Exhibit 10.1
MODIFIED AND RESTATED REVOLVING CREDIT AGREEMENT
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MODIFIED AND RESTATED REVOLVING CREDIT AGREEMENT
(the "Agreement" or "Revolving Credit Agreement")
dated April 16, 2008
by and between
CVD EQUIPMENT CORPORATION,
a New York corporation
with an address at:
0000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxx 00000
(the "Borrower")
and
Capital One, N.A.,
successor by merger to North Fork Bank
having offices at
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
(the "Bank").
RECITALS
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WHEREAS, Borrower has previously borrowed from North Fork Bank (now Capital
One, N.A., as successor by merger to North Fork Bank) the principal amount of
Two Million and 00/100 ($2,000,000.00) Dollars by revolving credit facility
dated June 1, 2007 which such loan is evidenced by, among other things, a
Revolving Credit Agreement, a Revolving Line of Credit Note, a Revolving Credit
Security Agreement and other documents all dated on or about June 1, 2007; and
WHEREAS, Borrower has requested an increase in the revolving line of
credit in the principal amount of Three Million ($3,000,000.00) Dollars; and
WHEREAS, the Bank has agreed to increase the revolving line of credit in
said amount provided that the said Borrower be liable for the increased
revolving line of credit; and
WHEREAS, the increased revolving line of credit in the new principal sum of
Five Million and 00/100 ($5,000,000.00) Dollars (at times, the "Loan") shall be
secured by, among other things, (i) a first position security interest in all
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assets of the Borrower evidenced by a Modified and Restated 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 (its
successors and/or assigns as their interests may appear) 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 Xxxxxxx X. Xxxxxxxxx, 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. [intentionally omitted] (contract date October 14, 2006) and has a
face value of Two Million and 00/100 ($2,000,000.00) Dollars; and
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 Line of Credit Note" shall mean the Consolidated and
Restated Revolving Line of Credit Note of even date herewith in the principal
amount of Five Million and 00/100 ($5,000,000.00) 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 Modified and
Restated 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.
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"Loan Documents" as used herein shall mean this Modified and Restated
Revolving Credit Agreement, the Consolidated and Restated Revolving Line of
Credit Note dated April 16, 2008 in the principal sum of Five Million and 00/100
($5,000,000.00) Dollars, the Modified and Restated 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.
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 Five Million and 00/100 ($5,000,000.00)
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 April 30, 2011,
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 2:00 p.m.(eastern standard
time) on that business 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
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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 Line
of Credit Note or Modified and Restated 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.
Section 2.03 The Note.
(a) The Loan shall be evidenced by a Consolidated and Restated Revolving
Line of Credit [Promissory] Note dated the date hereof in the amount of Five
Million and 00/100 ($5,000,000.00) Dollars, made by the Borrower and payable to
the order of the Bank and having a final maturity of May 1, 2011.
(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 MAY 1, 2011 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
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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 May 1, 2011 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.
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 Capital One, N.A.
account No. [Intentionally omitted] 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. Borrower will utilize any
advances hereunder or under the Note to capitalize its closing costs and for its
working capital only. Throughout the term of the Loan, a borrowing sublimit of
$500,000.00 shall exist and such funds shall be used exclusively to finance
capital equipment purchases with funds from the Bank, or any subsidiary thereof,
with a maximum term of 60 months (self-liquidating). Such equipment term loan(s)
under the "sublimit" shall bear interest at a fixed annual rate equal to two
hundred fifty (250) basis points above the weekly average yield on United States
Treasury Securities, adjusted to a constant maturity of five (5) years, using
the most recent figure made available by the Federal Reserve Board as of the
funding date of any such equipment finance term facility/loan (or the last
business day prior thereto). The principal sums outstanding on such financings
(including any term loans presently existing with the Bank) shall reduce the
overall availability of the Revolving Line of Credit contemplated hereby by the
sum or sums outstanding on such other facilities. Further, the Borrower will
not, directly or indirectly, use any part of such proceeds for the purpose of
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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
each calendar 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.
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 Modified and Restated Revolving Credit Security
Agreement of even date herewith (at times, the "Revolving Credit Security
Agreement" or "Modified and Restated 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;
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(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 continuation of the collateral Assignment to the
Bank of a portion of the proceeds of a life insurance policy issued on the life
of Xxxxxxx X. Xxxxxxxxx, 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.[intentionally
omitted] (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
(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 $15,000.00; 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
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(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
(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.
