Exhibit 10.5

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ASSIGNMENT OF LEASES AND RENTS

Dated:  March 15, 2012

-from-

FAE HOLDINGS 411519R, LLC,
 a New York limited liability company
with an address at:
 c/o First American Exchange Company, LLC
560 South 300 East
Salt Lake City, Utah  84111
(the “Borrower”)

and

THE TOWN OF ISLIP INDUSTRIAL
DEVELOPMENT AGENCY,
a corporate governmental agency,
having an office at:
40 Nassau Avenue
Islip, New York 11751
(the “Assignor”)

-to-

HSBC BANK USA, NATIONAL ASSOCIATION
a national banking association,
having an office at:
534 Broad Hollow Road
Melville, New York 11747
(the “Assignee”)

LOCATION OF PREMISES:
 

    Address: 355 South Technology Drive       Central Islip, New York    
District: 0500     Section: 206.00     Block: 03.00     Lot: 001.003

County of Suffolk
State of New York

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After recording, please return to
Farrell Fritz, P.C.
1320 RXR Plaza
Uniondale, New York 11556-1320
Attention:  Jodi L. Gladstone, Esq.
This instrument was prepared by the above-named Attorney
 
 
 

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ASSIGNMENT OF LEASES AND RENTS

           THIS ASSIGNMENT OF LEASES AND RENTS (the “Assignment”), is made as of
the 15th day of March, 2012, by FAE HOLDINGS 411519R, LLC, a New York limited
liability company, having an address at c/o First American Exchange Company,
LLC, 560 South 300 East, Salt Lake City, Utah  84111  (herein called the
“Borrower”) and THE TOWN OF ISLIP INDUSTRIAL DEVELOPMENT AGENCY, a corporate
governmental agency, having an office at 40 Nassau Avenue, Islip, New York 11751
(herein called the “Assignor”) and HSBC BANK USA, NATIONAL ASSOCIATION, a
national banking association, with offices at 534 Broad Hollow Road, Melville,
New York 11747 (herein called the “Assignee”).

RECITALS

A.           The Assignor is the fee owner of the premises described on Exhibit
A (the “Premises”).

B.           The Assignor, as lessor, and the Borrower, as lessee, have entered
into a Lease Agreement dated as of  March 1, 2012 (the “Lease Agreement”)
whereby the Assignor leased the Premises to the Borrower.

C.           Title 1 of Article 18-A of the General Municipal Law of the State
of New York authorizes and provides for the creation of industrial development
agencies for the benefit of the several counties, cities, villages and towns in
the State of New York and empowers such agencies, among other things, to
acquire, construct, reconstruct, lease, improve, maintain, equip and sell land
and any building or other improvement, and all real and personal properties,
including, but not limited to, machinery and equipment deemed necessary in
connection therewith, whether or not now in existence or under construction,
which shall be suitable for manufacturing, warehousing, research, civic,
commercial or industrial facilities, including industrial pollution control
facilities, in order to advance the job opportunities, health, general
prosperity and economic welfare of the people of the State of New York and to
improve their prosperity and standard of living (the “Public Purposes”) and
further authorizes each such agency to lease and sell any or all of its
facilities on such terms and conditions as it deems advisable, to mortgage any
or all of its facilities in furtherance of such Public Purposes.

D.           Borrower and CVD EQUIPMENT CORPORATION (“CVD”) have entered into a
certain Qualified Exchange Accommodation Agreement dated as of February 9, 2012
(the “Accommodation Agreement”), pursuant to which the Borrower agreed to
acquire the leasehold interest under the Lease Agreement and sublease the same
to CVD pursuant to agreement dated March 1, 2012 (the “Sublease”),  in order to
facilitate CVD’s intended property exchange pursuant to Internal Revenue Code
Section 1031 and Revenue Procedure 2000-37.

E.           Pursuant to the terms of the Accommodation Agreement, either (a)
all of the membership interests in the Borrower will be transferred by First
American Exchange Company, LLC to CVD or (b) the Borrower’s leasehold interest
under the Lease Agreement will be assumed by CVD, on the earlier to occur of (i)
the closing of the transactions contemplated by the Accommodation Agreement or
(ii) six (6) months from the date hereof.
 
 
 

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F.           It is a condition of the Accommodation Agreement that Borrower, on
behalf of CVD, obtain funds sufficient to acquire the tenant’s interest under
the Lease Agreement,

G.           CVD has applied to Assignee for a loan (the “Loan”) to the Borrower
in the principal sum of SIX MILLION and 00/100 DOLLARS ($6,000,000.00), the
payment of which Loan  is to be guaranteed by CVD.

