LOAN MODIFICATION AGREEMENT (Loan No. 9117000148)
Exhibit
10.2
(Loan
No. 0000000000)
This
Loan
Modification Agreement ("Modification") is made and entered as of December
26,
2006, between CALIFORNIA BANK & TRUST, a California banking
corporation ("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 (separately and collectively "Borrower”).
RECITALS
A. Pursuant
to the terms of a Commercial Loan Agreement ("Loan Agreement") between Bank
and
Borrower dated as of August 31, 2005, Bank agreed to make a revolving line
of
credit in the principal sum of $17,000,000 (“Line of Credit”) available to
Borrower; capitalized terms used and not otherwise defined herein shall have
the
meanings assigned to such terms in the Loan Agreement.
B. The
Line of Credit was evidenced by a promissory note ("Note") of even date with
the
Loan Agreement, executed by Borrower in favor of Bank.
C. Borrower's
indebtedness under the Loan Agreement was secured by assets of Borrower under
a
separate Security Agreement, dated August 31, 2005 ("Security Agreement"
executed by each entity comprising Borrower).
D. In
response to Borrower's request and in reliance upon Borrower's representations
made to Bank in support thereof, Bank has agreed to modify the terms of the
Loan
Agreement as set forth in this Modification.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Bank agree as follows:
1. Adoption
of Recitals. Borrower hereby represents and warrants that each of the
recitals set forth above is true, accurate and complete.
2. Acknowledgment
of Debt. Borrower acknowledges that, to the best of Borrower’s knowledge,
there are no claims, demands, offsets or defenses at law or in equity that
would
defeat or diminish Bank's present and unconditional right to collect the
indebtedness evidenced by the Note and to proceed to enforce the rights and
remedies available to Bank as provided in the Note, Loan Agreement, Security
Agreement, or any other instrument, agreement, or document given in connection
with the Line of Credit (collectively the "Loan Documents") or by law. Until
the
Line of Credit is paid in full, interest and other charges shall continue to
accrue and shall be due and owing.
3. Representations
and Warranties. Borrower hereby represents and warrants that no material
default exists under the Line of Credit and no event of default, breach or
failure of condition has occurred or exists, or would exist with notice or
lapse
of time, or both, under any of the Loan Documents that could reasonably be
expected to have a Material Adverse Change, and all representations and
warranties of Borrower in this Modification and the other Loan Documents are
true and correct in all material respects as of the date of this Modification
(other than any such representations and warranties that, by their terms, are
specifically made as of a date other than the date hereof) and shall survive
the
execution of this Modification.
4. Modification
of Loan Documents. The Loan Documents are hereby supplemented, amended and
modified to incorporate the following, which shall supersede and prevail over
any existing and conflicting provisions thereof:
(a) Section
1.1 of the Loan Agreement, entitled "Definitions" is modified as
follows:
(i) By
deleting the definition of “Collateral” and replacing it with the
following:
“Collateral”
means and includes, without limitation, all property and assets granted as
collateral security for a Loan pursuant to the Security Agreement, 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;” provided, that notwithstanding anything to the
contrary in this Agreement, the words “Accounts”, “Accounts Receivable”,
“Collateral Documents”, “Indirect Lease”, “Indirect Loan Contract”, “Inventory”,
“Lease”, “Loan Contract”, and “Revolving Loan Contract” shall not mean any
“Accounts”, “Accounts Receivable”, “Collateral Documents”, “Indirect Leases”,
“Indirect Loan Contracts”, “Inventory”, “Leases”, “Loan Contracts”, or
“Revolving Loan Contracts” that are owned or receivable by or to which ICON
Leasing Fund Eleven ULC and/or ICON U.S. Equipment, LLC is a party, as
applicable.
(ii) By
deleting the definition of “Discount Rate” in its entirety.
(iii) By
deleting the definition of "Line of Credit Expiration Date" and replacing it
in
its entirety with the following:
“Line
of Credit Expiration Date” shall mean September 30, 2008, unless extended
pursuant to Section 2.1.a.
