COMMERCIAL LOAN AGREEMENT (Loan No. 9117000148)
Exhibit 10.2
(Loan No. 0000000000)
This Commercial Loan Agreement dated as of August 31, 2005 ("Agreement") is by and among CALIFORNIA BANK & TRUST, a California banking corporation, as lender ("Bank"),
and ICON INCOME FUND EIGHT B L.P.; ICON INCOME FUND NINE, LLC; ICON INCOME FUND TEN, LLC; and ICON LEASING FUND ELEVEN, LLC, as borrowers
(separately and collectively "Borrower").
1. DEFINITIONS
1.1 The following terms shall have the following meanings when used in this
Agreement:
"Account Obligor" shall mean the obligor on any Accounts Receivable.
"Accounts" shall mean each of the presently existing and hereafter arising accounts, Accounts Receivable, contract rights and other forms of monetary obligations and receivables (including healthcare receivables) owing to
Borrower, and any credit insurance, guaranties, or security therefore, irrespective of whether earned by performance.
"Accounts Receivable" shall mean open Accounts which are Collateral.
"Adjusted Total Liabilities" shall mean the sum of current liabilities plus long term liabilities (excluding all non-recourse debt and all other debt subordinated to Borrower's obligations to Bank in a manner acceptable
to Bank), including, without limitation, accrued and deferred income taxes, all calculated in accordance with GAAP, consistently applied.
"Affiliate” shall mean, when used with respect to any Person, any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person. For purposes of this definition, "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with"), with respect to any Person, shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Commercial Loan Agreement as amended or modified from time to time, together with all exhibits and schedules attached hereto from time to time.
"Authorized Officer” shall have the meaning given the term in Section 5.3.a.
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"Availability" shall mean, as of the date of determination, the difference between the Line of Credit Limit and the outstanding amount under the Line of Credit.
"Bank" shall mean California Bank & Trust, its successors and assigns.
"Banking Day" shall mean, unless otherwise provided in this Agreement, a day other than Saturday, Sunday, or a legal holiday on which Bank is open for business in the State of California.
"Beneficial Interest” shall mean a beneficial interest in a trust, a partnership interest in a partnership, or a membership interest in a limited liability company.
"Borrower" shall mean ICON Income Fund Eight B L.P.; ICON Income Fund Nine, LLC; ICON Income Fund Ten, LLC; and ICON Leasing Fund Eleven, LLC, separately and collectively.
"Borrower’s Assets" shall mean any real or personal property owned, now or hereafter, in whole or in part by Borrower.
"Borrowing Base" shall mean 85% of the Present Value of the Eligible Borrowing Base Contracts, with the limitation that no more than $5,000,000.00 in advances, in the aggregate, shall be based on a contract or contracts involving the
same Lessee or Debtor unless otherwise approved in writing by Bank and with the further limitation that no more than 25% of the Present Value of the Eligible Borrowing Base Contracts shall mature within 90 days (to the extent that the $5,000,000.00 or 25% limitation is exceeded in the Eligible Borrowing Base Contracts identified on Schedule 1, Bank
approves that excess).
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
"Collateral” means and includes, without limitation, all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future and whether granted
in the form of a security interest, assignment, pledge, lien, or any other security or lien interest whatsoever, whether created by law, contract or otherwise. The word "Collateral" includes without limitation all collateral described in the section of this Agreement titled "Collateral."
"Collateral Documents” shall mean all the documents set forth in this Agreement in the section titled "Collateral Documents."
"Contribution Agreement” shall have the meaning given the term in Section 8.23 of this Agreement.
"Debt Service Coverage Ratio" means EBITDA divided by Interest Expense.
"Debtor" means a borrower under a Loan Contract or Indirect Loan Contract.
"Default” means an event which, with the passage of time or the giving of notice or both, would constitute an Event of Default.
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"Default Rate" shall have the meaning given the term in Section 5.8.
"Designated Accounts" shall have the meaning given the term in Section 5.3 of this Agreement.
"Discount Rate" means the rate of interest equal to one-quarter of one percent (0.25%) per annum in excess of the Prime Rate, which shall vary concurrently with any change in the Prime Rate.
"EBITDA" means the sum of (a) Borrower's net income; (b) depreciation and amortization expense and other non-cash items deducted on the Borrower's financial statements in determining
such net income; (c) Interest Expense; and (d) taxes imposed by any jurisdiction upon Borrower's net income, absent the effect of write-ups or forgiveness of debt; all as calculated in accordance with GAAP, consistently applied.
"Eligible Borrowing Base Contract” means a Revolving Loan Contract which satisfies each of the following conditions at the date of determination:
a. No event of default exists under such contract, except that past due payments that are deemed acceptable under paragraph b. below shall not cause an otherwise Eligible Borrowing Base Contract to becomeineligible;
b. Scheduled payments by the Lessee or the Debtor under such contract are
current or less than 60 days past the scheduled payment date specified
in such contract;
c. The contract identifies Borrower as the lessor or lender, or, if
another Person is the original lessor or lender, the lessor's or
lender's interest in the contract and the underlying equipment has
been transferred in writing to Borrower (if the Revolving Loan
Contract is an Indirect Lease or Indirect Loan Contract, the term
"Borrower" in this clause is replaced by "Person in whom Borrower has
a Beneficial Interest");
d. There is no indication on the contract that Borrower or any
predecessor-in-interest on the contract has transferred or pledged any
interest in the contract to any Person other than Bank or Borrower (if
the Revolving Loan Contract is an Indirect Lease or Indirect Loan
Contract, the term "Borrower" in this clause is replaced by "Person in
whom Borrower has a Beneficial Interest") or, if there is such
indication, such interest has been validly transferred by such Person
to Borrower or Bank;
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e. If the contract is a lease, the lease and the equipment leased
thereunder are owned by Borrower and are subject to no Liens (other
than Permitted Liens) in favor of anyone other than Bank or to any
rights other than the rights of the Lessee as lessee under such lease;
if a lease is deemed a security interest under the applicable Uniform
Commercial Code, Borrower has a perfected first-priority Lien in the
equipment covered thereby (if the Revolving Loan Contract is an
Indirect Lease or Indirect Loan Contract, the term "Borrower" in this
clause is replaced by "Person in whom Borrower has a Beneficial
Interest");
f. Bank has a perfected first priority Lien in the Revolving Loan
Contract and, if the Revolving Loan Contract is a lease, Bank has a
perfected first-priority Lien in the equipment subject to that lease,
subject to any Permitted Liens (if the Revolving Loan Contract is an
Indirect Lease or Indirect Loan Contract, Bank has a first priority
Lien in Borrower's Beneficial Interest in the lessor or lender);
g. If the contract is a loan, the contract is owned by Borrower and is
subject to no Lien, other than Permitted Liens, in favor of anyone
other than Bank, and Borrower has a perfected first priority Lien in
the equipment that secures the loan, subject to any Permitted Liens
(if the Revolving Loan Contract is an Indirect Loan Contract, the term
"Borrower" in this clause is replaced by "Person in whom Borrower has
a Beneficial Interest");
h. The contract is written; the contract has not been amended or modified
except by a written document delivered to Bank; the contract was
entered into or acquired in the ordinary course of Borrower's
business; the contract is in full force and effect and is enforceable
in accordance with its terms; to Borrower's knowledge, the equipment
covered by the contract is in good working order; the Lessee or Debtor
has accepted the equipment delivered pursuant to the contract as
evidenced by a delivery and acceptance certificate executed by the
Lessee or Debtor or other standard document; if a lease, the Lessee
has commenced making rent payments pursuant to the terms of the lease;
if a loan, the Debtor has commenced making loan payments pursuant to
the loan; and to Borrower's knowledge, no defenses, offsets,
counterclaims or disputes exist under or with respect to such contract
or to the equipment covered by such contract;
i. All existing "chattel paper" originals of the contract, together with
any and all schedules, supplements and amendments thereto and
modifications thereof, including any and all promissory notes and
other instruments as defined in the Uniform Commercial Code,
evidencing any monetary obligation owing to Borrower in connection
therewith, have been delivered to, and are in the possession of Bank
(if the Revolving Loan Contract is an Indirect Lease or Indirect Loan
Contract, the term "Borrower" in this clause is replaced by "Person in
whom Borrower has a Beneficial Interest");
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j. If the Revolving Loan Contract is an Indirect Lease or Indirect Loan
Contract, Borrower shall have, prior to the making of a Line of Credit
advance, disclosed to Bank in writing the identity of the lessor or
lender, as the case may be, and the nature of Borrower's Beneficial
Interest in such Person;
k. No part of the contract, or the equipment thereunder, shall be
financed by non-recourse or other debt (unless subordinated on terms
and conditions satisfactory to Bank); and
l. The contract shall have a remaining term of not less than 31 days from the date of funding by Bank.