H.           The Assignee has agreed to extend the Loan to the Borrower, subject
to, among other things, receipt of the this Assignment.

I.            The Assignor has determined that granting this Assignment will
accomplish, in part, its Public Purposes.

           NOW THEREFORE, FOR VALUE RECEIVED, the Borrower and the Assignor each
hereby grants, transfers, and assigns to the Assignee, its successors and
assigns, all of the right, title and interest of the Assignor and the Borrower
in and to the Lease Agreement (except, as to the Assignor, for the Unassigned
Rights, as defined in the Lease Agreement), and any and all leases, subleases,
occupancy agreements and tenancies (individually and collectively, the “Lease”)
whether now existing or hereafter entered into affecting the Premises or the
Improvements, as defined in the Mortgage (defined below), except, however, the
Lease Agreement, for the purpose of securing (a) payment of all sums now or at
any time hereafter due the Assignee from Borrower pursuant to a certain Amended
and Restated Mortgage Note in the principal amount of $6,000,000 (the “Note”)
dated the date hereof, made by the Borrower in favor of the Assignee and secured
by a certain Amended and Restated Fee and Leasehold Mortgage (the “Mortgage”)
dated the date hereof, granted by the Assignor and the Borrower to the Assignee;
and (b) performance and discharge of each obligation, covenant and agreement of
the Assignor and Borrower contained herein and in the Mortgage, and each
obligation, covenant and agreement of the Borrower contained in the Note secured
thereby.

I.           THE ASSIGNOR AND THE BORROWER EACH AGREES, WITH RESPECT TO EACH
LEASE THAT:

           1.           The Borrower will fulfill or perform each and every
condition and covenant of the Lease by lessor thereunder (individually and
collectively, depending upon the context used, the “Lessor”) to be fulfilled or
performed; give prompt notice to the Assignee of any notice of default by the
Lessor under the Lease received by the Assignor or the Borrower together with a
complete copy of any such notice; at the sole cost and expense of the Borrower,
enforce, short of termination of the Lease, the performance or observance of
each and every material covenant and condition of the Lease by the lessee
thereunder (individually and collectively, depending upon the context used, the
“Lessee”) to be performed or observed; not modify nor in any way alter the terms
of the Lease so as to diminish Lessor’s security in the Premises; not terminate
the term of the Lease nor accept a surrender thereof unless required to do so by
the terms of the Lease; not anticipate the rents thereunder for more than thirty
(30) days prior to accrual; and not waive or release the Lessee from any
obligations or conditions by the Lessee to be performed.  This Assignment is
made with reference to Section 291-f of the New York Real Property Law.

           2.           The rights assigned hereunder include all the Assignor’s
and Borrower’s right and power to modify the Lease or to terminate the term or
to accept a surrender thereof or to waive, or release the Lessee from the
performance or observance by the Lessee of any obligation or condition thereof
or to anticipate rents thereunder for more than thirty (30) days prior to
accrual.
 
 
 

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           3.           At the Borrower’s sole cost and expense, the Assignor
and/or the Borrower will appear in and defend any action growing out of or in
any manner connected with the Lease or the obligations or liabilities of the
Lessor, Lessee or any guarantor thereunder, and the Assignee, if made a party to
any such action, may employ counsel and incur and pay necessary costs and
expenses and reasonable attorney’s fees and all such sums, with interest at the
Involuntary Rate (as defined in the Mortgage), shall immediately be due from the
Borrower and secured hereby and by the Mortgage.

           4.           Should the Borrower fail to make any payment or should
the Assignor or Borrower fail to do any act as herein provided after notice and
demand, then the Assignee, but without obligation so to do and without releasing
the Assignor or Borrower from any obligation herein, may make or do the same,
including specifically, without limiting its general powers, appearing in and
defending any action purporting to affect the security hereof or the rights or
powers of the Assignee and performing any obligation of the Lessor in the Lease
contained, and, in exercising any such powers paying necessary costs and
expenses, employing counsel and incurring and paying reasonable attorneys’ fees;
and the Borrower will pay immediately upon demand all sums expended by the
Assignee under the authority hereof, together with interest thereon at the
Involuntary Rate (defined in the Mortgage), and the same shall be added to the
Indebtedness and shall be secured hereby and by the Mortgage.