(iv) By
deleting the definition of "Liquidity" and replacing it in its entirety with
the
following:
“Liquidity”
means Borrower’s cash reserves (other than deposits reserved pursuant to
Borrower’s non-recourse financing, if any) and unused Availability under the
Line of Credit.
(v) By
deleting the definition of "Present Value" and replacing it with the
following:
“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 Prime 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
Prime Rate; or (ii) the Present Value based on the lease terminating at its
scheduled termination date.
(b) Section
2.1.a. of the Loan Agreement, entitled “Revolving Line of Credit”, is deleted
and replaced in its entirety with the following:
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) one year extensions of the Line of Credit
Availability Period within 390 days of the then applicable 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 and/or (iii) in connection with any addition to Borrower pursuant
to
the immediately preceding clause (ii), the deletion from Borrower of a fund
managed by Manager or an Affiliate of Manager, but Bank has no obligation to
grant the deletion.
(c) Section
3.2.a. of the Loan Agreement, entitled "Line of Credit Interest Rate," is
modified by deleting "Prime Rate plus one quarter percent (P+0.25%)" and
replacing it with "Prime Rate plus zero percent (P+0.00%)."
(d) Section
3.2.b. of the Loan Agreement, entitled "Line of Credit Optional Interest,"
is
modified by deleting "LIBO Rate, as defined below, plus two and three quarters
percent (L+2.75%)" and replacing it with "LIBO Rate, as defined below, plus
two
and a half percent (L+2.50%)."
(e) Section
8.4 of the Loan Agreement, entitled "Minimum Debt Service Coverage Ratio,"
is
deleted and replaced in its entirety with the following:
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
10-Q or 10-K, as applicable, 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.
(f) Section
8.5 of the Loan Agreement, entitled "Tangible Net Worth," is deleted and
replaced in its entirety with the following:
Tangible
Net Worth. To maintain as of the end of each
fiscal quarter, based on the financial results of each entity comprising
Borrower as reported on SEC Form 10-Q or 10-K, as applicable, of each entity
comprising Borrower, a combined Tangible Net Worth of not less than Two Hundred
Seventy-Five Million Dollars ($275,000,000.00).
(g) Section
8.6 of the Loan Agreement, entitled "Leverage Ratio," is deleted and replaced
in
its entirety with the following:
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 10-Q or 10-K, as
applicable, of each entity comprising Borrower, a ratio of Adjusted Total
Liabilities to Tangible Net Worth not to exceed 0.5 to 1.0.
(h) Section
8.7 of the Loan Agreement, entitled "Minimum Liquidity," is deleted and replaced
in its entirety with the following:
Minimum
Liquidity. To maintain, as of the end of each
fiscal quarter, based on the combined financial results as reported on the
SEC
Form 10-Q or 10-K, as applicable, of each entity comprising Borrower, Liquidity
of at least Seven Million Dollars ($7,000,000.00).
(i) Section
8.8 of the Loan Agreement, entitled "Restricted Cash Deposit," is deleted in
its
entirety.
(j) Section
8.22 of the Loan Agreement, entitled "Operating/Business Accounts," is modified
by deleting the last sentence thereof: "Borrower shall also open and maintain
with Bank a lock box for Accounts Receivable collection."
(k) Section
11 of the Loan Agreement, entitled “Miscellaneous,” is hereby amended to insert
the following section at the end thereof:
11.18
Additional Collateral. With respect to any
Person, that on or subsequent to the date of the Modification, (i) is or becomes
a direct or indirect Subsidiary of any Borrower and (ii) Borrower elects to
have
one or more Eligible Borrowing Base Contracts to which such Subsidiary is a
party added to the Borrowing Base and thereby contribute the assets related
to
such Eligible Borrowing Base Contract as Collateral, then Borrower shall cause
such Subsidiary to execute and deliver to Bank such documentation to the
Security Agreement as to (x) become a party to the Security Agreement and (y)
grant Bank a lien on all of its assets for the benefit of Bank.
