Exhibit 10.17
-------------
PROMISSORY NOTE
---------------
$100,000.00 Date: June 6,2002
AMERICAN BIO MEDICA CORPORATION
Borrower
000 Xxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Borrower's Address
1. BORROWER'S PROMISE TO PAY
AMERICAN BIO MEDICA CORPORATION, a New York corporation, (the
"Borrower" or the "Undersigned"), for value received, promises to pay to the
order of COLUMBIA ECONOMIC DEVELOPMENT CORPORATION (hereinafter referred to as
"CEDC," "Lender" or "Note Holder") the sum of ONE HUNDRED THOUSAND AND 00/100
($100,000.00) DOLLARS (the "Principal") at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx
00000, which shall be paid at such rate and in accordance with such terms as
indicated below.
2. RATE
The Borrower shall pay interest at the rate indicated below (the
"Interest Rate").
If the Borrower does not reach the employment goal of 55 full-time
equivalent employees at the Borrower's Kinderhook, New York facility by March
31, 2004, the interest rate shall be three (3.0%) percent per annum, effective
April 1, 2004.
If the employment level at the Borrower's Kinderhook, New York facility
shall fall below 45 full-time equivalent employees at any time after the date of
this Note, then the interest rate shall not be three (3.0% ) percent per annum,
and the preceding paragraph shall not apply. Instead, the interest rate shall be
a variable interest rate equal to the Wall Street Journal prime rate as of the
first business date in the preceding January, and the rate will be adjusted each
January thereafter for the remaining term of the loan based on the Wall Street
Journal prime rate on the first business date in January for each year
thereafter. The Wall Street Journal prime rate is defined as the highest prime
rate published in the Wall Street Journal. The interest rate referenced herein
will become effective as of the date that the employment level at the Borrower's
Kinderhook, New York facility falls below 45 full-time equivalent employees.
The Lender is not required to deliver any notice to the Borrower of a
change in the interest rate. However, upon request, the Lender shall provide the
Borrower with information regarding the dates and amounts of the change in the
interest rate. There is no maximum limit on the amount that the interest rate
may change.
3. REPAYMENT TERMS
The Borrower will repay this Note by making successive monthly payments
of Principal and interest based upon the amount due amortized over a ten (10)
year period commencing on the first day of the second month after repayment of
the amount due on the Note is required, and ending on the first day of the one
hundred twentieth (120) month thereafter when the remaining unpaid Principal and
interest shall be due and payable in full. The Borrower will also make an
interest only payment based on the amount due and the interest rate as set forth
herein on the first day of the first month after repayment of the loan is due.
4. BUSINESS LOAN
The Borrower represents and warrants that this Note evidences a loan
for business or commercial purposes and is not a consumer transaction.
5. APPLICATION OF PAYMENTS
Each payment received on this Note shall be applied first to interest
due and then to the outstanding principal balance. However, if there are any
additional amounts due to CEDC hereunder, such as late charges, CEDC may elect
to apply any monies received for payment of such additional amounts due, prior
to applying same toward payment of the principal balance.
6. COLLECTION OR ENFORCEMENT COSTS
If it is necessary for CEDC to bring any action or proceeding in order
to collect any amounts due hereunder or as a result of a breach of any of the
terms or conditions herein, including an action or proceeding pursuant to
Article 9 of the Uniform Commercial Code, or if CEDC is made a party to a
lawsuit by virtue of this agreement, the Borrower shall be responsible for
paying all costs, expenses and reasonable attorneys' fees incurred by CEDC in
such lawsuit, action or proceeding, and also for all costs, expenses and
reasonable attorneys' fees incurred by CEDC incidental to the care,
preservation, processing and sale of the Collateral, or in any way relating to
the rights of CEDC hereunder.
7. BINDING AGREEMENT;GOVERNING LAW
The Note shall be binding upon the heirs, successors and assigns of the
Borrower and CEDC. It shall be interpreted and construed in accordance with the
laws of New York State.