           5.           The whole of the Indebtedness shall become due (a) upon
the election by the Assignee to accelerate the maturity of the Indebtedness
pursuant to the provisions of the Note, or of the Mortgage, or any other
instru­ment which may be held by the Assignee as security for the Indebtedness,
or (b) at the option of the Assignee, after any attempt by the Assignor or
Borrower to exercise any of the rights described in Paragraph 2 or after any
other default by the Assignor or the Borrower hereunder and the continuance of
such default for ten (10) days after notice and demand from Assignee to remedy
same.

           6.           After any attempt by the Assignor or the Borrower to
exercise any of the rights described in Paragraph 2 or after any default in the
performance of an­y obligation of the Assignor or the Borrower herein, or upon
the occurrence of an Event of Default under the Mortgage, the Assignee, at its
option, without notice and without regard to the adequacy of security for the
Indebtedness hereby secured, either in person or by agent with or without
bringing any action or proceed­ing, or by a receiver to be appointed by a court,
may:  enter upon, take possession of, and operate the Premises; make, enforce,
modi­fy, and accept the surren­der of leases; obtain and evict tenants; fix or
modify rents; and do any acts which the Assignee deems proper to protect the
security hereof until all Indebtedness secured hereby is paid in full, and
either with or without taking possession of the Premises, in its own name, sue
for or otherwise collect and receive all rents, issues and profits, other than
under the Lease Agreement, including those past due and unpaid, and apply the
same, less costs and expenses of operation and col­lection, including reasonable
attor­neys’ fees, upon any Indebted­ness secured hereby in such order as the
Assignee may determine.  Any income received from the Premises by the Assignee
in excess of the amount necessary to meet all obliga­tions for the subsequent
six (6) month period shall be paid over by the Assignee to the Borrower promptly
after the expiration of each six (6) month period following the date of such
entry.  The enter­ing upon and taking possession of said Pre­mises, the
collection of such rents, issues and profits and the application thereof as
aforesaid, shall not cure or waive any default or waive, modify or affect any
notice of default under the Mortgage or invalidate any act done pursuant to said
notice.

           7.           Intentionally Omitted.
 
 
 

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           8.           (a)  Each of the Assignor and the Borrower has not
executed any prior assignment of any of its rights under the Lease except to
Assignee; (b) each of the Assignor and the Borrower has not done anything which
might prevent the Assignee from or limit the Assignee in operating under any of
the provisions hereof; (c) each of the Assignor and the Borrower has not
accepted rent under the Lease more than thirty (30) days in advance of its due
date; (d) so far as the Assignor and the Borrower know, there is no present
default by the Lessee under the Lease; and (e) the Lease is unmodified and in
full force and effect.

9.           The Assignee shall not be obligated to perform or discharge any
obligation under the Lease, or under or by reason of this Assignment, and the
Borrower hereby agrees to indemnify the Assignee against and hold it harmless
from any and all liability, loss or damage which it may or might incur under the
Lease or under or by reason of this Assignment and of and from any and all
claims and demands whatsoever which may be asserted against it by reason of any
alleged obligation or undertaking on its part to perform or discharge any of the
terms of the Lease; should the Assignee incur any such liability, loss or damage
under the Lease or under or by reason of this Assignment, or in defense against
any such claims or demands, the amount thereof, including costs, expenses and
reason­able attorneys’ fees, together with interest thereon at the Involuntary
Rate, shall be secured hereby and by the Mortgage, and the Borrower shall
reimburse the Assignee there­for immediately upon demand.

10.           This Assignment shall inure to the benefit of the successors and
assigns of the Assignee and shall bind each of the Assignor’s and the Borrower’s
legal representatives, successors and assigns.

11.           (a)           The Borrower agrees that the Assignor, its
directors, members, officers, agents (except the Borrower) and employees shall
not be liable for and agrees to defend, indemnify, release and hold the
Assignor, its directors, members, officers, agents (except the Borrower) and
employees harmless from and against any and all (i) liability for loss or damage
to property or injury to or death of any and all persons that may be occasioned
by, directly or indirectly, any cause whatsoever pertaining to the Premises or
arising by reason of or in connection with the use thereof or under this
Assignment or (ii) liability arising from or expense incurred by the Assignor’s
acquiring, construction, renovation, installation, owning and leasing of the
Premises, including without limiting the generality of the foregoing, all claims
arising from the breach by the Borrower of any of its covenants contained herein
and all causes of action and reasonable attorneys’ fees and any other expenses
incurred in defending any claims, suits or actions which may arise as a result
of any of the foregoing, provided that any such losses, damages, liabilities or
expenses of the Assignor are not incurred or do not result from the gross
negligence or intentional or willful wrongdoing of the Assignor or any of its
directors, members, officers, agents (except the Borrower) or employees.  The
foregoing indemnities shall apply notwithstanding the fault or negligence on the
part of the Assignor, or any of its members, directors, officers, agents or
employees and irrespective of the breach of a statutory obligation or the
application of any rule of comparative or apportioned liability.  The foregoing
indemnities are limited only to the extent of any prohibitions imposed by law.

