UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the quarterly period ended June 30, 2004
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[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the transition period from _______________________ to ___________________
Commission File Number 000-50654
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ICON Income Fund Ten, LLC
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 35-2193184
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
100 Fifth Avenue, 10th floor, New York, New York 10011-1505
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(Address of principal executive offices) (Zip Code)
(212) 418-4700
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [x] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). [ ] Yes [x] No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Balance Sheets
(unaudited)
June 30, December 31,
2004 2003
---- ----
Assets
Cash and cash equivalents $ 14,577,705 $ 15,908,041
Investments in operating leases
Equipment at cost 101,484,721 2,880,000
Accumulated depreciation (2,491,387) (219,423)
------------- ---------------
98,993,334 2,660,577
-------------- ---------------
Escrow deposits 976,000 -
Equipment held for sale or lease, net 541,196 665,321
Prepaid service fees, net 3,007,554 1,417,995
Due from Manager and affiliates, net - 38
Other assets 91,957 -
-------------- -----------------
Total assets $ 118,187,746 $ 20,651,972
============== ================
Liabilities and Members' Equity
-------------------------------
Notes payable - non-recourse $ 67,562,822 $ -
Security deposits and other liabilities 468,943 233,524
Deferred income 2,079,350 -
Refunds payable 20,000 203,000
Due to Manager and affiliates, net 127,114 50,159
Minority interest in consolidated joint ventures 2,369,483 -
-------------- ----------------
Total liabilities 72,627,712 486,683
-------------- ----------------
Commitments and Contingencies
Members' equity
Manager (one share outstanding, $1,000 per share original issue price) (30,444) (3,092)
Additional members (56,089.235 and 23,784.330 shares outstanding,
$1,000 per share original issue price) 45,590,478 20,168,381
-------------- ---------------
Total members' equity 45,560,034 20,165,289
-------------- ---------------
Total liabilities and members' equity $ 118,187,746 $ 20,651,972
============== ================
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statement of Operations
(unaudited)
For the Three Months For the Six Months
Ended June 30, 2004 Ended June 30, 2003
------------------- -------------------
Revenues
Rental income $ 2,324,368 $ 2,600,239
Net gain on sales of equipment 18,893 18,893
-------------- ---------------
Total revenues 2,343,261 2,619,132
-------------- ---------------
Expenses
Depreciation expense 2,148,406 2,353,982
Amortization of prepaid service fees 307,910 510,260
Interest expense 197,873 197,873
Management fees - Manager 144,728 267,694
Administrative expense reimbursements - Manager 340,777 531,351
General and administrative 28,039 47,147
Minority interest income in
consolidated joint ventures (35,509) (35,509)
-------------- ----------------
Total expenses 3,132,224 3,872,798
-------------- ----------------
Net loss $ (788,963) $ (1,253,666)
============== ================
Net loss allocable to:
Managing member $ (7,890) $ (12,537)
Additional members (781,073) (1,241,129)
-------------- ----------------
$ (788,963) $ (1,253,666)
============== ===============
Weighted average number of additional member
shares outstanding 47,337 39,223
============== ================
Net loss per weighted average additional
member shares $ (16.50) $ (31.64)
============== =================
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statement of Changes in Members' Equity
For the Six Months Ended June 30, 2004
(unaudited)
Additional Members' Distributions
Return of Investment Additional Managing
Capital Income Members Member Total
------- ------ ------- ------ -----
(Per weighted average share)
Balance at January 1, 2004 $ 20,168,381 $ (3,092) $ 20,165,289
Proceeds from issuance of additional
member shares (32,304.905 shares) 32,304,905 - 32,304,905
Sales and offering expenses (4,175,270) - (4,175,270)
Cash distributions to members $ 37.39 $ - (1,466,409) (14,815) (1,481,224)
Net loss (1,241,129) (12,537) (1,253,666)
--------------- ------------ --------------
Balance at June 30, 2004 $ 45,590,478 $ (30,444) $ 45,560,034
=============== ============ ==============
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statement of Cash Flows
For The Six Months Ended June 30, 2004
(unaudited)
Cash flows from operating activities:
Net loss $ (1,253,666)
--------------
Adjustments to reconcile net loss to
net cash provided by operating activities:
Rental income paid directly to lenders by lessees (1,588,728)
Interest expense on non-recourse financing paid directly
to lenders by lessees 197,873
Depreciation expense 2,353,982
Amortization of prepaid service fees 510,260
Net (gain) on sales of equipment (18,893)
Minority interest in consolidated joint ventures (35,509)
Changes in operating assets and liabilities:
Other assets (91,957)
Security deposits and other liabilities 235,419
Due to Manager and affiliates, net 76,993
---------------
Total adjustments 1,639,440
--------------
Net cash provided by operating activities 385,774
--------------
Cash flows from investing activities:
Investment in equipment (28,547,694)
Services fees paid (2,099,819)
Proceeds from sales of equipment 61,000
--------------
Net cash used in investing activities (30,586,513)
--------------
Cash flows from financing activities:
Issuance of additional membership shares, net
of sales and offering expenses paid 28,129,635
Cash distributions to members (1,481,224)
Minority interest contribution in joint venture, net 2,404,992
Refunds payable (183,000)
-------------
Net cash provided by financing activities 28,870,403
------------
Net decrease in cash and cash equivalents (1,330,336)
Cash and cash equivalents at beginning of period 15,908,041
--------------
Cash and cash equivalents at end of period $ 14,577,705
==============
(continued on next page)
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
Condensed Consolidated Statement of Cash Flows (Continued)
For The Six Months Ended June 30, 2004
(unaudited)
Supplemental Disclosures of Cash Flow Information
- --------------------------------------------------
For the period ended June 30, 2004, non-cash activities included the following:
Non-cash portion of equipment purchased $ 70,057,027
Non-recourse notes assumed in purchase price (70,057,027)
----------------
$ -
================
Other liabilities assumed $ 12,500
=================
Rental income on operating lease receivables
paid directly to lender by lessee $ 1,588,728
Deferred income on operating lease receivables paid
directly to lenders by lessees, net 1,103,350
Principal and interest on non-recourse debt paid directly
to lenders by lessees (2,692,078)
-----------------
$ -
=================
Interest expense on non-recourse financing accrued
or paid directly to lenders by lessees $ 197,873
=================
See accompanying notes to condensed consolidated financial statements.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements
June 30, 2004
(unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of ICON Income Fund Ten,
LLC (the "LLC") have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC") and, in the opinion of
management, include all adjustments (consisting only of normal recurring
accruals) necessary for a fair statement of results for the periods shown.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
SEC rules and regulations. Management believes that the disclosures made are
adequate to make the information presented not misleading. The results for the
interim period are not necessarily indicative of the results for the full year.
These condensed consolidated financial statements should be read in conjunction
with the financial statements and notes included in the LLC's 2003 Annual Report
Form 10-K.
2. Organization
The LLC was formed on January 2, 2003 as a Delaware limited liability
company. The initial capitalization of the LLC was $1,000 by the Managing
Member. The LLC is offering membership interests on a "best efforts" basis with
the intention of raising up to $150,000,000 of capital. The LLC had its initial
closing on August 22, 2003 when it admitted members holding 5,065.736 additional
member shares, representing $5,065,736 in capital contributions. As of June 30,
2004 the LLC had admitted additional members holding 51,023.499 additional
member shares, representing $51,023,499 in capital contributions, bringing the
total capital contributions and additional member shares to $56,089,235 and
56,089.235, respectively.
The Manager of the LLC, ICON Capital Corp., is a Connecticut corporation.
The Manager manages and controls the business affairs of the LLC's equipment
leases and financing transactions under the terms of a management agreement with
the LLC.
3. Related Party Transactions
The LLC has entered into certain agreements with ICON Securities Corp. and
ICON Capital Corp. whereby the LLC pays certain fees and reimbursements to those
parties.
The LLC is a joint venture partner in ICON GeicJV, a joint venture formed
for the purpose of purchasing information technology equipment on lease to
Government Employees Insurance Company ("GEICO"). The LLC currently has a 74%
interest in ICON GeicJV.
The LLC is also a joint venture member of ICON Aircraft 46837, LLC, a
limited liability company which was formed for the sole purpose of purchasing
the beneficial interest in a DC-10-30 aircraft on lease to Federal Express
Corporation ("FedEx"). The LLC currently has a 71.4% interest in ICON Aircraft
46837, LLC.
Fees and expenses paid or accrued by the LLC to the Manager or its
affiliates for the six months ended June 30, 2004 are as follows:
Prepaid service fees $ 2,099,819 Capitalized
Organization and offering expenses 944,779 Charged to members' equity
Underwriting commissions 646,098 Charged to members' equity
Management fees 267,694 Charged to operations
Administrative expense reimbursements 531,351 Charged to operations
------------
Total $ 4,489,741
============
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
Included in the balance sheet item Due to Manager and affiliates is a net
payable of $25,604 due to ICON Income Fund Eight A L.P. ("Fund Eight A") and
$78,500 due to ICON Income Fund Nine, LLC ("Fund Nine") for investments in joint
ventures. (See Note 4 for additional information relating to these joint
ventures).
4. Consolidated Joint Ventures
ICON Aircraft 46837, LLC
------------------------
In March 2004, the LLC and an affiliate, Fund Eight A, formed a joint
venture, ICON Aircraft 46837, LLC ("ICON Aircraft 46837"), for the purpose of
acquiring and managing a McDonnell Douglas DC-10-30F aircraft on lease to FedEx
through March 2007. The LLC and Fund Eight A have substantially identical
investment objectives and participate on the same terms and conditions. The LLC
has a right of first refusal to purchase the equipment, on a pro-rata basis, if
the affiliate desires to sell its interest in the equipment. The joint venture
is majority owned and consolidated with the LLC.
The purchase price of the aircraft was $21,489,374, which was funded with
cash of $3,566,226, the assumption of other liabilities of $12,500 and
non-recourse debt of $17,672,027. The non-recourse debt has an interest rate of
4% and matures in March 2007. The lender has a security interest in the aircraft
and an assignment of the rental payments under the lease with FedEx. Legal fees
of $36,050 were also paid and capitalized as part of the cost of the aircraft.
Subsequent to closing, an additional $202,571 in bank fees and legal expenses
were paid and capitalized as part of the cost of the aircraft.
The LLC and Fund Eight A acquired interests of 71.4% and 28.6%,
respectively, in ICON Aircraft 46837. Fund Eight A has an option to purchase an
additional interest in ICON Aircraft 46837, which expires on September 30, 2004.
If Fund Eight A exercises this option, its ownership interest would increase to
90% and, as a result, the LLC would have a 10% interest in ICON Aircraft 46837.
The exercise price of the option is $2,130,604.
The LLC's condensed consolidated financial statements include 100% of the
assets, liabilities, revenues and expenses of ICON Aircraft 46837. Fund Eight
A's investment in ICON Aircraft 46837 is reflected as minority interest in
consolidated joint ventures on the condensed consolidated balance sheet.
ICON GeicJV
-----------
In March 2004, the LLC and an affiliate, Fund Nine, formed a joint venture
Partnership, ICON GeicJV, for the purpose of acquiring and managing certain
information technology equipment on lease to GEICO through March 2007. The LLC
and Fund Nine acquired interests of 74% and 26%, respectively, in ICON GeicJV.
The LLC and Fund Nine have substantially identical investment objectives and
participate on the same terms and conditions. The LLC has a right of first
refusal to purchase the equipment, on a pro-rata basis, if the affiliate desires
to sell its interest in the equipment. The joint venture is majority owned and
consolidated with the LLC.
The purchase price of the equipment was $5,852,197, which was funded
entirely with cash. The LLC paid $4,330,626 to fund its pro-rata share of the
purchase price.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
Notes to Condensed Consolidated Financial Statements - Continued
5. Investments in Operating Leases
During June 2004, the LLC acquired two (2) shipping container vessels from
ZIM Israel Navigation Co., Ltd. ("ZIM"). The LLC simultaneously entered into a
bareboat charter agreement with ZIM for the use of the vessels. The bareboat
charter agreement is for a five-year period, starting June 24, 2004, with two
one-year extensions.
The purchase price of the vessels was $70,700,000 which was funded with
cash of $18,400,000 and the assumption of non-recourse debt of $52,300,000. The
non-recourse debt has an interest rate of 5.36% and matures in July 2009. The
lenders have a security interest in the vessels and an assignment of the rental
payments under the lease with ZIM. Bank fees, legal fees and other expenses of
$563,150 were also paid and capitalized as part of the acquisition cost of the
vessels.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
June 30, 2004
Item 2. Manager's Discussion and Analysis of Financial Condition and Results of
Operations
Forward-Looking Information - The following discussion and analysis should
be read in conjunction with the audited financial statements and notes included
in the LLC's annual report on Form 10-K dated December 31, 2003. Certain
statements within this document may constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements are identified by words such as "anticipate," "believe," "estimate,"
"expects," "intend," "predict" or "project" and similar expressions. The LLC
believes that the expectations reflected in such forward-looking statements are
based on reasonable assumptions. Any such forward-looking statements are subject
to risks and uncertainties and the LLC's future results of operations could
differ materially from historical results or current expectations. Some of these
risks are discussed in this report, and include, without limitation,
fluctuations in oil and gas prices; level of fleet additions by competitors and
industry overcapacity; changes in capital spending by customers in the cargo
delivery industry; changing customer demands for vessel and aircraft; acts of
terrorism; unsettled political conditions, war, civil unrest and governmental
actions, especially in higher risk countries of operations, such as Israel;
foreign currency fluctuations; and environmental and labor laws. The LLC's
actual results could differ materially from those anticipated by such
forward-looking statements due to a number of factors, some of which may be
beyond the LLC's control, including, without limitation:
o changes in our industry, interest rates or the general economy;
o the degree and nature of our competition;
o availability of qualified personnel;
o cash flows from operating activities may be less than the LLC's current
level of expenses;
o the financial condition of lessees; and
o lessee defaults.
a. Overview
The LLC is an equipment leasing business formed on January 2, 2003 and
which began active operations on August 22, 2003. The LLC primarily engages in
the business of acquiring equipment subject to leases and, to a lesser degree,
acquiring ownership rights to items of leased equipment at lease expiration.
Some of the LLC's equipment leases will be acquired for cash and are expected to
provide current cash flow, which we refer to as "income" leases. The majority of
the purchase price of the LLC's other equipment leases will be borrowed, so
these leases will generate little or no current cash flow because substantially
all of the rental payments received from a lessee will be paid to a lender. For
these "growth" leases, we anticipate that the future value of the leased
equipment will exceed the cash portion of the purchase price paid for the
equipment by the LLC.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
June 30, 2004
We expect that the LLC will invest most of the net proceeds of this
offering in items of equipment that will be subject to a lease. After the net
offering proceeds have been invested, it is anticipated that additional
investments will be made with the cash generated from the LLC's initial
investments to the extent that cash is not needed for LLC's expenses, reserves
and distributions to investors. The investment in additional equipment in this
manner is called "reinvestment." We anticipate the LLC will purchase equipment
from time to time until five years from the date we complete the current
offering of membership. That time frame is called the "reinvestment period",
which we may extend at our discretion for an additional three years. After the
"reinvestment period", the LLC will then sell its assets in the ordinary course
of business during a time frame called the "liquidation period". If we believe
it would benefit investors to reinvest the LLC's cash flow in equipment during
the liquidation period, the LLC may do so, but we will not receive any
additional fees in connection with such reinvestments. Our goal is to complete
the liquidation period in three years, but it may take longer to do so.
Accordingly, an investor should expect to hold his shares for at least 10 years
from the time he invests.
The LLC's current equipment portfolio, which is held directly by the LLC or
through joint venture investments with affiliates, consists of:
o Boeing 767 aircraft rotables and accessories, of which approximately 80% is
on lease to Flugfelagid Atlanta hf, d/b/a Air Atlanta Icelandic ("Air
Atlanta") with an expiration date of November 30, 2004. The remaining 20%
was on lease with Air Atlanta, but is now being held for sale or lease and
has a net book value of $541,196. The equipment was originally purchased
for $3,600,000.
o Two (2) 3,300 TEU container vessels, on bareboat charter lease to ZIM
Israel Navigation Co. Ltd. ("ZIM"). The expiration of the bareboat charter
is June 23, 2009. The purchase price for the vessels was $70,700,000
comprised of (i) approximately $18,400,000 in cash, and (ii) approximately
$52,300,000 of non-recourse debt.
o a 74% interest in information technology equipment -- such as Sun servers,
HP servers, Dell desktop computers, and Panasonic laptop computers -- which
are subject to a three year lease with GEICO. The expiration of the lease
is March 31, 2007. The LLC's share of the purchase price was $4,330,626 in
cash.
o A 71.4% interest in a 1979 McDonnell Douglas DC-10-30F aircraft on lease to
Federal Express Corporation ("FedEx") with an expiration of March 2007. The
LLC's contribution to the purchase price of the aircraft was $2,656,237 in
cash and $12, 678,517 in non-recourse debt.