"Environmental Laws" shall mean each and every material federal, state or local law, ordinance, regulation, permit, license, authorization, judgment, decree, agreement, restriction or requirement pertaining
to health, industrial hygiene, Hazardous Substances (as defined below), or the environment.
"Event of Default" means and includes without limitation any of the Events of Default set forth in this Agreement in the section titled "Events of Default."
"Facility Fee" shall have the meaning given the term in Section 3.5.a. of this Agreement.
"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by
such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of purpose.
"Hazardous Substance" shall mean any substance whose nature, existence, use or effect render it subject now, or in the future, to federal, state or local regulation, investigation, remediation or removal as potentially injurious to public health or welfare.
"Indirect Lease" means a lease (including a schedule under a master lease) in which a Person in whom Borrower has a Beneficial Interest is the lessor or has been assigned the lessor's interest.
"Indirect Loan Contract" means a loan contract (including a schedule under a master loan contract) or promissory note in which a Person in whom Borrower has a Beneficial Interest is the lender or payee or
has been assigned the lender's or payee's interest.
"Interest Expense" for any applicable period shall mean all interest expense as it appears on Borrower's income statement for such period, all calculated
in accordance with GAAP, consistently applied.
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"Inventory" shall mean all finished goods wherever located, and goods which are or may at any time be held for sale or lease, furnished under any contract of service or held as raw materials, work-in-progress, supplies, components or materials used or consumed
in Borrower's business or which are or might be used in connection with the manufacturing, shipping, advertising, selling or finishing of such goods, merchandise and other personal property and all documents of title or documents representing the
same, whether negotiable or non-negotiable and all such property, the sale or other disposition of which has given rise to Accounts Receivable and which has been returned to or repossessed or stopped in transit by Borrower.
"Lease" shall mean a lease (including a schedule under a master lease) under which Borrower is the lessor or for which Borrower has been assigned the lessor's interest.
"Lessee" means a lessee under any Lease or Indirect Lease.
"Lien" shall mean any lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale, trust receipt, judgment, attachment or by operation of law, or from a lease, consignment, or bailment for security purposes and any agreement to grant any lien or security interest.
"LIBO Rate" shall have the meaning given the term in Sections 3.2.b.iii.
"Line of Credit Applicable Interest Period" shall have the meaning given the term in Section 3.2.b.
"Line of Credit Availability Period" shall mean the period of time commencing on the date of this Agreement and continuing until the Line of Credit Expiration Date.
"Line of Credit Expiration Date" shall mean August 31, 2007.
"Line of Credit" shall have the meaning given the term in Section 2.1.a.
"Line of Credit LIBO Rate Portion" shall have the meaning given the term in Section 3.2.b.
"Line of Credit Limit" shall have the meaning given the term in Section 2.1.a.
"Line of Credit Note" shall have the meaning given the term in Section 2.1.a.
"Liquidity" means Borrower's cash reserves (other than the Restricted Cash Deposit and other deposits reserved pursuant to Borrower's non-recourse financing, if any) and unused vailability under
the Line of Credit.
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"Loan" shall mean and include, without limitation, any and all commercial loans and financial accommodations from Bank to Borrower, whether now or hereafter existing, and however evidenced, including
without limitation, those loans and financial accommodations described in this Agreement or on any exhibit or schedule attached to this Agreement from time to time.
"Loan Contract" shall mean a loan contract (including a schedule under a master loan contract) or promissory note in which Borrower is the lender or payee or which Borrower has been assigned the lender's or payee's interest.
"Loan Documents" shall mean this Agreement and all other documents and agreements executed or delivered to Bank in connection with this Agreement.
"Manager" means ICON Capital Corp., a Connecticut corporation, in its capacity as manager of those entities comprising Borrower that are limited liability companies and
in its capacity as general partner of ICON Income Fund Eight B L.P.
"Material Adverse Change" means a material adverse effect on (a) the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Manager, (b)
the business, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Borrower and its Subsidiaries taken as a whole, (c) the ability of Borrower to
perform its obligations under the Loan Documents to which it is a party or of Bank to enforce the Obligations or realize upon the Collateral, (d) the value of the Collateral or the amount that Bank would be likely to receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral, (e) the validity or enforceability of this Agreement, the other Loan Documents, or the rights and remedies of Bank hereunder or
thereunder, or (f) the priority of Bank's Liens with respect to the Collateral.
"Note" shall mean the Line of Credit Note.
"Obligation" shall mean all loans, advances, debt, principal, interest, fees, expenses, costs and other amounts owed to Bank by Borrower pursuant to this Agreement, together with all guaranties, covenants
and duties owing by Borrower to Bank of any kind or description hereunder, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including any interest, fees, expenses, costs and other amounts owed to Bank
that but for the provisions of the Bankruptcy Code would have accrued after the commencement of any insolvency proceeding and including any debt, liability, or obligation owing from Borrower to other Persons that Bank may have obtained by assignment or otherwise.
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"Optional Line of Credit Interest Rate" shall have the meaning given the term in Section 3.2.b.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Liens" shall mean any: (a) Liens approved in writing by Bank or arising under this Agreement or the other Loan Documents; (b) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank's Liens; (c) Liens incurred in the ordinary course of business of Borrower, except that (i) no Liens other than in favor of Bank are permitted on any of the Leases, Loan Contracts and other property identified in Schedule 1 or otherwise the subject of any Line of Credit advance, and (ii) no Lien is permitted
on any equipment related to clause (i) except in favor of Bank and, in the case of equipment securing a Loan Contract, a Lien in favor of Borrower; provided, however, that nothing herein shall prevent Borrower from incurring Liens in favor of carriers, warehousemen, mechanics, materialmen, workmen and landlords and other similar Liens, in each case arising in the ordinary course of business; (d) Liens
consisting of another Person's interest in a residual sharing agreement or remarketing agreement with respect to the sale of equipment upon the termination of a Lease or Indirect Lease provided that the value of Borrower's interest in such equipment as shown on its books is net of such other Person's interest; (e) Liens on equipment subject to a Lease that are expressly permitted
by the terms of the Lease; (f) judgment Liens not constituting an Event of Default hereunder; (g) subordinate Liens granted pursuant to the Contribution Agreement; (h) Liens of the relevant deposit bank incurred in the ordinary course of business encumbering customary deposit accounts or brokerage accounts; (i)
Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty
requirements, including rights of setoff; and (j) Liens arising from the refinancing of any of the indebtedness secured by any of the foregoing described Liens.
"Person" shall mean and include an individual, a partnership, a limited liability company, a corporation, a joint stock corporation, an unincorporated association, a joint venture or other similar entity or a governmental
authority.
"Plan" shall mean any employee pension benefit plan maintained or contributed to by Borrower and insured by the PBGC under Title IV of ERISA.
"Present Value" means any fixed unpaid payment obligation owed to Borrower by a Lessee under a lease or a Debtor under a loan (including, without limitation, unpaid regularly
scheduled payments, puts and balloon payments) (in each case excluding leases and loans that are not Eligible Borrowing Base Contracts), such unpaid payments to be discounted to their present value on the date of calculation at the Discount Rate. If the contract is an Indirect Lease or Indirect Loan Contract, the Present Value shall
be multiplied by that percentage of the foregoing that corresponds to Borrower's interest in the Person that is the lessor or lender, as the case may be. If a lessee under a lease has the option to terminate the lease as of a date prior to its scheduled termination date, the Present Value of that lease shall be the lower of the following: (i)
the Present Value based on the lease terminating at such prior date plus the amount of any payment that the lessee would be obligated to pay the lessor upon exercise of such option, discounted to its present value on the date of calculation at the Discount Rate; or (ii) the Present Value based on the lease terminating at its scheduled termination date.
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"Prime Rate" shall mean the rate of interest set from time to time by Bank at its head office as its Prime Rate. The Prime Rate is determined by Bank as a means of pricing credit extensions to some customers and is neither tied to any external rate of interest or
index nor is it necessarily the lowest rate of interest charged by Bank at any given time for any particular class of customers or credit extensions.
"Regular Line of Credit Interest Rate" shall have the meaning given the term in Section 3.2.a.
"Restricted Cash Deposit" shall have the meaning given the term in Section 8.8.
"Revolving Loan Contract" means a Lease, Loan Contract, Indirect Lease or Indirect Loan Contract based on which Bank makes a Line of Credit advance (including any and all schedules, supplements and amendments thereto and
modifications thereof and together with any and all promissory notes and other instruments, as defined in the Uniform Commercial Code, evidencing any monetary obligation owing to Borrower in connection therewith) originated by Borrower or acquired by Borrower from the lessor or lessor's assignee or from the lender or lender's assignee, as the case may be.
