UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8 K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 1, 2007
CVD EQUIPMENT CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
New York
(State or Other Jurisdiction of Incorporation or Organization)
1-16525 11-2621692
(Commission File Number) (IRS Employer Identification No.)
1860 Smithtown Ave., Ronkonkoma, New York 11779
(Address of Principal Executive Offices, Including Zip Code)
(631) 981-7081
(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On June 1, 2007, CVD Equipment Corporation (the "Registrant") entered into
a three year Revolving Credit Agreement (the "Loan Agreement") with North
Fork Bank (the "Bank") pursuant to which the Bank has agreed to make
revolving loans (the "Loan") to the Registrant of up to $2,000,000. The
Loan is evidenced by a promissory note issued by the Registrant (the
"Revolving Credit Note"), the obligations of which are secured by a first
priority lien and security interest in all personal property owned by the
Registrant and $500,000 of the proceeds of a life insurance policy which is
owned by the Registrant and issued on the life of the Registrants Chief
Executive Officer, Leonard A. Rosenbaum.
The Loan will bear interest on the unpaid principal balance thereof from
time to time outstanding at a rate per annum to be elected by the
Registrant, which shall be equal to either (1) the LIBOR Rate plus 2.50% or
(2) the Banks Prime Rate plus .25%.
The obligation of the Registrant to pay the amounts outstanding under the
Loan Agreement may be accelerated upon the occurrence of an "Event of
Default" as defined in the Loan Agreement. Such Events of Default include
among others:
(a) Registrant fails to pay the principal of, or interest on, the
Revolving Credit Loan or the Revolving Credit Note or any advance
thereunder when due, or if the Registrant fails to pay any amount
of any fee, or any other amount due and payable hereunder the
Loan Documents or otherwise due to the Bank, as and when due and
payable;
(b) any representation or warranty made or deemed made by or on
behalf of the Registrant in the Agreement or which is contained
in any written instrument, including any certificate, documents,
or financial or other statement furnished by or on behalf of
Registrant at any time under or in connection with any Loan
Documents shall prove to have been false or misleading in any
material respect on or as of the date made or deemed made;
(c) Default by the Registrant in its obligations under Section
5.01 (maintenance of corporate existence), Section 5.04 (duly pay
and discharge all taxes or other claims which might result in a
Lien upon any of tits properties), Section 5.09 (reporting
requirements), Section 5.13 (financial covenants) or Section 6
(negative covenants, including: dissolution, incurrence of
additional debt, liens or other encumbrances; capital
expenditures in excess of $500,000 per each fiscal year; payment
of dividends; merger; change in the nature of the business) of
the Loan Agreement;
(d) The Registrant commences a bankruptcy or similar proceeding or
such a proceeding is commenced against them and remains
undismissed for a period of sixty (60) days or more;
(e) Any judgment, Federal, state or municipal tax lien entered
exceeding $10,000.00 against Registrant, or any attachment, levy
or execution exceeding $10,000.00 against any of their respective
properties for any amount shall remain unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period of
sixty (60) days or more; or
(f) There is a material adverse change in the business, properties
or financial condition of the Registrant.
Certain capitalized terms used herein but not defined shall have
the meaning ascribed to them in the Loan Agreement.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
10.1 Revolving Credit Agreement dated as of June 1, 2007 between the
Registrant and North Fork Bank.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CVD EQUIPMENT CORPORATION
Date: June 6, 2007 /s/ Leonard A. Rosenbaum
________________________________
Name: Leonard A. Rosenbaum
Title: Chairman, President,
Chief Executive Officer and
Director (Principal Executive
Officer)
1 Exhibit 10.1
REVOLVING CREDIT AGREEMENT
______________________________
REVOLVING CREDIT AGREEMENT
(the "Agreement" or "Revolving Credit Agreement")
dated June 1, 2007
by and between
CVD EQUIPMENT CORPORATION,
a New York corporation
with an address at:
1860 Smithtown Avenue,
Ronkonkoma, New York 11779
(the "Borrower")
and
NORTH FORK BANK,
having offices at
275 Broadhollow Road
Melville, New York 11747
(the "Bank").
RECITALS
WHEREAS, Borrower has requested a revolving line of credit facility
from the Bank in the principal amount of Two Million and 00/100
($2,000,000.00) Dollars (at times, the "Loan") to be secured by, among
other things, (i) a first position security interest in all assets of the
Borrower evidenced by a Revolving Credit Security Agreement made by the
Borrower in favor of the Bank of even date herewith; and (ii) a security
interest in and assignment and pledge of all monies, deposits, or other
sums now or hereafter held by the Bank on deposit, in safekeeping, transit
or otherwise, at any time credited by or due from Bank to the Borrower, or
in which the Borrower shall have an interest evidenced by a Pledge
Agreement made by the Borrower in favor of the Bank of even date herewith;
and (iii) a collateral Assignment to the Bank of a portion of the proceeds
of a life insurance policy issued on the life of Leonard A. Rosenbaum,
President and CEO of the Borrower, in the amount of Five Hundred Thousand
and 00/100 ($500,000.00) Dollars which such policy was issued by Pruco Life
Insurance Company of New Jersey (a Stock Company of the Prudential
Insurance Company of America), under policy no. ___________ (contract date
October 14, 2006) and has a face value of Two Million and 00/100
($2,000,000.00) Dollars; and
2 Exhibit 10.1
WHEREAS, the Bank is willing to make the Loan on the terms and
conditions set forth herein.
NOW, THEREFORE, IT IS HEREBY AGREED by the parties hereto in
consideration of the terms, covenants and conditions hereinafter set forth
as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms. As used in this Agreement, all
capitalized terms shall have the meanings set forth herein (except where
the context otherwise requires, terms defined in the singular to have the
same meaning when used in the plural and vice versa).
"Note" or "Revolving Credit Note" shall mean the Revolving
Line of Credit Note of even date herewith in the principal amount of Two
Million and 00/100 ($2,000,000.00) Dollars, made by Borrower in favor of
the Bank.
"Indebtedness" shall mean collectively all of Borrower's
obligation(s) to pay any amount(s) due, and to perform and observe every
provision of and under this Agreement, the Note or any other Loan Documents
of even date herewith executed by Borrower in favor of the Bank.
The terms "Borrower's Liabilities" as used herein and in the
Revolving Line of Credit Note and Loan Documents shall mean duties, debts,
liabilities and obligations of the Borrower (or its successors, assigns or
legal representatives) to the Bank, present or future, whether now or
hereafter existing, contingent or absolute, which are arising or incurred
or evidenced under this Agreement, the Revolving Line of Credit Note, the
Revolving Credit Security Agreement, and/or any and all other documents
executed and delivered to the Bank in furtherance of this Revolving Credit
Loan.
"Collateral" shall mean the assets of the Borrower pledged
in favor of the Bank as described with more particularity herein and in the
Revolving Credit Security Agreement of even date herewith.
"Loan Documents" as used herein shall mean this Revolving
Credit Agreement, the [Revolving Line of Credit] Note, the Revolving Credit
Security Agreement (defined herein), the Pledge Agreement(s) and any and
all other documents executed and delivered in connection herewith.
Section 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with that applied in the preparation of the financial statements
referred to herein, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles.
