Exhibit 10.2
For Bank use only:
Received by: _________________
Approved by: _________________
Other: _________________
CAPITAL ONE, N.A.
CONSOLIDATED AND RESTATED MORTGAGE NOTE
BORROWER: CVD EQUIPMENT CORPORATION,
a New York corporation
PRINCIPAL: $805,000.00
DATE: June 30, 2008
PROMISE TO PAY: The undersigned (the "Borrower"), jointly and severally if more
than one signer, does hereby promise to pay to the order of CAPITAL ONE, N.A.
(the "Bank") at its offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
or at any of its branches, the sum of EIGHT HUNDRED FIVE THOUSAND AND 00/100
($805,000.00) DOLLARS plus interest thereon, from the date hereof in the manner
set forth below.
RATE AND PAYMENT: The unpaid principal balance hereof shall bear interest at a
fixed annual rate of interest of Six and 20/100 percent (6.20%) (at times, the
"Rate"), payable monthly in arrears, and repayment shall be from the date hereof
up to July 1, 2018 (the "Maturity Date") as follows:
(1) in one payment due and payable at closing in the amount of $138.64
representing interest on the principal amount outstanding hereunder from the
date hereof to July 1, 2008; and, then
(2) in one hundred nineteen (119) consecutive monthly payments each
consisting of principal and interest in the amount of $5,903.27, commencing and
due and payable on the first (1st) day of August, 2008 and continuing on the
first (1st) day of each and every month thereafter; and, then
(3) in one final payment due and owing on the Maturity Date consisting of
the entire unpaid principal balance hereof and all accrued interest and/or
related charges due to the Bank hereunder.
THIS NOTE SHALL MATURE ON JULY 1, 2018 WITH ALL SUMS OF PRINCIPAL, ACCRUED
INTEREST AND RELATED CHARGES DUE AND OWING ON SUCH DATE.
Payments shall be applied first to interest on unpaid principal balance hereof
to the date payment is received by the Bank and then to reduction of principal.
Interest shall be calculated on a 360 day year and actual number of days
elapsed.
All payments due hereunder shall be made by automatic debit from an 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.
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Each monthly payment of principal and interest shall be automatically deducted
from Capital One, N.A. Account No. [OMITTED] in connection with this 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
undersigned further agrees that should there be insufficient funds in any of
▇▇▇▇▇▇▇▇'s accounts with the Bank to be charged for any monthly payment
hereunder on the monthly payment due date, an overdraft charge will be incurred
and the account will not be charged for the monthly payment. However, if this
occurs, the undersigned will remain responsible for the principal and interest
payment, plus any late charges, and the undersigned 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 Note, the Bank may charge any
account of the Borrower or any Guarantor hereof for any payment due to the Bank
under this Note.
PREPAYMENT: This Note may be prepaid, upon no less than thirty (30) days' prior
written notice from the Borrower to the Bank, provided the Borrower is not in
default, all accrued interest and any and all applicable charges due hereunder
have been paid to the date of such prepayment, and further provided that in
connection with any prepayment in whole or in part the undersigned shall to the
Bank a prepayment fee equal to two (2%) percent of the principal sum so prepaid.
If this Note is prepaid in part, then any such prepayment shall be applied
against the payments due hereunder in inverse order of maturity.
DEFAULT INTEREST RATE: The unpaid principal sum due under this Note shall bear
interest at a rate equal to five (5%) percent above the applicable Rate herein
on and after the occurrence of any Event of Default as herein described and
until the entire principal sum hereof has been fully paid, both before and after
the entry of any judgment with respect to such event, but in no event shall the
Rate either before or after the occurrence of any Event of Default exceed the
highest rate of interest, if any, permitted under the applicable New York or
Federal Law.
RIGHT OF OFFSET: If any payment is not made on time, or if the entire balance
becomes due and payable and is not paid, all or part of the amount due may be
offset out of any account or other property which the Borrower or the Guarantors
hereof has at the Bank or at any affiliate of the Bank without prior notice or
demand.
LATE CHARGES: The Borrower will pay a charge of four (4%) percent of the amount
of any payment which is not made within ten (10) days of its respective due
date.
