AGENCY, a public benefit corporation of the State of New York having an office for the transaction of business located at 5 Warren Street, Glens Falls, New York 12801 (the "Issuer") and ANGIODYNAMICS, INC., a corporation organized and existing under the laws of the State of New York, having an office for the transaction of business located at 603 Queensbury Avenue, Queensbury, New York 12804 (the "Company") to KEYBANK NATIONAL ASSOCIATION, a banking corporation organized and existing under the laws of the State of New York, having an office for the transaction of business located at 66 South Pearl Street, Albany, New York 12207, as Bank (the "Bank") for the holders of the Issuer's Multimode Variable Rate Industrial Development Revenue Bonds (Angiodynamics, Inc. Project), Series 2002 in the aggregate principal amount of $3,500,000 (the "Initial Bonds") and any Additional Bonds (as defined in the Indenture hereinafter referred to and collectively with the Initial Bonds, the "Bonds") issued pursuant to a certain trust indenture dated as of August 1, 2002 (the "Indenture") by and between the Issuer and the Bank;


WITNESSETH:


WHEREAS, Title 1 of Article 18-A of the General Municipal Law of the State of New York (the "Enabling Act") was duly enacted into law as Chapter 1030 of the Laws of 1969 of the State of New York; and


WHEREAS, the Enabling Act authorizes and provides for the creation of industrial development agencies for the benefit of the several counties, cities, villages and towns in the State of New York (the "State") and empowers such agencies, among other things, to acquire, construct, reconstruct, lease, improve, maintain, equip and dispose of land and any building or other improvement, and all real and personal properties, including, but not limited to, machinery and equipment deemed necessary in connection therewith, whether or not now in existence or under construction, which shall be suitable for manufacturing, warehousing, research, civic, commercial or industrial purposes, in order to advance the job opportunities, health, general prosperity and economic welfare of the people of the State and to improve their standard of living; and


WHEREAS, the Enabling Act further authorizes each such agency to lease or sell any or all of its facilities, to issue its bonds, for the purpose of carrying out any of its corporate purposes and, as security for the payment of the principal and redemption price of and interest on any such bonds so issued and any agreements made in connection therewith, to mortgage and pledge any or all of its facilities, whether then owned or thereafter acquired, and to pledge the revenues and


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receipts from the lease or sale thereof to secure the payment of such bonds and interest thereon; and


WHEREAS, the Issuer was created, pursuant to and in accordance with the provisions of the Enabling Act, by Chapter 862 of the Laws of 1971 of the State, as amended (collectively, with the Enabling Act, the "Act") and is empowered under the Act to undertake the Project (as hereinafter defined) in order to so advance the job opportunities, health, general prosperity and economic welfare of the people of the State and improve their standard of living; and


WHEREAS, the Company has presented an application (the "Application") to the Issuer which Application requested that the Issuer consider undertaking a project (the "Project") consisting of (A)(i) the acquisition of an interest in a certain parcel or parcels of land located at 603 Queensbury Avenue, Town of Queensbury, County of Warren, State of New York (the "Land"), (ii) the acquisition thereon of an approximately 32,000 square foot facility (the "Existing Facility"), together with equipment therein (the "Existing Equipment"), (iii) the making of certain renovations to the Existing Facility (as so renovated, the "Facility") consistent with its present and authorized use, (iv) the construction of approximately 32,000 square feet of additions(s) to the Existing Facility, (v) the purchase of additional equipment (together with the Existing Equipment, the "Equipment" and, together with the Land and the Facility, the "Project Facility") and (B) the financing of a part of the cost of the foregoing by issuing its tax-exempt Industrial Development Revenue Bonds (the "Bonds") in an aggregate principal amount not to exceed $4,500,000.00, all pursuant to Title 1 of Article 18-A of the General Municipal Law of the State of New York (collectively, the "Act"), as amended, the proceeds of which may be applied to the costs of issuance, and, as necessary and appropriate, the provision of a debt service reserve fund, capitalized interest or other means of providing credit enhancement for the Bonds; and (C) to lease (with the option to purchase) and/or sell the Project Facility to the Company, all pursuant to the Act;