Substantially all of our recurring operating cash flows are generated from
the operations of the single-investor leases in the LLC's portfolio. On a
monthly basis, we deduct the expenses related to the recurring operations of the
portfolio from such revenues and assess the amount of the remaining cash flows
that will be required to fund known re-leasing costs and equipment management
costs. Any residual operating cash flows are considered available for
distribution to the investors and are paid monthly (up until the liquidation
period). We anticipate increases in cash available for distributions to
investors from the acquisition of more single-investor transactions.
From January 1, 2004 through June 30, 2004, the LLC raised approximately
$32,300,000 through the issuance of approximately 32,300 units. As of June 30,
2004, approximately 94,000 units remain available for sale pursuant to the LLC's
offering.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
June 30, 2004
Industry Factors
Our results continue to be impacted by a number of factors influencing the
equipment leasing industry.
General Economic Conditions
The U.S. economy appears to be recovering, and the leasing industry's
outlook for the foreseeable future is encouraging. Many experts foresee an
increase in capital spending by corporations through 2007 which should increase
the pool of available secondary market leases, and to that end, the LLC is
seeing more opportunities in this market. Nonetheless, a key obstacle still
facing the leasing industry is the continued low interest rate environment,
which reduces leasing volume inasmuch as customers are more prone to purchase
than lease. Other factors which may negatively affect the leasing industry are
the proposed legal and regulatory changes that may affect tax benefits of
leasing and the continued misperception by potential lessees, stemming from
Enron, WorldCom and others, that leasing should not play a central role as a
financing alternative. However, as economic growth continues and interest rates
inevitably begin to rise over time, we are optimistic that more lessees will
return to the marketplace.
Further Deterioration of the Air Travel Industry.
The aircraft leasing industry is currently on the downside of a business
cycle and this has resulted in depressed sales prices for assets such as the
LLC's aircraft interests. It does not appear that the industry will recover
significantly in the very near future, although the LLC is optimistic that
within two to three years, there will be a full recovery. However, a further
weakening of the industry could cause the proceeds realized from the future sale
of the LLC's aircraft and its rotables to be even less than suggested by recent
appraisals.
b. Results of Operations for the Three Months Ended June 30, 2004
The LLC commenced active operations on August 22, 2003; therefore, a
comparison to the three months ended June 30, 2003 is not discussed.
Revenues
Revenues for the three months ended June 30, 2004 were $2,343,261 comprised
of rental income of $2,324,368 and net gain on sale of equipment of $18,893.
Rental income reflects the increase in operating lease activities. The gain on
sale of equipment resulted from sale of equipment that was off-lease.
Expenses of the LLC
Expenses for the three months ended June 30, 2004 were $3,132,224,
comprising primarily of depreciation and amortization expense of $2,456,316,
interest expense of $197,873, management fees - Manager of $144,728,
administrative expense reimbursements - Manager of $340,777, general and
administrative expenses of $28,039, and minority interest income of $35,509.
Our largest expense is depreciation. It is directly related to the
acquisition of operating lease assets. Our continued acquisition of operating
lease assets will lead to further increases in depreciation expense and other
operating expenses.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
June 30, 2004
Net Income/Loss of the LLC
Net loss for the three months ended June 30, 2004 was $788,963. The net
loss per weighted average additional member shares was $16.50.
c. Results of Operations for the Six Months Ended June 30, 2004
The LLC commenced active operations on August 22, 2003; therefore, a
comparison to the six months ended June 30, 2003 is not discussed.
Revenues
Revenues for the six months ended June 30, 2004 were $2,619,132 comprised
of rental income of $2,600,239 and net gain on sales of equipment of $18,893.
Rental income reflects the increase in operating lease activities.
Expenses of the LLC
Expenses for the six months ended June 30, 2004 were $3,872,798 comprised
primarily of depreciation and amortization expense of $2,864,242, interest
expense of $197,873, management fees - Manager of $267,694, administrative
expense reimbursements - Manager of $531,351, general and administrative
expenses of $47,147, and offset by minority interest income of $35,509. These
expenses reflect an increase in the level of the LLC's activities, as the LLC
engaged in additional leasing activities.
Our largest expense is depreciation. It is directly related to the
acquisition of operating lease assets. Our continued acquisition of operating
lease assets will lead to further increases in depreciation expense and other
operating expenses.
Net Income/Loss of the LLC
Net loss for the six months ended June 30, 2004 was $1,253,666. The net
loss per weighted average additional member shares was $31.64.
d. Liquidity and Capital Resources
Cash Requirements
The LLC has sufficient funds necessary to maintain current operations and
to continue to invest in business essential assets subject to lease. The LLC is
currently focused on increasing cash flow through acquisition of more "income"
leases.
Sources of Cash
Operations
For the six months ended June 30, 2004, the LLC's primary source of
liquidity was from financing activities; specifically from the sale of
additional members shares. Proceeds from the issuance of additional members
shares, net of sales and offering expenses, were $28,129,635. These funds, as
well as funds held in reserve by the LLC, were used primarily in investing
activities for the investment in equipment. Equipment subject to operating
leases was purchased for $28,547,694. The LLC is expected to continue acquiring
equipment subject to lease, and also make other types of related investments.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
June 30, 2004
Financings and Recourse Borrowings
Certain affiliates of the LLC--ICON Income Fund Nine, LLC; ICON Income Fund
Eight A L.P.; ICON Income Fund Eight B L.P.; and ICON Cash Flow Partners L.P.
Seven (collectively, the "Initial Funds") -- are parties to a Loan and Security
Agreement dated as of May 30, 2002, as amended (the "Loan Agreement"). Under the
terms of the Loan Agreement, the Initial Funds may borrow money from Comerica
Bank with all borrowings to be jointly and severally collateralized by (i) cash
and (ii) the present values of certain rents receivable and equipment owned by
the Initial Funds. Such Loan Agreement was amended to add the LLC as a borrower
(the LLC, together with the Initial Funds, the "Funds") effective August 5,
2004. The expiration of the Loan Agreement is December 31, 2004.
In connection with the Loan Agreement, the Initial Funds previously entered
into a Contribution Agreement dated as of May 30, 2002, as amended (the
"Contribution Agreement"). Pursuant to the Contribution Agreement, the Initial
Funds agreed to restrictions on the amount and the terms of their respective
borrowings under the Loan Agreement in order to minimize the unlikely risk that
a Fund would not be able to repay its allocable portion of the outstanding
revolving loan obligation at any time, including restrictions on any Fund
borrowing in excess of the lesser of (A) an amount each Fund could reasonably
expect to repay in one year out of its projected free cash flow, or (B) the
greater of (i) the Borrowing Base (as defined in the line of credit agreement)
as applied to such Fund, and (ii) 50% of the net worth of such Fund. The
Contribution Agreement provides that, in the event a Fund pays an amount under
the agreement in excess of its allocable share of the obligation under the
agreement whether by reason of an Event of Default or otherwise, the other Funds
will promptly make a contribution payment to such Fund in such amount that the
aggregate amount paid by each Fund reflects its allocable share of the aggregate
obligations under the agreement. The Initial Funds' obligations to each other
under the Contribution Agreement are collateralized by a subordinate lien on the
assets of each participating Fund. In order to facilitate the addition of the
LLC to the Contribution Agreement, the Funds entered into a Second Amended and
Restated Contribution Agreement effective as of August 5, 2004. The Second
Amended and Restated Contribution Agreement contains substantially identical
terms and limitations as did the Contribution Agreement.
Aggregate borrowings by all funds under the line of credit agreement
amounted to $8,615,439 on June 30, 2004.
Distributions
The LLC made cash distributions to members of $1,481,224 during the quarter
ended June 30, 2004. Such distributions are reflected as a return of capital, as
the LLC recorded a loss for the quarter.
Capital Resources
The LLC is an investment vehicle formed for the purpose of acquiring and
owning equipment leases and the business essential equipment subject thereto. As
of June 30, 2004, the LLC was holding net offering proceeds of approximately
$14,577,705 available for such investments. At this time, the Manager is unaware
of any specific need requiring capital resources to be funded by the LLC.
Uncertainties
As of June 30, 2004, except as noted above in the Overview section and
listed below in the Risk Factors section, and to the best of our knowledge,
there were no known trends or demands, commitments, events or uncertainties
which we believe are likely to have a material effect on liquidity. As cash is
realized from the continued offering, operations, or borrowings, the LLC will
continue to invest in additional leasing transactions, while retaining
sufficient cash to meet its reserve requirements and recurring obligations.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
June 30, 2004
e. Inflation and Interest Rates
The potential effects of inflation on the LLC are difficult to predict. If
the general economy experiences significant rates of inflation, however, it
could affect the LLC in a number of ways. The cost of equipment acquisitions
could increase with inflation and revenues from existing leases would not
generally increase with inflation, as the LLC does not currently have or expect
to have rent escalation clauses tied to inflation in its leases. Nevertheless,
the anticipated proceeds from residual values to be realized upon the sale or
re-lease of equipment upon lease terminations (and thus the overall cash flow
generated from the LLC's leases) may be expected to increase with inflation as
the cost of similar new and used equipment increases.
If interest rates increase significantly, the lease rates that the LLC can
obtain on future leases may be expected to increase as the cost of capital is a
significant factor in the pricing of lease financing. Leases already in place,
for the most part, would not be affected by changes in interest rates.
Item 3. Qualitative and Quantitative Disclosures About Market Risk
The LLC is exposed to certain market risks, including changes in interest
rates and the demand for equipment (and the related residuals) owned by the LLC
and its investors.
The LLC manages its interest rate risk by obtaining fixed rate debt either
directly or through its joint ventures. The fixed rate debt service obligations
are matched with fixed rate lease receivable streams generated by the leases.
The LLC attempts to manage its exposure to equipment and residual risk by
monitoring the market and maximizing remarketing proceeds received through
re-lease or sale of equipment.
Item 4. Controls and Procedures
The LLC carried out an evaluation, under the supervision and with the
participation of management of ICON Capital Corp., the Manager of the LLC,
including the Chief Executive Officer and the Principal Financial and Accounting
Officer, of the effectiveness of the design and operation of the LLC's
disclosure controls and procedures as of the end of the period covered by this
report pursuant to the Securities Exchange Act of 1934. Based upon the
evaluation, the Chief Executive Officer and the Principal Financial and
Accounting Officer concluded that the LLC's disclosure controls and procedures
were effective.
There were no significant changes in the LLC's internal control over
financial reporting during the LLC's second quarter that have materially
affected, or are likely to materially affect, the LLC's internal control over
financial reporting.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
PART II - OTHER INFORMATION
- ---------------------------
Item 1 - Legal Proceedings
- --------------------------
The LLC, from time-to-time, in the ordinary course of business, commences
legal actions when necessary to protect or enforce the rights of the LLC. We are
not a defendant party to any pending litigation and are not aware of any pending
or threatened litigation against the LLC.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
10.1 Loan and Security Agreement dated May 30, 2002 as amended.
32.1 Certification of Chairman and Chief Executive Officer.
32.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer.
33.1 Certification of Chairman and Chief Executive Officer pursuant to 18 U.S.C.
(Section)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
33.2 Certification of Executive Vice President and Principal Financial and
Accounting Officer pursuant to 18 U.S.C. (Section)1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Report on Form 8-K
The LLC filed a Current Report on Form 8-K, dated July 13, 2004, which
furnished a narrative on the recently completed ZIM acquisition. As well, it
announces that the LLC filed a Supplement No. 2 to its Prospectus in order to
disclose acquisitions and to provide clarifications related to fees charged by
the Manager.
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ICON Income Fund Ten, LLC (Registrant)
By its Manager,
ICON Capital Corp.
August 16, 2004 /s/ Thomas W. Martin
--------------------- --------------------------------------
Date Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
ICON Capital Corp.
Manager of ICON Income Fund Ten, LLC
EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
dated May 30, 2002
between
ICON CASH FLOW PARTNERS L.P. SEVEN
ICON INCOME FUND EIGHT A L.P.
ICON INCOME FUND EIGHT B L.P.
and
COMERICA BANK-CALIFORNIA
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT..............................................................................49
1.1 Revolving Line of Credit Commitment.................................................................49
1.1.1 Revolving Line of Credit.................................................................49
1.1.2 Revolving Loan Account; Use of Proceeds..................................................49
1.1.3 Requests for Revolving Loans/Approval by Lender..........................................50
1.1.4 Revolving Loan Interest..................................................................50
1.2 Interest Rates......................................................................................50
1.2.1 Default Rate.............................................................................50
1.2.2 Computation of Interest..................................................................50
1.2.3 Maximum Interest Rate....................................................................50
1.3 Loan Fees...........................................................................................50
1.3.1 Facility Fee.............................................................................51
1.3.2 Documentation Fee, Costs and Expenses....................................................51
1.4 Late Charges........................................................................................51
1.5 Repayment...........................................................................................51
1.5.1 Payment on Revolving Loan Maturity Date..................................................51
1.5.2 Optional Prepayment......................................................................51
1.5.3 Repayment Procedure......................................................................51
1.6 Borrowing and Prepayment Notices....................................................................51
1.7 Note................................................................................................52
1.8 Payments on Non-Business Day........................................................................52
1.9 Collection of Payments..............................................................................52
1.9.1 Automatic Payments.......................................................................52
1.9.2 Other Payments...........................................................................52
1.10 Receipt of Payments by Lender......................................................................52
1.11 Extension of Time for Advances and Repayment.................... 6
2. CREATION OF SECURITY INTEREST...........................................................................53
2.1 Grant of Security Interest..........................................................................53
2.2 Authorization to File Financing Statements..........................................................53
2.3 Chattel Paper.......................................................................................54
2.4 Negotiable Collateral...............................................................................54
2.5 Investment Property.................................................................................54
2.6 Delivery of Additional Documentation Required.......................................................54
2.7 Right to Inspect....................................................................................55
2.8 Bailees and Other Third Parties in Possession.......................................................55
2.9 Control Agreements..................................................................................55
2.10 Ownership of Collateral..............10
3. CONDITIONS PRECEDENT....................................................................................55
3.1 Conditions Precedent to Initial Loan................................................................55
3.1.1 Note.....................................................................................55
3.1.2 Financing Statements and Perfection of Security Interest.................................55
3.1.3 Search Results...........................................................................55
3.1.4 Due Diligence............................................................................55
3.1.5 Insurance................................................................................55
3.1.6 Organizational Documents.................................................................56
3.1.7 Authorizations...........................................................................56
3.1.8 Good Standing............................................................................56
3.1.9 Executed Agreement.......................................................................56
3.1.10 Certificates of Title...................................................................56
3.1.11 Collateral Access Agreements............................................................56
3.1.12 Control Agreements......................................................................56
3.1.13 Payment of Borrower 1 and Borrower 3 Indebtedness.......................................56
3.1.14 Payment of All Fees and Expenses........................................................56
3.1.15 Opinion of Counsel......................................................................56
3.1.16 Contribution Agreement..................................................................11
3.1.17 Material Adverse Change................................................................56
3.1.18 Additional Documents....................................................................56
3.2 Conditions Precedent to All Loans...................................................................56
3.2.1 Borrowing Request........................................................................56
3.2.2 Representations and Warranties...........................................................56
3.2.3 Defaults.................................................................................57
3.2.4 Additional Documents.....................................................................57
4. REPRESENTATIONS AND WARRANTIES OF BORROWER..............................................................57
4.1 Existence and Rights................................................................................57
4.2 Agreement Authorized................................................................................57
4.3 No Conflict.........................................................................................57
4.4 Litigation..........................................................................................57
4.5 Financial Condition.................................................................................57
4.6 Title to Assets.....................................................................................58
4.7 Name; State of Incorporation; Location of Chief Executive Office....................................58
4.8 General Partner.....................................................................................58
4.9 Subsidiaries........................................................................................58
4.10 Tax Status.........................................................................................58
4.11 Trademarks, Trade Names, Copyrights, Patents.......................................................58
4.12 Regulatory Compliance..............................................................................58
4.13 ERISA..............................................................................................58
4.14 Solvency, Payment of Debts.........................................................................58
4.15 Full Disclosure....................................................................................59
4.16 Enforceability; Priority of Security Interest......................................................59
4.17 Enforceability of Collateral.......................................................................59
4.18 Other Financing Statements.........................................................................59
4.19 Environmental Representations......................................................................59
4.19.1 Existing Conditions.....................................................................59
4.19.2 Existing Orders........................................................................60
4.19.3 Permits.................................................................................60
4.19.4 Leases and Loan Contracts Subject to Revolving Loans....................................60
4.20 Inventory Records..................................................................................60
4.21 Commissions Due to Brokers.........................................................................60
4.22 Benefit to All Borrowers..............18
4.23 Consultation with Counsel.............18
5. AFFIRMATIVE COVENANTS OF BORROWER.......................................................................60
5.1 Rights and Facilities...............................................................................60
5.2 Use of Proceeds.....................................................................................61
5.3 Insurance...........................................................................................61
5.4 Taxes and Other Liabilities.........................................................................61
5.5 Records and Reports.................................................................................61
5.5.1 Quarterly Financial Statement............................................................61
5.5.2 Annual Financial Statement...............................................................61