3 Exhibit 10.1
ARTICLE II
AMOUNT AND TERMS OF THE REVOLVING CREDIT LOAN
Section 2.01. Revolving Loan. The Bank agrees, on the terms and
conditions hereinafter set forth and those set forth in the Note, to make
certain revolving loans to Borrower (each an "Advance" or, collectively,
the "Advances") up to the aggregate total principal amount of Two Million
and 00/100 ($2,000,000.00) Dollars (at times, the "Commitment Amount") (the
"Loan").
Subject to the terms and conditions hereof, the Bank will make
Advances to the Borrower from time to time until the close of business on
May 31, 2010, the "Revolving Credit Termination Date", in such sums as the
Borrower may request, provided that the aggregate principal amount of all
Advances at any one time outstanding hereunder shall not exceed the
Commitment Amount. The Borrower may borrow, repay pursuant to Article II
and reborrow, from the date of this Agreement until the Revolving Credit
Termination Date, the full amount of the Commitment Amount or any lesser
sum that is at least $20,000.00 and in integral multiples of $10,000.00.
All Advances must be repaid with interest as set forth herein by the
Maturity Date.
Section 2.02. Notice and Manner of Borrowing. (1) The sums to be
advanced under the Note shall be advanced from time to time by the Bank
upon its receipt of a requisition from Borrower, in such form and with such
supporting documentation as may be required by the Bank. Whenever the
Borrower desires to obtain an Advance hereunder, it shall notify the Bank
(which notice shall be irrevocable) in writing in substantially the form of
Exhibit B hereto by facsimile or other writing received no later than 12:00
p.m.(eastern standard time) on the business day prior to the day on which
the requested Advance is to be made. Such notice shall specify the
effective date (which must be a business day in the State of New York) and
amount of each requested Advance subject to the limitations set forth
herein and the interest rate choice applicable thereto. In addition, and
pursuant to this Section 2.02, any such request for an Advance shall be
accompanied by the notices and documents specified herein. Each such
notification (a "Notice of Advance") shall be evidenced by a written
confirmation thereof by the Borrower in substantially the form of Exhibit B
hereto, provided, that if such written confirmation differs in any material
respect from the action taken by the Bank, the records of the Bank shall
control absent manifest error.
(2) Additional Conditions. In addition to the conditions herein
specified with respect to Advances, the Bank's obligations to make Advances
shall be subject to the fulfillment of the following conditions:
(a) No Defaults. No event shall have occurred which
constitutes or, which with the giving of notice or the passage of time, or
both, would constitute an Event of Default hereunder. The Bank shall not
be obligated to make any advance hereunder if a default shall have occurred
hereunder, under the Revolving Credit Note or Revolving Credit Security
Agreement or under any other monetary obligation of the Borrower to the
Bank.
(b) No Adverse Conditions. Neither the condition, business
or prospects of the Borrower shall have been materially and/or adversely
affected in any way as the result of force majeure, any legislative or
regulatory change, revocation of license or right to do business or
otherwise.
4 Exhibit 10.1
Section 2.03 The Note.
(a) The Loan shall be evidenced by a Revolving Line of Credit
[Promissory] Note dated the date hereof in the amount of Two Million and
00/100 ($2,000,000.00) Dollars, made by the Borrower and payable to the
order of the Bank and having a final maturity of June 1, 2010.
(b) The Bank shall, and is hereby irrevocably authorized by the
Borrower to, enter on the schedule forming a part of the Note or otherwise
in its records appropriate notations evidencing the date and the amount of
each Advance and the date and amount of each payment of principal made by
the Borrower with respect thereto; and in the absence of manifest error,
such notations shall constitute conclusive evidence thereof. The Bank is
hereby irrevocably authorized by the Borrower to attach to and make a part
of the Note a continuation of any such schedule as and when required. No
failure on the part of the Bank to make any notation as provided in this
subsection (b) shall in any way affect any advance or the rights or
obligations of the Bank or the Borrower with respect thereto.
THE NOTE SHALL MATURE ON JUNE 1, 2010 WITH ALL SUMS OF OUTSTANDING
PRINCIPAL, ACCRUED INTEREST AND RELATED CHARGES DUE AND OWING ON SUCH DATE.
Section 2.04. Interest Rates. Changes in Interest Rate and
Payments of Interest.
(a) Each Advance, whether a Libor Advance or Prime Advance as each
term is defined in the Note, shall bear interest on the outstanding
principal amount thereof pursuant to the terms and conditions set forth in
the Note.
(b) Such interest shall be payable by Borrower to the Bank in
accordance with the terms and conditions set forth in the Note.
(c) Interest shall be calculated on the basis of a year of three
hundred sixty (360) days and actual number of days elapsed, and shall be
paid in immediately available funds monthly in arrears on the first (1st)
day of each month at the offices of the Bank shown above. Any principal or
interest amount not paid within ten (10) days of when due (at maturity, by
acceleration, or otherwise) shall bear interest at a rate which shall be
five percent (5%) above the Rate which would otherwise be applicable
whether or not the Bank has declared a default (but in no event higher than
the maximum legal interest rate) and shall be payable on demand. Such
interest rate shall be in effect until paid.
Increases in the interest rate will result in higher
payments; decreases in the interest rate will result in lower payments.
(d) The Loan and the Note shall mature on June 1, 2010 with all
sums due hereunder and under the Note due and owing on that said date.
(e) The monthly payment shall be applied first to the payment of
interest on the unpaid balance from the last date to which interest has
been paid, to the date of payment, with the remainder, if any, being
applied against principal.
5 Exhibit 10.1
Section 2.05. Prepayments. The Note may be prepaid in whole
or in part pursuant to the terms specified therein.
Section 2.06. Method of Payment. All payments due hereunder shall
be made by automatic debit from a non-interest bearing account maintained
by the Borrower for such purpose at the Bank in which the Borrower shall
maintain balances sufficient to pay each monthly payment due to the Bank.
Each monthly payment of interest shall be automatically deducted from North
Fork Bank account No.________________ in connection with this Agreement and
the Note on the due date thereof (at times, the "due date"), and the
undersigned agrees to maintain sufficient funds in said account to cover
these payments. The Borrower further agrees that should there be
insufficient funds in said account on the monthly payment due date, and
within three (3) business days thereafter, an overdraft charge will be
incurred and the account will not be charged for the monthly payment.
However, if this occurs, the Borrower will remain responsible for the
interest payment, plus any late charges, and the Borrower will be in
default under this Note. In the event that the money maintained in such
account is insufficient for any payment due under this Agreement and the
Note, the Bank may charge any account of the Borrower for any payment due
to the Bank under this Agreement and the Note.
Section 2.07. Use of Proceeds. The proceeds of the Loan
hereunder shall be used by the Borrower for its business purposes. The
Borrower will not, directly or indirectly, use any part of such proceeds
for the purpose of purchasing or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System or to extend credit to any Person for the purpose of purchasing or
carrying any such margin stock.
Section 2.08. Late Fee. The Borrower shall pay to the Bank a late
fee of four (4%) percent of the amount of any payment which is not made
within ten (10) days of its respective due date, or, which cannot be
debited from its account due to insufficient balance therein on the due
date or within three (3) business days thereafter.
Section 2.09. Unused Line Fee. The Borrower agrees to pay to the
Bank from the date hereof, on the first day of each calendar year quarter,
an unused line fee at the annual rate per annum of 25/100 (0.25%) percent
computed on the basis of the actual number of days elapsed over 360 days on
the average daily unused amount of the Commitment Amount. The said fee
will be calculated on a quarterly basis in arrears and will be due and
payable by Borrower on the first day of quarter during the term of this
facility.