WHEREAS, pursuant to Article 8 of the Environmental Conservation Law, Chapter 43-B of the Consolidated Laws of New York, as amended (the "SEQR Act"), and the regulations adopted pursuant thereto by the Department of Environmental Conservation of the State of New York, being 6 NYCRR Part 617, as amended (the "Regulations", and collectively with the SEQR Act, "SEQRA"), by resolution adopted by the members of the Issuer on June 24, 2002 (the "SEQR Resolution"), the Issuer (A) reviewed the application, (B) determined that the Project constitutes an "Unlisted Action," and (C) determined that the Project will not have a "significant effect" on the environment and issued a "negative declaration" with respect to the Project (as said quoted terms are used in SEQRA); and


WHEREAS, the Issuer (A) caused notice of a public hearing of the Issuer (the "Public Hearing") pursuant to Section 859-a of the Act and Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), to hear all persons interested in the Project and the financial assistance being contemplated by the Issuer with respect to the Project, mailed on May ___, 2002 to the chief executive officers of the county and of each city, town, village and school district in which the Project Facility is to be located, (B) caused notice of the Public Hearing to be


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published on May ___, 2002 in The Post Star, a newspaper of general circulation available to residents of the City of Albany, (C) conducted the Public Hearing on June 17, 2002 at 3:00 o'clock, local time in the Board of Supervisors Chambers in the Warren County Municipal Center, Queensbury, New York 12804, and (D) prepared a report of the Public Hearing (the "Report") which fairly summarized the views presented at said public hearing and distributed same to the members of the Issuer and to the Courts Legislatures of Warren and Washington County; and


WHEREAS, by certificates dated June 21, 2002 and July 17, 2002 (the "Public Approval"), the County Legislatures of Washington County and Warren County, respectively, approved the issuance of the Bonds for purposes of Section 147(f) of the Code; and


WHEREAS, by resolution adopted by the members of the Issuer on July 15, 2002 (the "Bond Resolution"), the Issuer determined to (A) issue the Initial Bonds pursuant to the provisions of the Indenture, (B) enter into this Mortgage and Security Agreement, and (C) enter into certain other documents related to the foregoing; and


WHEREAS, the Issuer proposes to undertake the Project, to appoint the Company as agent of the Issuer to undertake the acquisition, construction and installation of the Current Project, and to sell the Issuer's interest in the Project Facility to the Company, and the Company desires to act as agent of the Issuer to undertake the acquisition, construction and installation of the Current Project and to purchase the Issuer's interest in the Project Facility from the Issuer, all pursuant to the terms and conditions set forth in the installment sale agreement dated as of August 1, 2002 (the "Installment Sale Agreement") between the Issuer and the Company; and


WHEREAS, pursuant to the Deed to Issuer, the Company will convey to the Issuer the Land; and


WHEREAS, as security for the Bonds, the Issuer will assign to the Bank certain of the Issuer's rights and remedies under the Installment Sale Agreement, including the right to receive installment purchase payments and other amounts payable thereunder, but not including the Unassigned Rights (as hereinafter defined), pursuant to a pledge and assignment dated as of August 1, 2002 (the "Pledge and Assignment") from the Issuer to the Bank,


WHEREAS, the Company's obligation to make all installment purchase payments due under the Installment Sale Agreement, and to perform all obligations related thereto, and the Issuer's obligation to repay the Bonds, will be further secured by a guaranty dated as of August 1, 2002 (the "Guaranty") from the Company to the Bank; and


WHEREAS, as security for the Bonds and the Company's obligations under the Guaranty and the other Financing Documents (as hereinafter defined), the Issuer and the Company now intend to grant to the Bank a mortgage Lien (as hereinafter defined) on and security interest in the Project Facility pursuant to this Mortgage; and


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WHEREAS, all things necessary to constitute this Mortgage a valid first Lien on and pledge of the Mortgaged Property (as hereinafter defined) herein described in accordance with the terms hereof, have been done and performed, and the creation, execution and delivery of this Mortgage, as security for the payment of the principal of, premium, if any, and interest on the Bonds and as security for the Company's obligations under the Reimbursement Agreement and the other Financing Documents (as hereinafter defined), have in all respects been duly authorized;


NOW THEREFORE, THIS MORTGAGE FURTHER WITNESSETH:


KNOW ALL MEN BY THESE PRESENTS, that the Company and the Issuer, in order to secure payment of the principal of, premium, if any, and interest on the Bonds, originally in the aggregate principal amount of $3,500,000 according to the tenor and effect of the Bonds, the payment of all other sums required to be paid hereunder and under the Indenture, the Reimbursement Agreement and the other Financing Documents, and the performance and observance by the Issuer and the Company of all of the covenants, agreements, representations and warranties herein and in the Indenture, and the other Financing Documents, do hereby covenant and agree as follows:


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ARTICLE I


DEFINITIONS


SECTION 101. DEFINITIONS. The following words and terms used in this Indenture shall have the respective meanings set forth below unless the context or use indicates another or different meaning or intent:


"Accountant" means an independent certified public accountant or a firm of independent certified public accountants selected by the Company and acceptable to the Bank.