5.5.3 Borrowing Base/Eligible Borrowing Base Contract Aging Report.............................18
5.5.4 Audit Reports............................................................................61
5.5.5 Compliance Certificate...................................................................62
5.5.6 Other Information........................................................................62
5.6 ERISA...............................................................................................62
5.7 Laws 62
5.8 Compliance with GAAP................................................................................62
5.9 Maintenance of Collateral...........................................................................62
5.10 Location of Inventory and Equipment................................................................62
5.11 Disposition of Proceeds of Collateral..............................................................62
5.12 Operating Accounts.................................................................................63
5.13 Notices............................................................................................63
5.14 Audits.............................................................................................63
5.15 Assignment of Accounts, Leases and Loan Contracts..................................................63
5.16 Collection of Accounts, Leases and Loan Contracts, Inventory Proceeds..............................63
5.17 Environmental Covenants............................................................................63
5.18 Contribution Agreement.............................................................................64
6. NEGATIVE COVENANTS OF BORROWER..........................................................................64
6.1 Type of Business; Management; Change of Control.....................................................64
6.2 Change of Name......................................................................................64
6.3 Change of State of Formation........................................................................64
6.4 Outside Indebtedness................................................................................64
6.5 Liens and Encumbrances..............................................................................64
6.6 Transactions Involving Collateral...................................................................64
6.7 Loans, Investments; Secondary Liabilities...........................................................65
6.8 Acquisition or Sale of Business; Merger or Consolidation............................................65
6.9 Distributions.......................................................................................65
6.10 Transactions with Subsidiaries and Affiliates......................................................65
6.11 Pension Plans......................................................................................65
6.12 No Further Negative Pledges........................................................................65
7. FINANCIAL COVENANTS.....................................................................................65
7.1 Aggregate Tangible Net Worth........................................................................65
7.2 Individual Borrower Tangible Net Worth..............................................................65
7.3 Debt to Tangible Net Worth..........................................................................65
7.4 Profitability.......................................................................................26
7.5 Other Collateral....................................................................................65
8. EVENTS OF DEFAULT.......................................................................................66
8.1 Failure to Pay......................................................................................66
8.2 Breach of Representations and Warranties, Affirmative, Negative or Financial Covenants..............66
8.3 Breach of Other Covenants...........................................................................66
8.4 Breach of Warranty..................................................................................66
8.5 Breach Under Any Other Loan Document................................................................66
8.6 Default Under Agreements with Other Persons.........................................................66
8.7 Judgments...........................................................................................66
8.8 Ownership...........................................................................................66
8.9 ERISA Compliance....................................................................................66
8.10 Insolvency; Receiver or Trustee....................................................................66
8.11 Bankruptcy.........................................................................................67
8.12 Security Interest..................................................................................67
8.13 Cessation of Business..............................................................................67
8.14 Material Adverse Change............................................................................67
8.15 Attachments........................................................................................67
8.16 Other Defaults.....................................................................................67
9. LENDER'S RIGHTS AND REMEDIES UPON EVENT OF DEFAULT......................................................67
9.1 Rights and Remedies.................................................................................67
9.2 Power of Attorney...................................................................................68
9.3. Payment of Expenses by Lender......................................................................69
9.4 No Obligation to Pursue Others......................................................................69
9.5 Compliance with Other Laws..........................................................................69
9.6 Warranties..........................................................................................69
9.7 Sales on Credit.....................................................................................69
9.8 No Marshaling.......................................................................................69
9.9 Government Consents.................................................................................69
9.10 Lender's Liability for Collateral..................................................................69
9.11 Waiver of Defaults.................................................................................70
9.12 Remedies Cumulative................................................................................70
9.13 Demand; Protest....................................................................................70
10. MISCELLANEOUS PROVISIONS................................................................................70
10.1 Failure or Indulgence Not Waiver...................................................................70
10.2 Amendments and Waivers.............................................................................70
10.3 Construction; Interpretation.......................................................................70
10.4 Cumulative Effect; Conflict of Terms...............................................................71
10.5 Counterparts; Entire Agreement.....................................................................71
10.6 Lender's Expenses and Attorney's Fees..............................................................71
10.7 Taxes and Fees.....................................................................................71
10.8 Successors and Assigns; Participations; Disclosure.................................................71
10.9 Applicable Law.....................................................................................71
10.10 Notices...........................................................................................72
10.11 Further Action....................................................................................72
10.12 Severability......................................................................................72
10.13 Reliance on and Survival of Various Provisions....................................................72
10.14 Effective Upon Execution..........................................................................72
10.15 Confidentiality...................................................................................72
10.16 Time of the Essence...............................................................................73
10.17 Joint and Several Liability......................................................................33
10.18 Waiver of Jury Trial..............................................................................73
APPENDIX A......................................................................................................A-1
GENERAL DEFINITIONS....................................................................................A-1
SCHEDULE 1......................................................................................................B-1
LEASES, LOAN CONTRACTS AND RELATED PROPERTY............................................................B-1
Exhibit 1.......................................................................................................B-4
Borrower's Report......................................................................................B-4
Exhibit 2.......................................................................................................B-6
Promissory Note........................................................................................B-6
Exhibit 3.......................................................................................................B-8
Compliance Certificate.................................................................................B-8
Exhibit 4......................................................................................................B-13
Borrowing Base/Eligible Borrowing Base Contract Aging Report...................................................B-13
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement is made and entered into as of May 30, 2002, by
and between ICON Cash Flow Partners L.P. Seven, a Delaware limited partnership
("Borrower 1"), ICON Income Fund Eight A L.P., a Delaware limited partnership
("Borrower 2"), ICON Income Fund Eight B L.P., a Delaware limited partnership
("Borrower 3"), on the one hand, and Comerica Bank-California, a California
banking corporation ("Lender"), on the other hand. Borrower 1, Borrower 2,
Borrower 3 and all other Persons who are or hereafter (with Lender's consent)
become borrowers under this Agreement are jointly and severally, individually
and collectively, referred to herein as "Borrower." Except as otherwise defined
herein, initially capitalized terms used in this Agreement have the meanings
assigned to them in Appendix A attached hereto.
Subject to the terms and conditions hereof, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender shall make the Loans to Borrower as set forth below.
In consideration of the mutual covenants and conditions hereof, the parties
agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1......Revolving Line of Credit Commitment.
1.1.1 Revolving Line of Credit. Subject to the terms and conditions of this
Agreement, from time to time from the Closing Date to 4:00 p.m., California
time, on the Business Day immediately prior to the Revolving Loan Maturity Date,
Lender agrees, upon Borrower's request in accordance with this Agreement, to
make advances (each a "Revolving Loan," and collectively, the "Revolving Loans")
to Borrower in an aggregate amount outstanding not to exceed at any one time the
lesser of: (x) the Borrowing Base or (y) the Maximum Revolving Amount.
If at any time or for any reason, the outstanding principal amount of the
Revolving Loans issued by Lender pursuant to this Agreement and outstanding
shall exceed the lesser of: (x) the Borrowing Base or (y) the Maximum Revolving
Amount, Borrower shall pay to Lender, in cash, the amount of such excess within
5 days of the date such excess occurs. Borrower shall not request any Revolving
Loan from Lender which, if made, issued or allowed, would exceed the limits set
forth in this Section 1.1.1.
Any commitment of Lender, pursuant to the terms of this Agreement, to make
Revolving Loans shall expire at 4:00 p.m., California time, on the Business Day
prior to the Revolving Loan Maturity Date, subject to Lender's right to renew
said commitment in its sole and absolute discretion at Borrower's request. Any
such renewal of said commitment shall not be binding upon Lender unless it is in
writing and signed by an officer of Lender. Provided that no Event of Default
has occurred and is continuing, all or any portion of the Revolving Loans
advanced by Lender which are repaid by Borrower shall be available for
reborrowing in accordance with the terms hereof.
1.1.2 Revolving Loan Account; Use of Proceeds. The amount and date of each
Revolving Loan made by Lender to Borrower hereunder, the amount from time to
time outstanding, the applicable interest rate in respect of each Loan, the
amount and date of any repayment hereunder, and the amount allocable to each
Borrower based on Loans to that Borrower and repayments by that Borrower shall
be noted on Lender's books and records ("Revolving Loan Account"), which shall
be presumptive evidence thereof, absent manifest error; provided, however, that
any failure by Lender to make any such notation, or any error in any such
notation, shall not relieve Borrower of its obligations to pay to Lender all
amounts owing to Lender under or pursuant to this Agreement and each of the
other Loan Documents, in each case, when due in accordance with the terms hereof
or thereof. Borrower shall not use the proceeds of Revolving Loans for any
purpose other than (a) payment of the balance owing to Lender on loans made by
Lender to Borrower 1 and Borrower 3 existing on the date hereof; (b) payment of
the balance owing to Pullman Bank (not to exceed $2,600,000) on a line of credit
by Pullman Bank to Borrower 2 (provided that Pullman Bank prior to or
concurrently therewith terminates the line of credit and its security interest
in property of Borrower 2 and delivers to Lender the original lease documents it
obtained as collateral to secure such line of credit); (c) payment of Borrower's
periodic cash flow needs, including modifications and upgrades to equipment in
the process of being sold or released, reduction of non-recourse borrowings,
making scheduled distributions to limited partners, acquiring equipment subject
to lease or similar transactions intended for the investment account of
Borrower, and for general working capital needs of Borrower.
1.1.3 Requests for Revolving Loans/Approval by Lender. Requests for
Revolving Loans hereunder shall be in writing duly executed by each Borrower, on
a Borrower's Report in the form attached hereto as Exhibit 1, and shall contain
a certification: (a) demonstrating on a pro forma basis Borrower's compliance
with Section 1.1.1 and Section 1.1.2 after taking into account the proposed
borrowing and the proposed payment terms of the Eligible Borrowing Base
Contracts or Eligible Residual Values proposed to be financed by the borrowing,
(b) describing in detail satisfactory to Lender the Eligible Borrowing Base
Contracts, Eligible Residual Values, and related equipment based on which such
Revolving Loan has been requested, (c) certifying that the applicable contracts
are Eligible Borrowing Base Contracts, (d) certifying that Borrower is in
compliance with, and will continue to be in compliance with upon the making of
the Revolving Loan, the terms and conditions of the Agreement, and (e) providing
such additional information as is requested in the Borrower's Report. Borrower
shall also state in writing to which Borrower the Revolving Loan is being made.
Notwithstanding any other provision contained herein or in any of the Loan
Documents, Lender is under no obligation to make a Revolving Loan with respect
to any lease or loan contract in which Borrower is not the lessor or lender, as
the case may be. If Lender decides, in its sole and absolute discretion, to make
such a Revolving Loan, it shall be on such terms and conditions as are
acceptable to Lender.
1.1.4 Revolving Loan Interest. Borrower further promises to pay to Lender,
from the date of the advance of the initial Revolving Loan until all Obligations
are repaid in full and Lender has no further obligation to make Revolving Loans,
on or before the last day of each month, interest on the unpaid balance of the
Revolving Loans at a fluctuating rate of interest equal to the Base Rate plus
1.0% per annum, which rate shall vary concurrently with any change in the Base
Rate.
1.2......Interest Rates.
1.2.1 Default Rate. Notwithstanding anything to the contrary set forth
herein, upon the occurrence and during the continuation of an Event of Default,
all Obligations shall bear interest at a rate equal to 3.00% per year in excess
of the rate applicable immediately prior to the occurrence of the Event of
Default, and such rate of interest shall fluctuate thereafter from time to time
at the same time and in the same amount as any fluctuation in the rate
applicable immediately prior to such occurrence. Such default interest shall be
payable on demand.
1.2.2 Computation of Interest. All computations of interest shall be
calculated on the basis of a year of three hundred sixty (360) days for the
actual days elapsed. In the event that the Base Rate announced is, from time to
time, changed, adjustment in the rate of interest payable hereunder shall be
made as of 12:01a.m. (California time) on the effective date of the change in
the Base Rate. Interest shall accrue from the Closing Date to the date of
repayment of the Loans in accordance with the provisions of this Agreement;
provided, however, if a Loan is repaid on the same day on which it is made, then
one (1) day's interest shall be paid on that Loan. Any and all interest not paid
when due shall, at Lender's option, thereafter be deemed to be a Revolving Loan
made under Section 1.1.1 and shall bear interest thereafter as provided for in
Subsection 1.1.4.
1.2.3 Maximum Interest Rate. In no event shall the interest rate and other
charges hereunder exceed the highest rate permissible under any law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that such a court determines that Lender has received
interest and other charges hereunder in excess of the highest rate applicable
hereto, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations, other than interest, in the
inverse order of maturity, and the provisions hereof shall be deemed amended to
provide for the highest permissible rate. If there are no Obligations
outstanding, Lender shall refund to Borrower such excess.
1.3......Loan Fees. In addition to any other amounts due or to become due
under this Agreement concurrent with the execution hereof, Borrower shall pay to
Lender, the following fees:
1.3.1 Facility Fee. A Facility Fee in the amount of $75,000.00 per year,
payable in arrears in installments of $18,750.00 per quarter, with the first
installment in the amount of $18,750.00 to be paid on June 30, 2002, and with
subsequent installments to be paid on the last day of each three-month period
thereafter (September 30, 2002, December 31, 2002, etc.) through the Revolving
Loan Maturity Date of, if an extension of time beyond the Revolving Loan
Maturity Date for advances and repayment is provided pursuant to Section 1.11,
through the end of the extension period.
1.3.2 Documentation Fee, Costs and Expenses. In addition to any other
amounts due, or to become due, concurrently with the execution hereof, a
documentation fee in the amount of $500.00 and all other costs and expenses
(including attorney's fees) incurred by Lender in the negotiation and
preparation of this Agreement and the other Loan Documents, incurred in the
perfection of any security interest granted to Lender by Borrower, or incurred
by Lender in the negotiation and preparation of any modification or restatement
of, or amendment to, this Agreement or any of the other Loan Documents.
1.4......Late Charges. If any installment payment, interest payment,
principal payment or principal balance due under any of the Loans is delinquent
10 or more days, in addition to and not in substitution of Lender's other rights
and remedies with respect to such late payment, Borrower agrees to pay Lender a
late charge in the amount of 5% of the payment so due and unpaid, in addition to
the payment. All payments, at Lender's sole discretion, shall be applied first
to any late charges owing, then to interest and the remainder, if any, to
principal.
1.5......Repayment.
1.5.1 Payment on Revolving Loan Maturity Date. Borrower promises to pay to
Lender the entire outstanding unpaid principal balance of the Loans, together
with all accrued unpaid interest thereon and unpaid fees, costs, expenses, and
charges owing to Lender pursuant to the Loan Documents, on the earlier of the
date otherwise due under this Agreement or the Revolving Loan Maturity Date.
1.5.2 Optional Prepayment. Borrower may, at its option, prepay the Loans,
in whole or in part, at any time and from time to time without penalty or
premium.
1.5.3 Repayment Procedure. All repayments of Loans (including prepayments
and payments of interest and late charges with respect to Loans) shall be made
to Lender in immediately available funds. In the case of any repayment, Borrower
shall designate to Lender the identity of the Borrower to whom the repayment is
to be allocated and the amount(s) being repaid. If Borrower fails to make such a
designation, Lender may apply the repayment in any manner it deems appropriate.
1.6......Borrowing and Prepayment Notices. Borrower shall give Lender prior
written notice of each request for the making of a Revolving Loan (each, a
"Borrowing Notice") or the prepayment of a Revolving Loan (each, a "Prepayment
Notice") as follows:
1.6.1 Each Borrowing Notice and Prepayment Notice shall be effective only
if actually received by Lender at the address set forth in Section 10.10 of this
Agreement not later than 11:00 a.m., Pacific time, on the date of the proposed
borrowing or prepayment, as the case may be.
1.6.2 Each such Borrowing Notice or Prepayment Notice shall specify (i) the
amount (subject to the limitations set forth in this Agreement) to be borrowed
or prepaid, as the case may be, (ii) the identity of the Borrower who is
obtaining the Revolving Loan or who is to be credited with the prepayment, as
the case may be, and (iii) the date of the borrowing or prepayment, as the case
may be. Any such date shall be a Business Day.
1.6.3 Lender shall not incur any liability to Borrower in acting upon any
telephonic notice which Lender believes in good faith to have been given by a
Responsible Officer of Borrower, or for otherwise acting in good faith under
this Section 1.6, and in making any Loans pursuant to telephonic notice.
1.6.4 Lender may, in its sole and absolute discretion, either require all
Borrowers to join in any request for a Loan or in any other action under the
Loan Documents, or act on the basis of a request or action of any one or more
Borrower.
1.6.5 So long as all of the conditions for a borrowing of a Revolving Loan
set forth herein have been satisfied, Lender shall make the proceeds of such
Loan available to Borrower on the applicable borrowing date by transferring same
day funds, equal to the amount of such Loan, in accordance with written
disbursement instructions given by Borrower to Lender, in form and substance
satisfactory to Lender and otherwise consistent with Section 1.1.
1.7......Note. Borrower will execute and deliver to Lender a promissory
note substantially in the form of Exhibit 2, with appropriate insertions as to
payee, date and principal amount (each, as amended, supplemented, replaced or
otherwise modified from time to time, the "Note"), payable to the order of
Lender and in a principal amount equal to the Maximum Revolving Amount. The Note
shall (x) be dated the Closing Date, (y) be payable as provided herein and (z)
provide for the payment of interest in accordance with the terms of this
Agreement.