8. MORE THAN ONE SIGNER
If more than one person or entity signs this Note as a Borrower, the
obligations contained herein shall be deemed joint and several and all
references to "Borrower" shall apply to all persons signing this agreement both
individually and jointly.
-2-
9. DEFAULT
The total unpaid balance of this Note shall become due and payable
without notice or demand upon the occurrence of anyone of the following "Events
of Default"; (a) default in any payment of principal or interest when due under
this Note and the continuance thereof for twenty (20) days after the due date,
except that the twenty-day period shall not apply for any payment due at the end
of the term or upon demand, which shall be due immediately upon such date; (b )
default in any payment of late charges when due under this Note and the
continuance thereof for ten (10) days after the due date; (c) failure to fulfill
or perform any other term of this Note or to keep any promises made in this Note
or related Term Loan Agreement, mortgage, building loan agreement or security
agreement, if any; ( d) a false or incomplete statement in any information
submitted to CEDC in connection with this Note; (e) entry of a judgment against
the Borrower; (f) a significant decline in the value of any real or personal
property securing payment of this Note; (g) business failure or dissolution of
any Borrower; (h) death of the insured under any life insurance policy securing
payment of this Note or the cancellation of the policy for any reason; (i)
commencement of any bankruptcy, receivership or similar proceeding involving any
Borrower as debtor; 0) transfer of any interest in the Collateral pledged or
granted to the CEDC as a security interest, or any other breach by the Borrower
with regard to the terms and conditions of the security instrument given by the
Borrower to the Lender; (k) default by any guarantor of the Borrower with
respect to any obligation of such guarantor to the Lender; (I) default with
respect to any of the terms and conditions set forth in the commitment letter
from the Lender to the Borrower dated January 29,2002; (m) Borrower fails to
comply with reporting requirements of the United States of America Housing and
Urban Development Agency relative to job creation and retention.
10. WAIVER
The Borrower and all endorsers, sureties and guarantors hereof hereby
jointly and severally waive presentment for payment, demand, notice of
non-payment, notice of protest and/or notice of dishonor, and protest of this
Note.
11. EXCESS INTEREST
At no time shall the Interest Rate exceed the highest rate allowed by
law for this type of loan. Should this occur or should the Lender ever
erroneously collect interest at a rate which exceeds the applicable legal limit,
such excess will be credited to principal. However, this shall not be grounds
for voiding the Borrower's obligations hereunder and in such event, the
Borrower's obligations shall be deemed to be automatically modified to conform
with any such applicable legal limit.
12. GIVING OF NOTICES OR DEMANDS
Any notice or other formal communication given either by Borrower or by
the Lender will
-3-
be in writing, and shall be deemed sufficiently given if delivered by anyone of
the following methods: (i) personal delivery which, in case of notice to the
Lender, shall be to an officer or principal thereof; (ii) certified or
registered mail, return receipt requested, postage prepaid and properly
addressed as set forth below; or (iii) Federal Express or other nationally
recognized courier services providing written evidence of delivery .Addresses
for receipt of notices are as follows:
To the Borrower: To the Lender:
---------------- --------------
American Bio Medica Corporation Columbia Economic Development Corporation
000 Xxxxx Xxxx 000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000 Xxxxxx, Xxx Xxxx 00000
Either party may change address for receipt of notices by written
notice given to the other party in the manner provided above.
13. RIGHT TO TRANSFER
CEDC may transfer or assign this Note and deliver all or any of its
rights in the Collateral held as security there for to another party or entity
which shall thereupon become vested of all of the powers and rights given to
CEDC herein, and CEDC shall thereafter be forever relieved and fully discharged
of any liability or responsibility to the Borrower.
14. LATE CHARGES
In addition to any other payment required herein, the Borrower shall
also be obligated to pay a late charge of five (5.0%) percent or Twenty-Five
($25.00) Dollars, which ever amount is greater for any payment due hereunder
which is received by CEDC more than ten (10) days after such payment is due.
