Exhibit 10.4
 
JOINT AND SEVERAL HAZARDOUS MATERIAL
GUARANTY AND INDEMNIFICATION AGREEMENT

Melville, New York
As of March 15, 2012

WHEREAS, CVD EQUIPMENT CORPORATION (“CVD”) contemplates effecting, pursuant to
Section 1031 of the Internal Revenue Code of 1986, as amended, a tax-deferred
exchange (the “Exchange”) of certain premises known by the street address 355
South Technology Drive, Central Islip, New York (the “Premises”), as more
particularly described in the Mortgage (as defined on Exhibit A);

WHEREAS, it is a condition of the Exchange that FAE Holdings 411519R, LLC, a New
York limited liability company having an office at c/o First American Exchange
Company, LLC, 560 South 300 East, Salt Lake City, Utah  84111 (the “Borrower”),
on behalf of CVD, obtain funds sufficient to acquire a leasehold interest in the
Premises;

WHEREAS, CVD has applied to HSBC BANK USA, NATIONAL ASSOCIATION, a national
banking association (being hereinafter called “Lender”), for a loan (the “Loan”)
to the Borrower in the principal sum of $6,000,000.00 to be evidenced by the
Note (as defined on Exhibit A) and secured by the Mortgage;

WHEREAS, the Borrower and CVD have entered into a certain Qualified Exchange
Accommodation Agreement, dated as of March 15, 2012 (the “Accommodation
Agreement”) pursuant to which the Borrower has agreed to enter into a certain
Lease Agreement, dated as of March 1, 2012 (the “Lease Agreement”) whereby the
Town of Islip Industrial Development Agency (the “IDA”) will lease the Premises
to the Borrower;

WHEREAS, pursuant to the Accommodation Agreement, CVD shall acquire a
subleasehold estate in the Premises and, prior to the date which is six (6)
months from the date hereof, either (a) acquire all of the membership interests
in the Borrower from First American Exchange Company, LLC or (b) assume the
Borrower’s leasehold interest in the Premises, and thereupon assume Borrower’s
obligations and liabilities under the Note, the Mortgage and all related
documents executed by the Borrower in connection with the Loan;

WHEREAS, the undersigned wishes to grant Lender security and assurance in order
to secure the payment and performance by the Borrower of all of its present and
future obligations under the Note and Mortgage, and, to that effect, to guaranty
the Loan as set forth herein.

WHEREAS, Lender is willing to make the Loan only if the undersigned execute and
deliver this Guaranty and Indemnification Agreement;

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, and in order to induce Lender to make the Loan, the undersigned
hereby acknowledge, agree and confirm that all of the above recitals are true,
correct and complete and hereby covenant and agree with Lender as follows:
 
 
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1.           For the purposes of this Guaranty and Indemnification Agreement the
following terms shall have the following meanings:

(a)           the term “Hazardous Material” shall mean any material or substance
that, whether by its nature or use, is now or hereafter defined as hazardous
waste, hazardous substance, pollutant or contaminant under any Environmental
Requirement, or which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and which is now or
hereafter regulated under any Environmental Requirement, or which is or contains
petroleum, gasoline, diesel fuel or another petroleum hydrocarbon product;

(b)           the term “Environmental Requirements” shall collectively mean all
present and future laws, statutes, common law, ordinances, rules, regulations,
orders, codes, licenses, permits, decrees, judgments, directives or the
equivalent of or by any Governmental Authority and relating to or addressing the
protection of the environment or human health;

(c)           the term “Governmental Authority” shall mean the Federal
government, or any state or other political subdivision thereof, or any agency,
court or body of the Federal government, any state or other political
subdivision thereof, exercising executive, legislative, judicial, regulatory or
administrative functions;

(d)           the term “Mortgaged Property” shall have the meaning given to such
term in the Mortgage; and

(e)           the term “Debt” shall mean all principal, interest, additional
interest (including specifically all interest accruing from and after the
commencement of any case, proceeding or action under any existing or future laws
relating to bankruptcy, insolvency or similar matters with respect to the
Borrower) and other sums of any nature whatsoever which may or shall become due
and payable pursuant to the provisions of the Note, the Mortgage or any other
document or instrument now or hereafter executed and/or delivered in connection
therewith or otherwise with respect to the Loan (said Note, Mortgage and other
documents and instruments, collectively, the “Loan Documents”) (all of the above
unaffected by modification thereof in any bankruptcy or insolvency proceeding),
and even though Lender may not have an allowed claim for the same against the
Borrower as a result of any bankruptcy or insolvency proceeding.