1.8......Payments on Non-Business Day. Whenever any payment to Lender under
the Loan Documents would otherwise be due (except by reason of acceleration) on
a date that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.
1.9......Collection of Payments. All sums payable by Borrower to Lender
under or pursuant to this Agreement or any other Loan Document, whether
principal, interest, or otherwise, shall be paid, when due, directly to Lender
at the office of Lender identified in Section 10.10, in immediately available
United States funds, and without setoff, deduction or counterclaim. Borrower
hereby authorizes Lender to collect all principal, interest, late charges, fees,
costs, or expenses due under this Agreement or the other Loan Documents, as
follows:
1.9.1 Automatic Payments. Borrower authorizes Lender to automatically
deduct from deposit account number 1891551895 maintained by Borrower 1 with
Lender the portion of the amount of principal, interest and late charges due
allocable to Borrower 1 (which allocation shall be based on Loans to Borrower 1
and payments by Borrower 1). Borrower authorizes Lender to automatically deduct
from deposit account number 1892184233 maintained by Borrower 2 with Lender the
portion of the amount of principal, interest and late charges due allocable to
Borrower 2 (which allocation shall be based on Loans to Borrower 2 and payments
by Borrower 2). Borrower authorizes Lender to automatically deduct from deposit
account number 1891552869 maintained by Borrower 3 with Lender the portion of
the amount of principal, interest and late charges due allocable to Borrower 3
(which allocation shall be based on Loans to Borrower 3 and payments by Borrower
3). Lender may automatically deduct from any account maintained by any Borrower
with Lender any other amounts owed by any Borrower to Lender and, if there are
insufficient funds in any of the above-referenced accounts to satisfy the amount
owed to Lender, Lender may automatically deduct the deficiency from any account
maintained by any Borrower with Lender or an Affiliate of Lender.
Should there be insufficient funds in any such account to pay all such sums
when due, the full amount of such deficiency shall be immediately due and
payable by Borrower; provided, however, that Lender shall not be obligated to
advance funds to cover any such payment. In addition, Borrower authorizes
Lender, at its sole option, without prior notice to Borrower, to advance a
Revolving Loan for any payment due or past due hereunder, including principal,
interest or late charges owing of the Loans, and to pay the proceeds of such
Revolving Loan to Lender for application toward such due or past due payment.
1.9.2 Other Payments. Any such amounts not collected in accordance with the
foregoing instructions may be paid in cash or deducted from loan proceeds;
provided, however, that Lender shall not be obligated to advance funds to cover
payment of any such amount.
1.10.....Receipt of Payments by Lender. Any payment by Borrower of any of
the Obligations made by mail will be deemed tendered and received by Lender only
upon actual receipt thereof by Lender at the address designated for such
payment, whether or not Lender has authorized payment by mail or in any other
manner, and such payment shall not be deemed to have been made in a timely
manner unless actually received by Lender on or before the date due for such
payment, time being of the essence. Borrower expressly assumes all risks of loss
or liability resulting from non-delivery or delay of delivery of any item of
payment transmitted by mail or in any other manner. Acceptance by Lender of any
payment in an amount less than the amount then due shall be deemed an acceptance
on account only, and any failure to pay the entire amount then due within the
grace period set forth in Section 8.1 of this Agreement shall constitute and
continue to be an Event of Default hereunder, and at any time thereafter, and
until the entire amount then due has been paid in full, Lender shall be entitled
to exercise any and all rights and remedies conferred upon and otherwise
available to Lender hereunder or under any of the other Loan Documents upon the
occurrence and during the continuance of any such Event of Default. Prior to the
occurrence of any Event of Default hereunder, Borrower shall have the right to
direct the application of any and all payments made to Lender by Borrower
hereunder to the respective Obligations. Borrower waives the right to direct
application of any and all payments received by Lender from and on behalf of
Borrower at any time or times after the occurrence and during the continuation
of any Event of Default hereunder. Borrower further agrees that after the
occurrence and during the continuation of any Event of Default hereunder, or
prior to the occurrence of any Event of Default hereunder if Borrower has failed
to direct such application, Lender shall have the continuing exclusive right to
apply and to reapply any and all payments received by Lender at any time or
times hereafter, whether as voluntary payments, proceeds from any Collateral,
offsets, or otherwise, against the Obligations in such order and in such manner
as Lender may, in its sole discretion, deem advisable, notwithstanding any entry
by Lender upon any of its books and records. Borrower hereby expressly agrees
that, to the extent that Lender receives any payment or benefit of or otherwise
upon any of the Obligations, and such payment or benefit, or any part thereof,
is subsequently invalidated, declared to be fraudulent or preferential, or set
aside, or required to be repaid to a trustee, receiver, or other party under any
provision of the Bankruptcy Code or under any other state or federal law, common
law, or equitable cause, then to the extent of such payment or benefit, the
Obligations, or part thereof, intended to be satisfied shall be revived and
continued in full force and effect as if such payment or benefit had not been
made by Borrower or received by Lender, and, further, any such repayment by
Lender shall be added to and be deemed to be part of the Obligations.
1.11 Extension of Time for Advances and Repayment.
1.11.1 If Lender fails to give Borrower written notice prior to six months
before the Revolving Loan Maturity Date of its intention not to extend the
Revolving Loan Maturity Date, then the date on which Lender's obligation to make
advances (subject to the terms and conditions of the Loan Documents) shall be
extended to the earlier of the following: (a) 4:00 p.m., California time, on the
Business Day immediately prior to the date that is 6 months after Lender
provides Borrower with written notice of its intention not to extend the
Revolving Loan Maturity Date; and (b) 4:00 p.m., California time, on the
Business Day immediately prior to the date that is 6 months after the Revolving
Loan Maturity Date.
1.11.2 If Lender fails to give Borrower written notice prior to six months
before the Revolving Loan Maturity Date of its intention not to extend the
Revolving Loan Maturity Date, then the date on which amounts are due and payable
by Borrower on the Revolving Loan Maturity Date shall be extended to the earlier
of the following: (a) 6 months after Lender provides Borrower with written
notice of its intention not to extend the Revolving Loan Maturity Date; and (b)
6 months after the Revolving Loan Maturity Date. Notwithstanding the foregoing,
regardless of whether Lender has provided such notice, Borrower remains
obligated to pay when otherwise due all amounts payable prior to the Revolving
Loan Maturity Date (including but not limited to interest payments and amounts
payable as the result of an acceleration of the loan in accordance with the
Agreement).
1.11.3 Regardless of whether Lender has provided the notice described in
Sections 1.11.1 or 1.11.2, Lender retains all of the rights and remedies
available to it if an Event of Default or Unmatured Event of Default occurs.
2. CREATION OF SECURITY INTEREST
2.1......Grant of Security Interest. Borrower hereby grants to Lender a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Lender's security interests in
the Collateral shall attach to all Collateral without further act on the part of
Lender or Borrower.
Borrower acknowledges that Lender may place a "hold" on any Deposit Account
pledged as Collateral to secure the Obligations. At any time until the full and
final payment of the Obligations and the termination of all obligations of
Lender hereunder, Lender may notify any Account debtor, Lessee or Debtor of
Lender's security interest, and verify with such Person information relating to
such Account, Lease, Loan Contract, Indirect Lease or Indirect Loan Contract.
Notwithstanding termination of this Agreement, the security interest of Lender
shall remain in effect for so long as any Obligations are outstanding or any
loan facility in favor of Lender is in place.
2.2......Authorization to File Financing Statements. Borrower hereby
irrevocably authorizes Lender at any time and from time to time to file in any
Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as to all assets of
Borrower or words of similar effect, regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9 of the Uniform
Commercial Code of the state or such jurisdiction, or (ii) as being of an equal
or lesser scope or with greater detail, and (b) contain any other information
required or authorized by part 5 of Article 9 of the Uniform Commercial Code of
the state to be included in such financing statement or amendment. Borrower
agrees to furnish any information needed or appropriate for the filing of such a
document within three Business Days after request therefore by Lender. Lender
shall endeavor to provide Borrower with a copy of any financing statements and
amendments filed by it, but incurs no liability to Borrower, and such financing
statements and amendments shall be effective, even if Lender fails to do so.
2.3......Chattel Paper. Borrower agrees to deliver to Lender the originals
of all Leases and Loan Contracts identified in Schedule 1 hereto, as well as any
other Leases and Loan Contracts based upon which Lender makes a Revolving Loan,
as well as (when Borrower was not the original lessor under such Lease or the
original lender under such Loan Contract) the originals of documents reflecting
the transfer of the lessor's interest in the Lease or lender's interest in the
Loan Contract, and the related equipment, to Borrower. Upon request of Lender,
Borrower will deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Borrower will note Lender's interest upon any
and all chattel paper if not delivered to Lender for possession by Lender.
2.4......Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Borrower,
promptly upon the request of Lender, shall (a) endorse or assign such Negotiable
Collateral to Lender, (b) deliver physical possession of such Negotiable
Collateral to Lender, and (c) mark conspicuously all of its records pertaining
to such Negotiable Collateral with a legend, in form and substance satisfactory
to Lender (and in the case of Negotiable Collateral consisting of tangible
Chattel Paper, immediately mark all such Chattel Paper with a conspicuous legend
in form and substance satisfactory to Lender), indicating that the Negotiable
Collateral is subject to the security interest granted hereby.
2.5......Investment Property. If Borrower shall at any time hold or acquire
any certificated securities that constitutes Collateral, Borrower shall
forthwith endorse, assign and deliver the same to Lender, accompanied by such
instruments of transfer or assignment duly executed in blank as Lender may from
time to time specify. If any securities now or hereafter acquired by Borrower
are uncertificated and are issued to Borrower or its nominee directly by the
issuer thereof, Borrower shall promptly notify Lender thereof and, at Lender's
request and option, pursuant to an agreement in form and substance satisfactory
to Lender, either (a) cause the issuer to agree to comply with instructions from
Lender as to such securities, without further consent of Borrower or such
nominee, or (b) arrange for Lender to become the registered owner of such
securities. If any securities, whether certificated or uncertificated, or other
investment property now or hereafter acquired by Borrower are held by Borrower
or its nominee through a securities intermediary or commodity intermediary,
Borrower shall promptly notify Lender thereof and, at Lender's request and
option, pursuant to an agreement in form and substance satisfactory to Lender,
either (i) cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply with entitlement orders or other instruments
from Lender to such securities intermediary as to such securities or other
investment property, or (as the case may be) to apply any value distributed on
account of any commodity contract as directed by Lender to such commodities
intermediary, in each case without further consent of Borrower or its nominee,
or (ii) in the case of financial assets or other investment property held
through a securities intermediary, arrange for Lender to become the entitlement
holder with respect to such investment property, with Borrower being permitted,
only with consent of Lender, to exercise rights to withdraw or otherwise deal
with such investment property. Borrower shall also execute such additional
agreements or instruments, in form and substance satisfactory to Lender, with
respect to investment property, as Lender shall request.
2.6......Delivery of Additional Documentation Required. At any time at the
request of Lender, Borrower shall execute and deliver to Lender, all financing
statements, continuation financing statements, fixture filings, security
agreements, pledges, assignments, endorsements of certificates of title,
applications for title, affidavits, reports, notices, schedules of accounts,
letters of authority, powers of attorney, and other documents that Lender may
reasonably request, in form satisfactory to Lender, to perfect and continue
perfected Lender's security interests in the Collateral, in order to enable
Lender to enforce its rights and remedies under the Loan Documents, and in order
to fully consummate all of the transactions contemplated under the Loan
Documents. Borrower hereby appoints Lender as its irrevocable attorney-in-fact
for the purpose of executing any documents, or taking any other action,
necessary or appropriate to perfect, or continue the perfection of, the security
interest granted in this Agreement, with Lender being authorized to act in its
own name or in the name of Borrower. Lender shall endeavor to provide Borrower
with notice and a copy of any documents executed and other actions taken
pursuant to the appointment of Lender as its attorney-in-fact made in the
preceding sentence, but incurs no liability to Borrower, and the execution of
such documents and such actions shall be effective, even if Lender fails to do
so.
2.7......Right to Inspect. Lender (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower's usual business hours, no less frequently than semi-annually
(or at any time and without notice required if an Event of Default has occurred
and is continuing), to inspect and audit Borrower's Books and to make copies
thereof and to check, test, and appraise the Collateral in order to verify
Borrower's financial condition or the amount, condition of, or any other matter
relating to, the Collateral. Borrower shall pay all reasonable expenses incurred
by Lender with respect to such inspection and audit.
2.8......Bailees and Other Third Parties in Possession. In the event that
any Collateral is in the possession of a third party, Borrower shall join with
Lender in notifying such third party of Lender's security interest and obtaining
an acknowledgment from such third party that it is holding such Collateral for
the benefit of Lender.
2.9......Control Agreements. Borrower shall cooperate with Lender in
obtaining a control agreement in form and substance satisfactory to Lender with
respect to all Deposit Accounts, electronic Chattel Paper, Investment Property,
Letter of Credit Rights, or other property that constitutes Collateral for which
a control agreement is a necessary or appropriate means of perfecting a security
interest.
2.10.....Ownership of Collateral. Borrower shall, upon request by Lender,
promptly inform Lender which Borrower owns each item of Collateral that has been
pledged to Lender and provide such documents as Lender may reasonably request to
support such a statement.
3. CONDITIONS PRECEDENT
3.1......Conditions Precedent to Initial Loan. Lender's obligation to make
the initial Loan is subject, in addition to any other conditions specified in
this Agreement, to the fulfillment, to the satisfaction of Lender and its
counsel, of each of the following conditions:
3.1.1 Note. Lender shall have received an original, executed Note from
Borrower, pursuant to Section 1.7 of this Agreement, in the form of Exhibit 2
hereto, and duly completed.
3.1.2 Financing Statements and Perfection of Security Interest. Lender
shall have received original UCC financing statements, in each case in form and
substance satisfactory to Lender, covering the Collateral (and executed by
Borrower and any grantor of a security interest in Collateral if so requested by
Lender), and such UCC financing statements have been filed with the appropriate
official of the state where the Borrower and each grantor of a security interest
is located and/or any other state or county in which Lender has required the
filing of a UCC financing statement, describing all personal property which is
collateral for the Loan; and all other actions have been taken, and documents
provided to Lender, as are necessary or appropriate to perfect Lender's security
interest in the Collateral.
3.1.3 Search Results. Lender shall have received Uniform Commercial Code
and other public record searches with respect to Borrower and any grantor of a
security interest, in each case in form and substance satisfactory to Lender.
3.1.4 Due Diligence. Lender shall have completed its due diligence
requirements with respect to Borrower, including audits, financial and legal
survey, review of Borrower's formation and authorization documents.
3.1.5 Insurance. Borrower shall have delivered to Lender satisfactory
evidence of insurance coverage required by the Loan Documents, covering risks
and issued by companies satisfactory to Lender, in each case including, where
required by Lender, certified copies of the policies of insurance therefor,
together with endorsements thereto, and where required by Lender, with a
lender's loss payable endorsement form 438BFU or other form of lender's loss
payable endorsement satisfactory to Lender, in favor of Lender as additional
loss payee thereunder, in form, substance, amount and covering risks
satisfactory to Lender, and specifying that the insurer shall give Lender at
least 30 days prior written notice of the cancellation of any such policies of
insurance for any reason. This Section 3.1.5 does not require Borrower to have
Lender added as a loss payee or additional insured on insurance policies for
Revolving Loan Contracts.
3.1.6 Organizational Documents. Borrower and its general partner shall have
delivered to Lender certified copies of the certificates of limited partnership,
partnership agreements, articles of incorporation, bylaws or similar document of
Borrower and its general partner, in each case in form and substance
satisfactory to Lender.
3.1.7 Authorizations. Lender shall have received certified copies of all
action taken by Borrower to authorize the execution, delivery and performance of
the Loan Documents.
3.1.8 Good Standing. Lender shall have received good standing certificates
from the appropriate secretary of state of the state in which Borrower and its
general partner are organized and in each state in which Borrower is required to
be qualified to do business.
3.1.9 Executed Agreement. Lender shall have received an original of this
Agreement and all other Loan Documents to which Borrower is a party, duly
executed by Borrower.
3.1.10 Certificates of Title. Lender shall have received duly executed
certificates of title with respect to that portion of the Collateral that is
subject to certificates of title.
3.1.11 Collateral Access Agreements. Lender shall have received such
collateral access agreements from each lessor, warehouseman, bailee, and other
Person as Lender may require, in form and substance satisfactory to Lender.
3.1.12 Control Agreements. Lender shall have received such control
agreements from each Person as Lender may require, in form and substance
satisfactory to Lender.
3.1.13 Payment of Borrower 1 and Borrower 3 Indebtedness. All indebtedness
owed by Borrower 1 and Borrower 3 to Lender as of the date hereof and as of the
date of the initial Loan hereunder shall have been paid in full, either prior to
or concurrently with, the making of the initial Loan hereunder.
3.1.14 Payment of All Fees and Expenses. Lender shall have received payment
of all fees payable on the Closing Date in accordance with the provisions of
this Agreement, including but not limited to the Commitment Fee, together with
all Lender expenses owing on the Closing Date.
3.1.15 Opinion of Counsel. Lender shall have received an opinion letter
from Borrower's counsel, in form and substance satisfactory to Lender.