This payment shall automatically be payable by the Borrower to CEDC, without
demand, and the failure to pay same shall constitute a default in accordance
with paragraph "9" of this Note.
15. ALL MODIFICATIONS IN WRITING
No modification or waiver of any of the provisions of this Note shall
be effective unless in writing, signed by an officer of CEDC and only to the
extent therein set forth, nor shall any such waiver be applicable, except in the
specific instance for which given.
16. WAIVER OF JURY TRIAL AND SETOFFS
The Borrower hereby waives trial by jury and the right to interpose any
setoffs of any kind in any litigation commenced by CEDC relating to this Note or
any Collateral security for this Note.
-4-
17. STRICT PERFORMANCE
The failure of CEDC to immediately act with respect to any of its
rights herein shall not be deemed to be a waiver on its part with respect to any
such rights, and CEDC shall have the right to so act with respect to any of its
rights herein at any time thereafter.
18. CROSS-DEFAULT
The Borrower hereby covenants and agrees that any event constituting a
default in the terms, covenants and conditions of any Notes, Mortgages,
agreements or other obligations given to the Lender, or a default in the terms,
covenants and conditions of any Notes, Mortgages, agreements or other
obligations given to another Lender and secured by Collateral pledged to the
Lender herein (including both real and personal property) shall be considered a
default of the terms, covenants and conditions of this Note, and the Lender may
take whatever action it deems necessary pursuant to said default. Furthermore, a
default in the terms, covenants and/or conditions of this Note shall constitute
a default in the terms, covenants and conditions of any other Notes, Mortgages,
agreements or other obligations given by the Borrower to the Lender.
19. SECURED NOTE
In addition to the protections given to the Lender under this Note, the
Borrower has also given the Lender a mortgage and a security agreement on
certain real and personal property (the "Security Instruments") dated the same
date as this Note, which provides the Lender with certain rights as set forth
herein and also sets forth certain obligations on the part of the Borrower. A
default in any of the provisions of any Security Instrument shall constitute a
default with respect to this Note. By granting a security interest in this
Collateral, Borrower intends to provide the Lender with security for payment of
said Note and obligation, including any extensions, modifications or renewals
thereof.
20. SALE OR TRANSFER OF PROPERTY OR INTEREST THEREIN IS PROHIBITED
The Borrower may not sell or otherwise transfer all or any part of any
property pledged as collateral pursuant to any Security Instrument executed by
the Borrower in connection with this transaction. In addition, if the Borrower
is not a natural person, no beneficial interest in the Borrower, corporation,
partnership or other entity may be sold or otherwise transferred to any other
party without the express written consent of the Lender. If all or any part of
the property or any interest in the property referred to herein is sold or
otherwise transferred or if the beneficial interest in the Borrower,
corporation, partnership or other entity is sold or otherwise transferred where
the Borrower is not a natural person, the entire indebtedness under the Note and
underlying Security Instruments shall become immediately due and payable. If the
Borrower fails to pay these sums, the Lender may bring a lawsuit for foreclosure
and sale or invoke any remedies permitted pursuant to this Note or any of the
Security Instruments, without further notice or demand on the Borrower.
-5-
21. BORROWER'S RIGHT TO PREPAY
The Borrower shall have the right to make a full prepayment or partial
prepayment of the principal due hereunder at any time, without penalty. When the
Borrower makes a prepayment, the Borrower will tell the Lender, in writing, that
it is doing so. If the Borrower makes a partial prepayment, there will be no
change in the due dates or in the amount of the monthly payments unless
otherwise agreed to in writing by the Lender .