2.           The undersigned hereby represent and warrant to Lender that to the
best of each of the undersigned’s knowledge after diligent inquiry:

(a)           no Hazardous Material is currently located at, on, in, under or
about the Mortgaged Property;

(b)           the undersigned has not released, emitted, discharged, leached,
dumped or disposed of any Hazardous Material from the Mortgaged Property onto or
into any other property or from any other property onto or into the Mortgaged
Property in violation of any Environmental Requirement, nor is the undersigned
aware of any releasing, emitting, leaching, dumping or disposing of any
Hazardous Materials from the Mortgaged Property onto or into any other property
or from any other property onto or into the Mortgaged Property in violation of
any Environmental Requirement;
 
 
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(c)           no notice of violation, lien, complaint, suit, order or other
notice with respect to the Mortgaged Property is presently outstanding under any
Environmental Requirement; and

(d)           the Mortgaged Property and the operation thereof are in full
compliance with all Environmental Requirements.

3.           The undersigned absolutely and unconditionally guarantee to Lender
that the Borrower will fully comply with all of the terms, covenants and
provisions of paragraph 9 of the Mortgage.  If the Borrower does not fully
comply with all of the terms, covenants and provisions of paragraph 9 of the
Mortgage, the undersigned shall reimburse Lender upon demand for all sums and
costs and expenses incurred by Lender to the extent not otherwise reimbursed to
Lender pursuant to said paragraph in the Mortgage and/or in connection with
Lender performing the Borrower’s obligations as set forth in paragraph 9 of the
Mortgage (including specifically all such sums and interest thereon accruing
from and after the commencement of any case, proceeding or action under any
existing or future laws relating to bankruptcy, insolvency or similar matters
with respect to the Borrower), it being understood and agreed that, the
undersigned’s obligations hereunder shall be unaffected by modification of any
of the Borrower’s obligations in any bankruptcy or insolvency proceeding, nor by
the fact that Lender may not have an allowed claim for the same against the
Borrower as a result of any bankruptcy or insolvency proceeding.

4.           The undersigned will defend, indemnify, and hold harmless Lender,
its employees, agents, officers, and directors, from and against any and all
claims, demands, penalties, causes of action, fines, liabilities, settlements,
damages, costs, or expenses of whatever kind or nature, known or unknown,
foreseen or unforeseen, contingent or otherwise (including, without limitation,
counsel and consultant fees and expenses, investigation and laboratory fees and
expenses, court costs, and litigation expenses) arising out of, or in any way
related to:

(a)           any breach by the Borrower of any of the provisions of paragraph
9 of the Mortgage;

(b)           the presence, disposal, spillage, discharge, emission, leakage,
release, or threatened release of any Hazardous Material which is at, in, on,
under, about, from or affecting the Mortgaged Property, including, without
limitation, any damage or injury resulting from any such Hazardous Material to
or affecting the Mortgaged Property or the soil, water, air, vegetation,
buildings, personal property, persons or animals located on the Mortgaged
Property or on any other property or otherwise;

(c)           any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to any such Hazardous Material;

(d)           any lawsuit brought or threatened, settlement reached, or order or
directive of or by any Governmental Authority relating to such Hazardous
Material; or

(e)           any violation of any Environmental Requirement.