"Security Agreement" shall mean the document delivered by Borrower to Bank detailed in the section of this Agreement titled "Collateral Documents."
"Subsidiary" shall mean a business entity in which Borrower owns, directly or indirectly, an equity interest having sufficient ordinary voting power to elect a majority of the board of directors or other managers of such entity or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, of which Borrower has a controlling interest.
"Tangible Net Worth" means the gross book value of Borrower's Assets (excluding goodwill, patents, trademarks, trade names, organizational expenses, treasury stock, unamortized debt discount and
expense, deferred research and development costs, other like intangibles, and monies due from Affiliates except in connection with sales to Affiliates on terms that Borrower normally provides to third parties) plus debt that is subordinated to Bank in a manner acceptable to Bank, less all liabilities, including, without limitation, accrued and
deferred income taxes, and any reserves against assets, all calculated in accordance with GAAP, consistently applied.
"UCC-1 Financing Statement" shall mean the document delivered by Borrower to Bank detailed in the section of this Agreement titled "Collateral Documents."
"Unused Commitment Fee" shall have the meaning given to the term in Section 3.5.c.
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2. LOAN FACILITY
2.1 Bank agrees to make available to Borrower the following credit on the following terms, covenants and conditions:
a. Revolving Line of Credit. During the Line of Credit Availability
Period and so long as no Event of Default has occurred and is
continuing, Bank will, on a revolving basis, make advances to Borrower
("Line of Credit"), which, except as set forth below, may not at any
time exceed an aggregate amount outstanding equal to the lesser of
Seventeen Million Dollars ($17,000,000.00) or the Borrowing Base
(collectively the "Line of Credit Limit"). Borrower's obligation to
repay advances under the Line of Credit shall be evidenced by a
promissory note in a form acceptable to Bank (the "Line of Credit
Note"). During the Line of Credit Availability Period, Borrower may
repay principal amounts and reborrow them. Borrower agrees that
Borrower will not permit the outstanding balance under the Line of
Credit to exceed the Line of Credit Limit unless Borrower increases
the Restricted Cash Deposit by an amount equal to the sum that would
otherwise be overadvanced, in which case Borrower shall have the right
to borrow an amount in excess of the Borrowing Base but not more than
$17,000,000.00. Provided no Event of Default has occurred and is
continuing at such time, Borrower may request (i) a one year extension
of the Line of Credit Availability Period within sixty days of the
Line of Credit Expiration Date, but Bank has no obligation to grant
the extension and/or (ii) the addition to Borrower of an additional
fund or funds managed by Manager or an Affiliate of Manager acceptable
to Bank, but Bank has no obligation to grant the addition.
3. TERMS
3.1 Availability Period.
a. Availability Period Line of Credit. Borrower may draw on the Line of
Credit during the Line of Credit Availability Period, unless (i) a
Default or an Event of Default has occurred and is continuing or (ii)
Borrower has failed to satisfy any condition hereunder to such
borrowing and Bank has refused to waive such condition.
3.2 Interest Rate.
a. Line of Credit Interest Rate. Interest on advances on the Line of
Credit shall accrue at the Prime Rate plus one quarter percent
(P+0.25%) per annum in effect from time to time (the "Regular Line of
Credit Interest Rate"). Any changes in the Regular Line of Credit
Interest Rate resulting from a change in the Prime Rate shall take
effect without notice at the time the Prime Rate is set.
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b. Line of Credit Optional Interest. Instead of the Regular Line of
Credit Interest Rate, Borrower may elect to have up to five (5)
advances on the outstanding principal balance of the Line of Credit
(each a "Line of Credit LIBO Rate Portion") during the Line of Credit
Availability Period bear interest at the LIBO Rate, as defined below,
plus two and three-quarters percent (L+2.75%) (the "Optional Line of
Credit Interest Rate") during an interest rate period designated by
Borrower (the "Line of Credit Applicable Interest Period"). Borrower
shall not select a Line of Credit Applicable Interest Period that
would extend beyond the Line of Credit Expiration Date. Each interest
rate is a rate per annum. At the end of any Line of Credit Applicable
Interest Period, the interest rate will revert to the Regular Line of
Credit Interest Rate, unless Borrower has designated another Optional
Line of Credit Interest Rate for that Line of Credit LIBO Rate
Portion.
Designation of a Line of Credit LIBO Rate Portion shall be made by
delivery or telephone facsimile transmission to Bank of written notice
signed by an Authorized Officer of such election, including
designation of the amount of the proposed Line of Credit LIBO Rate
Portion, the proposed Line of Credit Applicable Interest Period and
the proposed effective date of the election. The notice shall be given
at least three (3) Banking Days in advance of the effective date of
the election. The election shall also be subject to the following
requirements:
i. The Line of Credit Applicable Interest Period during which the LIBO
Rate will be in effect will be three (3) months, so long as no Event
of Default has occurred and is continuing. In determining a Line of
Credit Applicable Interest Period, a month means a period that starts
on one Banking Day in a month and ends on and includes the day
preceding the numerically corresponding day in the next month. For any
month in which there is no such numerically corresponding day, then as
to that month, such day shall be deemed to be the last calendar day of
such month. Any Line of Credit Applicable Interest Period which would
otherwise end on a non-Banking Day shall end on the next succeeding
Banking Day unless that is the first day of a month, in which event
such Line of Credit Applicable Interest Period shall end on the next
preceding Banking Day.
ii. Each Line of Credit LIBO Rate Portion shall be for an amount not less
than Two Hundred Fifty Thousand Dollars ($250,000.00).
iii. The "LIBO Rate" shall mean, for each Line of Credit Applicable
Interest Period with respect to a Line of Credit LIBO Rate Portion,
the per annum rate determined by the Bank as of the first day of the
Line of Credit Applicable Interest Period to be equal to the rate at
which U.S. dollar deposits can be acquired by Bank in the London
Interbank Eurocurrency Market two (2) Banking Days before the
commencement of such Line of Credit Applicable Interest Period in an
amount comparable to such Line of Credit LIBO Rate Portion.
iv. No Line of Credit LIBO Rate Portion bearing interest at the LIBO Rate
may be converted to a different rate during the Line of Credit
Applicable Interest Period.
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v. Each prepayment of a Line of Credit LIBO Rate Portion, whether
voluntary, by reason of acceleration or otherwise, will be accompanied
by the amount of accrued interest on the amount prepaid, and a
prepayment fee equal to the amount (if any) by which the additional
interest which would have been payable on the amount prepaid had it
not been paid until the last day of the Line of Credit Applicable
Interest Period exceeds the interest which would have been recoverable
by Bank by placing the amount prepaid on deposit in the LIBO Rate
Market for a period starting on the date on which it was prepaid and
ending on the last day of the interest period for such Line of Credit
LIBO Rate Portion. Any such calculation shall be made by Bank in the
same manner in which such calculation is made in respect to all other
customers of Bank and Bank shall, upon the request of Borrower,
deliver to Borrower all backup information showing how any such
prepayment fee is calculated.
3.3 Repayment Terms.
a. Line of Credit.
i. Borrower shall pay interest monthly in arrears on the outstanding
balance under the Line of Credit commencing on September 1, 2005, and
then on the first Banking Day of each month thereafter, except that
interest accruing at the Optional Line of Credit Interest Rate shall
be due at the end of the applicable Interest Rate Period.
ii. Borrower shall pay in full, all principal, interest and other charges
outstanding under the Line of Credit no later than the Line of Credit
Expiration Date.
3.4 Expenses.
a. Subject to any limitations contained herein, Borrower agrees to repay
Bank for the reasonable expenses incurred in processing and funding
the Line of Credit, including the following: filing, recording and
search fees, appraisal fees, asset based field report fees, and
documentation fees.
b. Borrower agrees to reimburse Bank for any reasonable expenses it
incurs in the negotiation and preparation of this Agreement and any
agreement or instrument required by this Agreement.
c. Borrower's prior deposit of Twenty Thousand Dollars ($20,000.00) shall
be applied to Bank's expenses under this Section.