3.1.16 Contribution Agreement. The contribution agreement referred to in
Section 5.18 of this Agreement shall have been executed by each Borrower and a
copy thereof shall have been delivered to Lender.
3.1.17 Material Adverse Change. No event that has resulted or could result
in a Material Adverse Change shall have occurred, as determined by Lender in its
sole discretion.
3.1.18 Additional Documents. Lender shall have received all such other
agreements, instruments and documents as Lender may reasonably deem necessary or
desirable.
3.2......Conditions Precedent to All Loans. Lender's obligation to make
each Loan is subject, in addition to any other conditions specified in this
Agreement, to the fulfillment, to the satisfaction of Lender and its counsel, of
each of the following conditions:
3.2.1 Borrowing Request. With respect to each Loan or other extension of
credit hereunder, Lender shall have received a Borrower's Report, executed and
completed to Lender's satisfaction.
3.2.2 Representations and Warranties. Each of the representations and
warranties contained in this Agreement and the other Loan Documents shall be
true and correct in all respects on and as of the date of such Loan or other
extension of credit, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date).
3.2.3 Defaults. No Event of Default or Unmatured Event of Default shall
occur, or shall have occurred and be continuing, on the date of such extension
of credit, nor shall either result from the making thereof.
3.2.4 Additional Documents. Lender shall have received such other documents
and information as Lender may reasonably deem necessary.
4. REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement and to make Loans,
Borrower makes the following representations and warranties to Lender which
shall be true, correct, and complete in all respects as of the Closing Date and
at, and as of, the date of the making of each Loan made thereafter (except to
the extent that such representations and warranties relate solely to an earlier
date):
4.1......Existence and Rights. Borrower 1 is a limited partnership, duly
organized and existing and in good standing under the laws of the state of
Delaware, which shall survive at least two years beyond the maturity of any
Loans hereunder. Borrower 2 is a limited partnership, duly organized and
existing and in good standing under the laws of the state of Delaware, which
shall survive at least two years beyond the maturity of any Loans hereunder.
Borrower 3 is a limited partnership, duly organized and existing and in good
standing under the laws of the state of Delaware, which shall survive at least
two years beyond the maturity of any Loans hereunder. Each Borrower is
authorized and in good standing in the state of its formation. Each Borrower has
the appropriate powers and adequate authority, rights, licenses and franchises
to own its property and to carry on its business as now conducted, and is duly
qualified, in good standing and has all licenses necessary in California and in
each state in which the character of the properties owned by it therein or the
conduct of its business makes such qualification or licenses necessary. Each
Borrower has the power and adequate authority to execute, deliver and perform
this Agreement and the other Loan Documents.
4.2......Agreement Authorized. The execution, delivery and performance of
this Agreement and the Loan Documents are duly authorized and do not require any
registration with, consent or approval of, or notice to, or other action with or
by, any governmental body or other regulatory authority; are not in
contravention of or in conflict with any law or regulation or any term or
provision of Borrower 1's partnership agreement, Borrower 2's partnership
agreement, Borrower 3's partnership agreement, or similar document as the case
may be, and this Agreement and each of the other Loan Documents is a valid,
binding and legally enforceable obligation of each Borrower in accordance with
its terms, subject only to bankruptcy, insolvency or similar laws affecting
creditors' rights generally.
4.3......No Conflict. The execution, delivery and performance of this
Agreement and the Loan Documents are not in contravention of or in conflict
with, and do not result in a breach or constitute a default under any agreement,
contract, indenture, instrument or undertaking to which Borrower is a party or
by which it or any of its property may be bound or affected, and do not cause
any Lien, charge or other encumbrance to be created or imposed upon any such
property by reason thereof. Borrower is not in default under any agreement,
contract, indenture, instrument or undertaking to which Borrower is a party or
by which it may be bound, which default could result in a Material Adverse
Change.
4.4......Litigation. There is no litigation or other proceeding pending or
threatened against or affecting Borrower which if determined adversely to
Borrower or its interest could result in a Material Adverse Change, and Borrower
is not in default with respect to any order, writ, injunction, decree or demand
of any court or other governmental or regulatory authority.
4.5......Financial Condition. All financial statements, balance sheets and
profit and loss statements related to Borrower, that have been delivered by
Borrower to Lender fairly present in all material respects Borrower's financial
condition as of the date thereof and Borrower's results of operations, for the
period then ended. Said statements and all other statements and data submitted
in writing by Borrower to Lender in connection with this request for credit are
true and correct, and each said balance sheet and profit and loss statement
fairly presents the financial condition of Borrower as of the date thereof and
the results of the operations of Borrower for the period covered thereby,
consistently applied, and has been prepared in accordance with GAAP (subject to
year-end adjustments in the case of interim reports). Borrower has no knowledge
of any liabilities, contingent or otherwise, at such date not reflected in its
balance sheet, and Borrower has not entered into any special commitments or
substantial contracts that are not reflected in said balance sheet or that have
resulted or could result in a Material Adverse Change. There has not been a
Material Adverse Change in the financial condition of Borrower since the date of
the most recent of such financial statements submitted to Lender on or about the
date of this Agreement.
4.6......Title to Assets. Borrower has the power and authority to transfer
and pledge its assets (including the Collateral), and Borrower has good and
indefeasible title to its assets (including the Collateral), free and clear of
any Liens or restrictions, except for Permitted Liens.
4.7......Name; State of Formation; Location of Chief Executive Office.
Borrower has not done business under any name other than that specified on the
signature page hereof. Each Borrower is organized under the laws of the State of
Delaware. The chief executive office of Borrower 1 is located in New York City,
New York; Borrower 1's Organizational Identification Number is 2509766. Borrower
1's Tax Identification Number is 13-3835387. The chief executive office of
Borrower 2 is located in New York City, New York. Borrower 2's Organizational
Identification Number is 2755654. Borrower 2's Tax Identification Number is
13-4006824. The chief executive office of Borrower 3 is located in New York
City, New York. Borrower 3's Organizational Identification Number is 3172491.
Borrower 3's Tax Identification Number is 13-4101114. The chief executive office
of Borrower 3 is located in New York City, New York.
4.8......General Partner. ICON Capital Corp. is the sole general partner of
each Borrower. ICON Capital Corp. is a corporation duly organized and existing
and in good standing under the laws of the state of Connecticut. ICON Capital
Corp. has the appropriate powers and adequate authority, rights, licenses and
franchises to own its property and to carry on its business as now conducted,
and is duly qualified, in good standing and has all licenses necessary in
California and in each state in which the character of the properties owned by
it therein or the conduct of its business makes such qualification or licenses
necessary. ICON Capital Corp. has the power and adequate authority to make and
carry out this Agreement and the other Loan Documents in its capacity as general
partner of each Borrower.
4.9......Subsidiaries. Borrower does not own any Stock, partnership
interest or other equity securities of any Person that is a Subsidiary, except
as follows: (a) such ownership as has been disclosed by Borrower in a Form 10-Q
or a Form 10-K filed with the U.S. Securities and Exchange Commission; or (b)
such Subsidiary was formed and is operated in the ordinary course of Borrower's
business as heretofore conducted, or will be formed for such purposes; or (c)
such Subsidiary whose ownership has been disclosed by Borrower to Lender in
writing.
4.10.....Tax Status. Borrower has filed or caused to be filed all tax
returns required to be filed by Borrower, and has no liability for any
delinquent state, local or federal taxes, and, if Borrower has contracted with
any government agency, Borrower has no liability for renegotiation of profits.
4.11.....Trademarks, Trade Names, Copyrights, Patents. Borrower, as of the
date hereof, possesses all necessary trademarks, trade names, copyrights,
patents, patent rights, and licenses to conduct its business as now operated,
without any known conflict with the valid trademarks, trade names, copyrights,
patents and license rights of others.
4.12.....Regulatory Compliance. Borrower is not an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940. Borrower is not engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulations T, U
and X of the Board of Governors of the Federal Reserve System). Borrower has
complied with all the provisions of the Federal Fair Labor Standards Act.
Borrower has not violated any statutes, laws, ordinances or rules applicable to
it, violation of which could result in a Material Adverse Change. None of the
proceeds of any Revolving Loan shall be used to purchase or carry margin stock
(as defined in Regulation U of the Board of Governors of the Federal Reserve
System).
4.13.....ERISA. All defined benefit pension plans as defined in the
Employees Retirement Income Security Act of 1974, as amended ("ERISA"), of
Borrower meet, as of the date hereof, the minimum funding standards of Section
302 of ERISA. No Reportable Event or Prohibited Transaction as defined in ERISA
has occurred with respect to any such plan, or any other failure by Borrower to
comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could result in a Material Adverse Change.
4.14.....Solvency, Payment of Debts. Borrower is solvent and able to pay
its debts (including trade debts) as they mature. No transfer of property is
being made by Borrower and no obligation is being incurred by Borrower in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower.
4.15.....Full Disclosure. No representation, warranty or other statement
made by Borrower in any certificate or written statement furnished to Lender
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading.
4.16.....Enforceability; Priority of Security Interest. (i) This Agreement
creates a security interest in favor of Lender which is enforceable against all
Collateral in which Borrower now has rights and will create a security interest
which is enforceable against all Collateral in which Borrower hereafter acquires
rights at the time Borrower acquires any such rights, with such security
interest being perfected to the extent perfection may be obtained under the
applicable state's Uniform Commercial Code (or if perfection may be obtained by
some other means, in accordance with those other means if so requested by
Lender); and (ii) Lender has a perfected first-priority security interest
(regardless of whether the appropriate method to perfect is under the Uniform
Commercial Code or by another means) in the Collateral described in Schedule 1,
and shall have a perfected, first-priority security interest (regardless of
whether the appropriate method to perfect is under the Uniform Commercial Code
or by another means) in any Collateral based upon which Lender previously,
concurrently herewith or hereafter makes a Revolving Loan (with such perfected,
first priority security interest commencing at or before the time such Revolving
Loan is made); in each case securing the payment and performance of the
Obligations. Except for Liens in favor of Lender and Permitted Liens, there are
no Liens against the Collateral described in Schedule 1 or in any Collateral
based upon which Lender makes a Revolving Loan, or the equipment related thereto
(except that Borrower shall have a perfected first-priority security interest in
the equipment subject to the applicable Loan Contracts).
4.17.....Enforceability of Collateral. To the extent the Collateral
consists of Accounts, Chattel Paper, Leases, Loan Contracts or General
Intangibles, Borrower, after conducting commercially reasonable due diligence at
the time of acquisition, is informed and believes that the Collateral is
enforceable in accordance with its terms, is genuine, and complies with
applicable laws concerning form, content and manner of preparation and
execution, and all Persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear on
the Collateral, and Borrower has no information that any Person contends
otherwise. Borrower, after conducting commercially reasonable due diligence at
the time of acquisition, is informed and believes that all Indirect Leases and
Indirect Loan Contracts are enforceable in accordance with their terms, are
genuine, and comply with applicable laws concerning form, content and manner of
preparation and execution, and all Persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact obligated as
they appear thereon, and Borrower has no information that any Person contends
otherwise.
4.18.....Other Financing Statements. Other than financing statements,
pledge documents, deeds of trust and mortgages in favor of Lender and financing
statements, deeds of trust and mortgages filed or recorded in connection with
Permitted Liens, no effective financing statement, pledge document, deed of
trust or mortgage naming Borrower as debtor, assignor, grantor, mortgagor,
pledgor, trustor or the like and covering all or any part of the Collateral is
on file in any filing or recording office in any jurisdiction.
4.19.....Environmental Representations. Borrower has not received any
notice of any violation of any Environmental Law(s); and Borrower is not a party
to any litigation or administrative proceeding, nor, so far as is known by
Borrower, is any litigation or administrative proceeding threatened against
Borrower which, in any case, (i) asserts or alleges that Borrower violated any
Environmental Law(s), (ii) asserts or alleges that Borrower is required to clean
up, remove, or take any other remedial or response action due to the disposal,
depositing, discharge, leaking or other release of any hazardous materials, or
(iii) asserts or alleges that Borrower is required to pay all or a portion of
any past, present or future clean-up, removal or other remedial or response
action which arises out of or is related to the disposal, depositing, discharge,
leaking or other release of any hazardous materials by Borrower, and which,
either singularly or in the aggregate, could constitute a Material Adverse
Change.
4.19.1 Existing Conditions. To Borrower's knowledge, there are no
conditions existing currently which could subject Borrower to damages,
penalties, injunctive relief or clean-up costs under any applicable
Environmental Law(s), or which require,, or are likely to require, clean-up,
removal, remedial action or other response pursuant to any applicable
Environmental Law(s) by Borrower, and which, in any case, either singularly or
in aggregate, could constitute a Material Adverse Change.
4.19.2 Existing Orders. Borrower is not subject to any judgment, decree,
order, or citation related to or arising out of any Environmental Law(s), which,
either singularly or in the aggregate, could constitute a Material Adverse
Change; and, to Borrower's knowledge Borrower has not been named or listed as a
potentially responsible party by any governmental body or agency in any matter
arising under any applicable Environmental Law(s).
4.19.3 Permits.. Borrower has all material permits, licenses and approvals
required under applicable Environmental Laws, where the failure to so obtain or
maintain any such permits, licenses or approvals could constitute a Material
Adverse Change.
..................4.19.4 Leases and Loan Contracts Subject to Revolving
Loans. The Leases and Loan Contracts listed in Schedule 1, and any other Leases
and Loan Contracts based upon which Lender makes a Revolving Loan, and the
equipment subject thereto, never have been, and never will be so long as this
Agreement remains a Lien on the Collateral, used for the generation,
manufacture, storage, transportation, treatment, disposal, release or threatened
release of any hazardous waste or substance, as those terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5
through 7.7 of Division 20 of the California Health and Safety Code, Section
25100, et seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. This representation and warranty does
not apply, however, to equipment in the possession of a Lessee pursuant to a
Lease or a Debtor pursuant to a Loan Contract, but Borrower represents and
warrants that, in such case, it either (a) has no knowledge that such equipment
has been used in such manner and shall use reasonable efforts to assure that the
Lessee and Debtor does not use the equipment in such manner; or (b) has obtained
an indemnity agreement from such Lessee or Debtor from any loss or damages that
may arise if such equipment has been used in the manner described above.
The terms "hazardous waste" and "hazardous substance" shall also include,
without limitation, petroleum and petroleum by-products or any fraction thereof
and asbestos. The representations and warranties contained herein are based on
Borrower's due diligence in investigating the Collateral for hazardous wastes
and substances. Borrower hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Borrower becomes
liable for cleanup or other costs under any such laws, and (b) agrees to
indemnify and hold harmless Lender against any and all claims and losses
resulting from any Collateral being used by any Person other than Lender in the
manner identified in the first sentence of this subsection. This obligation to
indemnify shall survive the repayment of the Revolving Loans and the termination
of this Agreement.
4.20.....Inventory Records. Borrower keeps correct and accurate records
itemizing and describing the kind, type, quality and quantity of the Inventory,
and Borrower's cost therefor.
4.21.....Commissions Due to Brokers. No broker has been engaged in this
transaction and no commission is due to a broker with respect to this
transaction.
4.22.....Benefit to All Borrowers. The co-borrowing arrangement as set
forth in the Loan Documents is of benefit to all Borrowers regardless of which
Borrower is the actual recipient of Loans made by Lender or the amount of Loans
received by each Borrower in that, among other reasons, the co-borrowing
arrangement enables each Borrower to enter into larger transactions than such
Borrower would be able to enter into if separate credit facilities were
established for each Borrower. Furthermore, the co-borrowing arrangement was
established at the request of each Borrower.
4.23.....Consultation with Counsel. Borrowers are represented by, and have
consulted with, an attorney or attorneys in connection with the Loan Documents
and the transactions contemplated thereby.
5. AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees that until the full and final payment of the Obligations
and the termination of all obligations Lender hereunder, and unless Lender shall
otherwise consent in writing, Borrower shall do each of the following:
5.1......Rights and Facilities. Maintain and preserve all rights,
franchises, qualifications, licenses, approvals and other authority adequate for
the conduct of its business; maintain its properties, equipment and facilities
in good order and repair; conduct its business in an orderly manner without
voluntary interruption and maintain and preserve its legal existence.
5.2......Use of Proceeds. Use the proceeds of the Loans only for purposes
authorized in Article 1 hereof.
5.3......Insurance. Maintain insurance coverage on its physical assets and
against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature (including, without
limitation, loss of rent and/or business interruption insurance), and in the
event of acquisition of additional property, real or personal, or of the
incurrence of additional risks of any nature, increase such insurance coverage
in such manner and to such extent as prudent business judgment and present
practice would dictate; and in the case of all policies covering Collateral or
property in which Lender shall have a security interest of any kind whatsoever,
other than those policies protecting against casualty liabilities to strangers,
all such insurance policies shall provide that the loss payable thereunder shall
be payable to Borrower (or other Person providing Collateral hereto) and Lender,
with mortgagee's clauses in favor of and satisfactory to Lender for all such
policies, and such policies shall also provide that they may not be canceled or
changed without 30 days' prior written notice to Lender. Upon the request of
Lender, all of said policies, or copies thereof, including all endorsements
thereon and those required hereunder, shall be deposited with Lender. This
Section 5.3 does not require Borrower to have Lender added as a loss payee or
additional insured on insurance policies for Revolving Loan Contracts.