5.           The undersigned hereby agree to indemnify and shall hold harmless
and defend Lender at the undersigneds’ sole cost and expense against any loss or
liability, cost or expense (including, but not limited to, reasonable attorneys’
fees and disbursements of Lender’s counsel, whether in-house staff, retained
firms or otherwise), and all claims, actions, procedures and suits arising out
of or in connection with:
 
 
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(a)           any ongoing matters arising out of this Guaranty and
Indemnification Agreement and any document or instrument now or hereafter
executed and/or delivered in connection herewith (the “Indemnity Documents”);

(b)           any amendment to, or restructuring of the obligations of the
undersigned hereunder; and

(c)           any and all lawful action that may be taken by Lender in
connection with the enforcement of the provisions of this Guaranty and
Indemnification Agreement or any of the other Indemnity Documents and the
obligations of the undersigned thereunder, whether or not suit is filed in
connection with the same, or in connection with the Borrower, and/or any
partner, joint venturer or shareholder thereof becoming a party to a voluntary
or involuntary federal or state bankruptcy, insolvency or similar proceeding.

All sums expended by Lender shall be payable on demand and, until reimbursed by
the undersigned pursuant hereto, shall bear interest at the default interest
rate set forth in the Note.

6.           In addition to any right available to Lender under applicable law
or any other agreement, the undersigned hereby give to Lender a continuing lien
on, security interest in and right of set-off against all moneys, securities and
other property of the undersigned and the proceeds thereof, now on deposit or
now or hereafter delivered, remaining with or in transit in any manner to
Lender, its correspondents, participants or its agents from or for the
undersigned, whether for safekeeping, custody, pledge, transmission, collection
or otherwise or coming into possession of Lender in any way, and also, any
balance of any deposit account and credits of the undersigned with, and any and
all claims of the undersigned against, Lender at any time existing, as
collateral security for all of the obligations of the undersigned under this
Guaranty and Indemnification Agreement, including fees, contracted with or
acquired by Lender, whether joint, several, absolute, contingent, secured,
matured or unmatured (for the purposes of this paragraph 6 and paragraphs 8, 10
and 18 below, collectively, the “Liabilities”), hereby authorizing Lender at any
time or times, without prior notice, to apply such balances, credits or claims,
or any part thereof, to such Liabilities in such amounts as it may select,
whether contingent, unmatured or otherwise and whether any collateral security
therefore is deemed adequate or not.  The collateral security described herein
shall be in addition to any collateral security described in any separate
agreement executed by the undersigned.  Lender, in addition to any right
available to it under applicable law or any other agreement, shall have the
right, at its option, to immediately set off against any Liabilities all monies
owed by Lender in any capacity to the undersigned, whether or not due, and
Lender shall, at its option, be deemed to have exercised such right to set off
and to have made a charge against any such money immediately upon the occurrence
of any events of default set forth below, even though such charge is made or
entered on the books of Lender subsequent to those events.

7.           The obligations and liabilities of the undersigned under this
Guaranty and Indemnification Agreement shall survive and continue in full force
and effect and shall not be terminated, discharged or released, in whole or in
part, irrespective of whether the Debt has been paid in full and irrespective of
any foreclosure of the Mortgage, sale of the Mortgaged Property pursuant to the
provisions of the Mortgage or acceptance by Lender, its nominee or wholly owned
subsidiary of a deed or assignment in lieu of foreclosure or sale and
irrespective of any other fact or circumstance of any nature whatsoever.
 
 
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8.           The undersigned hereby expressly agree that this Guaranty and
Indemnification Agreement is independent of, and in addition to, all collateral
granted, pledged or assigned under the Loan Documents, and the undersigned
hereby consents that from time to time, before or after any default by the
Borrower:

(a)           any security at any time held by or available to Lender for any
obligation of the Borrower, or any security at any time held by or available to
Lender for any obligation of any other person or party primarily, secondarily or
otherwise liable for all or any portion of the Debt, any other Liabilities
and/or any other obligations of the Borrower or any other person or party, other
than Lender, under any of the Loan Documents (“Other Obligations”), including
any guarantor of the Debt, the Liabilities and/or of any of such Other
Obligations, may be accelerated, settled, exchanged, surrendered or released and
Lender may fail to set off and may release, in whole or in part, any balance of
any deposit account or credit on its books in favor of the Borrower, or any such
other person or party;