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3.5 Fees.
a. Facility Fee. Borrower agrees to pay the amount of Eight-Five Thousand
Dollars ($85,000.00) to Bank as a loan fee for the Line of Credit
("Facility Fee").
b. Renewal Fee. Borrower agrees to pay a fee equal to one-quarter of one
percent (0.25%) of the Bank's committed amount for the Line of Credit
upon any renewal of the Line of Credit.
c. Unused Commitment Fee. For the Line of Credit, Borrower agrees to pay
a fee ("Unused Commitment Fee") equal to the product of one-half of
one percent (0.50%) multiplied by the difference between Seventeen
Million Dollars ($17,000,000.00) and the amount of credit extended to
Borrower, determined by the Average Loan Balance, as defined below,
maintained during the Line of Credit Availability Period. For purposes
of this section, the "Average Loan Balance" is calculated by dividing
the sum of the daily loan balances on the Line of Credit during the
applicable period by the number of days in that period. This fee is
due and payable each calendar quarter in arrears, and is due on the
tenth (10th) day of each of the following months during the Line of
Credit Availability Period: October, January, April and July,
respectively, except a prorated fee for the first partial quarter
shall be due in October, 2005 and for the final quarter shall be due
and payable on the Line of Credit Expiration Date.
4. SECURITY
4.1 Collateral. All obligations of Borrower under this Agreement shall be
secured by the following:
a. Personal Property. Borrower's obligations to Bank under this Agreement
shall be secured by, and Borrower shall grant to Bank, a first Lien in
all business personal property Borrower now owns or will own in the
future, including without limitation, Borrower's Accounts Receivable,
equipment, equipment held for lease, Leases, chattel paper, general
intangibles, Inventory, any money deposit accounts or other assets of
Borrower which hereafter come into the possession, custody or control
of Bank and all products and proceeds of the above-described
collateral, including, but not limited to, money, deposit accounts,
goods, insurance proceeds and other property, except that Collateral
shall not include Leases, Indirect ------ Leases, Loan Contracts,
Indirect Loan Contracts (and the equipment subject thereto) which are
financed by Borrower with non-recourse debt and which have not been
financed by Bank. The Collateral shall be further described in the
Security Agreement executed by Borrower.
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4.2 Collateral Documents. In connection with the foregoing, Borrower will
execute the following "Collateral Documents":
a. Security Agreement. A Security Agreement executed by each Borrower, as
debtor, in favor of Bank, as secured party, by which Bank will obtain
a Lien in the Collateral consisting of certain of Borrower's personal
property.
b. UCC-1 Financing Statement. UCC-1 financing statement as debtor, in
favor of Bank, as secured party, filed with the Delaware, California
and New York Secretaries of State offices.
5. DISBURSEMENTS, PAYMENTS AND COSTS
5.1 Request for Credit. Each request for an advance under the Line of Credit will be made by a disbursement request in a form acceptable to Bank executed by an Authorized Officer, or by any other means acceptable to Bank.
5.2 Disbursements and Payments. Each advance under the Line of Credit by Bank and each payment by Borrower under the Line of Credit will be:
a. Made at Bank's South Bay Commercial Banking Office, or other location selected by Bank from time to time.
b. Made for the account of Bank's South Bay Commercial Banking Office (or other office or branch selected by Bank from time to time).
c. Made in lawful money of the United States in immediately available funds and shall be made without setoff or counterclaim.
d. Evidenced by records kept by Bank.
5.3 Telephone Authorization.
a. Bank may honor telephone instructions for disbursements and repayments
pursuant to this Agreement, given by an Authorized Officer, as defined
below, or any officer authorized by an Authorized Officer. For
purposes of this Agreement, "Authorized Officer" shall mean any
officer of Borrower whose name and signature are set forth in the
Corporate Authorizations, as defined below.
b. Advances will be deposited in, and payments may be withdrawn by Bank
from, Borrower's deposit accounts as designated in writing by Borrower
("Designated Accounts")
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c. Upon Bank's request, Borrower will provide written confirmation to
Bank of telephone authorized transactions pursuant to this Section.
Borrower agrees to provide such confirmation within one (1) Banking
Day of the telephone authorization. If there is a discrepancy and Bank
has already acted on the telephone instructions, the telephone
instructions will prevail over the written confirmation.
d. Borrower indemnifies and holds harmless Bank (including its officers,
employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone instructions that
Bank reasonably believes are made by an Authorized Officer or a person
authorized by an Authorized Officer except to the extent of Bank's
gross negligence or willful misfeasance. This indemnity and agreement
to hold harmless will survive this Agreement's termination.
5.4 Banking Days. All payments and disbursements which would be due on a day which is not a Banking Day will be due on the next Banking Day. All payments received on a day which is not a Banking Day will be applied to
the Line of Credit on the next Banking Day.
5.5 Taxes. Borrower will not deduct any taxes from any payments made to Bank. If any government authority imposes any taxes or charges on any payments to Borrower, Borrower will pay the taxes or charges. Upon request by Bank, Borrower will confirm that
it has paid the taxes by giving Bank official tax receipts (or notarized copies thereof) within thirty (30) days after the date the taxes are due.
5.6 Interest Calculation. Except as otherwise stated in this Agreement, all interest, if any, will be computed on the basis of a 360-day year and the actual number of days elapsed. This results in more interest or a higher fee than if a 365-day year is used.
5.7 Fee on Late Payments. At Bank's sole option in each instance, Borrower shall pay a late fee equal to two percent (2.0%) of any monthly installment not paid within fifteen (15) days of the date due under this Agreement (including
interest).
5.8 Default Rate. If any amount under this Agreement is not paid in full when due at maturity, or upon acceleration of the Loans pursuant to Bank's exercise of its rights and remedies hereunder, Borrower agrees to pay interest on the outstanding principal at
the rate of interest then in effect under this Agreement plus two percent (2.0%) (the "Default Rate").
5.9 Overdrafts. At Bank's sole option in each instance, and provided there is no Event of Default which has occurred and is continuing, Bank may make advances under this Agreement to prevent or cover an overdraft on any account of Borrower with Bank. Each such advance will accrue interest
from the date of the advance or the date on which the account is overdrawn, whichever occurs first, at the interest rate then applicable to the Line of Credit. Any advances made pursuant
to this section shall be added to the outstanding balance under the Line of Credit.
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6. CONDITIONS
6.1 Initial Advance. Bank's obligation to extend any credit to Borrower pursuant to this Agreement is subject to the condition precedent that prior to or on the date of this Agreement, Borrower shall have complied with the requirements set forth below in this section and shall have delivered to
Bank, in form and substance satisfactory to Bank, the following documents, duly executed by
authorized representatives of Borrower or as specified below:
a. This Agreement.
b. Line of Credit Note.
c. Security Agreement of Borrower and UCC-1 Financing Statements, filed
with the Delaware, California and New York Secretaries of State.
d. Borrowing Authorizations. Borrowing resolutions granting authorization
to borrow and pledge in a form acceptable to Bank.
e. Termination Statements. Evidence, satisfactory to Bank, that all Liens
in favor of any third Persons not constituting Permitted Liens have
been terminated.
f. Insurance. Evidence of insurance coverage, as required in the
"Affirmative Covenants" section of this Agreement.
g. Governing Documents. A copy of the organizational documents of
Borrower certified by the Secretary of State of the state of
organization of the Borrower.
h. Fees and Costs. Payment of the Facility Fee and reimbursement of
Bank's filing fees, reasonable fees of counsel, appraisal fee, and
other expenses reasonably incurred by Bank in connection with this
Agreement.
i. Deposit Accounts. The opening of Borrower's deposit accounts with Bank
together with entry of a lock box agreement by Borrower and Bank.
j. Opinion of Counsel. Bank shall have received an opinion letter from
Borrower's counsel, in form and substance satisfactory to Bank.
k. Contribution Agreement. The Contribution Agreement shall have been
executed by each entity comprising Borrower and a copy thereof shall
have been delivered to Bank.
l. Material Adverse Change. A Material Adverse Change shall not have
occurred, as determined by Bank in its sole discretion.
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m. Search Results. Bank shall have received Uniform Commercial Code and
other public record searches with respect to Borrower in each case in
form and substance satisfactory to Bank.
n. Due Diligence. Bank shall have completed its due diligence
requirements with respect to Borrower, including audits, financial and
legal due diligence, and review of Borrower's formation and
authorization documents.
o. Good Standing. Bank shall have received good standing certificates
form the appropriate secretary of state of the state in which Borrower
and the Manager are organized and in each state in which Borrower's
failure to qualify to do business would result in a Material Adverse
Change.
p. Alternative Dispute Resolution. Borrower shall execute an Alternative
Dispute Resolution Agreement in form acceptable to Bank.
q. Miscellaneous. Such other evidence as Bank may reasonably require to
establish the consummation of the transactions contemplated hereby,
the taking of all proceedings in connection herewith and compliance
with the conditions set forth in this Agreement.