22. REPAYMENT REQUIREMENT PURSUANT TO THIS NOTE
The One Hundred Thousand and 00/lOO ($100,000.00) Dollars evidenced by
this Note is in "the form of a conditional grant to the Borrower which grant
does not need to be repaid as long as the Borrower attains and maintains certain
employment thresholds referenced in the commitment letter, dated January
29,2002. If the Borrower does not maintain such employment thresholds, the grant
will automatically convert into a loan which shall be repaid pursuant to the
provisions of the commitment letter and this Note.
Fifty Thousand and 00/lOO ($50,000.00) Dollars of the grant will be
awarded at this time, with the provision that the Borrower must reach the
employment goal of 55 full-time equivalent employees at its Kinderhook, New York
facility by March 31, 2004. If the Borrower does not reach this employment goal
by March 31, 2004, then the grant will automatically convert into a loan to be
amortized over a ten (10) year period at three (3.0%) percent per annum interest
in accordance with the provisions of this Note, and no further advances will be
made to the Borrower. Provided that Borrower meets this employment goal of 55
full-time equivalent employees at its Kinderhook, New York facility by March 31,
2004, then the Borrower will be eligible for two (2) further advances of
$25,000.00 each which will be made to the Borrower when Borrower achieves
employment thresholds of 60 and 75 full-time equivalent employees at its
Kinderhook, New York facility respectively.
The opportunity to obtain further advances by the Borrower pursuant to
the grant will expire on March 31,2006.
Also, if the employment level at the Borrower's Kinderhook, New York
facility shall fall below 45 full-time equivalent employees at any time after
the date hereof and prior to March 31, 2012, and if the grant has reached the
second or third advance when such employment falls below 45 full-time equivalent
employees, then the grant will also convert into a loan and will be repaid to
the Lender based upon the following schedule:
o 90% of the total grant made, if employment falls below threshold in
2004, to be repaid over nine (9) years at the appropriate interest rate
set forth in paragraph 2.
o 80% of the total grant made, if employment falls below threshold in
2005, to be repaid over eight (8) years at the appropriate interest
rate set forth in paragraph 2.
o 70% of the total grant made, if employment falls below threshold in
2006, to be repaid over seven (7) years at the appropriate interest
rate set forth in paragraph 2.
-6-
o 60% of the total grant made, if employment falls below threshold in
2007, to be repaid over six (6) years at the appropriate interest rate
set forth in paragraph 2.
o 50% of the total grant made, if employment falls below threshold in
2008, to be repaid over five (5) years at the appropriate interest rate
set forth in paragraph 2.
o 40% of the total grant made, if employment falls below threshold in
2009, to be repaid over four (4) years at the appropriate interest rate
set forth in paragraph 2.
o 30% of the total grant made, if employment falls below threshold in
2010, to be repaid over three (3) years at the appropriate interest
rate set forth in paragraph 2.
o 20% of the total grant made, if employment falls below threshold in
2011, to be repaid over two (2) years at the appropriate interest rate
set forth in paragraph 2.
o 10% of the total grant made, if employment falls below threshold in
2012, to be repaid over one (1) year at the appropriate interest rate
set forth in paragraph 2.
IN WITNESS WHEREOF, this Note has been signed by the Borrower at
Hudson, New York on June 6, 2002
AMERICAN BIO MEDICA CORPORATION,
Borrower
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------------
Xxxx Xxxxxxxxx, Exec. V.P.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Xxxxx X. Xxxxxx, Chief Financial Officer
STATE OF NEW YORK )
) ss.:
COUNTY OF COLUMBIA )
On the 6th day of June in the year 2002 before me, the undersigned,
personally appeared Xxxx Xxxxxxxxx, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual(s) whose name(s) is
(are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.
/s/
------------------------------------
Signature and Office of Individual
taking acknowledgment
-0-
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF COLUMBIA )
On the 6th day of June in the year 2002 before me, the undersigned,
personally appeared Xxxxx X. Xxxxxx, personally known to me or proved to me on
the basis of satisfactory evidence to be the individual(s) whose name(s) is
(are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.
/s/
----------------------------------
Signature and Office of Individual
taking acknowledgment
-8-