(b)           any obligation of the Borrower, or of any such other person or
party, may be changed, altered, renewed, extended, continued, accelerated,
surrendered, compromised, settled, waived or released in whole or in part, or
any default with respect thereto waived; and

(c)           Lender may extend further credit in any manner whatsoever to the
Borrower, and generally deal with the Borrower or any of the above-mentioned
security, deposit account, credit on its books or other person or party as
Lender may see fit;

and the undersigned shall remain bound under this Guaranty and Indemnification
Agreement, without any loss of rights by Lender and without affecting the
liability of the undersigned, notwithstanding any such exchange, surrender,
release, change, alteration, renewal, extension, continuance, compromise,
waiver, inaction, extension of further credit or other dealing.  In addition,
all moneys available to Lender for application in payment or reduction of the
Debt, the Liabilities and/or any Other Obligations may be applied by Lender in
such manner and in such amounts and at such time or times and in such order,
priority and proportions as Lender may see fit.

9.           The undersigned hereby waive:

(a)           notice of acceptance of this Guaranty and Indemnification
Agreement;

(b)           protest and notice of dishonor or default to the undersigned or to
any other person or party with respect to any obligations hereby guaranteed;

(c)           except as provided herein or in the Loan Documents, all other
notices to which the undersigned might otherwise be entitled; and

(d)           any demand under this Guaranty and Indemnification Agreement.

10.           If any of the following events should occur:

(a)           default under any of the Loan Documents and its continuance beyond
any applicable notice and/or grace period therein contained; or
 
 
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(b)           the undersigned violates any provision of this Guaranty and
Indemnification Agreement or any other guaranty or other agreement executed by
it with respect to the Loan or this Guaranty and Indemnification Agreement;

then, and in such event, Lender may declare the Liabilities to be, and the same
shall become, immediately due and payable and/or may exercise any or all of its
remedies as set forth herein or at law or in equity.

11.           This is a guaranty of payment and not of collection and the
undersigned further waives any right to require that any action be brought
against the Borrower or any other person or party or to require that resort be
had to any security or to any balance of any deposit account or credit on the
books of Lender in favor of the Borrower or any other person or party.  Any
payment on account of or reacknowledgment of the Debt by the Borrower, or any
other party liable therefor or action taken, payment or reacknowledgment made,
of any of the obligations of the Borrower under paragraph 9 of the Mortgage or
otherwise with respect to any Environmental Requirements or to Lender in
connection therewith, shall be deemed to be taken or made on behalf of the
undersigned and shall serve to start anew the statutory period of limitations
applicable to the obligations of the Borrower and/or the undersigned pursuant to
said paragraph 9 of the Mortgage, hereunder or otherwise with respect to any
Environmental Requirement or to Lender in connection therewith or herewith.

12.           Each reference herein to Lender shall be deemed to include its
successors and assigns, in whose favor the provisions of this Guaranty and
Indemnification Agreement shall also inure.  Each reference herein to the
undersigned shall be deemed to include the heirs, executors, administrators,
legal representatives, successors and assigns of the undersigned, all of whom
shall be bound by the provisions of this Guaranty and Indemnification Agreement,
provided, however, that the undersigned shall in no event nor under any
circumstance have the right, without obtaining the prior written consent of
Lender, to assign or transfer the undersigned’s obligations and liabilities
under this Guaranty and Indemnification Agreement, in whole or in part, to any
other person, party or entity.