Section 2.10. Cancellation. The Revolving Line of Credit
evidenced by this Agreement and the Note may be cancelled by the Borrower
at any time provided all sums due hereunder and under the Note are paid in
full by the Borrower and further subject to the prepayment provisions set
forth in the said Note.
6 Exhibit 10.1
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Initial Loan. The
obligation of the Bank to make the initial Loan and all advances
contemplated hereunder to the Borrower is subject to the Bank's receipt of
the following, satisfactory in form and substance to it and its counsel:
(a) evidence of all Corporate ("Corporate") action by the Borrower
consisting of certified (as of the date of this Agreement) copies of all
Corporate action taken by the Borrower, including Certificate of
Incorporation and all amendments thereto and Corporate resolutions
authorizing the execution, delivery, and performance of the Loan Documents
to which it is a party, and each other document to be delivered pursuant
to this Agreement, in form and substance satisfactory to the Bank and its
counsel; and
(a) this Agreement, duly executed by the Borrower;
(b) the Note, duly executed by the Borrower;
(c) a duly executed Revolving Credit Security Agreement of even
date herewith (at times, the "Revolving Credit Security Agreement" or
"Security Agreement") executed and delivered by the Borrower granting to
the Bank a first position security interest in all assets of the Borrower,
except real property and other property already subject to purchase money
financing lien(s), along with appertaining UCC-1 financing statements, and
evidence of the Bank's priority of lien with respect thereto showing no
other financing statements or other liens;
(d) certificate of good standing with respect to Borrower;
(e) a duly executed Pledge Agreement of even date herewith (at
times, the "Pledge Agreement") made by the Borrower in favor of the Bank,
granting to the Bank a security interest in and assignment and pledge of
all monies, deposits, or other sums now or hereafter held by the Bank on
deposit, in safekeeping, transit or otherwise, at any time credited by or
due from Bank to the Borrower, or in which the Borrower shall have an
interest; and
(f) Documentation deemed sufficient by the Bank and its counsel,
in their sole discretion, verifying the collateral Assignment to the Bank
of a portion of the proceeds of a life insurance policy issued on the life
of Leonard A. Rosenbaum, President and CEO of the Borrower, in the amount
of Five Hundred Thousand and 00/100 ($500,000.00) Dollars which such policy
was issued by Pruco Life Insurance Company of New Jersey (a Stock Company
of the Prudential Insurance Company of America), under policy no. _________
(contract date October 14, 2006) and has a face value of Two Million
and 00/100 ($2,000,000.00) Dollars; and
(g) evidence there has been no pending or threatened litigation
against the Borrower which would, in the Bank's judgment, have a material
adverse effect on the Borrower's ability to perform the obligations
hereunder; and
7 Exhibit 10.1
(h) Opinion of Borrower's Counsel in form satisfactory to the Bank
and its counsel; and
(i) payment by the Borrower of the fees and expenses of counsel to
the Bank; and
(j) payment by the Borrower to the Bank, at or before closing, of a
one time facility fee in the amount of $10,000.00; and
(k) such other certificate, opinions, documents and instruments
confirming or otherwise relating to the transactions contemplated hereby as
may reasonably be requested by the Bank; and
(l) such other documents, and completion of such other matters, as
counsel for the Bank may deem necessary or appropriate.
Section 3.02. Conditions Precedent to Subsequent Advances. The
obligation of the Bank to make each advance, including the initial Advance,
is further subject to the following conditions precedent:
(a) the truth and correctness of the representations and covenants
contained in Article IV hereof; and
(b) there shall have occurred no Event of Default as set forth in
Article VIII hereof; and
(c) timely receipt by the Bank of the Notice of Borrowing as
provided in Section 2.02; and
(d) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for the Bank, would
make it illegal or against the policy of any governmental agency or
authority for the Bank to make advances hereunder; and
(e) the representations and warranties contained in Section VI
shall be true and accurate in all material respects on and as of the date
of such Notice of Borrowing and on the effective date of the making,
continuation or conversion of the Loan and any advances hereunder as though
made at and as of each such date; and
The making of each advance shall be deemed to be a
representation and warranty by the Borrower on the date of the making of
such advance as to the accuracy of the facts referred to in Article 3; and
(f) evidence of no material adverse change to the financial
condition or performance of the Borrower, or to the nature or value of the
Collateral; and
(g) satisfactory evidence that the Bank has been named additional
insured and loss payee with respect to the Collateral with respect to
insurance policies required by the Security Agreement; and
8 Exhibit 10.1
(h) evidence of no pending or threatened litigation against the
Borrower which would, in the Bank's judgment, have a material adverse
effect on the Borrower's ability to perform the obligations hereunder; and
(i) such other certificate, opinions, documents and instruments
confirming or otherwise relating to the transactions contemplated hereby as
may reasonably be requested by the Bank; and
(j) prior to the closing, Borrower shall open an operating account
with the Bank to facilitate the automatic debit provisions of this Loan and
the Note. Such account shall be maintained continuously throughout the
term of the Loan.
9 Exhibit 10.1
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank as follows:
Section 4.01. Corporate Existence and Standing. Borrower is a
corporation duly formed, and validly existing under the laws of the State
of New York; has the corporate power and authority to own its assets and to
transact business in which it is now engaged or proposed to be engaged; and
is duly qualified as a foreign corporation and in good standing under the
laws of each other jurisdiction in which failure to so qualify would have a
material adverse effect upon its business, operation, property or other
condition.
Section 4.02. Corporate Power and Authority. The execution,
delivery and performance by Borrower of the Loan Documents has been duly
authorized by all necessary Corporation action and do not and will not:
(1) require any consent or approval of any third party; and
(2) contravene the Borrower's Certificate of Incorporation, By-
Laws; and
(3) violate in any material respect any provision of any law,
rule, regulation (including, without limitation, Regulation U of the Board
of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to such corporation or LLC; and
(4) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease, or
instrument to which Borrower is a party or by which it or its properties
may be bound or affected if such default would have a material adverse
affect on the business, financial or other condition of Borrower on the
ability of the Borrower to perform its obligations hereunder; and
(5) result in, or require, the creation or imposition of any lien
upon or with respect to any of the properties now owned or hereafter
acquired by Borrower other than the liens created by the Loan Documents;
and
(6) cause the Borrower to be in default in any material respect
under any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination, or award or any such indenture, agreement, lease or
instrument.
Section 4.03. Legally Enforceable Agreement. Each of this Agreement
and the Revolving Credit Note is, and each of the other Loan Documents when
delivered under this Agreement will be, legal, valid, and binding
obligations of the Borrower enforceable against the Borrower in accordance
with its respective terms.
Section 4.04. Other Agreements. The Borrower is not a party to any
indenture, loan, or credit agreement, or to any lease or other agreement or
instrument, or subject to any restriction which could have a material
adverse effect on the ability of Borrower to carry out its obligations
under the Loan Documents. Borrower is not in default in any material
respect in the performance, observance, or fulfillment of any of the
obligations, covenants, or
10 Exhibit 10.1
conditions contained in any agreement or instrument material to its
business to which it is a party.