SECURITY: This Note is secured by:
(1) 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 to the Guarantor hereof, or in which the Borrower or the
Guarantor shall have an interest;
(2) a first position mortgage lien evidenced by a Mortgage and Security
Agreement of even date herewith made by ▇▇▇▇▇▇▇▇ in favor of the Bank (the
"Mortgage") encumbering certain real property owned by the Borrower known as,
and located at, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of Ulster,
and State of New York and formally described on the Tax Maps of the said County
of Ulster as Section 17.4, Block 2, Lot 31 (hereinafter referred to, at times,
as the "Premises");
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(3) a Consolidation, Extension and Modification Agreement of even date
herewith (the "CEMA") encumbering the Premises; and
(4) an Assignment of all Leases and Rents from the Premises that is the
subject of the Mortgage and CEMA;
(5) a security interest in all personal property of the Borrower evidenced
by a Security Agreement of even date herewith made by the Borrower in favor of
the Bank and appertaining UCC-1 financing statement, excluding any of the
Borrower's equipment financed under chattel liens held by the Bank;
(6) a collateral Assignment by Borrower to the Bank of a portion of the
proceeds of a life insurance policy issued on the life of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
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. [OMITTED] (contract date October 14, 2006)
and has a face value of Two Million and 00/100 ($2,000,000.00) Dollars.
FINANCIAL COVENANTS: The Borrower expressly covenants and represents that at all
times during the term hereof, it shall comply with the following financial
covenants, to wit:
(a) Borrower shall maintain a Maximum Leverage of 1.20:1. For purposes
hereof, the term "Maximum Leverage" shall mean the ratio of total liabilities of
the Borrower divided by its tangible net worth at all times; and
(b) Borrower shall maintain a minimum Debt Service Coverage Ratio of
1.25:1. For purposes hereof, the term "Debt Service Coverage" shall mean
earnings of the Borrower 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 (12) month
period, exclusive of any balloon or maturity balance of (i) any loans made by
the Bank to the Borrower including, without limitation, the loan evidenced by
the Note; and (ii) the GE Capital mortgage loan made to the Borrower, and
exclusive of the principal balance due at the maturity of the Note.
DEFAULT: The Bank may declare the entire unpaid balance of this Note due and
payable on the happening of any of the following events (each, an "Event of
Default" or, collectively, "Events of Default"):
(a) failure to pay any amount required by this Note within ten (10) days of
its respective due date, or any other obligation owed to the Bank by Borrower,
or, failure of the Borrower to have sufficient funds in its account(s) for
payments due hereunder to be debited on the due date or within three (3)
business days thereafter;
(b) failure to perform or keep or abide by any term, covenant or condition
contained in this Note or the Mortgage or the CEMA or any other document or
instrument given to the Bank in connection with this or any other loan;
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(c) the filing of a bankruptcy proceeding, assignment for the benefit of
creditors, issuance of any execution, garnishment, or levy against, or the
commencement of any proceeding for relief from indebtedness by or against the
Borrower;
(d) the happening of any event which, in the judgment of the Bank
substantially affects: (i) the Borrower's ability to repay this Note; or (ii)
the value of the Premises; or (iii) the value of any collateral for this Note or
the Mortgage or the CEMA;
(e) if any written representation or statement made to the Bank by the
Borrower is untrue;
(f) if any written representation, covenant or warranty made to the Bank by
the Borrower is breached;
(g) the occurrence of an Event of Default under the Mortgage, the CEMA, any
Guaranty, or any other document or instrument given to the Bank in connection
with this Note, the Mortgage, the CEMA or any other loan;
(h) Inability of the Borrower to manage its affairs, or the voluntary or
involuntary dissolution of the Borrower;
(i) failure of the Borrower to utilize the Bank as its/their primary bank
and to maintain relevant accounts at the Bank during the term hereof;
(j) default by Borrower under any other guaranty or loan document or other
agreement made in favor of, or with, the Bank.