13.           The term “undersigned” as used herein shall, if this Guaranty and
Indemnification Agreement is signed by more than one party, unless otherwise
stated herein, mean the “undersigned and each of them” and each undertaking
herein contained shall be their joint and several undertaking.  If the Guaranty
is signed by more than one party, all singular references to the undersigned
shall be deemed to be plural.  Lender may proceed against none, one or more of
the undersigned at one time or from time to time as it sees fit in its sole and
absolute discretion.  If any party hereto shall be a partnership, the agreements
and obligations on the part of the undersigned herein contained shall remain in
force and application notwithstanding any changes in the individuals composing
the partnership and the term “undersigned” shall include any altered or
successive partnerships but the predecessor partnerships and their partners
shall not thereby be released from any obligations or liability hereunder.  If
any party hereto shall be a corporation, the agreements and obligations on the
part of the undersigned herein contained shall remain in force and application
notwithstanding the merger, consolidation, reorganization or absorption thereof,
and the term “undersigned” shall include such new entity, but the old entity
shall not thereby be released from any obligations or liabilities
hereunder.  The Borrower is executing this Guaranty and Indemnification
Agreement as a further assurance that its obligations set forth herein will
remain in full force and effect, notwithstanding the assignment or discharge of
record of the Mortgage or any other fact or circumstances whatsoever.
 
 
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14.           No delay on the part of Lender in exercising any right or remedy
under this Guaranty and Indemnification Agreement or failure to exercise the
same shall operate as a waiver in whole or in part of any such right or
remedy.  No notice to or demand on the undersigned shall be deemed to be a
waiver of the obligation of the undersigned or of the right of Lender to take
further action without notice or demand as provided in this Guaranty and
Indemnification Agreement.  No course of dealing between the undersigned and
Lender shall change, modify or discharge, in whole or in part, this Guaranty and
Indemnification Agreement or any obligations of the undersigned hereunder.

15.           This Guaranty and Indemnification Agreement may only be modified,
amended, changed or terminated by an agreement in writing signed by Lender and
the undersigned.  No waiver of any term, covenant or provision of this Guaranty
and Indemnification Agreement shall be effective unless given in writing by
Lender and if so given by Lender shall only be effective in the specific
instance in which given.  The execution and delivery hereafter to Lender by the
undersigned of a new instrument of guaranty or any reaffirmation of guaranty, of
whatever nature, shall not terminate, supersede or cancel this instrument,
unless expressly so provided therein, and all rights and remedies of Lender
hereunder or under any instrument of guaranty hereafter executed and delivered
to Lender by the undersigned shall be cumulative and may be exercised singly or
concurrently.

16.           The undersigned acknowledges that this Guaranty and
Indemnification Agreement and the undersigned’s obligations under this Guaranty
and Indemnification Agreement are and shall at all times continue to be
absolute, irrevocable and unconditional in all respects, and shall at all times
be valid and enforceable irrespective of any other agreements or circumstances
of any nature whatsoever which might otherwise constitute a defense to this
Guaranty and Indemnification Agreement and the obligations of the undersigned
under this Guaranty and Indemnification Agreement or the obligations of any
other person or party relating to this Guaranty and Indemnification Agreement or
the obligations of the undersigned hereunder or otherwise with respect to the
Debt, including, but not limited to, a foreclosure of the Mortgage or the
realization upon any other collateral given, pledged or assigned as security for
all or any portion of the Debt, or the filing of a petition under Title 11 of
the United States Code with regard to the Borrower, or the commencement of an
action or proceeding for the benefit of the creditors of the Borrower or the
undersigned, or the obtaining by Lender of title to, respectively, the Mortgaged
Property or to any collateral given, pledged or assigned as security for the
Debt by reason of the foreclosure or enforcement of the Mortgage or any other
pledge or security agreement, the acceptance of a deed or assignment in lieu of
foreclosure or sale, or otherwise.  This Guaranty and Indemnification Agreement
sets forth the entire agreement and understanding of Lender and the undersigned
with respect to the matters covered by this Guaranty and Indemnification
Agreement, and the undersigned acknowledges that no oral or other agreements,
understandings, representations or warranties exist with respect to this
Guaranty and Indemnification Agreement or with respect to the obligations of the
undersigned under this Guaranty and Indemnification Agreement, except those
specifically set forth in this Guaranty and Indemnification Agreement.
 