Section 4.05. Litigation. There is no pending or, to the Borrower's
knowledge, threatened action or proceeding against or affecting Borrower or
its properties before any court, governmental agency, or arbitrator which,
if adversely determined, would, in any case or in the aggregate, materially
adversely affect the financial condition, operations, properties, or
business of Borrower or the ability of Borrower to perform its obligations
under the Loan Documents.
Section 4.06. No Defaults on Outstanding Judgments or Orders. The
Borrower has satisfied all judgments and the Borrower is not in default
with respect to any judgment, writ, injunction, decree, rule, or regulation
of any court, arbitrator, or federal, state, municipal, or other
governmental authority, commission, board, bureau, agency or
instrumentality, domestic or foreign having jurisdiction over Borrower or
its assets, which, if adversely determined, would in any case or in the
aggregate materially adversely affect the financial condition, operations,
properties or business of Borrower or the ability of Borrower to perform
their obligations under the Loan Documents.
Section 4.07. Ownership and Liens. Borrower has good and marketable
title to, or valid leasehold interests in, all of its properties and
assets, real and personal, and none of the properties and assets owned by
Borrower and none of their interests are subject to any lien, except as
disclosed to the Bank herein.
Section 4.08. Financial Statements. All balance sheets, profit and
loss statements and other financial information heretofore furnished to the
Bank by the Borrower are true, correct and complete and present fairly the
financial condition of the Borrower at the dates thereof and for the
periods covered thereby, including contingent liabilities of every kind,
and such financial conditions have not materially adversely changed since
the date of the most recently dated balance sheet of the Borrower
heretofore furnished to the Bank.
Section 4.09. Operation of Business. Borrower possesses all
licenses, permits, franchises, patents, copyrights, trademarks, and trade
name, or rights thereto, necessary or desirable to conduct its business
substantially as now conducted and as presently proposed to be conducted,
and, the Borrower is not in violation of any valid rights of others with
respect to any of the foregoing.
Section 4.10. Taxes. Borrower has filed or caused to be filed all
tax returns (federal, state and local) required to be filed and have paid
all taxes, assessments, and governmental charges and levies thereon to be
due, including interest and penalties, are due and owing except those being
contested in good faith by appropriate proceedings for which the Borrower
has set aside adequate reserves in conformity with GAAP on the books of the
Borrower.
Section 4.11. Insurance. The Borrower has in full force and effect
fire, liability and other forms of insurance policies which are valid,
outstanding, and enforceable policies, as to which premiums have been paid
currently, are with reputable insurers believed by the Borrower to be
financially sound and are, to the Borrower's knowledge, consistent with the
practices of similar concerns engaged in substantially similar operations
as those currently
11 Exhibit 10.1
conducted by the Borrower and in compliance with the requirements of the
Loan Documents. There exists no state of facts, and no event has occurred,
which might reasonably (i) form the basis for any claim against the
Borrower not fully covered by insurance for liability, or (ii) result in
any material increase in insurance premiums. Each policy or policies shall
name the Bank as lienholder and shall remain continuously in effect
throughout the term of the Loan.
Section 4.12. The Security Documents. The provisions of the
Revolving Credit Security Agreement, when duly executed by the Borrower and
UCC-1 financing statements are filed with the Secretary of State of the
State of New York are effective to create in favor of the Bank, a legal,
valid, perfected and enforceable first position security interest in all
right, title, and interest of the Borrower in the Collateral described
thereon. No person or entity has on the date hereof or will have
subsequent to the date hereof any lien or security interest in or to the
Collateral which is, or shall be prior, paramount, superior or equal to the
security interest of the Bank unless otherwise provided herein in a
separate schedule to be attached to this Agreement and initialed by
Borrower and Bank, or as otherwise consented to in writing by Bank.
In accordance with Article 9 of the Uniform Commercial Code
and Revised Article 9 thereof, the Borrower hereby authorizes the Bank to
file such financing statements or amendments thereof as may be necessary in
the form provided in Article 9 of the Uniform Commercial Code and Revised
Article 9, and Forms MV 900 with the Department of Motor Vehicles of the
State of New York, to perfect the security interests created herein and in
the Security Agreement in the collateral described herein and in the
Security Agreement. The Borrower agrees to pay all filing fees and all
other costs and expenses incident to the filing of such statements.
Section 4.13. Continuing Representations. The representations and
warranties contained in Article IV of this Agreement and in any Loan
Document executed and delivered in connection herewith shall be deemed to
be made by the Borrower on and as of the date of the request for the
Revolving Credit loans under this Agreement.
Section 4.14. Full Disclosure. Neither the financial statements nor
any of the Loan Documents or any certificate or written statement furnished
by the Borrower to the Bank in connection with the Loan Documents contains
any untrue statement of a material fact or omits to state any material fact
necessary to make the statements contained therein and herein not
misleading as of the date hereof. There is no fact known to the Borrower
which the Borrower have not disclosed to the Bank in writing prior to the
date of this Agreement, with respect to the transactions contemplated by
the Loan Documents, which materially and adversely affects the condition,
financial or otherwise, results of operations, businesses, properties,
assets or prospects of the Borrower.
Section 4.15. Solvency. The Borrower is solvent, is able to pay its
debts as they become due and has capital sufficient to carry on its
business and all businesses in which it is about to engage, and now own
property having a value both at fair valuation and at present fair salable
value greater than the amount required to pay its debts. The Borrower will
not be rendered insolvent by the execution and delivery of this Agreement
or any of the Loan Documents or by the transactions contemplated hereunder
or thereunder.
12 Exhibit 10.1
Section 4.16. No Defaults. No Event of Default or default exists or
would exist after giving effect to the transactions contemplated by this
Agreement and the other Loan Documents. The Borrower is not and, after
giving effect to such transactions, will not be, in default under any
indenture, agreement or other contractual provision.
Section 4.17. Compliance with Laws, Etc. The Borrower is in
compliance, in all material respects, with all applicable laws, rules,
regulations and orders.
Section 4.18. Shares. INTENTIONALLY OMITTED
Section 4.19. Survival. All of the foregoing representation and
warranties shall survive the making of the Revolving Credit and the
termination of this Agreement.
13 Exhibit 10.1
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Revolving Credit Note or any other obligation
hereunder or thereunder shall remain unpaid or the Bank shall have any
Commitment under this Agreement, Borrower will:
Section 5.01. Maintenance of Existence. Preserve and maintain its
corporate existence and good standing in the State of New York with all
rights, privileges and franchises now enjoyed, and qualify and remain
qualified, as a foreign corporate in other jurisdictions in which the
failure to so qualify would have a material adverse effect upon its
business, operation, property or other condition.
Section 5.02. Maintenance of Records. Keep adequate records and
books of account, in which complete entries will be made in accordance with
GAAP consistently applied, reflecting all financial transactions of the
Borrower.
Section 5.03. Maintenance of Properties. Maintain, keep and
preserve all of its material properties (tangible and intangible) necessary
or useful in the proper conduct of its business in good working order and
condition, ordinary wear and tear excepted, and make all reasonable
repairs, replacements, additions, betterments and improvements thereto.
Section 5.04. Taxes, Etc. Duly pay and discharge all taxes or other
claims which might result in a Lien upon any of its properties except to
the extent such items are being appropriately contested in good faith by
appropriate proceedings and Borrower have maintained adequate reserves, in
accordance with GAAP with respect thereto.