(k) 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;
(l) Failure of the Borrower to provide the Bank with the following during
the term of this Note:
(i) 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 one hundred five
(105) days of its fiscal year end; and
(ii) SEC 10-Q quarterly financial statements of the Borrower within sixty
(60) days of each quarter end; and
(iii) compliance and covenant calculations for the Borrower on a quarterly
basis to be submitted with each of the afore-mentioned financial statements;
(m) Failure of the Borrower, during the term hereof, to maintain a Maximum
Leverage of 1.20:1. For purposes hereof, the term "Maximum Leverage" shall mean
the ratio of total liabilities of the Borrower divided by its tangible net worth
at all times;
(n) Failure of the Borrower, during the term hereof, to maintain a minimum
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Debt Service Coverage Ratio of 1.25:1. For purposes hereof, the term "Debt
Service Coverage" shall mean earnings of the Borrower 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 (12) month period, exclusive of any balloon or maturity balance
of (i) any loans made by the Bank to the Borrower including, without limitation,
the loan evidenced hereby; and (ii) the GE Capital mortgage loan made to the
Borrower, and exclusive of the principal balance due at the maturity of this
Note;
(o) Borrower shall fail to pay its debts, liabilities and obligations to
the Bank as and when due and payable, or Borrower fails to perform or observe
any term, covenant, or condition on its part to be performed or observed under
any agreement or instrument relating to any such debts, liabilities and
obligations when required to be performed or observed, if the effect of such
failure to perform or observe is to accelerate, or to permit the acceleration
after the giving of notice or passage of time, or both, of the maturity of such
debts, liabilities and obligations, whether or not such failure to perform or
observe shall be waived by the holder of such debts, liabilities and
obligations, or any such debts, liabilities and obligations shall be declared to
be due and payable, or be required to be prepaid (other than by a regularly
scheduled required prepayment) prior to the stated maturity of such debts,
liabilities and obligations;
(p) payment by the Borrower of cash dividends on its common stock during
the term of this Note.
Notwithstanding the foregoing, the balance of this Note shall become immediately
due and payable upon the occurrence of any of the events set forth in (c) above.
ATTORNEY'S FEES: In the event the Bank retains counsel with respect to
enforcement of this Note or any other document or instrument given to the Bank,
the Borrower agrees to pay the Bank's reasonable attorney's fees and associated
costs and disbursements (whether or not an action is commenced and whether or
not in the court of original jurisdiction, appellate court, bankruptcy court, or
otherwise).
SUBSEQUENT AGREEMENTS: The Borrower shall be bound by any agreement extending
the time or modifying the above terms of payment made by the Bank and any
owner(s) of the property covered by the Mortgage or the CEMA referred to herein,
without notice to the Borrower or the Guarantor, and the Borrower and Guarantors
shall continue to be liable to pay all amounts due hereunder, but at an interest
rate not exceeding the rate set forth herein, according to the terms of any such
agreement of extension or modification.
MISCELLANEOUS: Delay or failure of the Bank to exercise any of its rights under
this Note shall not be deemed a waiver thereof. No waiver of any condition or
requirement shall operate as a waiver of any other or subsequent condition or
requirement. The Bank or any other holder of this Note does not have to present
it before requiring payment. The Borrower and the Guarantors, jointly and
severally, waive trial by jury, offset, and counterclaim with respect to any
action arising out of or relating to this Note. This Note may not be modified or
terminated orally. This Note shall be governed by the laws of the State of New
York without regard to its conflict of laws rules. The Borrower and the
Guarantors irrevocably consent to the jurisdiction and venue of the New York
State Supreme Court, Suffolk County or Ulster County, said venue being chosen in
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the sole and absolute discretion of the Bank, in any action concerning this
Note. This Note is binding upon the Borrower and the Guarantors and all of their
respective heirs, successors and assigns.
All signatories to this Note, jointly and severally, waive presentment for
payment, notice of dishonor, protest, notice of protest of this Note or other
notice of any kind and all demands whatsoever; and in any litigation with the
Bank, whether or not arising out of or relating to this Note or any collateral
security therefore, said parties expressly waive trial by jury, and in addition,
expressly waive the right to interpose any defense based on any statute of
limitations or any claim of laches and any set-off, counterclaim, or cross-claim
of any nature or description.
No failure to accelerate the debt evidenced hereby by reason of an Event of
Default hereunder, acceptance of a past due installment, or indulgence granted
from time-to-time shall be construed (a) as a novation of this Note or a
reinstatement of the indebtedness evidenced hereby or as a waiver of such right
or acceleration or the right of the Bank thereafter to insist upon strict
compliance with the terms of this Note, or (b) to prevent the exercise of such
right of acceleration or any other right granted hereunder or by applicable law;
and ▇▇▇▇▇▇▇▇ and the Guarantors hereby expressly waive the benefit of any
statute or rule of law or equity now provided, which may hereafter be provided,
which would produce a result contrary to or in conflict with the foregoing. No
extension of the time for the payment of this Note or any installment due
hereunder, made by agreement with any person now or hereafter liable for the
payment of this Note, shall operate to release, discharge, modify, change or
affect the original liability of Borrower under this Note, either in whole or in
part, unless the Bank agrees otherwise in writing. No provision of this Note may
be changed, waived, discharged, or terminated except by an instrument in writing
signed by the party against whom enforcement of the waiver, change, modification
or discharge is sought. The Bank may, without the consent of Borrower, release
or discharge the Borrower, accommodation party, or surety or release, surrender,
waive, substitute, compromise, or discharge any security herefor without
affecting the liability of the Borrower hereunder.