 
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17.           This Guaranty and Indemnification Agreement has been validly
authorized, executed and delivered by the undersigned.  Each of the undersigned
represents and warrants to Lender, to the extent applicable, that it has the
corporate power to do so and to perform its obligations under this Guaranty and
Indemnification Agreement and this Guaranty and Indemnification Agreement
constitutes the legally binding obligation of the undersigned fully enforceable
against the undersigned in accordance with the terms hereof.  The undersigned
further represent and warrant to Lender that:

(a)           neither the execution and delivery of this Guaranty and
Indemnification Agreement nor the consummation of the transactions contemplated
hereby nor compliance with the terms and provisions hereof will violate any
applicable provision of law or any applicable regulation or other manifestation
of governmental action; and

(b)           all necessary approvals, consents, licenses, registrations and
validations of any governmental regulatory body, including, without limitation,
approvals required to permit the undersigned to execute and carry out the
provisions of this Guaranty and Indemnification Agreement, for the validity of
the obligations of the undersigned hereunder and for the making of any payment
or remittance of any funds required to be made by the undersigned under this
Guaranty and Indemnification Agreement, have been obtained and are in full force
and effect.

18.           To the extent applicable, notwithstanding any payments made by the
undersigned pursuant to the provisions of this Guaranty and Indemnification
Agreement, the undersigned irrevocably waives all rights to enforce or collect
upon any rights which it now has or may acquire against the Borrower either by
way of subrogation, indemnity, reimbursement or contribution for any amount paid
under this Guaranty and Indemnification Agreement or by way of any other
obligations whatsoever of the Borrower to any of the undersigned, nor shall any
of the undersigned file, assert or receive payment on any claim, whether now
existing or hereafter arising, against the Borrower in the event of the
commencement of a case by or against the Borrower under Title 11 of the United
States Code.  In the event either a petition is filed under said Title 11 of the
United States Code with regard to the Borrower or an action or proceeding is
commenced for the benefit of the creditors of the Borrower, this Guaranty and
Indemnification Agreement shall at all times thereafter remain effective in
regard to any payments or other transfers of assets to Lender received from or
on behalf of the Borrower prior to notice of termination of this Guaranty and
Indemnification Agreement and which are or may be held voidable on the grounds
of preference or fraud, whether or not the Debt has been paid in full.  Any
payment on account of or reacknowledgment of the Debt by the Borrower, or any
other party liable therefor, or action taken, or payment or reacknowledgment
made, of any of the obligations of the Borrower to take and complete the actions
specified in paragraph 9 of the Mortgage shall serve to start anew the statutory
period of limitations applicable to the Borrower with respect to said paragraph
9 and the undersigned hereunder.  The provisions of this paragraph 18 shall
survive the term of this Guaranty and the payment in full of the Debt and all
other Liabilities.
 
 
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19.           Any notice, request or demand given or made under this Guaranty
and Indemnification Agreement shall be in writing and shall be hand delivered or
sent by Federal Express or other reputable courier service or by postage prepaid
registered or certified mail, return receipt requested, and shall be deemed
given (a) when received at the following addresses if hand delivered or if sent
by Federal Express or other reputable courier service, and (b) three (3)
business days after being postmarked and addressed as follows if sent by
registered or certified mail, return receipt requested:

If to Lender:

HSBC Bank USA, National Association
534 Broad Hollow Road, Room 130
Melville, New York  11747

Attention:                      Mr. Robert J. Caruana, Jr.
         Vice President

With a copy to:

Farrell Fritz, P.C.
1320 RXR Plaza
Uniondale, New York  11556-1320

Attention:                      Jodi L. Gladstone, Esq.