"Act" means Title 1 of Article 18-A of the General Municipal Law of the State, as amended from time to time, together with Chapter 862 of the Laws of 1971 of the State, as amended from time to time.


"Act of Bankruptcy" means the filing of a petition in bankruptcy (or the other commencement of a bankruptcy or similar proceeding) by or against the Bank, the Company or the Issuer under any applicable bankruptcy, insolvency, reorganization or similar law, now or hereafter in effect.


"Additional Bonds" means any bonds issued by the Issuer pursuant to Section 214 of the Indenture.


"Additional Facility" means any additional property financed with the proceeds of Additional Bonds.


"Additional Project" means the purposes for which any Additional Bonds may be issued.


"Affiliate" of any specified entity means any other entity directly or indirectly controlling or controlled by or under direct or indirect common control with such specified entity and "control", when used with respect to any specified entity, means the power to direct the management and policies of such entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.


"Alternate Credit Facility" means any direct pay letter of credit or other credit enhancement or support facility that has terms which are the same in all material respects (except for the term and maximum interest rate but including coverage of accrued interest on the Bonds for 98 days if the Bonds bear interest at the Weekly Rate or for 183 days if the Bonds bear interest at the Semi-Annual Rate or the Long-Term Rate) as the then current Credit Facility and (A) shall have a term of not less than one year, (except if the Long-Term Rate shall then be in


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effect, the term of such Alternate Credit Facility shall not expire prior to (a) the first par redemption date plus 15 days or (b) the first redemption date plus 15 days if the Alternate Credit Facility covers the redemption premium) (B) shall be issued by a bank, a trust company or other financial institution or credit provider, and (C) with respect to which the Trustee shall have received the opinions required by Section 408(F) of the Indenture.


"Applicable Laws" means all statutes, codes, laws, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of all Governmental Authorities, foreseen or unforeseen, ordinary or extraordinary, which now or at any time hereafter may be applicable to or affect the Project Facility or any part thereof or the conduct of work on the Project Facility or any part thereof or to the operation, use, manner of use or condition of the Project Facility or any part thereof (the applicability of such statutes, codes, laws, acts, ordinances, orders, rules, regulations, directions and requirements to be determined both as if the Issuer were the owner of the Project Facility and as if the Company and not the Issuer were the owner of the Project Facility), including but not limited to (1)applicable building, zoning, environmental, planning and subdivision laws, ordinances, rules and regulations of Governmental Authorities having jurisdiction over the Project Facility, (2)restrictions, conditions or other requirements applicable to any permits, licenses or other governmental authorizations issued with respect to the foregoing, and (3) judgments, decrees or injunctions issued by any court or other judicial or quasi-judicial Governmental Authority.


"Arbitrage Certificate" means the certificate dated the Closing Date for the Initial Bonds executed by the Issuer and relating to certain requirements set forth in Section 148 of the Code.


"Authenticating Agent" means the Trustee and any agent so designated in and appointed pursuant to Section 204 of the Indenture.


"Authorized Investments" means any of the following: (A) Government Obligations; (B)obligations issued or guaranteed by any state or political subdivision thereof rated A or higher by Moody's and by S&P; (C) open market commercial or finance paper of any corporation having a net worth in excess of $100,000,000 and which is rated either P-1 or A-1 or an equivalent by Moody's and S&P; (D) bankers' acceptances drawn on and accepted by commercial banks including the Trustee or its affiliates; (E) investments due within 12 months in certificates of deposit issued by, or bankers' acceptances of, the Trustee or its affiliates, or of banks or trust companies organized under the laws of the United States of America or any state thereof, which must have a reported capital and surplus of at least $25,000,000 in dollars of the United States of America; (F) bank repurchase agreements, including the Trustee's or its affiliate's, fully secured by obligations of the type described in (A) above; (G) variable rate demand securities redeemable within 7 days or able to be tendered for remarketing or purchase upon no more than 7 days' notice and secured by a credit facility issued by a financial institution, which financial institution (or its corporate parent) maintains a long term debt rating assigned by Moody's and S&P which is not lower than the third highest long term debt category (without regard to numerical or other modifiers assigned within the category) by either Rating Service, or


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by both Rating Services, if rated by both Rating Services; and (H)shares of any so called "money market mutual fund", including any "money market mutual fund" which the Trustee or any of its affiliates provide services for a fee, whether as an investment advisor, custodian, transfer agent, registrar, sponsor, distributor, manager or otherwise, which invests solely in obligations described in items (A) through (G) above; and further provided that any such investment or deposit is not prohibited by law.