5.4......Taxes and Other Liabilities. Pay and discharge, or cause to be
paid and discharged, before the same become delinquent and before penalties
accrue thereon, all taxes, assessments and governmental charges upon or against
it or any of its properties, and all its other liabilities at any time existing,
except to the extent and so long as: (a) the same are being contested in good
faith and by appropriate proceedings in such manner as not to cause any
materially adverse effect upon its financial condition or the loss of any right
of redemption from any sale thereunder; and (b) Borrower shall have set aside on
its books reserves (segregated to the extent required by GAAP) deemed by it to
be adequate with respect thereto. Notwithstanding the foregoing, if a Lessee has
defaulted on its obligation to pay taxes owed with respect to leased equipment,
this Section 5.4 does not require Borrower to pay and discharge, or cause to be
paid and discharged, those taxes.
5.5......Records and Reports. Maintain a standard and modern system of
accounting in accordance with GAAP; permit Lender's representatives to have
access to, and to examine its properties, books and records at all reasonable
times and upon reasonable notice during normal business hours, and furnish
Lender with copies thereof as often as Lender may reasonably request. Furnish
Lender:
5.5.1 Quarterly Financial Statement As soon as available, and in any event
within 45 days after the close of each quarter of each fiscal year of Borrower
(or within 75 days after the close of each quarter of each fiscal year of
Borrower if Borrower has obtained a corresponding extension of the filing
deadline from the U.S. Securities and Exchange Commission): a copy of each
Borrower's Form 10-Q filed with the U.S. Securities and Exchange Commission or
any governmental authority at any time substituted therefor, covering the
applicable quarter, which filing Borrower promises to make on a timely basis. If
Borrower obtains an extension of the filing deadline, it shall promptly notify
Lender thereof and provide Lender with a copy of a document reflecting the
extension.
5.5.2 Annual Financial Statement. As soon as available, and in any event
within 120 days after and as of the close of each fiscal year of Borrower, a
copy of each Borrower's Form 10-K report as filed with the U.S. Securities and
Exchange Commission or any governmental authority at any time substituted
therefor, covering the applicable fiscal year, which filing Borrower promises to
make on a timely basis.
5.5.3 Borrowing Base/Eligible Borrowing Base Contract Aging Report. Within
15 days after each month-end, deliver to Lender a monthly Borrowing
Base/Eligible Borrowing Base Contract Aging Report, in the form of Exhibit 4
attached hereto, providing information as of the last day of the preceding month
and certified by an authorized signer of Borrower. Borrower shall provide in
that report a statement of the Tangible Net Worth of each Borrower as of the
last day of the preceding month (if the exact amount is not known, Borrower
shall provide an estimate) and such other information as is requested in Exhibit
4.
5.5.4 Audit Reports. Promptly after the receipt thereof by Borrower, copies
of any detailed audit reports submitted to Borrower by independent accountants
in connection with each annual or interim audit of the accounts of Borrower
performed by such accountants;
5.5.5 Compliance Certificate. At the earlier of the date a Form 10-Q or
Form 10-K required under Section 5.5.1 or Section 5.5.2 is due or is provided by
Borrower to Lender, a Compliance Certificate of the chief financial officer of
Borrower's general partner, in the form of Exhibit 3, stating that Borrower has
performed and observed each and every covenant contained in this Agreement to be
performed by it and that no event has occurred and no condition then exists
which constitutes an Event of Default or Unmatured Event of Default hereunder
or, if any such event has occurred or any such condition exists, specifying the
nature thereof.
5.5.6 Other Information. Such other information and documents relating to
the affairs of Borrower or the Collateral as Lender may reasonably request from
time to time.
5.6......ERISA. Cause all defined benefit pension plans, as defined in
ERISA, of Borrower to, at all times, meet the minimum funding standards of
Section 302 of ERISA, and ensure that no Reportable Event or Prohibited
Transaction, as defined in ERISA, shall occur with respect to any such plan.
5.7......Laws. At all times comply with, or cause to be complied, in all
material respects, with, all laws, statutes, rules, regulations, orders and
directions of any governmental authority having jurisdiction over Borrower,
Borrower's business, or the Collateral.
5.8......Compliance with GAAP. All information used in and the calculation
of Borrower's compliance with all financial covenants hereunder shall be based
on and in accordance with GAAP.
5.9......Maintenance of Collateral. Borrower shall maintain all tangible
Collateral in good condition and repair or, if Collateral consisting of
equipment is in the possession of a Lessee pursuant to a Lease or a Debtor
pursuant to a Loan Contract, shall use its reasonable efforts to assure that
such Lessee or Debtor complies with the provisions of the applicable Lease or
Loan Contract pertaining to maintenance of such equipment. Borrower will not
commit or fail to reasonably enforce provisions in Leases or Loan Contracts
governing damage to or destruction of the Collateral or any part of the
Collateral.
5.10.....Location of Inventory and Equipment. Insofar as the Collateral
consists of Inventory or Equipment, Borrower shall deliver to Lender, as often
as Lender shall require, such lists, descriptions, and designations of such
Collateral as Lender may require to identify the nature, extent and location of
such Collateral.
5.11.....Disposition of Proceeds of Collateral.
(a) (i) Inform Lender of any proposed sale or other disposition of any
Leases or Loan Contracts (or the equipment related thereto) listed on Schedule 1
or based on which Lender makes a Revolving Loan, or insurance proceeds received
with respect to such Leases, Loan Contracts or equipment; (ii) If an Event of
Default or Unmatured Event of Default has occurred and is continuing,
immediately deliver all proceeds of such sale or other disposition or such
insurance proceeds (subject to the rights of Lessees) to Lender and, until such
delivery, hold such proceeds in trust for Lender and not commingle such proceeds
with any other funds; (iii) If an Event of Default or Unmatured Event of Default
has not then occurred and be continuing, immediately deliver all proceeds of
such sale or other disposition or such insurance proceeds (subject to the rights
of Lessees) to Lender as are necessary to ensure that the aggregate amount
outstanding does not exceed the Borrowing Base, all covenants set forth in
Article 7 of this Agreement are, as of the date of such transaction, satisfied,
and no Event of Default or Unmatured Event of Default is created by such
transaction and, until such delivery, hold such proceeds in trust for Lender and
not commingle such proceeds with any other funds.
(b) (i) Inform Lender of any proposed sale or disposition of any Indirect
Leases or Indirect Loan Contracts (or the equipment related thereto) listed on
Schedule 1 or based on which Lender makes a Revolving Loan, or insurance
proceeds received with respect to such Indirect Leases, Indirect Loan Contracts
or equipment (or of any proposed sale or disposition of Borrower's Beneficial
Interest in the Person who is the lessor of such Indirect Lease or lender/payee
of such Indirect Loan Contract); (ii) If an Event of Default or Unmatured Event
of Default has occurred and is continuing, immediately deliver Borrower's share
of all proceeds of such sale or other disposition or such insurance proceeds
(subject to the rights of Lessees) to Lender and, until such delivery, hold
Borrower's share of such proceeds in trust for Lender and not commingle
Borrower's share of such proceeds with any other funds; (iii) if an Event of
Default or Unmatured Event of Default has not then occurred and be continuing,
immediately deliver Borrower's share of all proceeds of such sale or other
disposition or such insurance proceeds (subject to the rights of Lessees) to
Lender as are necessary to ensure that the aggregate amount of Loans outstanding
does not exceed the Borrowing Base, all covenants set forth in Article 7 of this
Agreement are, as of the date of such transaction, satisfied, and no Event of
Default or Unmatured Event of Default created by such transaction, and, until
such delivery, hold Borrower's share of such proceeds in trust for Lender and
not commingle Borrower's share of such proceeds with any other funds.
5.12.....Operating Accounts.
5.12.1 Maintain Borrower's banking relationship with Lender.
5.12.2 Maintain on deposit with Lender or an Affiliate of Lender an amount
equal to a majority (by value) of all of Borrower's Cash and Cash Equivalents
and inform Lender of all of Lender's Affiliates at which Borrower has on deposit
Cash or Cash Equivalents.
5.13.....Notices. Promptly notify Lender in writing of (i) any case
involving the return, rejection, repossession, loss or material damage of or to
any the Leases, Loan Contracts, Indirect Leases and Indirect Loan Contracts
identified on Schedule 1 or any other Leases, Loan Contracts, Indirect Leases or
Indirect Loan Contracts based upon which Lender makes a Revolving Loan, or the
equipment related thereto, any request for credit or adjustment or of any other
dispute arising with respect to such Leases, Loan Contracts, Indirect Leases,
Indirect Loan Contracts or equipment, and generally of all material happenings
and events affecting such Leases, Loan Contracts, Indirect Leases, Indirect Loan
Contracts or equipment or the value or the amount of such Leases, Loan
Contracts, Indirect Leases, Indirect Loan Contracts or equipment, in each case
to the extent Borrower is aware of, or has been informed of; such event; (ii)
the occurrence of any Event of Default hereunder or any event that, upon notice
or upon notice and the lapse of time specified herein, would be an Event of
Default under this Agreement or under any other Loan Document; (iii) all
litigation affecting Borrower where the amount in controversy is $500,000 or
more; (iv) any substantial dispute which may exist between Borrower and any
governmental regulatory body or law enforcement authority; (v) any change in
Borrower's name or principal place of business; or (vi) any other matter which
has resulted or could result in a Material Adverse Change.
5.14.....Audits. Permit Lender or representatives of Lender to conduct
audits of Borrower's books and records relating to the Accounts, Inventory,
Leases, Loan Contracts and other Collateral and make extracts therefrom no less
frequently than semi-annually (or at any time and without notice required if an
Event of Default has occurred and is continuing) with results satisfactory to
Lender, provided that Lender shall use its best efforts to not interfere with
the conduct of Borrower's business, and arrange for verification of the Accounts
directly with the account debtors obligated thereon or otherwise, of the Leases
directly with the Lessees, and of the Loan Contracts directly with the Debtors,
all under reasonable procedures acceptable to Lender and at Borrower's sole
expense. Borrower shall pay all reasonable expenses incurred by Lender with
respect to such audits.
5.15.....Assignment of Accounts, Leases and Loan Contracts. In addition to
any covenant contained in any Loan Document relating to any Collateral, Borrower
shall execute and deliver to Lender such assignments covering individual
Accounts, Leases and Loan Contracts notices, financing statements, and other
documents and papers as Lender may reasonably require in order to affirm,
effectuate or further assure the assignment and grant of security interest to
Lender of the Collateral or to give any third party, including the account
debtors obligated on the Accounts, Lessees obligated on the Leases and Debtors
obligated on the Loan Contracts, notice of Lender's interest in the Collateral.
5.16.....Collection of Accounts, Leases and Loan Contracts, Inventory
Proceeds. In addition to any covenant contained in any Loan Document relating to
any Collateral, Borrower shall, until Lender exercises its rights to collect the
Accounts, Leases, Loan Contracts and Inventory proceeds as the result of an
Event of Default, collect with diligence amounts owed to Borrower under or with
respect to the Accounts, Leases, Loan Contracts and Inventory.
5.17.....Environmental Covenants. Comply or take reasonable efforts to
cause Lessees and Debtors to comply in all material respects with all applicable
Environmental Laws, and maintain all material permits, licenses and approvals
required under applicable Environmental Laws, where the failure to do so could
constitute a Material Adverse Change. Promptly notify Lender, in writing, as
soon as Borrower becomes aware of any condition or circumstance which makes any
of the environmental representations or warranties set forth in this Agreement
incomplete, incorrect or inaccurate in any material respect as of any date; and
promptly provide to Lender, immediately upon receipt thereof, copies of any
material correspondence, notice, pleading, citation, indictment, complaint,
order, decree, or other document from any source asserting or alleging a
violation of any Environmental Laws by Borrower, or of any circumstance or
condition which requires or may require, a financial contribution by Borrower,
or a clean-up, removal, remedial action or other response by or on behalf of
Borrower, under applicable Environmental Law(s), or which seeks damages or
civil, criminal, or punitive penalties from Borrower, for any violation or
alleged violation of Environmental Law(s).
5.18 Contribution Agreement. Borrower must have entered into an agreement,
among themselves, providing that, to the extent that an individual Borrower's
property is used to repay Lender an amount greater than the amount owed under
Revolving Loans that such Borrower has obtained from Lender, then such Borrower
shall be entitled to reimbursement from the other Borrowers 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 Lender. Such agreement shall not
be amended, modified, or restated in any manner that would 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 Lender.
6. NEGATIVE COVENANTS OF BORROWER
Borrower agrees that until the full and final payment of the Obligations
and the termination of all obligations of Lender hereunder, and unless Lender
shall otherwise consent in writing, Borrower shall not do any of the following:
6.1......Type of Business; Management; Change of Control. Make any
substantial change in the character of its business or make any change in its
general partner or in the current president or chief executive officer of its
general partner, but Lender shall not unreasonably withhold its consent to a
change in such current president or chief executive officer.
6.2......Change of Name. Change its legal name, trade names, or trade
styles or add any new trade names or trade styles unless (i) Borrower gives
Lender 30 days' prior written notice thereof, and (ii) Borrower executes and
delivers such additional agreements, instruments and documents as Lender shall
reasonably require to maintain Lender's perfected security interests in the
Collateral.
6.3......Change of State of Formation. Change its state of formation.
6.4......Outside Indebtedness. Other than in the ordinary course of
business, create, incur, assume or permit to exist any recourse indebtedness for
borrowed moneys other than Revolving Loans from Lender, except obligations now
existing as shown in the financial statements of Borrowers 1, 2 and 3 dated
September 30, 2001, excluding those obligations being refinanced by Lender.
6.5......Liens and Encumbrances. Create, incur, permit to exist, or assume
any mortgage, pledge, encumbrance, Lien or charge of any kind upon any asset now
owned or hereafter acquired by it, other than Permitted Liens.
6.6......Transactions Involving Collateral. (a) Subject to any Lessee's
rights under any Lease relating to the Collateral, sell, transfer or dispose of
any Collateral for less than reasonably equivalent value; (b) sell, transfer or
dispose of Inventory, Equipment, Accounts, Leases or Loan Contracts except in
the ordinary course of Borrower's business (a sale in the ordinary course of
Borrower's business does not include a transfer in partial or total satisfaction
of a debtor or bulk sale; (c) sell, transfer or dispose of any Lease, Loan
Contract, or its interest in any Indirect Lease or Indirect Loan Contract
identified on Schedule 1 or based upon which Lender makes a Revolving Loan (or
the equipment related to the foregoing) unless Borrower has complied with the
requirements of Section 5.11; or (d) Create or permit any Lien to be placed upon
any Lease, Loan Contract, or its interest in any Indirect Lease or Indirect Loan
Contract identified on Schedule 1 or based upon which Lender makes a Revolving
Loan (or the equipment related to the foregoing) (except that Borrower may have
a Lien on equipment subject to a Loan Contract). Notwithstanding the foregoing,
Borrower may create or permit a first priority Lien or other Lien to be placed
on any property described in clause (d), thereby causing such property to cease
to be an Eligible Borrowing Base Contract, provided that no Event of Default or
Unmatured Event of Default then exists or would be created as a result thereof,
the aggregate amount outstanding immediately before such transaction and
immediately after such transaction does not exceed the Borrowing Base, and
Borrower provides written evidence to Lender within 5 Business Days prior to the
placement of such Lien reasonably satisfactory to Lender establishing that such
conditions are satisfied; in such event and if the property thereafter does not
constitute "Collateral," as that term is defined in this Agreement, Lender shall
take such actions as are reasonably requested by Borrower to evidence the
release of its security interest in such property.
6.7......Loans, Investments; Secondary Liabilities. Other than in the
ordinary course of business, (a) make any loans or advances to any Person; (ii)
make any investment in the securities of any Person other than the United States
Government; (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 or deposit or collection in the ordinary
and normal course of its business.
6.8......Acquisition or Sale of Business; Merger or Consolidation. (a)
Purchase or otherwise acquire the assets or business of any Person except in the
ordinary course of business as now conducted by Borrower; (b) liquidate,
dissolve, merge or consolidate, or commence any proceedings therefor; (c) sell
any assets except in the ordinary course of its business as now conducted; (d)
sell, lease, assign, or transfer any substantial part of its business or fixed
assets, or any property or other assets necessary for the continuance of its
business as now conducted, including without limitation the selling of any
property or other asset accompanied by the leasing back of the same.
6.9......Distributions. (a) Declare or pay any distribution to any
partnership interest now outstanding or hereafter issued or purchased, redeem or
retire any such partnership 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 or
redeem or retire any outstanding partnership interests, as provided in the
Agreement of Limited Partnership 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 of such Borrower.
6.10.....Transactions with Subsidiaries and Affiliates. Directly or
indirectly enter into or permit to exist any material transaction with any
Subsidiary or Affiliate of Borrower except for transactions that are in the
ordinary course of Borrower's business, upon fair and reasonable terms that are
no less favorable to Borrower than would be obtained in an arm's length
transaction with a non-affiliated Person.