6.2 Conditions to Each Line of Credit Advance.
The obligation of Bank to make any advances under the Line of Credit (including the initial advance) shall be subject to each of the further
conditions precedent that on the date of such advance:
a. Following the making of any such advances, the aggregate principal
amount outstanding under the Line of Credit shall not exceed the Line
of Credit Limit (except as set forth in Section 2.1a).
b. No Default or Event of Default shall have occurred and be continuing.
c. Borrower shall provide Bank with a disbursement request and Borrowing
Base Certificate in form and content acceptable to Bank executed by an
Authorized Officer and all representations therein shall be true and
correct in all material respects.
7. REPRESENTATIONS AND WARRANTIES
When Borrower signs this Agreement, and until Bank is repaid in full, Borrower makes the following representations and warranties. Each request for an extension of credit under the Line of Credit constitutes a renewed
representation.
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7.1 Organization of Borrower. Each entity comprising Borrower is a limited partnership or limited liability company duly formed and existing under the laws of the State of Delaware.
7.2 Authorization. This Agreement, and any instrument or agreement required hereunder, are within Borrower's powers, have been duly authorized, and do not conflict with any of Borrower's organizational documents.
7.3 Enforceable Agreements. This Agreement and any related Loan Documents, including any instrument or agreement required hereunder or thereunder, are legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms, except as enforceability may be limited by: (i) bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors' rights generally; and (ii) equitable
principles whether applied in an action at law or a proceeding in equity.
7.4 Good Standing. In each state in which Borrower does business, Borrower is properly licensed, in good standing, and, where required, in compliance in all material respects with all legal requirements, including, without limitation, fictitious name statutes,
except to the extent that Borrower's failure to comply with the foregoing would not result in a Material Adverse Change.
7.5 No Conflicts. This Agreement does not conflict with or violate in any material respect any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination, or
award applicable to Borrower or any other agreement, or result in a breach of or constitute a default under any other agreement, lease or instrument to which Borrower is a party or by which
Borrower or its property may be bound or affected.
7.6 Financial Information. All financial and other information that has been or
will be supplied to Bank are:
a. an accurate reflection of Borrower's financial condition.
b. in the form required by Bank.
c. in compliance with all applicable government regulations.
Since the dates of the financial statements specified above, there has been no Material Adverse Change.
7.7 Litigation. There is no litigation, investigation, proceeding, Lien or dispute pending or threatened against or affecting Borrower, or the property of Borrower, the adverse determination of which would constitute a Material Adverse Change, except as
has been disclosed in writing to Bank prior to the date hereof.
7.8 Collateral. All Collateral is owned by the grantor of the Lien, free of any material title defects or any Liens, except Permitted Liens. Bank will possess a properly perfected first Lien in the Collateral, except to the extent of any Permitted Liens.
7.9 Permits, Franchises. Borrower possesses all permits, memberships, franchises, contracts and licenses required and all trademark rights, trade name rights, patent rights and fictitious name rights necessary to
enable it to conduct the business in which it is now engaged without conflict with the rights of others except to the extent that Borrower's failure to comply with the
foregoing would not result in a Material Adverse Change.
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7.10 Tax Returns. Borrower has filed all required tax returns, has paid all taxes shown to be due and payable on said returns or any assessments made against it or any of its property and has no knowledge of any pending
assessments or adjustments of its income tax for any year provided, however, that Borrower shall not be required to pay any such tax or assessment, the payment of which is being contested in good faith and by proper proceedings, so long as Borrower has established reasonable reserves for the disputed tax or assessment and any enforcement of such tax
or assessment shall be stayed.
7.11 No Event of Default. No Default or Event of Default has occurred and is continuing.
7.12 ERISA Plans.
a. Borrower has fulfilled its obligations, if any, under the minimum
funding standards of ERISA and the Code, with respect to each Plan,
and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and has not incurred any
liability with respect to any Plan under Title IV of ERISA.
b. No reportable event has occurred under Section 4043(b) of ERISA for
which the PBGC requires a thirty (30) day notice.
c. No action by Borrower to terminate or withdraw from any Plan has been
taken and no notice of intent to terminate a Plan has been filed under
Section 4041 of ERISA.
d. No proceeding has been commenced with respect to a Plan under Section
4042 of ERISA, and no event has occurred or condition exists which
might constitute grounds for the commencement of such a proceeding.
7.13 Environmental Compliance.
a. Environmental Compliance. Borrower, to its knowledge, has implemented
and complied and will, in the future, implement and comply or will
cause its Lessees or Debtors to implement and comply in all material
respects with all Environmental Laws.
b. Survival of Representations and Warranties. The representations and
warranties of this Section 7.14 shall be continuing and shall survive
the termination and release of this Agreement or foreclosures under
the Security Agreement and the discharge or payment of any obligation
under this Agreement.
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8. AFFIRMATIVE COVENANTS
Borrower agrees, so long as credit is available under this Agreement and until Bank is repaid in full:
8.1 Loan Documents. To comply with and observe in all material respects all terms and conditions of this Agreement, and all other Loan Documents, including, without limitation, the obligation to pay principal, interest and all other sums due under this Agreement or under any of the other
Loan Documents.
8.2 Use of Proceeds. To use the proceeds of the Line of Credit for financing for the acquisition of equipment for lease and related leases and for other working capital purposes.
8.3 Financial Information. To provide Bank with the following financial information and statements:
a. As soon as available, and in any event within ninety (90) days (one hundred twenty (120) days in the case of Manager) after the end of each fiscal year, Borrower's and Manager's unqualified CPA audited annual financial statements
with balance sheets, income statements and operating budgets. Statements shall be prepared by Xxxx & Company, LLP or other accounting firm reasonably acceptable to Bank.
b. As soon as available, and in any event within sixty (60) days of each
quarterly period, Borrower's quarterly internally prepared financial
statements.
c. As soon as available, and in any event within fifteen (15) days of the
end of each month a Borrowing Base Certificate signed by Manager's
Chief Financial Officer.
d. An annual independent appraisal of all equipment related to Eligible
Borrowing Base Contracts.
e. An annual independent report of the audit of the Manager's systems,
Borrowing Base, xxxxxxxx, collections, ageings and a general
documentation review.
f. Any additional financial and/or reporting information reasonably
requested by the Bank.
g. Each statement provided under Section 8.3.a. and Section 8.3.b. shall be accompanied by a
Compliance Certificate in form and substance acceptable to Bank
signed by Manager's Chief Financial Officer.
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8.4 Minimum Debt Service Coverage Ratio. To maintain as of the end of each fiscal quarter based on the combined financial results as reported on SEC Form 10Q of each entity comprising Borrower, a Debt Service Coverage
Ratio of not less than 2.00 to 1.00 on a rolling four quarter basis.
8.5 Tangible Net Worth. To maintain as of the end of each fiscal quarter, based on the combined financial results as reported on SEC Form 10Q of each entity comprising Borrower, Tangible Net Worth of not less than One Hundred Twenty-Five Million Dollars ($125,000,000.00).
8.6 Leverage Ratio. To collectively maintain, and cause each entity comprising Borrower to maintain, as of the end of each fiscal quarter, based on the financial results as reported on SEC Form 10Q
of each entity comprising Borrower, a ratio of Adjusted Total Liabilities to Tangible Net Worth not to exceed 0.5 to 1.0.
8.7 Minimum Liquidity. To maintain, as of the end of each fiscal quarter, based on the combined financial results as reported on the SEC Form 10Q of each entity comprising Borrower, Liquidity of at least Seven Million Dollars
($7,000,000.00).
8.8 Restricted Cash Deposit. To maintain at all times, deposits in a restricted deposit account with Bank in an amount not less than twenty percentage (20%) of all outstanding advances, plus each pending requested advance, on the Line of Credit ("Restricted Cash Deposit").
8.9 Manager's Profitability. As of the end of each fiscal year, Manager shall have a positive profit.
8.10 Notices to Bank. To promptly notify Bank in writing of:
a. Any change in the location of Borrower's principal executive office
which is currently in New York City, New York;
b. Any Material Adverse Change;
c. Any Default or Event of Default, setting forth in such notice the
details of such Default or Event or Default and the action which is
proposed to be taken by Borrower with respect thereto;
d. 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 would result in a Material Adverse Change;
e. Any material dispute between Borrower and any governmental regulatory
body or law enforcement authority which would result in a Material
Adverse Change;
f. All claims made or threatened by any third party against Borrower
relating to any loss or injury resulting from any Environmental Law or
Hazardous Substance that shall be in an amount claimed in excess of
$2,500,000; and
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8.11 Collateral Examination. Bank may have examiners of its selection annually conduct an examination of the Collateral with the annual expense thereof (not to exceed $10,000.00) reimbursed by Borrower.