Section 5.05. Conduct of Business. Continue to engage in a business
of the same general type as conducted by it on the date of this Agreement
at the same location.
Section 5.06. Maintenance of Insurance. With respect to its
properties, assets and business, maintain and keep in force, insurance
reasonably satisfactory to the Bank with financially sound and reputable
insurance companies or associations in such amounts and covering such risks
as are usually carried by companies engaged in the same or a similar
business and similarly situated and operated similar properties, assets or
businesses, and as provided in the Loan Documents insuring the Bank as
additional insured and loss payee with respect to the Collateral.
Section 5.07. Compliance with Laws. Comply, in all material
respects with all applicable laws, rules, regulations, and orders, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments, and governmental charges imposed upon it
or upon its respective properties other than those being contested in good
faith by appropriate proceedings, for which the Borrower has set aside
adequate reserves or other security acceptable to the Bank.
Section 5.08. Right of Inspection. At any reasonable time and from
time to time after notice to an officer of the Borrower, permit the Bank or
any agent or representative thereof to examine and make copies of and
abstracts from the records and books of account
14 Exhibit 10.1
of, and visit the properties of the Borrower, and to discuss the affairs,
finances, and accounts of the Borrower with the Borrower's accountants.
Section 5.09. Reporting Requirements. Furnish to the Bank, during
the term of the Loan:
(1) annually, but not later than ninety (90) days after its fiscal
year end, audited financial statements for the immediately preceding fiscal
period. Such financial statements shall be prepared and certified by an
accounting firm reasonably acceptable to the Bank, in its sole and absolute
discretion, and shall include the Statement of Financial Position,
Statement of Activities and Statement of Cash Flow, together with all
appropriate schedules and footnotes, along with comparable prior year
financial statements; and
(2) SEC 10-K reports including audited consolidated fiscal
financial statements of the Borrower prepared by a firm or certified public
accountants acceptable to the Bank with an unqualified opinion, within
ninety (90) days of its fiscal year end; and
(3) SEC 10-Q quarterly financial statements of the Borrower within
sixty (60) days of each quarter end; and
(4) such other financial information with respect to the Borrower
as may be requested by the Bank, from time to time.
All financial data submitted pursuant to this Agreement shall be prepared
in accordance with GAAP consistently applied.
(5) No Default Certificates. Upon request of the Bank at any time
and from time to time, a certificate signed by an officer of the Borrower,
to the effect that no Event of Default hereunder or under any other
agreement to which Borrower is a party or by which it is bound, or by which
any of its properties or assets may be affected, and no event which, with
the giving of notice of the lapse of time, or both, would constitute such
an Event of Default, has occurred; and stating that Borrower are in
compliance with all terms and conditions of this Agreement and the Loan
Documents.
(6) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any court or
governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting Borrower which, if
determined adversely to Borrower could have a material adverse effect on
the financial condition, properties, or operations of Borrower.
(7) Notice of Defaults and Events of Default. As soon as possible
and in any event within three (3) business days after the occurrence of
each Default or Event of Default, a written notice setting forth the
details of such Default or Event of Default and the action which is
proposed to be taken by the Borrower with respect thereto.
(8) Quarterly Compliance Certificates. At the end of each fiscal
quarter during the term of the Loan, a certificate signed by an officer of
the Borrower, to the effect that all of the Financial Covenants set forth
in Section 5.13 below are being maintained and that no Event of Default
exists under such section.
15 Exhibit 10.1
(9) General Information. Such other information respecting the
conditions or operations, financial or otherwise, of Borrower as the Bank
may from time to time reasonably request.
The above reporting requirements are not mutually exclusive and will be in
addition to any and all other requirements and obligations due and owing
from the Borrower to the Bank in the event of default.
Section 5.10. Subsidiaries. Not create or permit to exist any
subsidiary corporation.
Section 5.11. Management. Not change the management of the
Borrower.
Section 5.12. Shares. intentionally omitted
Section 5.13. Financial Covenants. Maintain the following financial
parameters at all times during this Agreement:
(a) At all times during the term of the Loan, Borrower shall
maintain a minimum Debt Service Coverage Ratio of 1.25:1. For
purposes hereof, the term "Debt Service Coverage" shall mean earnings
before interest, taxes, depreciation and amortization for the previous
twelve month period, divided by the interest expense for the prior
twelve (12) month period and aggregate principal payments of loans
and capitalized leases scheduled to be paid over the ensuing twelve
month period, exclusive of any balloon or maturity balance of the
Kidco Realty mortgage and exclusive of the principal balance due at
the maturity of this Loan, all of the aforementioned to be determined
by generally accepted accounting principles consistently applied; and
(b) At all times during the term of the Loan Borrower shall
maintain a minimum Quick Ratio of 0.75:1. For purposes hereof, the
term "Quick Ratio" shall mean the ratio of cash, accounts receivable
and costs in excess of billings on uncompleted contracts divided by
the total current liabilities of the Borrower plus the amount
outstanding under the Loan, to be measured on a quarterly basis,
exclusive of any balloon or maturing balance of the Kidco Realty
mortgage, all of the aforementioned to be determined by generally
accepted accounting principles consistently applied; and
(c) At all times during the term of the Loan, Borrower shall
maintain its primary operating accounts with the Bank; and
(d) Maintain adequate working capital for its operations; and
(e) Not make any capital expenditures or distributions, whether
to shareholders or otherwise, except in the ordinary course of
business.
Section 5.14. Licenses. Obtain, renew, and maintain all licenses
and permits necessary for operation of the Borrower's business. Bank shall
be given prompt notice of any replacement licenses or permits.
16 Exhibit 10.1
ARTICLE VI
NEGATIVE COVENANTS
So long as the Revolving Credit Note or any sums thereunder or any
other obligation hereunder or thereunder shall remain unpaid, Borrower will
not do any of the following without the written consent of the Bank first
obtained:
Section 6.01. Dissolution. Wind-up or dissolve itself or sell,
transfer or lease (other than leases in the ordinary course of business) or
otherwise dispose of all or a substantial part of its assets.
Notwithstanding the foregoing, in the event of its dissolution or
liquidation during the term of the Loan, Borrower's obligation(s) to the
Bank hereunder shall remain senior and superior to any Certificates of
Indebtedness of any of its members.
Section 6.02. Indebtedness.
(ii) Create, incur, assume or suffer to exist any mortgage, lien,
security interest, pledge or other encumbrance on any of its property
or assets, whether now or hereafter owned or acquired except as such
borrowing may be done in its normal business operations and except for
Permitted Encumbrances set forth on the "Permitted Encumbrances
Schedule" annexed hereto and made a material part hereof, without
prior notification to, and written approval from, the Bank.
Section 6.03. Line of Credit. Enter into or create, incur or
otherwise become the beneficiary of, or obligated under, any other line of
credit facility whether secured or unsecured.
Section 6.04. Nature Of Business. Materially change or alter the
nature of its business from the nature of the business engaged in by it on
the Closing Date.
Section 6.05. Expenditures. Borrower shall not make capital
expenditures in excess of $500,000.00 per each fiscal year.
Notwithstanding the foregoing, this limitation shall not apply to any
capital expenditures made during fiscal year 2007 prior to the closing of
this Loan.
Section 6.06. Dividends. Throughout the term of the Loan, Borrower
will not pay out any cash dividends on its common stock.