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:
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(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 Line of 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
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
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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
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 Modified and
Restated 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.
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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.
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.
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ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Revolving Line of 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 of, and visit the properties of the Borrower, and
12
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 one hundred five (105) 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 one hundred five
(105) 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) compliance and covenant calculations on a quarterly basis to be
submitted with each of the afore-mentioned financial statements; and
(5) 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.
(6) 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.
(7) 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.
(8) 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.
13
(9) 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.
(10) 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 any mortgage made
or extended to the Borrower by the Bank and the GE Capital mortgage and 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
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
(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) Subject to the provisions of Section 6.07 hereof, not make any capital
expenditures or distributions, whether to shareholders or otherwise, except in
the ordinary course of business.
14
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.
ARTICLE VI
NEGATIVE COVENANTS
So long as the Revolving Line of 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. Intentionally omitted.
Section 6.06. Dividends. Throughout the term of the Loan, Borrower will not
pay out any cash dividends on its common stock.
Section 6.07. 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 6.08. Mergers or Acquisitions. Merge with any other entity or
acquire any other entity for a cost in excess of Five Hundred Thousand and
00/100 ($500,000.00) Dollars without the prior written consent of the Bank.
15
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 Line of 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 Modified and Restated 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
Modified and Restated 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 Modified and Restated Collateral Assignment of a
portion of the proceeds of a life insurance policy issued on the life of Xxxxxxx
X. Xxxxxxxxx, 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. [intentionally omitted]
(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
Line of Credit Note, the Modified and Restated 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.
16
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 Line of 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 Line of Credit Note, the Modified and Restated 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;
17
(8) the occurrence of an Event of Default as defined in any of the Loan
Documents, including, without limitation, the Modified and Restated 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 and 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;
18
(17) failure to pay any amount on this or any other obligation owed to the
Bank by Borrower or any other related entity;
(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 Line of 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 Line of
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.
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
19
Revolving Line of 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 Line of 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
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.
20
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 Revolving Line of 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 Line of 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.
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,
21
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 Modified and
Restated Revolving Line of 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 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.
22
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:
---------------------------------------
XXXXXXX X. XXXXXXXXX,
President and CEO
By:
--------------------------------------
XXXX XXXXXXX,
Secretary and Chief Financial Officer
CAPITAL ONE, N.A.,
successor by merger to North Fork Bank
By:
----------------------------------------
XXXXXX X. XXXXXX,
Senior Vice President
00
Xxxxx xx Xxx Xxxx )
) : ss.:
County of Suffolk )
On April 16, 2008, before me, the undersigned, personally appeared XXXXXXX
X. XXXXXXXXX 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 April 16, 2008, before me, the undersigned, personally appeared XXXX
XXXXXXX 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 April 16, 2008, before me, the undersigned, personally appeared XXXXXX
X. XXXXXX 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
24
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
[intentionally omitted] 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 [intentionally omitted] 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 [intentionally omitted] 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 [intentionally
omitted] 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 [intentionally omitted] 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
[intentionally omitted] filed on March 27, 2007 with the New York State
Department of State.
7) Lien of North Fork Bank evidenced by UCC financing statement number
[intentionally omitted] filed on June 7, 2007 with the New York State Department
of State.
8) Lien of North Fork Bank, a division of Capital One, N.A. evidenced by UCC
financing statement number [intentionally omitted] filed on February 11, 2008
with the New York State Department of State.
9) Lien of Dell Financial Services, L.P. evidenced by UCC financing statement
number [intentionally omitted] filed on March 12, 2008 with the New York State
Department of State.
10) Lien of Dell Financial Services, L.P. evidenced by UCC financing statement
number [intentionally omitted] filed on March 13, 2008 with the New York State
Department of State.
25
Exhibit "B"
REQUEST FOR ADVANCE
To: Capital One, N.A., successor by merger to North Fork Bank
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx, SVP or Xxxxxx Xxxxxx, VP
Request for Advance pursuant to Consolidated and Restated Revolving Line of
Credit Note ("Note") made by CVD EQUIPMENT CORPORATION ("Borrower") to Capital
One, N.A., successor by merger to North Fork Bank ("Lender") dated April 16,
2008.
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 less 0.25% 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 less 0.25%
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 Modified
and Restated Revolving Credit Agreement dated April 16, 2008 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:
--------------------------------------
XXXXXXX X. XXXXXXXXX,
President
26