8.12 Right of Inspection. Permit Bank or its agents with at least 24 hours notice by telephone, telephone facsimile and actual delivery of written notice to Borrower to examine and make copies and abstracts from Borrower's records, to inspect Collateral (subject
to quiet enjoyment covenants) and to discuss the affairs, finances, and accounts of Borrower with any of its executive officers and Borrower's independent accountants.
8.13 Payment of Taxes. Borrower will pay and discharge all lawful tax claims, including assessments and governmental charges or levies imposed upon it, its income or profits, or the improvements before penalties attached thereto;
provided, however, that Borrower shall not be required to pay any such tax, assessment, charge or levy, the payment of which is being contested in good faith and by proper proceedings so long as Borrower has established reasonable reserves for the disputed tax assessment or charge and any enforcement
proceedings have been stayed.
8.14 Books and Records. To maintain adequate books and records reflecting full, true and correct entries of all material financial transactions of Borrower.
8.15 Compliance. To comply in all material respects with all material laws, regulations, orders of any government body with authority over Borrower's business and all material contractual obligations
arising from any agreements, instruments or undertakings to which Borrower is bound except to the extent that the failure to comply with which would not result in a Material Adverse Change.
8.16 Preservation of Borrower’s Rights. To maintain and preserve all rights, privileges, and franchises Borrower now has that are necessary in the normal conduct of Borrower's business.
8.17 Perfection of Liens. To help Bank perfect and protect its Liens, and reimburse Bank for reasonable costs incurred to protect its Liens.
8.18 ERISA Plan. To give prompt written notice to Bank:
a. Within ten (10) days after Borrower knows or has reason to know of the
occurrence of any reportable event under Section 4043(b) of ERISA for
which the PBGC requires thirty (30) days' notice, together with a copy
of such materials required to be filed with the PBGC (with respect to
such reportable event and in each such case a statement of the chief
financial officer of the Borrower setting forth details as to such
reportable event and the action that Borrower proposes to take with
respect thereto.
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b. Within ten (10) days after Borrower knows or has reason to know of any
condition existing with respect to a Plan which presents a material
risk of termination or withdrawal from a Plan or the filing of any
notice of intent to terminate under Section 4041 of ERISA.
c. At least ten (10) days prior to the filing by any plan administrator
of a Plan of a notice of intent to terminate such Plan, together with
a copy of such notice.
d. Within ten (10) days after the filing thereof with the Secretary of
the Treasury, a copy of any application by the Borrower or any ERISA
Affiliate for a waiver of the minimum funding standard under Section
412 of the Code.
e. Within ten (10) days after Borrower knows or has reason to know of any
event giving rise to any notice of noncompliance made with respect to
a Plan under Section 4141(b) of ERISA.
f. Within ten (10) days after Borrower knows or has reason to know of any
event giving rise to any commencement of any proceeding with respect
to a Plan under Section 4042 of ERISA.
8.19 Expenses. To pay all reasonable expenses of Bank for the following:
a. Preparation, negotiation and administration of the Loan Documents and
the protection of the rights of Bank under the Loan Documents;
b. The enforcement of payment of Borrower's obligations under the Loan
Documents, whether by judicial pleadings or otherwise, including,
without limitation, in connection with bankruptcy, insolvency,
liquidation, reorganization, moratorium and other similar proceedings
involving the Borrower or a "workout" of Borrower's obligations under
the Loan Documents.
The obligations of the Borrower under this Section shall be effective and enforceable whether or not any amounts are advanced pursuant to this Agreement and shall survive payment of all of Borrower's obligations to the Bank.
8.20 Cooperation. To take any action reasonably requested by Bank to carry out the intent of this Agreement.
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8.21 Insurance.
a. Insurance Covering Assets. To maintain or cause to be maintained all
risk property damage insurance policies covering the personal property
Collateral. Each insurance policy shall be for the value of the
personal property Collateral or such other amount as required in the
Revolving Loan Contract.
b. General Business Insurance. To maintain insurance as is customary for
a business of the kind that Borrower conducts.
c. Evidence of Insurance. Upon request of Bank, to deliver to Bank a copy
of each insurance policy, or, if permitted by Bank, a certificate of
insurance listing all insurance policies currently in force.
8.22 Operating/Business Accounts. To establish and maintain deposit accounts with Bank for each of the entities comprising Borrower. The account conversion process shall be completed within sixty (60) days of execution of
this Agreement. Borrower shall also open and maintain with Bank a lock box for Accounts Receivable collection.
8.23 Contribution Agreement. The entities comprising Borrower shall have entered into an agreement, among themselves, providing that, to the extent that the property of any one of them is used to repay Bank an amount greater than the amount owed
on account of a Line of Credit advance that such entity has obtained from Bank, then such entity shall be entitled to reimbursement from the other entities comprising Borrower for any excess so paid, such agreement shall remain in full force and effect, and a copy executed by each Borrower shall have been delivered to Bank ("Contribution Agreement"). Such agreement shall not be amended, modified, or
restated in any manner that would materially adversely change the substance of the requirements set forth in this section and, if it is amended, modified or restated, a fully executed copy of such amendment, modification or restatement shall be promptly delivered by Borrower to Bank.
9. NEGATIVE COVENANTS
Borrower agrees, so long as credit is available under this Agreement and until Bank is repaid in full:
9.1 Other Debts. Not to have outstanding or incur any direct or contingent debts or lease obligations (other than those to Bank), or become liable for the debts of others without Bank's prior written consent. This does not prohibit:
a. Trade debt incurred in the ordinary course of business and outstanding
less than sixty (60) days after the same has become due.
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b. Endorsing negotiable instruments received in the usual course of
business.
c. Obtaining surety bonds or similar instruments in the usual course of
business.
d. Debts, lines of credit and leases in existence on the date of this
Agreement as disclosed in public filings with the Securities and
Exchange Commission and otherwise in writing to Bank.
e. Guarantees to Lessees and Debtors in the ordinary course of business.
f. Debt subordinated to the Obligations on terms and conditions
satisfactory to Bank in its sole discretion.
g. Debt in respect of netting services, overdraft protections and
otherwise in connection with deposit accounts in the ordinary course
of business.
h. Non-recourse secured debts.
i. Remarketing and residual sharing arrangements.
j. Indebtedness in connection with Permitted Liens.
k. Refinancings of any of the foregoing debt.
9.2 Other Liens. Not to create, assume, or allow any Lien on Collateral except Permitted Liens.
9.3 Distributions. (a) Not to declare or pay any distribution to the holder of any limited liability company or partnership interest now outstanding or hereafter issued or purchased, redeem or retire any such
interest except, as long as Borrower is in compliance with all terms and conditions of this Agreement and would remain so after taking such actions, Borrower may make distributions to its partners, members and investors, or redeem or retire any outstanding interests, as provided or permitted in
the organizational agreement of each Borrower, as amended from time to time; (b) pay management fees or acquisition fees except that, as long as Borrower is in compliance with all terms and conditions of this Agreement and would remain so after taking such actions, Borrower may pay such fees
if authorized under the partnership
agreement or limited liability company operating agreement for the entities comprising Borrower.
9.4 Loans, Investments; Secondary Liabilities. Other than in the ordinary course of business, (a) not to make any loans or advances to any Person; (ii) make any investment in the securities of any Person; (iii) guarantee or otherwise become liable upon the obligation of any Person which is not an Affiliate or Subsidiary
of Borrower, except by endorsement of negotiable instruments for deposit or collection in the ordinary and normal course of its business.
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9.5 Change in Organization or Operations. Not to cause, permit or suffer any material change, revision, amendment or modification of any kind in and to its organization and operations or the change of ownership or control of Borrower, if the effect thereof
would be a Material Adverse change.
9.6 Dissolutions, Mergers or Acquisitions. Not to liquidate or dissolve or enter into any consolidation, merger, partnership, pool, joint venture, syndicate or other combination, with respect to Borrower's business or Borrower's Assets as a whole or such portion as in the opinion of Bank, constitutes a substantial
part thereof or acquire or purchase any business' assets, except in the ordinary course of Borrower's business or engage in any business activity substantially
different from Borrower's present business, provided however, that nothing herein shall prohibit or limit Borrower's right to enter into any of the foregoing described business transactions
(other than liquidation, dissolution or merger whereby the Borrower is not the surviving entity) if in Borrower's reasonable judgment such transaction represents the most efficient means by which it may acquire or purchase, directly or indirectly, one or more Leases or
Indirect Leases, or Loans or Indirect Loan Contracts, or a portfolio of same, all as permitted by the constituent documents of Borrower.