(b)           Notwithstanding any other provisions hereof, the obligations of
the Borrower pursuant to this Section 11 shall remain in full force and effect
after the termination of this Assignment until the expiration of the period
stated in the applicable statute of limitations during which a claim, cause of
action or prosecution relating to the matters herein described may be brought
and payment in full or the satisfaction of such claim, cause of action or
prosecution relating to the matters herein described and the payment of all
reasonable expenses and charges incurred by the Assignor, or its respective
members, directors, officers, agents (except the Borrower) and employees,
relating to the enforcement of the provisions herein specified.
 
 
 

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(c)           In the event of any claim against the Assignor or its members,
directors, officers, agents (except the Borrower) or employees by any employee
or contractor of the Borrower or anyone directly or indirectly employed by any
of them or anyone for whose acts any of them may be liable, the obligations of
the Borrower hereunder shall not be limited in any way by any limitation on the
amount or type of damages, compensation, disability benefits or other employee
benefit acts.

12.           Borrower directs the Assignor to execute and deliver this
Assignment of Leases and Rents to the Assignee, and further agrees to indemnify
and hold harmless the Assignor (and its members, officers, directors, agents,
servants and employees).  Borrower shall pay all costs and expenses, including
reasonable attorney’s fees and expenses, incurred by the Assignor in connection
with the execution, delivery, recording, performing and enforcing of this
Assignment of Leases and Rents.

II.           THE ASSIGNEE AGREES THAT:

1.           So long as there shall exist no default after applicable grace
periods, if any, by the Borrower in the payment of any indebtedness secured
hereby or in the performance of any obligation of the Assignor or Borrower under
the Mortgage, the Assignor or the Borrower shall have the right to collect, but
not more than thirty (30) days prior to accrual, all rents, issues and profits
of the Premises and to retain, use and enjoy the same.

2.           Upon the payment in full of all Indebtedness (as defined in the
Mortgage) secured hereby, as evidenced by the recording or filing of an
instrument of satisfaction or full release of the Mortgage without the recording
of another Mortgage in favor of the Assignee affecting the Premises, this
Assignment shall become and be void and of no effect.

3.           The general credit of the Assignor is not obligated for or
available for the payment of any sums due hereunder.  The Assignee will not look
to the Assignor or any principal, member, director, officer or employee of the
Assignor with respect to the Indebtedness secured hereby and any covenant,
stipulation, promise, agreement or obligation contained herein.  The Assignee
will not seek a deficiency or other money judgment against the Assignor or any
principal, member, director, officer or employee of the Assignor and will not
institute any separate action against the Assignor by reason of any default that
may occur in the performance of any of the terms and conditions of this
Assignment, the Mortgage or the Note.  The agreement on the part of the Assignee
shall not be construed in any way so as to effect or impair the lien hereof or
the Assignee’s right to foreclose hereunder as provided by law or construed in
any way so as to limit or restrict any of the rights or remedies of the Assignee
against the Borrower in any foreclosure proceedings or other enforcement of
payment of the Indebtedness secured hereby out of any of the security given
therefor.

4.           All covenants, stipulations, promises, agreements and obligations
of the Assignor contained herein shall be deemed to be the covenants,
stipulations, promises, agreements and obligations of the Assignor and not of
any member, director, officer, agent, servant or employee of the Assignor in his
individual capacity, and no recourse under or upon any obligation, covenant or
agreement in this Assignment, or for any claim based hereon or otherwise in
respect hereof, shall be had against any past, present or future member,
officer, agent, servant or employee, as such, of the Assignor or of any
successor public benefit corporation or political subdivision or any person so
executing this Assignment, it being expressly understood that this Assignment is
solely a special obligation of the Assignor, and that no such personal liability
whatever shall attach to, or is or shall be incurred by, any such member,
director, officer, agent, servant or employee of the Assignor or of any
successor public benefit corporation or political subdivision or any person so
executing this Assignment by reason of the obligations, covenants or agreements
contained herein or implied herefrom; and that any and all such personal
liability of, and any and all such rights and claims against every such member,
officer, director, agent, servant or employee by reason of the obligations,
covenants or agreements contained in this Assignment or implied therefrom, are,
to the extent permitted by law, expressly waived and released as a condition of,
and as a consideration for, the execution of this Assignment.
 