"Authorized Newspaper" means a newspaper in English customarily published each Business Day and generally circulated in the Borough of Manhattan, City and State of New York.


"Authorized Representative" means the Person or Persons at the time designated to act on behalf of the Issuer, the Bank or the Company, as the case may be, by written certificate furnished to the Issuer, the Company, the Bank and the Trustee containing the specimen signature of each such Person and signed on behalf of (A) the Issuer by its Chairman or Vice Chairman, or such other person as may be authorized by resolution of the members of the Issuer to act on behalf of the Issuer, (B) the Bank by a Vice President or an Assistant Vice President, or such other person as may be authorized by the board of directors of the Bank to act on behalf of the Bank, and (C) the Company by its President or any Vice President, or such other person as may be authorized by the board of directors of the Company to act on behalf of the Company.


"Available Moneys" means, with respect to any date, (A) funds which (1) have been paid to the Trustee by the Issuer, the Company, any Affiliate of the Company, any Guarantor or any Insider of any of the foregoing and deposited into and held in a separate and segregated subaccount or subaccounts in the Redemption Premium Account of the Bond Fund in which no moneys not deposited on the same date were at any time held, (2) have been on deposit in the Redemption Premium Account of the Bond Fund for a period of at least one hundred twenty-three (123) consecutive days prior to such date, during and prior to which period no Event of Bankruptcy has occurred and (3) are represented by cash or its equivalent as of such date; (B) moneys drawn under the Letter of Credit and deposited directly into the Credit Facility Account of the Bond Fund; (C) the proceeds deposited directly into the Defeasance Account of the Bond Fund from the sale of refunding obligations other than, directly or indirectly, to the Issuer, the Company, any Guarantor, any Affiliate of the Company or any Guarantor or any Insider of any of them or any entity who at the time of the purchase of the Bonds, is a secured creditor of the Company or any Guarantor; (D) proceeds deposited directly into the Remarketing Proceeds Account of the Bond Fund from the marketing or remarketing of Bonds to any purchaser other than, directly or indirectly, the Company, the Issuer, any Guarantor, any Affiliate of the Company or any Guarantor or any Insider of any of them or any entity who at the time of the purchase of the Bonds, is a secured creditor of the Company or any Guarantor; (E) proceeds from investment of the foregoing, provided such proceeds are retained in the Account in which they were earned; and (F) any other funds or payments so long as, in the opinion of reputable bankruptcy counsel, such payments will not constitute an avoidable preference under the standards set forth in the Bankruptcy Code.


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"Bank" means the Credit Facility Issuer.


"Bank Documents" means the Letter of Credit, the Reimbursement Agreement, the Mortgage, the Bond Pledge Agreement, the Security Agreement and any other document now or hereafter executed by the Issuer, the Company or any Guarantor in favor of the Bank which affects the rights of the Bank in or to the Project Facility, in whole or in part, or which secures or guarantees any sum due under any Bank Document.


"Bank Rate" means the rate of interest being charged to the Company by the Credit Facility Issuer under the Reimbursement Agreement.


"Bankruptcy Code" means Title 11 of the United States Code, as it is amended from time to time.


"Beneficial Owner" means, with respect to the Bonds, a Person owning a Beneficial Ownership Interest therein, as evidenced to the satisfaction of the Trustee.


"Beneficial Ownership Interest" means the beneficial right to receive payments and notices with respect to the Bonds which are held by the Depository under a book entry system.


"Bill of Sale to Company" means the bill of sale from the Issuer to the Company conveying all of the Issuer's interest in the Project Facility to the Company, substantially in the form attached as Exhibit B to the Installment Sale Agreement.


"Bill of Sale to Issuer" means the bill of sale delivered on the Closing Date from the Company to the Issuer conveying all of the Company's interest in the Project Facility to the Issuer.


"Bond" or "Bonds" means, collectively, (A) the Initial Bonds and (B) any Additional Bonds.


"Bond Counsel" means the law firm of Bo ...