6.11.....Pension Plans. Except in compliance with this Agreement, enter
into, maintain, or make contribution to, directly or indirectly, any pension
plan that is subject to ERISA.
6.12.....No Further Negative Pledges. Enter into or become subject to any
agreement (other than this Agreement or the Loan Documents) (a) prohibiting the
guaranteeing by Borrower of any obligations, or (b) requiring an obligation to
become secured (or further secured) if another obligation is secured or further
secured.
7. FINANCIAL COVENANTS
Borrower agrees that until the full and final payment of the Obligations
and the termination of all obligations of Lender hereunder, and unless Lender
shall otherwise consent in writing:
7.1......Aggregate Tangible Net Worth. All Borrowers, in the aggregate,
shall maintain, as of the last day of the specified quarter, a Tangible Net
Worth of not less than $125,000,000.
7.2......Individual Borrower Tangible Net Worth. Each Borrower shall
maintain, as of the last day of each month and at each time it obtains a
Revolving Loan, a Tangible Net Worth equal to at least twice the amount of the
outstanding balance on Revolving Loans made to that Borrower as of such date
(after taking into account the amount of any new Revolving Loan that such
Borrower is seeking).
7.3......Debt to Tangible Net Worth. All Borrowers, in the aggregate, shall
maintain, as of the last day of each quarter, a ratio of total recourse
liabilities to Tangible Net Worth of not greater than 1.00 to 1.00.
7.4......Profitability. Each Borrower shall individually earn a net profit
after taxes of at least $1.00 in each fiscal year, as reported in such
Borrower's Form 10-K.
7.5......Other Collateral. In addition to the Collateral consisting of (a)
the Revolving Loan Contracts and the related equipment, and (b) Borrower's
interest in any Person that is the lessor of an Indirect Lease or a lender on an
Indirect Loan if such Indirect Lease or Indirect Loan was the subject of a
Revolving Loan, and the related equipment, Borrower shall cause Lender to have a
perfected security interest in Collateral having a net equity after deducting
the Indebtedness secured by Liens senior to those held by Borrower (based on
Borrower's Books prepared in accordance with this Agreement) equal to the
Maximum Revolving Amount or a greater amount.
8. EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an event of default
("Event of Default") hereunder:
8.1......Failure to Pay. Failure to pay any principal, interest or other
sums due to Lender under this Agreement or any other Loan Document, within five
days of when due.
8.2......Breach of Representations and Warranties, Affirmative, Negative or
Financial Covenants. Failure of Borrower to observe or perform any term or
condition, or failure to comply with any representation or warranty, set forth
in Article 2, Article 4, Article 5, Article 6, or Article 7 hereof.
8.3......Breach of Other Covenants. Failure of Borrower to observe or
perform any term or condition of this Agreement (other than those terms and
conditions described in Sections 8.1 and 8.2 hereof), and such failure continues
for 30 days after the earlier of (a) Borrower's discovery or knowledge of such
failure and (b) Lender's dispatch of notice to Borrower of such failure.
8.4......Breach of Warranty. Any of Borrower's representations or
warranties made herein or in any statement or certificate at any time given in
writing pursuant hereto or in connection herewith (other than those described in
Section 8.2 hereof) shall be or become false or misleading in any material
respect, or if any such representation, warranty, statement or certification is
withdrawn.
8.5......Breach Under Any Other Loan Document. Any default or event of
default, as the case may be, in the observance or performance by Borrower or any
other Person (excluding Lender) of any term or condition of any other Loan
Document or any other document, instrument or agreement with or in favor of
Lender entered into by or binding upon Borrower or any such other Person, and
the continuation thereof beyond any applicable period of grace or cure provided
with respect thereto.
8.6......Default Under Agreements with Other Persons. Any default by
Borrower (a) in the payment of any recourse Indebtedness (other than
Indebtedness owing to Lender), or (b) in the observance or performance of any
conditions, covenants or agreements related or given with respect thereto or any
other agreement, the failure to observe or perform under which could constitute
a Material Adverse Change and, in each case, continuation thereof beyond any
applicable grace or cure period with respect thereto.
8.7......Judgments. Any uninsured money judgment in excess of $500,000,
writ or warrant of attachment, or similar process shall be entered or filed
against Borrower or any of its assets and shall remain unvacated, unbounded or
unstayed for a period of 20 days or in any event later than 5 days prior to the
date of any proposed sale thereunder.
8.8......Ownership. If there shall be any change in the management,
ownership or control of Borrower, whether by reason of incapacity, death,
resignation, termination or otherwise, which, in Lender's sole judgment, shall
constitute a Material Adverse Change.
8.9......ERISA Compliance. Failure by Borrower to meet the minimum funding
requirements under ERISA with respect to any pension plan established or
maintained by it; the occurrence of any "reportable event," as defined in ERISA,
which could constitute grounds for termination by the PBGC of any pension plan
or for the appointment by the appropriate United States District Court of a
trustee to administer such pension plan, and such reportable event is not
corrected and such determination is not revoked within 30 days after notice
thereof has been given to the plan administrator or Borrower, as the case may
be; or the institution of any proceedings by the PBGC to terminate any such
pension plan or to appoint a trustee by the appropriate United States District
Court to administer such pension plan.
8.10.....Insolvency; Receiver or Trustee. Borrower shall become insolvent;
or admit its inability to pay its debts as they mature; or make an assignment
for the benefit of creditors; or apply for, consent to or acquiesce in the
appointment of a trustee, receiver, liquidator, conservator or custodian for it
or for a substantial part of its property or business.
8.11.....Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against Borrower and, if
instituted against it, shall not be dismissed within 45 days thereafter.
8.12.....Security Interest. This Agreement or any other Loan Document
ceases to be in full force and effect (including the failure of this Agreement
or any other Loan Document to create a valid and perfected security interest or
lien on the Collateral) at any time and for any reason.
8.13.....Cessation of Business. Borrower shall voluntarily suspend its
business.
8.14.....Material Adverse Change. Any change which, in the reasonable
opinion of Lender, has resulted or could result in a Material Adverse Change.
8.15.....Attachments. If any material portion of Borrower's properties or
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any third Person and such
attachment, seizure, writ or distress warrant or levy has not been removed,
discharged or rescinded within 10 days, or if Borrower is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs, or if a judgment or other claim becomes a
lien or encumbrance upon any material portion of Borrower's assets, or if a
notice of lien, levy, or assessment is filed of record with respect to
Borrower's assets by the United States Government, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or governmental
agency, and the same is not paid within 10 days after Borrower receives notice
thereof, provided that none of the foregoing shall constitute an Event of
Default where such action or event is stayed or an adequate bond has been posted
pending a good faith contest by Borrower (provided that no credit extensions
will be required to be made during such stay period).
8.16.....Other Defaults. Borrower shall commit or do or fail to commit or
do any act or thing which would constitute an event of default under any of the
terms of any other recourse agreement, document or instrument executed or to be
executed by it concerning the obligation to pay money and the result of such
action or inaction is to cause the amounts immediately due under such obligation
(either by the terms of the obligation or by acceleration of the indebtedness)
to be an amount in excess of $1,000,000.
9. LENDER'S RIGHTS AND REMEDIES UPON EVENT OF DEFAULT
9.1......Rights and Remedies. Upon the occurrence of an Event of Default,
Lender may without notice of its election and without demand, do any one or more
of the following, all of which are authorized by Borrower:
9.1.1 Declare all Obligations, whether evidenced by this Agreement, by any
of the other Loan Documents, or otherwise, immediately due and payable;
provided, however, that upon the occurrence of an Event of Default described in
Section 8.11, all Obligations shall become immediately due and payable without
any action by Lender;
9.1.2 Terminate the commitment of Lender to lend and cease advancing money
or extending credit to or for the benefit of Borrower under this Agreement,
under any of the other Loan Documents, or under any other agreement between
Borrower and Lender; provided, however, that Lender shall have no duty to make
advances while any Event of Default or Unmatured Event of Default exists
notwithstanding any cure period provided for herein;
9.1.3 Terminate this Agreement and any of the other Loan Documents as to
any future liability or obligation of Lender, but without affecting Lender's
rights and security interests in the Collateral and without affecting the
Obligations;
9.1.4 Settle or adjust disputes and claims directly with Account debtors,
Lessees, or Debtors for amounts, upon terms and in whatever order that Lender
reasonably considers advisable;
9.1.5 Without notice or demand upon Borrower, collect the Accounts, Leases,
Loan Contracts and Inventory proceeds and give notice of assignment to, and
collect from, any and all Account debtors, Lessees and Debtors;
9.1.6 Without notice to or demand upon Borrower, make such payments and do
such acts as Lender considers necessary or reasonable to protect its security
interest in the Collateral. Borrower agrees to assemble the Collateral if Lender
so requires, and to deliver or make available to Lender all or any portion of
the Collateral and any and all certificates of title and other documents
relating thereto as Lender may designate. Borrower authorizes Lender to enter
the premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any encumbrance, charge, or lien which in Lender's determination appears to be
prior or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of Borrower's owned premises, Borrower
hereby grants Lender a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of Lender's rights or
remedies provided herein, at law, in equity, or otherwise. All of the foregoing
are subject to the rights of any Lessees;
9.1.7 Without notice to or demand upon Borrower, set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Lender, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Lender;
9.1.8 Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. Lender is hereby granted a license or other right, solely pursuant
to the provisions of this Section 9.1, to use, without charge, Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with
Lender's exercise of its rights under this Section 9.1, Borrower's rights under
all licenses and all franchise agreements shall inure to Lender's benefit;
9.1.9 Sell the Collateral at either a public or private sale, or both, by
way of one or more contracts or transactions, for cash or on terms, in such
manner and at such places (including Borrower's premises) as Lender determines
is commercially reasonable, and apply any proceeds to the Obligations in
whatever manner or order Lender deems appropriate; provided, however, that
Lender shall have no obligation to clean-up or otherwise prepare the Collateral
for sale;
9.1.10 Lender may credit bid and purchase at any public sale, or at any
private sale as permitted by law;
9.1.11 In addition to any other rights, relief or remedies afforded Lender,
to the extent permitted by applicable law without notice to or consent and
completely without regard to the adequacy of any security for the Obligations,
Lender may have a receiver appointed as a matter of right, who may be an
employee of Lender and may serve without bond, and all fees of such receiver and
his or her attorney shall become part of the Obligations secured by this
Agreement and payable from the disposition of the Collateral, payable upon
demand with interest at the rate applicable to Loans hereunder until repaid, and
such receiver, in addition to any other rights to which he shall be entitled,
shall be authorized to sell, foreclose or conduct a complete foreclosure on all
Collateral contemplated by this Agreement for the benefit of Lender, pursuant to
provisions of applicable law; and
9.1.12 Any deficiency that exists after disposition of the Collateral as
provided above shall be paid immediately by Borrower.
9.2......Power of Attorney. Borrower hereby irrevocably makes, constitutes,
and appoints Lender (and any of Lender's designated officers, employees or
agents) as Borrower's true and lawful attorney to, upon the occurrence and
during the continuance of an Event of Default: (a) send requests for
verification of Accounts, Leases, Loan Contracts, Indirect Leases or Indirect
Loan Contracts or notify Account debtors, Lessees and Debtors of Lender's
security interest in the Accounts, Leases and Loan Contracts; (b) endorse
Borrower's name on any checks or other forms of payment or security that may
come into Lender's possession; (c) open mail addressed to Borrower; (d) sign
Borrower's name on any (i) invoice or bill of lading relating to any Account,
Lease, Loan Contract, Indirect Lease or Indirect Loan Contract, (ii) drafts
against Account debtors, Lessees, or Debtors, (iii) schedules and assignments of
Accounts, Leases, Loan Contracts, Indirect Leases and Indirect Loan Contracts,
(iv) verifications of Accounts, Leases, Loan Contracts, Indirect Leases and
Indirect Loan Contracts, and (v) notices to Account debtors, Lessees and
Debtors; (e) dispose of any Collateral; (f) make, settle, and adjust all claims
under and decisions with respect to Borrower's policies of insurance; (g) settle
and adjust disputes and claims respecting the Accounts directly with Account
debtors, Leases directly with the Lessees and Loan Contracts directly with the
Debtors, for amounts and upon terms which Lender determines to be reasonable;
(h) to file, in its sole discretion, one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral without the
signature of Borrower where permitted by law; and (i) transfer the Intellectual
Property Collateral into the name of Lender or a third party to the extent
permitted under the Code; provided, however, that Lender or any of its designees
or attorneys-in-fact may exercise such power of attorney to sign the name of
Borrower on any of the documents described in Section 2.6, and to do any and all
things necessary in the name and on behalf of Borrower in order to perfect, or
continue the perfection of, Lender's security interests in the Collateral,
regardless of whether an Event of Default has occurred or is continuing.
Borrower agrees that neither Lender, nor any of its designees or
attorneys-in-fact, will be liable for any act of commission or omission, or for
any error of judgment or mistake of fact or law with respect to the exercise of
the power of attorney granted under this Section 9.2, other than as a result of
its or their gross negligence or willful misconduct. The appointment of Lender
as Borrower's attorney in fact and each and every one of Lender's rights and
powers granted under this Section 9.2, being coupled with an interest, shall be
irrevocable until all of the Obligations have been indefeasibly paid in full,
Lender's obligation to provide advances hereunder has been terminated, and all
Borrower's duties hereunder have been performed in full.
9.3......Payment of Expenses by Lender. If Borrower fails to pay any
amounts or furnish any required proof of payment due to third persons or
entities, as required under the terms of this Agreement, then Lender may do any
or all of the following after reasonable notice to Borrower: (a) make payment of
the same or any part thereof; (b) set up such reserves as Lender deems necessary
to protect Lender from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type discussed in Section 5.3 hereof, and
take any action with respect to such policies as Lender deems prudent. Any
amounts so paid or deposited by Lender shall be immediately due and payable, and
shall bear interest at the rate applicable to the Loans from time to time, and
shall be secured by the Collateral. Any payments made by Lender shall not
constitute an agreement by Lender to make similar payments in the future or a
waiver by Lender of any Event of Default under this Agreement.
9.4......No Obligation to Pursue Others. Lender shall have no obligation to
attempt to satisfy the Obligations by collecting them from any third Person
which may be liable for them or any portion thereof, and Lender may release,
modify or waive any collateral provided by any other Person as security for the
Obligations or any portion thereof, all without affecting Lender's rights
against Borrower. Borrower waives any right it may have to require Lender to
pursue any third Person for any of the Obligations.
9.5......Compliance with Other Laws. Lender may comply with any applicable
state or federal law requirements in connection with a disposition of the
Collateral, and Lender's compliance therewith will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
9.6......Warranties. Lender may sell the Collateral without giving any
warranties as to the Collateral. Lender may specifically disclaim any warranties
of title or the like. This procedure will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.
9.7......Sales on Credit. If Lender sells any of the Collateral upon
credit, Borrower will be credited only with payments actually made by the
purchaser, received by Lender and applied to the indebtedness of the purchaser.
In the event that the purchaser fails to pay for the Collateral, Lender may
resell the Collateral and Borrower will be credited with the proceeds of such
sale.
9.8......No Marshaling. Lender shall be under no obligation to marshal any
assets in favor of Borrower, or against or in payment of the Obligations or any
other obligation owned to Lender by Borrower or any other Person. Furthermore,
Lender may, at its option, recover from any of the Collateral or from any
Borrower, regardless of which Borrower received the proceeds of the Revolving
Loans made.
9.9......Government Consents. Upon the exercise by Lender of any power,
right, privilege, or remedy pursuant to this Agreement which requires any
consent, approval, registration, qualification, or authorization of any federal,
state, local or other governmental authority, Borrower agrees to execute and
deliver, or will cause the execution and delivery of, all applications,
certificates, instruments, assignments, and other documents and papers that
Lender or any purchaser of the Collateral may be required to obtain for such
governmental consent, approval, registration, qualification, or authorization.
9.10.....Lender's Liability for Collateral. So long as Lender complies with
its obligations under the Code, Lender shall not in any way or manner be liable
or responsible for: (a) the safekeeping of the Collateral; (b) any loss or
damage thereto occurring or arising in any manner or fashion from any cause; (c)
any diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.
9.11.....Waiver of Defaults. No Event of Default shall be waived by Lender
except in a written instrument specifying the scope and terms of such waiver and
signed by an authorized officer of Lender, and such waiver shall be effective
only for the specific time(s) and purpose(s) given. No single or partial
exercise of any right, power, or privilege hereunder, nor any delay in the
exercise thereof, shall preclude other or further exercise of Lender's rights.
No waiver of any Event of Default shall extend to any other or further Event of
Default. No forbearance on the part of Lender in enforcing any of its rights or
remedies hereunder or any of the other Loan Documents shall constitute a waiver
of any of its rights or remedies. Borrower expressly agrees that this Section
may not be waived or modified by Lender by course of performance, estoppel or
otherwise.
9.12.....Remedies Cumulative. Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative and
not alternative. Lender shall have all other rights, powers and remedies not
inconsistent herewith as provided under the Code, by law, or in equity against
Borrower or any other person, including but not limited to Lender's rights of
setoff or banker's lien. No exercise by Lender of one right or remedy shall be
deemed an election, and no waiver by Lender of any Event of Default on
Borrower's part shall be deemed a continuing waiver. No delay by Lender shall
constitute a waiver, election, or acquiescence by it. No waiver by Lender shall
be effective unless made in a written document signed on behalf of Lender and
then shall be effective only in the specific instance and for the specific
purpose for which it was given.