If to the undersigned:

FAE Holdings 411519R, LLC
 c/o First American Exchange Company, LLC
560 South 300 East
Salt Lake City, Utah  84111

and

CVD Equipment Corporation
1860 Smithtown Avenue
Ronkonkoma, New York 11779

Attention: Glen Charles

With a copy to:

CVD Equipment Corporation
1860 Smithtown Avenue
Ronkonkoma, New York 11779

Attention:                      Martin J. Teitelbaum, Esq.
        General Counsel

it being understood and agreed that each party will use reasonable efforts to
send copies of any notices to the addresses marked “With a copy to” hereinabove
set forth; provided, however, that failure to deliver such copy or copies shall
have no consequence whatsoever to the effectiveness of any notice made to the
undersigned or Lender.  Each party to this Guaranty and Indemnification
Agreement may designate a change of address by notice given, as herein provided,
to the other party fifteen (15) days prior to the date such change of address is
to become effective.
 
 
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20.           This Guaranty and Indemnification Agreement is, and shall be
deemed to be, a contract entered into under and pursuant to the laws of the
State of New York and shall be in all respects governed, construed, applied and
enforced in accordance with the laws of the State of New York without regard to
principles of conflicts of laws.

21.           The undersigned agrees to submit to personal jurisdiction in the
State of New York in any action or proceeding arising out of this Guaranty and
Indemnification Agreement.  In furtherance of such agreement, the undersigned
hereby agrees and consents that without limiting other methods of obtaining
jurisdiction, personal jurisdiction over the undersigned in any such action or
proceeding may be obtained within or without the jurisdiction of any court
located in New York or Nassau County and that any process or notice of motion or
other application to any such court in connection with any such action or
proceeding may be served upon the undersigned by registered or certified mail
to, or by personal service at, the last known address of the undersigned,
whether such address be within or without the jurisdiction of any such
court.  The undersigned hereby further agrees that the venue of any litigation
arising in connection with the Debt or in respect of any of the obligations of
the undersigned under this Guaranty and Indemnification Agreement, shall, to the
extent permitted by law, be in New York or Nassau County.  Nothing in this
paragraph shall limit the right of Lender to bring an action or proceeding
arising out of the Guaranty and Indemnification Agreement in any other
jurisdiction.

22.           The undersigned absolutely, unconditionally and irrevocably waive
any and all right to assert or interpose any defense, setoff, counterclaim or
crossclaim of any nature whatsoever with respect to this Guaranty and
Indemnification Agreement or the obligations of the undersigned under this
Guaranty and Indemnification Agreement, or the obligations of any other person
or party (including, without limitation, the Borrower) relating to this Guaranty
and Indemnification Agreement, or the obligations of the undersigned hereunder
or otherwise with respect to the Loan in any action or proceeding brought by
Lender to collect the Debt, or any portion thereof, or to enforce the
obligations of the undersigned under this Guaranty and Indemnification Agreement
(provided, however, that the foregoing shall not be deemed a waiver of the right
of the undersigned to assert any compulsory counterclaim maintained in a court
of the United States, or of the State of New York if such counterclaim is
compelled under local law or rule of procedure, nor shall the foregoing be
deemed a waiver of the right of the undersigned to assert any claim which would
constitute a defense, setoff, counterclaim or crossclaim of any nature
whatsoever against Lender in any separate action or proceeding).  The
undersigned hereby undertakes and agrees that this Guaranty shall remain in full
force and effect for all of the obligations and liabilities of the undersigned
hereunder, notwithstanding the maturity of the Loan, whether by acceleration,
scheduled maturity or otherwise.

23.           No exculpatory provisions which may be contained in any Loan
Document shall in any event or under any circumstances be deemed or construed to
modify, qualify, or affect in any manner whatsoever the obligations and
liabilities of the undersigned under this Guaranty and Indemnification
Agreement.