(l) Section
9 of the Security Agreement, entitled “Miscellaneous,” is hereby amended to
insert the following section at the end thereof:
9.9
Additional Grantor. Each Subsidiary of the
Grantor that becomes a party to this Security Agreement pursuant to Section
11.18 of the Loan Agreement shall become a Grantor for all purposes of this
Security Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex I attached to the
Modification.
(m) Section
2 of the Security Agreement is modified by adding the following after the last
sentence thereof: “Notwithstanding the foregoing or anything to the contrary in
this Security Agreement, the words “Accounts”, “Chattel Paper”, “Collateral”,
“Contracts”, “Documents”, “Equipment”, “Financial Assets”, “Fixtures”, “General
Intangibles”, “Instruments”, “Inventory”, “Investment Property”, “Letter of
Credit Rights”, and “Proceeds” shall not mean any “Accounts”, “Chattel Paper”,
“Collateral”, “Contracts”, “Documents”, “Equipment”, “Financial Assets”,
“Fixtures”, “General Intangibles”, “Instruments”, “Inventory”, “Investment
Property”, “Letter of Credit Rights”, or “Proceeds” that are owned or receivable
by or to which ICON Leasing Fund Eleven ULC and/or ICON U.S. Equipment, LLC
is a
party, as applicable.
(n) Security
Instruments. Upon the effectiveness of this Modification, the Loan Documents
which recite that they are security instruments shall secure, in addition to
any
other obligations secured thereby, the payment and performance by Borrower
of
all obligations under the Line of Credit, as modified hereby, and any
amendments, modifications, extensions or renewals of the same which are
hereafter agreed to in writing by the parties.
5. Conditions
Precedent. This Modification shall only be effective upon Borrower's
completion of the following conditions precedent to Bank’s
satisfaction.
(a) Execution
and delivery by Borrower of this Modification in form satisfactory to
Bank;
(b) Such
other documents or instruments as Bank shall reasonably require;
(c) After
giving effect to this Modification, the absence of any Event of Default under
the Loan Agreement except as may be expressly waived in writing by
Bank;
(d) Payment
of an extension fee of Forty Two Thousand Five Hundred Dollars ($42,500) to
Bank; and
(e) Payment
of Bank's reasonable attorney fees incurred in preparation of this Modification
and related documents.
6. Governing
Law. This Modification shall be construed, governed and enforced in
accordance with the laws of the State of California.
7. Interpretation.
No provision of this Modification is to be interpreted for or against either
Borrower or Bank because that party, or that party's representative, drafted
such provision.
8. Full
Force and Effect. Except as set forth herein, all other terms and conditions
of the Loan Documents shall remain in full force and effect. Upon and after
the
effectiveness of this Modification, each reference in the Loan Agreement and
Security Agreement to “this Agreement”, “hereunder”, “hereof” or words of like
import referring to the Loan Agreement or Security Agreement, as applicable,
and
each reference in the other Loan Documents to “Loan Agreement”, “Security
Agreement”, “thereunder”, “thereof” or words of like import referring to the
Loan Agreement or Security Agreement, as applicable, shall mean and be a
reference to the Loan Agreement or Security Agreement, as applicable, as
modified hereby.
9. Reaffirmation.
Except as specifically modified by this Modification, Borrower hereby
acknowledges, reaffirms and confirms its obligations under the Loan
Documents.
10. Entire
Agreement. This Modification and the Loan Documents represent the entire
agreement of the parties and supersede all prior oral and written communication
between the parties. If there is any conflict between this Modification and
any
documents referred to herein, this Modification shall prevail. No amendment
of
this Modification shall be valid unless it is in writing and is signed by the
parties to this Modification.
11. Counterparts.
This Modification may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this Modification by facsimile shall be effective as
delivery of a manually executed counterpart of this Modification.
IN
WITNESS WHEREOF, the parties have executed this Modification as of the day
and
year first above written.
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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
Chief
Operating Officer and
Chief
Financial Officer
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CALIFORNIA
BANK & TRUST,
a
California banking corporation
By: /s/
J. Xxxxxxx Xxxxxxxx
Name: J.