 
 

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III.           THE PARTIES AGREE that all notices, demands or documents which
are required or permitted to be given or served hereunder shall be in writing
and shall be given in accordance with Section 5.2 of the Mortgage.

IV.           THE PARTIES AGREE that, notwithstanding anything to the contrary
in this Assignment, the Mortgage, the Note, or any other document executed in
connection with any of the foregoing (the “Loan Documents”), by acceptance of
this instrument, Assignee hereby waives any right to obtain a money judgment or
equitable relief against FAE Holdings 411519R, LLC and any and all members,
shareholders, partners and employees of FAE Holdings 411519R, LLC, whether by an
action brought upon this Assignment or any other Loan Document, or an action
brought for a deficiency judgment against FAE Holdings 411519R, LLC and/or the
members, shareholders, partners and employees of FAE Holdings 411519R, LLC, and
agrees that the extent of liability on the part of such parties with respect to
this document or any other Loan Document is and shall for all purposes be
limited to the interest of FAE Holdings 411519R, LLC in the Premises, including
policies of hazard insurance on the Premises and any proceeds thereof and any
award of damages on account of condemnation for public use of the Premises,
Mortgagee agreeing to look solely to FAE Holdings 411519R, LLC’s interest in the
Premises and such insurance policies and condemnation awards in satisfaction of
all obligations. The terms of this paragraph shall supersede any and all other
terms and conditions herein or in any Loan Document.  THE PROVISIONS OF THIS
SECTION IV SHALL BE APPLICABLE ONLY UNTIL, AND SHALL BE DEEMED DELETED FROM THIS
ASSIGNMENT AND OF NO FURTHER FORCE OR EFFECT FROM AND AFTER, THE DATE THAT
EITHER ALL OF THE MEMBERSHIP INTERESTS IN FAE HOLDINGS 411519R, LLC ARE
TRANSFERRED TO CVD OR CVD ASSUMES THE OBLIGATIONS AND LIABILITIES OF FAE
HOLDINGS 411519R, LLC UNDER THE LEASE AGREEMENT, THE NOTE, THE MORTGAGE AND THE
OTHER LOAN DOCUMENTS PURSUANT TO THE TERMS OF THE ACCOMMODATION AGREEMENT OR
OTHERWISE.

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           IN WITNESS WHEREOF, each of the Assignor and the Borrower has duly
executed this Assignment as of the day and year first above written.

 
FAE HOLDINGS 411519R, LLC
 

By:           /s/ Mark Bullock
Name:    Mark Bullock
Title:      Authorized Person of Manager

THE TOWN OF ISLIP INDUSTRIAL
DEVELOPMENT AGENCY

By:           /s/ William G. Mannix
Name:      William G. Mannix
Title:        Executive Director
 
 
 

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STATE OF NEW YORK                      )
) ss.:
COUNTY OF                                         )

On this ___ day of March, 2012, before me, the undersigned notary public,
personally appeared ______________ personally known to be 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/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person or entity upon behalf of which the individual acted,
executed the instrument.

______________________________________
Notary Public
My Commission Expires:

STATE OF NEW YORK                      )
) ss.:
COUNTY OF Suffolk                           )

On this 15th day of March, 2012, before me, the undersigned notary public,
personally appeared William G. Mannix personally known to be 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/she executed the same in
his/her capacity, and that by his/her signature on the instrument, the
individual, or the person or entity upon behalf of which the individual acted,
executed the instrument.

Kimberly Samuels
Notary Public
My Commission Expires: October 15, 2014

 
[UNIFORM OUT OF STATE ACKNOWLEDGMENT, IF APPLICABLE]

STATE OF Utah
)
     
)
SS:
 
COUNTY OF Salt Lake
)
   

On the 14 day of March in the year 2012 before me, the undersigned, personally
appeared Mark Bullock, 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 the same in his
capacity, and that by his signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument, and
that such individual made such appearance before the undersigned in the City of
Salt Lake, State of Utah.

/s/ Coty E. Romero
Notary Public