9.7 Sale of Assets; Sale and Leaseback. Other than in the ordinary course of business, not to sell or otherwise dispose of any of its assets for less than fair market value or enter into any sale leaseback agreement covering any of its fixed or capital assets.
9.8 Suspension of Business. Not to voluntarily suspend its business for more than five (5) consecutive business days in any thirty (30) day period.
9.9 Transactions with Affiliates. Not to enter any transaction with any Affiliate of Borrower, including Borrower's officers, directors, partners, members and Subsidiaries, on
terms less favorable than those available to Borrower from entities or persons not affiliated with Borrower, if the effect thereof would be to create an Event of Default hereunder.
10. DEFAULT
10.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
a. Failure to Pay. Borrower fails to make any payment of principal or interest
under this Agreement within five (5) days of the date due.
b. Non-Compliance. Borrower fails to meet the conditions of, or fails to
perform any material obligation within thirty (30) days after written
notice by Bank to Borrower of such failure, under:
i. this Agreement;
ii. any of the other Loan Documents; or
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iii. any other agreement between Borrower and Bank.
c. Other Defaults. Any material event of default (after taking into account
all applicable notice and cure periods) involving an indebtedness of more
than Two Million Five Hundred Thousand Dollars ($2,500,000) occurs under
any agreement evidencing indebtedness for borrowed money if the event of
default consists of failing to make a payment when due.
x. Xxxx Priority. Bank fails to have an enforceable first Lien position
(except for any Permitted Liens or prior Liens to which Bank has consented
in writing) on the Collateral.
e. False Information. Any representation or warranty under this Agreement or
any other Loan Document or in connection with any transaction contemplated
hereby shall prove to have been false or misleading in any material respect
when made or when deemed to have been made.
f. Bankruptcy. Borrower files a bankruptcy petition, a bankruptcy petition is
filed against Borrower or Borrower makes a general assignment for the
benefit of creditors. The default will be deemed cured if any bankruptcy
petition filed against Borrower is dismissed within a period of sixty (60)
days after the filing; provided, however, that Bank will not be obligated
to extend any additional credit to Borrower during any such period.
g. Receivers. A receiver or similar official is appointed for Borrower's
business, or Borrower's business is terminated.
h. Litigation. Any litigation is filed against Borrower in an aggregate amount
of Two Million Five Hundred Thousand Dollars ($2,500,000.00) or more and
such litigation is not dismissed or fully bonded or insured within sixty
(60) calendar days after service of process upon Borrower.
i. Judgments. Any judgments or arbitration awards are entered against Borrower
and, absent procurement of a stay of execution, such judgment or award
remains unbonded or unsatisfied or uncovered by insurance for thirty (30)
calendar days after the date of entry; or Borrower enters into any
settlement agreement with respect to any litigation or arbitration, in an
aggregate amount of Two Million Five Hundred Thousand Dollars
($2,500,000.00) or more.
j. ERISA Plans. The occurrence of a material reportable event with respect to
a Plan or any Plan termination (or commencement of proceedings to terminate
a Plan) or Borrower's full or partial withdrawal from a Plan, which is, in
the reasonable judgment of Bank, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, or could reasonably be
expected, in the judgment of Bank, to subject Borrower to any tax, penalty
or liability (or any combination of the foregoing) which, in the aggregate,
would result in a Material Adverse Change .
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10.2 Remedies. Upon the occurrence and during the continuance of an Event of Default herein, Bank shall be entitled to pursue any and all remedies, rights, privileges and benefits contained in this Agreement or in the Note, or other
Loan Documents, or available at law or in equity or by statute, including, without limitation, declaring any or all of the Note immediately due and
payable. No remedy conferred upon or reserved to Bank hereunder or under any of the other Loan Documents is intended to be exclusive of any other remedy conferred upon or reserved to Bank hereunder or
under any of the other Loan Documents or at law or in equity or by statute, but each shall be cumulative and shall be in addition to every other remedy given hereunder or under the other Loan Documents or now or hereafter existing at law or in equity or by statute. Every power or remedy given by the Loan Documents to Bank may be exercised, concurrently or independently, from time
to time and as often as may be deemed expedient by Bank, and Bank may pursue inconsistent remedies. In addition, upon and after the occurrence of an Event of Default, Bank shall have all of the following rights and remedies:
a. All obligations and indebtedness hereunder may, at the option of Bank and
without demand, notice, or legal process of any kind, be declared, and
immediately shall become, due and payable and Bank may terminate this
Agreement at any time, without notice, notwithstanding any other provision
of this Agreement. No such termination shall affect liabilities and
obligations of Borrower or the rights, powers and remedies of the Bank
under the Security Agreement with respect to future collateral, until all
obligations of Borrower to Bank have been satisfied or paid in full.
b. All obligations hereunder shall bear interest at the Default Rate;
c. All of the rights and remedies of a secured party under the California
Commercial Code or other applicable law, all of which rights and remedies
shall be cumulative, and not exclusive, to the extent permitted by law, in
addition to any other rights and remedies contained in this Agreement and
in any of the documents or agreements executed in connection herewith;
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d. The right to: (i) have Bank or Bank's agent peacefully enter upon the
premises of Borrower or any other place or places where the Collateral is
located, without any obligation to pay rent to Borrower or any other
person, through self-help and without judicial process or first obtaining a
final judgment or giving Borrower notice and opportunity for a hearing on
the validity of Bank's claim, and remove the Collateral from such premises
to the premises of Bank or any agent of Bank, for such time as Bank may
require to collect or liquidate the Collateral or (ii) have a receiver
appointed by a court to conduct Borrower's business, without regard to the
adequacy of any security for Borrower's indebtedness to Bank, and enter
upon and take possession of Borrower's Assets, or any part thereof, and
perform any acts that may be necessary or proper to conserve the value of
Borrower's Assets and/or run Borrower's business as an ongoing concern;
and/or (iii) require Borrower to assemble and deliver the Collateral to
Bank at a place to be designated by Bank;
e. The right to: (i) notify Account Obligors that the Accounts Receivable have
been assigned to Bank and that Bank has a Lien therein; and (ii) direct
such Account Obligors to make all payments due from them upon the Accounts
Receivable, directly to Bank or to a lock box designated by Bank. Bank
shall promptly furnish Borrower with a copy of any such notice sent and
Borrower hereby agrees that any such notice in Bank's sole discretion, may
be sent on Bank's stationery, in which event, Borrower shall, upon demand,
co-sign such notice with Bank; and
f. The right to sell, lease or to otherwise dispose of all or any Collateral
in its then condition, or after any further manufacturing or processing
thereof, at public or private sale or sales, in lots or in bulk, for cash
or on credit, all as Bank, in its sole discretion, may deem advisable. At
any such sale or sales of the Collateral, the Collateral need not be in
view of those present and attending the sale, nor at the same location at
which the sale is being conducted. Bank shall have the right to conduct
such sales on Borrower's premises or elsewhere and shall have the right to
use Borrower's premises without charge for such sales for such time or
times as Bank may see fit. Bank is hereby granted a license or other right
to use, without charge, Borrower's labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks and advertising
matter, or any property of a similar nature, as it pertains to the
Collateral, in advertising for sale and selling any Collateral and
Borrower's rights under all licenses and all franchise agreements shall
inure to Bank's benefit but Bank shall have no obligations thereunder. Bank
may purchase all or any part of the Collateral at public or, if permitted
by law, private sale and, in lieu of actual payment of such purchase price,
may setoff the amount of such price against amounts due under this
Agreement. The proceeds realized from the sale of any Collateral shall be
applied first to the costs and expenses, including attorneys' fees,
incurred by Bank for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Collateral; and
second to amounts due under this Agreement. Bank shall account to Borrower
for any surplus. If any deficiency shall arise, Borrower shall remain
liable to Bank therefor.
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g. Appointment of Receiver. Borrower agrees that in addition to any and all
remedies, rights, privileges and benefits contained in this Agreement or in
the Note and other Loan Documents, or available at law, or in equity, or by
statute, upon the occurrence of an Event of Default herein, Borrower agrees
and stipulates that any court of competent jurisdiction may appoint a
receiver to operate and manage the business of Borrower.
10.3 Disclaimer. Whether or not Bank elects to employ any or all of the remedies available to it upon the occurrence of an Event of Default, Bank shall not be liable for: (i) payment of any reasonable expense incurred in connection with the exercise of
any remedy available to Bank, and (ii) the performance or non-performance of any other obligations of Borrower.
10.4 Costs and Expenses. Upon the occurrence of any Event of Default, Bank shall be entitled to recover all reasonable costs, expenses, and attorneys' fees in connection with administering or enforcing this Agreement, whether or not an action is filed.