Section 6.06. Federal Reserve Regulations. Permit any Revolving
Credit or the proceeds of any Revolving Credit under this Agreement to be
used for any purpose which violates or is inconsistent with the provisions
of Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
Section 6.07. Mergers of Acquisitions. Merge with any other entity
without the prior written consent of the Bank.
17 Exhibit 10.1
ARTICLE VII
SECURITY
Section 7.01. Collateral Security. In order to secure the due
payment and performance by the Borrower of all of the Indebtedness of the
Borrower to the Bank hereunder and under the Revolving Credit Note, and all
other instruments and documents executed and delivered in connection
herewith and all other obligations of the Borrower to the Bank, whether now
existing or hereafter incurred, the Borrower shall prior to or concurrently
with the execution and delivery of this Agreement:
(1) grant to the Bank a first position security interest in the
Collateral (as such term is defined herein and in the Revolving Credit
Security Agreement made by the Borrower in favor of the Bank of even date
herewith, the "Collateral") by the execution and delivery to the Bank of
the Revolving Credit Security Agreement or agreements in form and substance
satisfactory to the Bank together with UCC financing statements; and
(2) deliver to the Bank the Pledge Agreement required hereby
granting a security interest in and assignment and pledge of all monies,
deposits, or other sums now or hereafter held by the Bank on deposit, in
safekeeping, transit or otherwise, at any time credited by or due from Bank
to the Borrower, or in which the Borrower shall have an interest as
evidenced by the Pledge Agreement of even date herewith made by the
Borrower in favor of the Bank; and
(3) deliver to the Bank the Pledge Agreement(s);
(4) deliver to Bank a collateral assignment of a portion of the
proceeds of a life insurance policy issued on the life of Leonard A.
Rosenbaum, President and CEO of the Borrower, in the amount of Five Hundred
Thousand and 00/100 ($500,000.00) Dollars which such policy was issued by
Pruco Life Insurance Company of New Jersey (a Stock Company of the
Prudential Insurance Company of America), under policy no. _______________
(contract date October 14, 2006) and has a face value of Two Million and
00/100 ($2,000,000.00) Dollars;
(5) execute and deliver or cause to be executed and delivered such
other agreements, instruments and documents as the Bank may reasonably
require in order to effectuate the purposes of this Section 7.01 hereof.
Section 7.02. Further Assurances. At any time from time to time,
upon the request of the Bank, the Borrower shall execute, deliver and
acknowledge or cause to be executed, delivered and acknowledged such
further documents and instruments and to do such other acts and things as
the Bank may reasonably request in order to fully effect the purposes of
this Agreement, the Revolving Credit Note, the Revolving Credit Security
Agreement or any other agreements, instruments or documents delivered
pursuant hereto or in connection herewith.
Section 7.03. Cross-Default and Cross-Collateral. This Revolving
Credit facility is cross-defaulted and cross-collateralized with each and
every obligation of the Borrower due to the Bank or any successor and/or
assignee or parent or subsidiary thereof. .
18 Exhibit 10.1
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default. If any of the following events
("Events of Default") shall occur:
(1) Borrower fails to pay the principal of, or interest on, the
Revolving Credit Loan or the Revolving Credit Note or any advance
thereunder when due, or failure of Borrower to have sufficient funds in its
account(s) with Bank for loan payments to be debited on the due date
thereof, or within three (3) business days thereafter, or if the Borrower
fails to pay any amount of any fee, or any other amount due and payable
hereunder or under the Loan Documents or otherwise due to the Bank, as and
when due and payable;
(2) if the Borrower fails to pay when due any other part of the
Indebtedness or any other amount payable in connection with the
Indebtedness or any part thereof; and
(3) any representation or warranty made or deemed made by or on
behalf of Borrower in this Agreement or which is contained in any written
instrument, including any certificate, documents, or financial or other
statement furnished by or on behalf of Borrower at any time under or in
connection with any Loan Documents shall prove to have been false or
misleading in any material respect on or as of the date made or deemed
made;
(4) Borrower shall fail to perform or observe any other term,
covenant, or agreement contained in this Agreement or any loan document to
which it is a party on its part to be performed or observed;
(5) Borrower shall fail to perform any term, condition or covenant
of the Revolving Credit Note, the Revolving Credit Security Agreement and
any other Loan Documents of even date herewith and executed in connection
herewith, or any bond, note, debenture, loan agreement, indenture,
guaranty, trust agreement, mortgage or other instrument or agreement in
connection with the borrowing of money or the obtaining of advances or
credit to which it is a party or by which it is bound, or by which any of
its properties or assets may be affected (a "Debt Instrument"), or that, as
a result of any such failure to perform (regardless of the satisfaction of
any requirement for the giving of appropriate notice thereof or the lapse
of time), the indebtedness included therein or secured or covered thereby
may be declared due and payable prior to the date on which such
indebtedness would otherwise become due and payable;
(6) any event or condition referred to any Debt Instrument shall
occur or fail to occur, so that, as a result thereof (regardless of the
satisfaction of any requirement for the giving of appropriate notice
thereof or the lapse of time), the Indebtedness included therein or secured
or covered thereby may be declared due and payable prior to the date on
which such Indebtedness would otherwise become due and payable;
(7) any Indebtedness included in any Debt Instrument or secured or
covered thereby is not paid when due, after giving effect to any applicable
grace period provided for in the documentation relating to such
Indebtedness;
19 Exhibit 10.1
(8) the occurrence of an Event of Default as defined in any of the
Loan Documents, including, without limitation, the Revolving Credit
Security Agreement;
(9) an order for relief under the United States Bankruptcy Code as
now or hereafter in effect, shall be entered against Borrower; or Borrower
shall become insolvent, generally fail to pay its debts as they become due,
make an assignment for the benefit of creditors, file a petition in
bankruptcy, be adjudicated insolvent or bankrupt, petition or apply to any
tribunal for the appointment of a receiver or any trustee for it or a
substantial part of its assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution,
or liquidation law or statute of any jurisdiction, whether now or hereafter
in effect; or if there shall have been filed any such petition or
application, or any such proceeding shall have been commenced against
Borrower, which remains undismissed for a period of sixty (60) days or
more; or Borrower by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or proceeding
or the appointment of a receiver of or any trustee for it or any
substantial part of any of its properties, or shall suffer any such
receivership or trusteeship to continue undischarged for a period of forty-
five (45) days or more;
(10) any judgment, Federal, State or municipal tax lien entered
exceeding $10,000.00 against Borrower, or any attachment, levy or execution
exceeding $10,000.00 against any of their respective properties for any
amount shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of sixty (60) days or more;
(11) the Bank shall have determined, in its reasonable business
judgment, that one or more conditions exist or events have occurred which
has resulted in a material adverse change in the business, properties or
financial condition of Borrower;
(12) dissolution, whether voluntary or involuntary, of the Borrower
or a change in composition of the Borrower;
(13) the happening of any event which, in the judgment of
the Bank, materially adversely affects: (i) the ability of the Borrower to
repay the Note; or (ii) the aggregate value of the collateral used to
secure the Note;
(14) for any reason any Loan Document ceases to be in full force
and effect or any lien or any collateral purported to be created by any
Loan Document ceases to be or is not a valid and perfected lien to the
extent and with the priority contemplated thereby or thereby, and no
substitute collateral acceptable to the Bank, in its sole and exclusive
discretion, is put in place within thirty (30) days;
(15) formal charges under Federal or State law shall be filed
against Borrower for which forfeiture is a potential penalty;
(16) failure to provide any financial information on request or
permit an examination of books and records;
(17) failure to pay any amount on this or any other obligation
owed to the Bank by Borrower or any other related entity;
20 Exhibit 10.1
(18) failure of the Borrower to utilize the Bank as its/their
primary bank and to maintain all relevant accounts at the Bank during the
term hereof;
then, and in any such event, the Bank may, upon five (5) days prior
written notice to the Borrower, declare the Revolving Credit Note, all
interest thereon, all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the
Revolving Credit Note, all such interest, and all such amounts payable
hereunder or under the other Loan Documents shall become and be forthwith
due and payable, without notice, presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by the
Borrower. Bank may exercise any and all remedies available whether under
this Agreement, by law, or otherwise.