Xxxxxxx Xxxxxxxx
Title: Vice
President and Relationship Manager
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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, 0xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
General Counsel
Attention:
Xxxxxx X. Xxxxxx, CFO
Facsimile
No.: (000) 000-0000
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Address
where notices are to be sent:
South
Bay Commercial Banking
0000
Xxxxx Xx Xxxxxx Xxxx
Xxx
Xxxxx, XX 00000
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ICON
INCOME FUND NINE, LLC,
a
Delaware limited liability company
By: ICON
CAPITAL CORP., its manager
By: /s/
Xxxxxx X. Xxxxxx
Xxxxxx
X. Xxxxxx
Chief
Operating Officer and
Chief
Financial Officer
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Address
where notices are to be sent:
ICON
INCOME FUND NINE, LLC
c/o
ICON Capital Corp., its manager
000
Xxxxx Xxxxxx, 0xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
General Counsel
Attention:
Xxxxxx X. Xxxxxx, CFO
Facsimile
No.: (000) 000-0000
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ICON
INCOME FUND TEN, LLC,
a
Delaware limited liability company
By: ICON
CAPITAL CORP., its manager
By: /s/
Xxxxxx X. Xxxxxx
Xxxxxx
X. Xxxxxx
Chief
Operating Officer and
Chief
Financial Officer
|
|
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Address
where notices are to be sent:
ICON
INCOME FUND TEN, LLC
c/o
ICON Capital Corp., its manager
000
Xxxxx Xxxxxx, 0xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
General Counsel
Attention:
Xxxxxx X. Xxxxxx, CFO
Facsimile
No.: (000) 000-0000
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ICON
LEASING FUND ELEVEN, LLC,
a
Delaware limited liability company
By: ICON
CAPITAL CORP., its manager
By: /s/
Xxxxxx X. Xxxxxx
Xxxxxx
X. Xxxxxx
Chief
Operating Officer 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, 0xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
General Counsel
Attention:
Xxxxxx X. Xxxxxx, CFO
Facsimile
No.: (000) 000-0000
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Annex
I
to
Security
Agreement
ASSUMPTION
AGREEMENT, dated as of ________________, 20__, made by _______________________,
a ______________ [limited liability company] (the “Additional Grantor”),
in favor of California Bank & Trust, a California banking corporation, as
lender (“Secured Party”) to the Loan Agreement referred to below. All
capitalized terms not defined herein shall have the meaning ascribed to them
in
the Security Agreement referred to below.
W
I T
N E S S E T H :
WHEREAS,
ICON Income Fund Eight B L.P., a Delaware limited partnership, and ICON Income
Fund Nine, LLC, ICON Income Fund Ten, LLC and ICON Leasing Fund Eleven, LLC,
Delaware limited liability companies (separately, and collectively,
“Borrower”), and Secured Party have entered into a Commercial Loan
Agreement, dated as of August 31, 2005, (as amended, supplemented, restated
or
otherwise modified from time to time, the “Loan Agreement”);
WHEREAS,
in connection with the Loan Agreement, the Borrower has entered into a Security
Agreement, dated as of August 31, 2005 (as amended, supplemented, restated
or
otherwise modified from time to time, the “Security Agreement”) in favor
of the Secured Party; and
WHEREAS,
the Additional Grantor has agreed to execute and deliver this Assumption
Agreement in order to become a party to the Security Agreement;
NOW,
THEREFORE, IT IS AGREED:
1.
Security Agreement. By executing and delivering this Assumption
Agreement, the Additional Grantor, as provided in Section 9.9 of the Security
Agreement, hereby becomes a party to the Security Agreement as a Grantor
thereunder with the same force and effect as if originally named therein
as a
Grantor and, without limiting the generality of the foregoing, hereby expressly
assumes all obligations and liabilities of a Grantor thereunder. The Additional
Grantor hereby represents and warrants that each of the representations and
warranties contained in Section 4 of the Security Agreement is true and correct
on and as the date hereof (after giving effect to this Assumption Agreement)
as
if made on and as of such date.
2.
Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA.
IN
WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to
be duly
executed and delivered as of the date first above written.
ADDITIONAL
GRANTOR
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By:
_
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Name:
_________________
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Title:
_________________
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