24.           The obligations and liabilities of the undersigned under this
Guaranty and Indemnification Agreement are in addition to the obligations and
liabilities of the undersigned under the Other Guaranties (as hereinafter
defined).  The discharge of any or all of the undersigned’s obligations and
liabilities under any one or more of the Other Guaranties by the undersigned or
by reason of operation of law or otherwise shall in no event or under any
circumstance constitute or be deemed to constitute a discharge, in whole or in
part, of the undersigned’s obligations and liabilities under this Guaranty and
Indemnification Agreement.  Conversely, the discharge of any or all of the
undersigned’s obligations and liabilities under this Guaranty and
Indemnification Agreement by the undersigned or by reason of operation of law or
otherwise shall in no event or under any circumstance constitute or be deemed to
constitute a discharge, in whole or in part, of the undersigned’s obligations
and liabilities under any of the Other Guaranties.  The term “Other Guaranties”
as used herein shall mean any other guaranty of payment, guaranty of
performance, completion guaranty, indemnification agreement or other guaranty or
instrument creating any obligation or undertaking of any nature whatsoever
(other than this Guaranty and Indemnification Agreement) now or hereafter
executed and delivered by the undersigned to Lender in connection with the Loan.
 
 
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25.           This Guaranty and Indemnification Agreement may be executed in one
or more counterparts by some or all of the parties hereto, each of which
counterparts shall be an original and all of which together shall constitute a
single agreement of guaranty.  The failure of any party listed below to execute
this Guaranty and Indemnification Agreement, or any counterpart hereof, or the
ineffectiveness for any reason of any such execution, shall not relieve the
other signatories from their obligations hereunder.

26.           The undersigned hereby irrevocably and unconditionally waive, and
Lender by its acceptance of this Guaranty and Indemnification Agreement
irrevocably and unconditionally waive, any and all right to trial by jury in any
action, suit or counterclaim arising in connection with, out of or otherwise
relating to this Guaranty and Indemnification Agreement.

27.           Notwithstanding anything to the contrary in this Guaranty and
Indemnification Agreement, the Mortgage, the Note, or any other document
executed in connection with any of the foregoing (the “Loan Documents”), by
acceptance of this instrument, Lender 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 Guaranty and Indemnification Agreement 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 PARAGRAPH 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.

[END OF PAGE]
 
 
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IN WITNESS WHEREOF, the undersigned have duly executed this Guaranty and
Indemnification Agreement the day and year first above set forth.

 
FAE HOLDINGS 411519R, LLC
 

By:           /s/ Mark Bullock
Name:  Mark Bullock
Title:    In House Counsel

 
CVD EQUIPMENT CORPORATION
 

By:           /s/ Glen Charles
Name:   Glen Charles
Title:     Chief Financial Officer
 
 
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State of New York                )
)ss.:
County of                              )

On the ___ day of March in the year 2012 before me, the undersigned, personally
appeared __________________, personally known to me or proved to me on the basis
of satisfactory evidence to be the individual whose name is subscribed to the
within instrument, and acknowledged to me that he executed 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.

________________________________________
Notary Public                                   

State of New York                )
)ss.:
County of                              )

On the ___ day of March in the year 2012 before me, the undersigned, personally
appeared Glen Charles, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument, and acknowledged to me that he executed 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.

________________________________________
Notary Public                                   

[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
 
 
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EXHIBIT A

Guaranty:  The term “Payment Guaranty” as used in this Guaranty and
Indemnification Agreement shall mean a certain Guaranty of Payment, dated the
date hereof, given by CVD Equipment Corporation for the benefit of Lender,
together with any and all modifications, supplements, extensions, replacements
or substitutions therefor as may exist from time to time.

Note:   The term “Note” as used in this Guaranty and Indemnification Agreement
shall mean a certain Amended and Restated Note, dated the date hereof, in the
consolidated principal sum of $6,000,000.00, between the Lender and the
Borrower, together with any and all modifications, supplements, extensions,
replacements or substitutions therefor as may exist from time to time.

Mortgage:  The term “Mortgage” as used in this Guaranty and Indemnification
Agreement shall mean a certain Amended and Restated Fee and Leasehold Mortgage,
dated the date hereof, in the consolidated principal sum of $6,000,000.00, to be
given by the Borrower to the Lender covering the fee simple estate of the
Borrower in certain premises located in Suffolk County, New York, as more
particularly described therein, and intended to be duly recorded in Suffolk
County, New York, together with any and all modifications, supplements,
extensions, replacements or substitutions therefor as may exist from time to
time.

 
A-1