Notwithstanding the foregoing, upon the occurrence of an Event of
Default as set forth in (9) above, all interest thereon, all other amounts
payable under this Agreement or under the Loan Documents shall
automatically become due and payable.
The provisions of this Article VIII are in addition to any provision
in any loan document. In the event of any conflict between the provisions
of this Article VIII and any provision of any loan document, the provisions
more restrictive to Borrower shall apply.
21 Exhibit 10.1
ARTICLE IX
MISCELLANEOUS
Section 9.01. Entire Agreement; Amendments, etc. This Agreement
and the other Loan Documents constitute the entire agreement among the
parties hereto and thereto as to the subject matter hereof and thereof and
supersede any previous agreement, oral or written, as to such subject
matter. No amendment, modification, termination, or waiver of any loan
document, nor shall in any event be effective unless the same shall be in
writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given.
Section 9.02. Notices, etc. All notices and other communications
provided for under this Agreement and under the other Loan Documents shall
be in writing (including telefax communication) and mailed, telegraphed,
telefaxed or sent by recognized overnight delivery service, to the address
set forth above, or, at such other address as shall be designated by such
party in a written notice to the other party complying as to deliver with
the terms of this Section. All such notices and communications shall, if
telefaxed or delivered by hand, be effective when received, or if mailed,
three days after deposited in the mails addressed as aforesaid; provided,
however that notices to the Bank shall not be effective until received by
the Bank.
Section 9.03. No Waiver; Remedies. No failure on the part of the
Bank to exercise, no delay in exercising any right, power, or remedy under
any right shall operate as a waiver thereof. The remedies provided in the
Loan Documents are cumulative of each other and not exclusive of any
remedies provided by law. No modification or waiver of any provision of
this Agreement, or of the Revolving Credit Note, nor consent to departure
by the Borrower from any provisions hereof or thereof, shall be effective
unless the same shall be given in writing from the Bank and then such
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it is given. No notice to the Borrower
shall entitle the Borrower to any other or further notice in other or
similar circumstances unless expressly provided for herein. No course of
dealing between the Borrower and the Bank shall operate as a waiver of any
of the rights of the Bank under this Agreement.
Section 9.04. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Bank and
their respective successors and assigns, except that the Borrower may not
assign or transfer any rights under any loan document without the prior
written consent of the Bank. The Bank reserves the right to sell
participations in or to sell and assign the Revolving Credit Note and
Agreements and all other Loan Documents to such Banks, lending institutions
or other parties as it may choose without the consent of Borrower.
Section 9.05. Costs, Expenses, and Taxes. The Borrower agrees to
pay on demand all reasonable costs and expenses in connection with the
preparation, execution, delivery, filing, recording, and administration of
any of the Loan Documents, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Bank and all costs and
expenses, if any, in connection with the enforcement of any of the Loan
Documents. In addition, the Borrower shall pay any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and
22 Exhibit 10.1
recording of any of the Loan Documents and other documents to be delivered
under any such Loan Documents, and shall save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay
in paying or the omission to pay such taxes and fees.
Section 9.06. Regulatory Changes; Additional Fees. If any
Regulatory Change shall either (i) impose, modify or deem applicable or
result in the application of, any reserve, special deposit, capital
maintenance, capital ratio or similar requirement against loans or loan
commitments made by the Bank or against any other extensions of credit or
commitments to extend credit or other assets of or any deposits or other
liabilities taken or entered into by the Bank or (ii) impose on the Bank
any other condition regarding this Agreement or the Bank's Commitment, and
the result of any event referred to in clause (i) and (ii) above shall be
to increase the cost to the Bank of making or maintaining, or to impose
upon the Bank or increasing any capital requirement applicable as a result
of the making or maintenance of, the Bank's Commitment or the obligation of
the Borrower hereunder to reduce the amounts receivable by the Bank
hereunder (which increase in cost or increase in (or imposition of) capital
requirements or reduction in amounts receivable may be determined by the
Bank's reasonable allocation of the aggregate of such cost increases,
capital increases or impositions or reductions in amounts receivable
resulting from such events) then, upon demand by the Bank, the Borrower
shall within five (5) business days after notice pay to the Bank from the
time as specified by the Bank, additional fees which shall be sufficient to
compensate the Bank for such increased costs or increase in (imposition of)
capital requirements or reduction in amounts receivable by the Bank from
the date of such change, together with interest on each such amount from
the date demanded until payment in full thereof at the rate provided in
this Agreement.
Upon the occurrence of any event referred to in clause (i) or (ii) above, a
certificate setting forth in reasonable detail the increased cost,
reduction in amounts receivable or amounts necessary to compensate the Bank
as a result of an increase in (or imposition of) capital requirements shall
be submitted by such Bank to the Borrower. Determinations by the Bank for
purposes of this Section 9.06 of the effect of any Regulatory Change on its
costs of making or maintaining loans hereunder or on amounts receivable by
it in respect of loans hereunder, and of the additional amounts required to
compensate such Bank in respect of any additional costs, shall be deemed
presumptive evidence of all such amounts absent manifest error.
Section 9.07. Right of Setoff. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any
time and from time to time, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) monies,
securities or other properties of Borrower, and the proceeds thereof, now
or hereafter held or received by or in transmit to the Bank from or for
Borrower, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and other indebtedness at any time owing by the
Bank to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement or the Bank's Revolving Credit Note or any other loan document,
irrespective of whether or not the Bank shall have made any demand under
this Agreement or the Revolving Credit Note or such other loan document and
although such obligations may be unmatured. This provision is in addition
to and not in limitation of any right of the Bank by statute or common law.
23 Exhibit 10.1
Section 9.08. Choice of Law; Construction. The Loan Documents
(other than those containing a contrary express choice of law provision)
shall be construed in accordance with the internal laws (and not the law of
conflicts) of the State of New York. If any provision of the Loan
Documents shall be or become unenforceable or illegal under any law, the
other provisions shall remain in full force and effect.
Section 9.09. Consent to Jurisdiction.
(1) The Borrower hereby irrevocably submits to the exclusive
jurisdiction of the New York State court sitting in Suffolk County or the
United States District Court sitting in the Eastern District of New York or
in any action or proceeding arising out of or relating to any Loan
Documents and the Borrower hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in any
such court and irrevocably waives any objection it may now or hereafter
have as to the venue of any such action or proceeding brought in such a
court or the fact that such court is an inconvenient forum.