This Note is cross-defaulted and cross-collateralized with each and every
obligation of the Borrower due to the Bank, any successor and/or assign or
parent or subsidiary thereof. Any Event of Default under any other loan or
obligation made by Bank to the Borrower, or any other obligation of the Borrower
in favor of the Bank, shall be deemed an Event of Default hereunder. The loan
evidenced by this Note, and any other obligation of the Borrower due to the
Bank, are hereby collateralized with the same security and collateral securing
this Note and any other said loan or obligation.
The Borrower shall not, without the prior written consent of the Bank hereof,
enter into any transaction of merger, sale or consolidation or transfer, sell,
assign, lease or otherwise dispose of any parcel or parcels of real property as
described herein or in the Mortgage or the CEMA or any or all or a substantial
part of their assets, individually or jointly subject to the terms and
conditions set forth in the Mortgage or the CEMA of even date herewith.
The terms of the said Mortgage and CEMA are incorporated into this Note by
reference with the same force and effect as if fully set forth at length herein.
The Borrower expressly warrants and represents that no statements, agreements or
representations, whether oral or written, have been made by the Bank, or by any
employee, agent or broker of the Bank with respect to the obligation or debt
evidenced by this Note. The Borrower further expressly warrants and represents
that (a) no oral commitment has been made by the Bank to extend or continue any
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credit to the Borrower or any party other than as expressly stated herein or in
those certain documents executed in connection herewith, (b) no representation
or agreement has been made by or with the Bank, or any employee, agent or broker
of the Bank, to forebear or refrain in any way from exercising any right or
remedy in its favor hereunder or otherwise unless expressly set forth herein,
and (c) the Borrower has not and will not rely on any commitment to extend or
continue any credit, nor on any agreement to forebear or refrain from exercising
rights or remedies unless such commitment or agreement shall be in writing and
duly executed by an authorized officer of the Bank.
In accordance with Article 9 of the Uniform Commercial Code and Revised Article
9 thereof, the Borrower hereby authorizes the Bank to sign and file financing
statements at any time with respect to any security herefor or for the Mortgage
and CEMA without the signature or any further authorization of the Borrower. The
Borrower agrees to pay all filing fees and all other costs and expenses incident
to the filing of such statements.
This Note is a consolidated note meant to consolidate and restate the debts
under the following notes, to wit: (a) Note dated November 14, 1988 made by
Kidco Realty Corp. in favor of Dutchess Bank & Trust Company, in the principal
sum of Five Hundred Thousand and 00/100 ($500,000.00) Dollars and interest
thereon; and (b) Note dated April 29, 1999 made by CVD Equipment Corporation in
favor of Kidco Realty, Ltd., in the principal sum of Six Hundred Two Thousand
Five Hundred Three and 13/100 ($602,503.13) Dollars and interest thereon; which
such Notes "a" and "b" were consolidated and superseded by (c) an Amended
Restated and Consolidated Promissory Note made by CVD Equipment Corporation in
favor of Kidco Realty, Ltd., in the principal sum of Nine Hundred Thousand and
00/100 ($900,000.00) Dollars and interest thereon; and (d) Note dated June 30,
2008 made by CVD Equipment Corporation in favor of Capital One, N.A., in the
principal sum of Sixteen Thousand Nine Hundred Thirty Six and 50/100
($16,936.50) Dollars and interest thereon, which such notes heretofore
designated (a), (b), (c) and (d) and the obligations thereunder are currently
owned and held by the Bank.
IN WITNESS WHEREOF, the Borrower has signed this Note the 30th day of June,
2008.
CVD EQUIPMENT CORPORATION,
a New York corporation,
Borrower
By: /s ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇,
Secretary and CFO
▇▇▇▇▇▇▇▇'s Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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State of New York )
) ss.:
County of Suffolk )
On June 30, 2008, before me, the undersigned, personally appeared ▇▇▇▇
▇▇▇▇▇▇▇, 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.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Notary Public
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