11. MISCELLANEOUS
11.1 GAAP. Except as otherwise stated in this Agreement, all financial information provided to Bank and all financial covenants will be made under GAAP consistently applied.
11.2 Personal Jurisdiction. BORROWER HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OF THE AGREEMENTS, DOCUMENTS OR INSTRUMENTS DELIVERED IN CONNECTION HEREWITH MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA AND, BY EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND CONSENTS TO, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY
BANK IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY BORROWER AGAINST BANK. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BANK TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. BORROWER HEREBY WAIVES, TO THE FULL EXTENT PERMITTED BY LAW, ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS.
11.3 Successors and Assigns. This Agreement is binding on Borrower's and Bank's successors and assignees. Borrower agrees that it may not assign this Agreement without Bank's prior written consent.
11.4 Severability; Waivers. If any part of this Agreement is not enforceable, the rest of the Agreement may be enforced. No failure on the part of Bank to exercise, and no delay in exercising, any right, power, or remedy
under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise thereof or the exercise of any other right. Any consent or waiver under this Agreement must be in writing. If Bank waives a default, it may enforce a later default.
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11.5 Costs and Expenses. In addition to the recovery of costs and expenses upon an occurrence of an Event of Default, if Bank incurs expenses in connection with the preparation, administration, or enforcement, of this Agreement, Borrower shall pay Bank all such reasonable costs and reasonable
attorneys' fees.
11.6 Appointment of Bank as Attorney in Fact. Until all the obligations have been paid in full, Borrower irrevocably appoints Bank as its attorney in fact and authorizes and empowers it to endorse and affix Borrower's name to or upon any check, draft,
note, instrument or other writing relating to the collection of Accounts Receivable, or relating to any other Collateral, or upon any check or other instrument given in payment thereof, or upon any omitted assignment,
notification of assignment, demand or auditor's verification relating to Collateral and upon all other instruments and writings required to assert and protect Bank's rights in the Collateral. Bank shall not exercise the
appointment as provided in this Section except upon the occurrence and during the continuance of an Event of Default.
11.7 Entire Agreement. This Agreement, the Note, and any related security or other agreements required by this Agreement, collectively:
a. represent the sum of the understandings and agreements between Bank and
Borrower concerning this Agreement;
b. replace any prior oral or written agreements between Bank and Borrower
concerning this credit;
c. are intended by Bank and Borrower as the final, complete and exclusive
statement of the terms agreed to by them; and
d. any alteration or amendment to this Agreement shall not be effective unless
given in writing and signed by an authorized person of the party or parties
sought to be changed or bound by the alteration or amendment.
In the event of any conflict between this Agreement and any other agreements required by this Agreement, this Agreement will prevail.
11.8 Notices. Except as otherwise provided herein, all notices required under this Agreement shall be personally delivered or sent by first class mail, postage prepaid, to the addresses on the signature page of this Agreement, or to
such other addresses as Bank and Borrower may specify from time to time in writing.
11.9 Headings. Article and section headings are for reference only and shall not affect the interpretation or meaning of any provisions of this Agreement.
11.10 Counterparts. This Agreement may be executed in as many counterparts as necessary or convenient, and by the different parties on separate counterparts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
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11.11 Further Assurances. Borrower shall, at its expense and without expense to Bank, do, execute and deliver such further acts and documents as Bank from time to time reasonably requires for the assuring to Bank the rights created or intended to be created
by this Agreement, the perfection or priority of Bank's Liens, and for carrying out the intention or facilitating the performance of the terms of this Agreement or any document executed in connection with this
Agreement.
11.12 Singular/Plural. Terms defined in the singular shall also have their meanings in the plural as the context of this Agreement requires.
11.13 Revival Clause. If any of the payments of money or transfers of property made to Bank by Borrower hereunder or under the Note should for any reason subsequently be declared to be "fraudulent" or a "voidable preference" within
the meaning of any state or federal law relating to fraudulent conveyances, preferential, or otherwise voidable or recoverable, in whole or in part, for any reason, under the Bankruptcy Code or any other federal or state law (collectively referred to herein as "Voidable Transfers"), and Bank is required to repay or
restore the amount of any such Voidable Transfers, or any portion thereof, then, as to the amount repaid or restored pursuant to any such Voidable Transfer (including all costs, expenses and attorneys' fees of Bank related thereto, including, without limitation, relief from stay or similar proceedings), the liability of Borrower shall automatically be revived,
reinstated and restored in such amount or amounts, and shall exist as though such Voidable Transfer had never been made to Bank. Nothing set forth herein is an admission that any such Voidable Transfer has occurred. Borrower expressly acknowledges that Bank may rely upon advice of counsel, and if so advised by counsel, may settle, without defending, any action to avoid any alleged Voidable
Transfer, and that upon settlement, Borrower shall again be liable for any deficiency resulting from such settlement as provided in this Section.
11.14 Survival of Representations and Warranties. All representations and warranties of the Borrower contained herein or in any other Loan Document, or in any certificate or other writing delivered by or on behalf
of the Borrower pursuant to any Loan Document, will survive the making of each advance and the execution and delivery of the Loan Documents, and have been or will be relied upon by Bank, notwithstanding any investigation made by Bank or on its behalf.
11.15 Provisional Remedies. Nothing contained in this Agreement shall be construed to limit any right that Bank may have under this Agreement or at law to exercise any provisional remedies that it may have under
this Agreement or any of the Loan Documents as a result of any Event of Default hereunder (including, without limitation, the right to conduct a non-judicial foreclosure sale, the right to seize any personal property collateral and the right to seek
the appointment of a receiver).
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11.16 Confidentiality. In handling any confidential information, Bank shall exercise the same degree of care that it exercises with respect to its own proprietary information and agrees to maintain the confidentiality of
any non-public information received pursuant to this Agreement, except that disclosures of such information may be made: (a) to the subsidiaries or Affiliates of Bank in connection with their present or prospective business relations with Borrower; (b)
to prospective transferees or purchasers of any interest in the Line of Credit, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower; (c) as required by law, regulations, rule or order, subpoena, judicial order or similar order; (d) as may be required in connection with
the examination, audit or similar investigation of Bank; and (e) as Bank may deem appropriate in connection with the exercise of any remedies hereunder. Confidential information thereunder shall not include information that either : (i) is in the public domain or in the knowledge or possession of Bank
when disclosed to Bank, or becomes part of the public domain after disclosure to Bank through no fault of Bank; or (ii) is disclosed to Bank by a third party that is not prohibited from disclosing such information.
11.17 Joint and Several Liability. Notwithstanding how Line of Credit advances and repayments may be allocated among the entities comprising the Borrower, each entity comprising Borrower has joint and several liability to Bank for all obligations of Borrower
under the Loan Documents.
This Agreement is executed as of the date stated at the top of the first page.
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ICON INCOME FUND EIGHT B L.P.,
a Delaware limited partnership
By: ICON CAPITAL CORP., its general partner
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
|
CALIFORNIA BANK & TRUST,
a California banking corporation
By: /s/ J. Xxxxxxx Xxxxxxxx
Name: J. Xxxxxxx Xxxxxxxx
Title: Vice President and Relationship Manager
|
|
Address where notices are to be sent:
ICON INCOME FUND EIGHT B L.P.
c/o ICON Capital Corp. its general partner
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Attention: Xxxxxx X. Xxxxxx, CFO
Facsimile No.: (000) 000-0000
|
Address where notices are to be sent:
South Bay Commercial Banking
0000 Xxxxx Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000 |
33
SIGNATURES CONTINUED ON FOLLOWING PAGES
ICON INCOME FUND NINE, LLC,
a Delaware limited liability company
By: ICON CAPITAL CORP., its manager
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
Address where notices are to be sent:
ICON INCOME FUND NINE, LLC
c/o ICON Capital Corp. its manager
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Attention: Xxxxxx X. Xxxxxx, CFO
Facsimile No.: (000) 000-0000
ICON INCOME FUND TEN, LLC,
a Delaware limited liability company
By: ICON CAPITAL CORP., its manager
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
Address where notices are to be sent:
ICON INCOME FUND TEN, LLC
c/o ICON Capital Corp. its manager
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Attention: Xxxxxx X. Xxxxxx, CFO
Facsimile No.: (000) 000-0000
34
SIGNATURES CONTINUED ON FOLLOWING PAGE
ICON LEASING FUND ELEVEN, LLC,
a Delaware limited liability company
By: ICON CAPITAL CORP., its manager
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
Address where notices are to be sent:
ICON LEASING FUND ELEVEN, LLC
c/o ICON Capital Corp. its manager
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Attention: Xxxxxx X. Xxxxxx, CFO
Facsimile No.: (000) 000-0000
| 35 |