(2) The Borrower irrevocably and unconditionally consents to the
service of process in any such action or proceeding in any of the aforesaid
courts by service effectuated in accordance with applicable law.
Section 9.10. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING
IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
Section 9.11. Limited Role of Bank. The relationship between the
Borrower and the Bank shall be solely that of Borrower and Bank,
respectively. The Bank shall not have any fiduciary responsibilities to
the Borrower and no joint venture exists between the Borrower and the Bank.
The Borrower and the Bank hereby severally acknowledge that there are no
representations, warranties, covenants, undertakings or agreements by the
parties hereto as to the Loan Documents, except as specifically provided
herein and therein.
Section 9.12. Severability of Provisions. Any provision of any loan
document which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such loan
document or affecting the validity or enforceability of such provision in
any other jurisdiction.
Section 9.13. Interest. Anything in this Agreement or in the
Revolving Credit Note to the contrary notwithstanding, the Bank shall not
charge, take or receive, and the Borrower shall not be obligated to pay,
interest in excess of the maximum rate from time to time permitted by
applicable law.
Section 9.14. Custodian. Upon the occurrence of any Event of
Default, the Bank may at any time and from time to time, employ and
maintain a custodian selected by the Bank, who shall have authority to
enter upon the premises of the Borrower for the purposes
24 Exhibit 10.1
of protecting the Bank's interest in the collateral and who shall have
authority to take such steps as the Bank deems necessary to protect the
collateral, at the cost of the Borrower.
Section 9.15. Attorney's Fees. Borrower shall pay all costs and
expenses of the Bank in connection with the enforcement of this Agreement
or the collection of any amounts due to Bank hereunder or under the Loan
Documents, including but not limited to the Bank's attorney's fees.
Borrower shall pay such amounts regardless of whether an action is
commenced and whether or not in the court of original jurisdiction,
appellate court, bankruptcy court or otherwise.
Section 9.16. Headings. Article and Section headings in the Loan
Documents are included in such Loan Documents for convenience and reference
only and shall not constitute a part of the applicable Loan Documents for
any other purpose.
Section 9.17. Release. Borrower acknowledges that it has no claims
or causes of action against the Bank and hereby releases the Bank from any
and all claims or causes of action which may exist as of the date hereof.
25 Exhibit 10.1
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date
first above written.
CVD EQUIPMENT CORPORATION,
a New York corporation
Borrower
By:
LEONARD A. ROSENBAUM,
President and CEO
By:
GLEN CHARLES,
Secretary and Chief Financial Officer
NORTH FORK BANK
By:
STEVEN E. RATNER,
Senior Vice President
26 Exhibit 10.1
State of New York )
) : ss.:
County of Suffolk )
On June 1, 2007, before me, the undersigned, personally appeared
LEONARD A. ROSENBAUM personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed same in his
capacity, and that by his signature in the instrument, the individual, or
the person upon behalf of which the individual acted, executed the
instrument.
_____________________________
Notary Public
State of New York )
) : ss.:
County of Suffolk )
On June 1, 2007, before me, the undersigned, personally appeared GLEN
CHARLES personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within
instrument and acknowledged to me that he executed same in his capacity,
and that by his signature in the instrument, the individual, or the person
upon behalf of which the individual acted, executed the instrument.
_____________________________
Notary Public
State of New York )
) : ss.:
County of Suffolk )
On June 1, 2007, before me, the undersigned, personally appeared
STEVEN E. RATNER personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed same in his
capacity, and that by his signature in the instrument, the individual, or
the person upon behalf of which the individual acted, executed the
instrument.
_____________________________
Notary Public
27 Exhibit 10.1
Permitted Encumbrances Schedule
Permitted Encumbrances shall mean: (a) liens expressly permitted and
consented to in writing by the Bank; (b) liens of local or state
authorities for franchise or other like taxes, provided that the aggregate
amounts of such liens shall not exceed $10,000.00 in the aggregate at any
one time; (c) statutory liens of landlords and liens of carriers,
warehousemen, bailees, mechanics, materialmen and other like liens imposed
by law, created in the ordinary course of business and for amounts not yet
due (or which are being contested in good faith, by appropriate proceedings
or other appropriate actions which are sufficient to prevent imminent
foreclosure of such liens and for which the Borrower has deposited with the
Bank an amount sufficient to pay such amount in full in the event the
Borrower does not prevail) and with respect to which adequate reserves or
other appropriate provisions are being maintained by the Borrower in
accordance with GAAP; (d) liens granted the Bank by Borrower; (e) tax liens
which are not yet due and payable; and (f) the security interests evidenced
by the following UCC financing statements, to wit:
1) Lien of North Fork Bank evidenced by UCC financing statement number
109272 filed on May 28, 1997 with the New York State Department of State;
and
2) Lien of GE Capital Public Finance, Inc. evidenced by UCC financing
statement number 056629 on March 11, 2002 with the New York State
Department of State; and
3) Lien of GE Capital Public Finance, Inc. evidenced by UCC financing
statement number 056641 on March 11, 2002 with the New York State
Department of State; and
4) Lien of Town of Islip Industrial Development Agency and GE Capital
Public Finance, Inc. evidenced by UCC financing statement number 063580 on
March 19, 2002 with the New York State Department of State; and
5) Lien of North Fork Equipment Leasing evidenced by UCC financing
statement number 200211202607364 on November 20, 2002 with the New York
State Department of State; and
6) Lien of North Fork Bank evidenced by UCC financing statement number
200703275327485 filed on March 27, 2007 with the New York State Department
of State.
28 Exhibit 10.1
Exhibit "B"
REQUEST FOR ADVANCE
To: North Fork Bank
275 Broadhollow Road
Melville, New York 11747
Attn: Steven Ratner, SVP or Gerard Waters, VP
Request for Advance pursuant to Revolving Line of Credit Note ("Note")
between CVD EQUIPMENT CORPORATION ("Borrower") and North Fork Bank
("Lender") dated June 1, 2007, made by Borrower to North Fork Bank.
Pursuant to the Note, the Borrower hereby requests the Bank make an advance
in the amount of __________________________($ ) Dollars on
__________________, crediting Account No. ________________, which amount
shall be absolutely due and owing under the terms of the Note.
Interest Rate Option:
[ ] Prime or [ ] LIBOR
If LIBOR, the duration of the Interest Rate Period applicable to this
advance shall be:
[ ] one month...or...[ ] two months...or...[ ] three months
If this is a renewal:
The renewal date is ____________________________.
The amount of the Loan to be renewed is ___________________($ ).
The duration of the Interest Period applicable to this renewal is:
[ ] one month...or...[ ] two months...or...[ ] three months
OR
Convert $___________________________ loan to Prime
In connection with this request for advance or renewal, the Borrower hereby
certifies to the Bank that:
1) The representations and warranties contained in the Note and the
Revolving Credit Agreement dated June 1, 2007 between the Borrower and
Lender ("RCLA") are true and accurate in all material respects on and
as of the date hereof as though made on and as of such date;
2) No Default or Event of Default as defined in the Note and/or RCLA has
occurred and is continuing, or would result from such advance; and
3) The Note and the RCLA, inclusive of the amount of the requested
advance or renewal, are valid and binding obligations of the Borrower,
each enforceable in accordance with its respective terms.
Dated: __________________
By:____________________________
LEONARD A. ROSENBAUM,
President