9.13.....Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Lender on which Borrower may in any way be
liable.
10. MISCELLANEOUS PROVISIONS
10.1.....Failure or Indulgence Not Waiver. No failure or delay on the part
of Lender or any holder of notes issued hereunder, in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this Agreement or any note (s) issued in
connection with a Loan that Lender may make hereunder, are cumulative to, and
not exclusive of, any rights or remedies otherwise available.
10.2.....Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any Loan Document, nor consent to any departure by Borrower,
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender, and then such waiver or consent shall be effective only in
the specific instance(s) and for the specific time(s) and purposes(s) for which
given.
10.3.....Construction; Interpretation.
10.3.1 Neither this Agreement nor any uncertainty or ambiguity herein shall
be construed or resolved against Lender or Borrower, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto.
10.3.2 Unless the context of this Agreement clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, the term "including" is not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning represented by the
phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. An Event of Default shall "continue"
or be "continuing" until such Event of Default has been cured or waived in
writing by Lender. Section, subsection, clause, schedule, and exhibit references
are to this Agreement unless otherwise specified. Any reference in this
Agreement or in the Loan Documents to this Agreement or any of the Loan
Documents shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, and supplements, thereto
and thereof, as applicable. All accounting terms shall have the meanings applied
under GAAP unless otherwise specified. All section titles appear as a matter of
convenience only and shall not affect the interpretation of this Agreement.
10.3.3 Each covenant hereunder shall be given independent effect so that if
a particular action or condition is not permitted by such covenant, the fact
that it would be permitted by an exception to, or would be otherwise within the
limitations of, another covenant shall not avoid the occurrence of an Event of
Default.
10.4.....Cumulative Effect; Conflict of Terms. The provisions of the other
Loan Documents are hereby made cumulative with the provisions of this Agreement.
Except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
10.5.....Counterparts; Entire Agreement. This Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement. This Agreement, together with the other Loan Documents, constitute
the entire understanding among the parties hereto with respect to the subject
matter hereof and supersedes any prior agreements, written or oral, with respect
thereto.
10.6.....Lender's Expenses and Attorney's Fees. If, at any time or times
regardless of whether an Event of Default then exists, Lender pays or incurs
legal or accounting expenses or any other costs or expenses in connection with
(a) the negotiation and preparation of this Agreement or any of the other Loan
Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents, (b) the perfection of, and continuation of perfection of,
any security interest in any of the Collateral; (c) the administration of this
Agreement or any of the other Loan Documents and the transactions or the
Collateral contemplated hereby and thereby, (d) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Lender, Borrower, or
any other person) in any way relating to the Collateral, this Agreement or any
of the other Loan Documents or Borrower's affairs, (e) any attempt to enforce
any rights of Lender against Borrower or any other person which may be obligated
to Lender by virtue of this Agreement or any of the other Loan Documents,
whether or not suit is filed, or (f) any attempt to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral, then all such legal and accounting expenses (including all
reasonable attorneys' fees) together with all other costs and expenses of Lender
shall be payable by Borrower without demand after notice, and Borrower shall
promptly pay all such amounts payable to Lender under this Section 10.6, and all
such amounts shall be secured by the Collateral and shall bear interest from the
date of such notice until paid in full at the rate applicable to the Loans from
time to time. If suit is brought to enforce any provision of this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys' fees and
court costs in addition to any other remedy or recovery awarded by the court.
10.7.....Taxes and Fees. Should any tax (other than a tax based upon the
net income of Lender) or recording or filing fee become payable in respect of
this Agreement or any of the Loan Documents, any of the Collateral, or any
amendment, modification or supplement hereof or thereof, Borrower agrees to pay
such taxes (or reimburse Lender therefor), together with any interest or
penalties thereon, and agrees to hold Lender harmless with respect thereto.
10.8.....Successors and Assigns; Participations; Disclosure. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
Lender's prior written consent and any prohibited assignment or transfer by
Borrower shall be absolutely void. No consent to an assignment by Lender shall
release Borrower from its Obligations. Lender may assign this Agreement and its
rights and duties hereunder to any Person or Persons with assets of
$1,000,000,000 or more and no consent or approval by Borrower is required in
connection with any such assignment. Lender reserves the right to sell, assign,
transfer, negotiate, or grant participations in all or any part of, or any
interest in Lender's rights and benefits hereunder. In connection with any such
actual or potential assignment or participation, Lender may disclose all
documents and information which Lender now or hereafter may have relating to
Borrower or its financial condition and business activities. To the extent that
Lender assigns its rights and obligations hereunder to a third Person, Lender
thereafter shall be released from such assigned obligations to Borrower and such
assignment shall effect a novation between Borrower and such third Person.
10.9.....Applicable Law. This Agreement, the other Loan Documents and any
and all other agreements and instruments required by Lender in connection
therewith shall be governed by and construed according to the internal laws of
the state of California, except to the extent that the Code provides for the
application of the laws of another state and except to the extent expressed to
the contrary in any of the Loan Documents. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
10.10....Notices. All notices, requests, reports and other communications
pursuant to this Agreement or the other Loan Documents shall be in writing, and
delivered by hand, by fax, by commercial overnight delivery or by certified
mail, return receipt requested, except for routine reports which may be sent by
any of those methods or by ordinary first class mail. In each case, such notice,
request, report or other communication shall be addressed to the parties as set
forth on the signature page of this Agreement, or to such other address as a
party shall have designated in writing in accordance with this Section 10.10.
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand to such party at the address
specified herein or, if sent by mail, on the third Business Day following the
day it was deposited in the mail, postage prepaid, or if sent by commercial
overnight delivery service on the second Business Day following deposit of the
item with commercial overnight delivery service, or in the case of fax notice,
when transmitted as aforesaid, confirmation received, except that Borrowing
Notices and Borrower's Reports shall not be deemed to have been made until
actually received by Lender. A notice, request, report or other communication
sent to any one Borrower shall be deemed a notice to each Borrower. The giving
of at least 5 days' notice before Lender shall take any action described in any
notice shall conclusively be deemed reasonable for all purposes; provided,
however, that this shall not be deemed to require Lender to give such 5 days'
notice, or any notice, if not specifically required to do so in this Agreement.
10.11....Further Action. Borrower shall, from time to time, upon written
request of Lender, promptly make, execute acknowledge and deliver, or cause to
be made, executed, acknowledged and delivered, all such further and additional
instruments, and promptly take all such further action as may be required to
carry out the intent and purpose of this Agreement and the other Loan Documents,
and to provide for the Loans under and payment of the Notes, according to the
intent and purpose herein and therein expressed.
10.12....Severability. In case any one or more of the obligations of
Borrower under this Agreement, any Note, or any of the other Loan Documents
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining obligations of Borrower shall not
in any way be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of Borrower under this Agreement, the Notes or
any of the other Loan Documents in any other jurisdiction.
10.13....Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of Borrower made herein or
in any of the Loan Documents, or in any certificate, report, financial statement
or other document furnished by or on behalf of Borrower in connection with this
Agreement or any of the Loan Documents, shall be deemed to have been relied upon
by Lender, notwithstanding any investigation heretofore or hereafter made by
Lender or on Lender's behalf, and those covenants and agreements of Borrower in
this Agreement (together with any other indemnities of Borrower contained
elsewhere in this Agreement or in any of the Loan Documents) shall survive the
termination of this Agreement and the repayment in full of the Indebtedness.
10.14....Effective Upon Execution. This Agreement shall become effective
upon the execution hereof by Lender and Borrower and shall remain effective
until the Indebtedness under this Agreement and each of the Notes shall have
been repaid and discharged in full and no commitment to extend any credit
hereunder (whether optional or obligatory) remains outstanding.
10.15....Confidentiality. In handling any confidential information, Lender
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Agreement,
except that disclosures of such information may be made: (a) to the subsidiaries
or Affiliates of Lender in connection with their present or prospective business
relations with Borrower; (b) to prospective transferees or purchasers of any
interest in the Loans, 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 Lender; and (e) as Lender may
deem appropriate in connection with the exercise of any remedies hereunder.
Confidential information hereunder shall not include information that either:
(i) is in the public domain or in the knowledge or possession of Lender when
disclosed to Lender, or becomes part of the public domain after disclosure to
Lender through no fault of Lender; or (ii) is disclosed to Lender by a third
party, provided Lender does not have actual knowledge that such third party is
prohibited from disclosing such information.
10.16....Time of the Essence. Time is hereby declared to be of the essence
of this Agreement and every part hereof.
10.17....Joint and Several Liability. Notwithstanding how Loans and
repayments may be allocated among the Borrowers, the Borrowers have joint and
several liability to Lender for all Obligations of any Borrower under the Loan
Documents.
10.18....Waiver of Jury Trial.. EACH OF THE UNDERSIGNED BORROWER AND EACH
LENDER ACKNOWLEDGES THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT
THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE
OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY,
AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF
LITIGATION REGARDING THE INTERPRETATION, PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
This Agreement is duly executed on behalf of each of the parties hereto by
duly authorized officers as of the date first above written.
COMERICA BANK-CALIFORNIA, ICON CASH FLOW PARTNERS L.P. SEVEN,
a Delaware Limited
a California banking corporation Partnership
By: ICON Capital Corp.,
its general partner
By: By:
Name: Name:
Title: Title:
Address for Notices: Address for Notices:
1331 North California Blvd. ICON Cash Flow Partners L.P. Seven
Suite 400 Attention: General Counsel
Walnut Creek, California 94596 100 5th Avenue, 10th Floor
Facsimile No.: (925) 941-1999 New York, New York 10011
Facsimile No.: (212) 418-4739
ICON INCOME FUND EIGHT A L.P.,
a Delaware limited partnership
By: ICON Capital Corp., its general partner
By:________________________________
Name:______________________________
Title:_______________________________
Address for Notices:
ICON INCOME FUND EIGHT A L.P.
Attention: General Counsel
100 5th Avenue, 10th Floor
New York, New York 10011
Facsimile No.: (212) 418-4739
ICON INCOME FUND EIGHT B L.P.,
a Delaware Limited Partnership
By: ICON Capital Corp.,
its general partner
By:________________________________
Name:______________________________
Title:_______________________________
Address for Notices:
ICON INCOME FUND EIGHT B L.P.
Attention: General Counsel
100 5th Avenue, 10th Floor
New York, New York 10011
Facsimile No.: (212) 418-4739
Lender shall endeavor to send a copy of any Notice sent to any Borrower
(except for routine reports or correspondence) to the following address,
but Lender shall incur no liability to Borrower, and such notice shall be
effective, even if Lender fails to do so.
ICON CAPITAL CORP.
Attention: President
260 California Street
San Francisco, California 94111
Facsimile No.: (415) 981-4298
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of May 30, 2002 by and
between ICON Cash Flow Partners L.P. Seven, a Delaware limited partnership, ICON
Income Fund Eight A, a Delaware limited partnership, and ICON Income Fund Eight
B, a Delaware limited partnership, on the one hand, and Comerica
Bank-California, a California banking corporation, on the other hand, the
following terms shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
Accounts - all 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 therefor, irrespective of whether earned by
performance.
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 - the Loan and Security Agreement referred to in the first sentence of
this Appendix A, all Schedules and Exhibits thereto, and this Appendix A,
together with all amendments, modifications and supplements thereto, and
restatements thereof.
Bankruptcy Code - the United States Bankruptcy Code (11 U.S.C. (Section) 101 et
seq.), as amended, and any successor statute.
Base Rate - means that variable rate of interest so announced by Lender at its
headquarters office in San Jose, California as its "Base Rate" from time to
time, which serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and which rate may not be
the lowest rate of interest charged by Lender to any of its customers.
Beneficial Interest - means a beneficial interest in a trust, a partnership
interest in a partnership, or a membership interest in a limited liability
company.
Borrower's Books - means all of Borrower's books and records including: ledgers;
records indicating, summarizing, or evidencing Borrower's properties or assets
(including the Collateral) or liabilities; all information relating to
Borrower's business operations or financial condition; and all computer
programs, disk or tape files, printouts, runs, or other computer prepared
information.
Borrower's Report - an irrevocable notice from Borrower to Lender of Borrower's
request for a borrowing, pursuant to the terms of Section 1.1.3 and in the form
of Exhibit 1 hereto.
Borrowing Base - means (a) 85% of the Present Value of the Eligible Borrowing
Base Contracts, with the limitation that no more than $1,000,000.00 in Revolving
Loans, in the aggregate, shall be based on a contract or contracts involving the
same Lessee or Debtor unless otherwise approved in writing by Lender (to the
extent that the $1,000,000.00 limitation is exceeded in the Eligible Borrowing
Base Contracts identified on Schedule 1, Lender approves that excess); plus (b)
15% of the Present Value of the Eligible Residual Values of the Eligible
Borrowing Base Contracts, with the limitation that no more than $1,000,000.00 in
Revolving Loans shall be based on this subcategory.
Business Day - any day that is not a Saturday, Sunday, or other day on which
banks in the State of California are authorized or required to close.
Cash - items designated as cash under GAAP.
Cash Equivalents - items designated as cash equivalents under GAAP.
Chattel Paper - all chattel paper (including tangible chattel paper and
electronic chattel paper) (as such terms are defined in the Code).
Closing Date - the date of execution of this Agreement.
Code - the California Uniform Commercial Code, as amended or supplemented from
time to time, including revised Division 9 of the Uniform Commercial
Code-Secured Transactions, effective July 1, 2001. Any and all terms used in the
Agreement which are defined in the Code shall be construed and defined in
accordance with the meaning and definition ascribed to such terms under the
Code, unless otherwise defined herein.
Collateral - all of Borrower's right, title, and interest in and to each of the
following:
(a) the Accounts;
(b) Borrower's Books;
(c) the Chattel Paper;
(d) the Deposit Accounts;
(e) the Equipment;
(f) the General Intangibles;
(g) the Inventory;
(h) the Investment Property;
(i) the Leases;
(j) the Letter of Credit Rights;
(k) the Loan Contracts;
(l) the Negotiable Collateral;
(m) the Intellectual Property Collateral;
(n) the Joint Ventures;
(o) the Trusts;
(p) the Partnerships;
(q) any Person or entity in which Borrower owns a beneficial
interest;
(r) the Supporting Obligations;
(s) any money, or other assets of Borrower that now or hereafter
come into the possession, custody, or control of Lender:
(t) The leases, loan contracts and other property described in
Schedule 1 hereto;
(u) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering
any or all of the Collateral, or other tangible or intangible
property received or receivable from the sale, exchange,
collection, lease, license, use or other disposition of any of
the foregoing, or any portion thereof or interest therein, and
the proceeds thereof.
Notwithstanding the foregoing, the following property shall not be Collateral
during such time (and only during such time) as each of the following conditions
is satisfied: (i) the property is subject to a senior Lien on behalf of a lender
other than Lender (i.e., other than Comerica Bank-California); (ii) the terms of
the senior Lien prohibit a subordinate Lien; (iii) such senior Lien remains in
effect and the debt secured by it has not been paid off; (iv) the lender holding
such senior Lien has no recourse to the assets of Borrower other than this
specific property (except for recourse arising from a breach by Borrower of its
representation or warranty that (A) Borrower has the status and authority
enabling it to properly enter into the transaction, (B) entering into the
transaction does not conflict with any other agreement to which Borrower is a
party, and (C) Borrower has not committed fraud in connection with the
transaction and the like); and (v) the property is not subject to a current
Revolving Loan by Lender (i.e., by Comerica Bank-California). Without limiting
the foregoing, any property of Borrower which is excluded from the definition of
"Collateral" shall be included within such definition, without further action or
agreement of Borrower or Lender, if, and at such time, as any legal or
contractual prohibition on the granting of a security interest in such property
by Borrower to Lender ceases to be in effect.
Copyrights - any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret, now or hereafter existing, created, acquired or
held.
Debtor - means a borrower under a Loan Contract or Indirect Loan Contract;
Deposit Account - any demand, time, savings, passbook or similar account now or
hereafter maintained by or for the benefit of Borrower with an organization that
is engaged in the business of banking including a bank, savings bank, savings
and loan association, credit union and trust companies, and all funds and
amounts therein, whether or not restricted or designated for a particular
purpose.
Discount Rate - means the rate of interest equal to one percent (1.00%) per
annum in excess of the Base Rate, which shall vary concurrently with any change
in the Base Rate.
Documents - any and all documents and documents of title, including documents of
title, bills of lading, dock warrants, dock receipts, warehouse receipts and
other documents of Borrower, whether or not negotiable, and includes all other
documents which purport to be issued by a bailee or agent and purport to cover
goods in any bailee's or agent's possession which are either identified or are
fungible portions of an identified mass, including such documents of title made
available to Borrower for the purpose of ultimate sale or exchange of goods or
for the purpose of loading, unloading, storing, shipping, transshipping,
manufacturing, processing or otherwise dealing with goods in an manner
preliminary to their sale or exchange, in each case whether now existing or
hereafter acquired.
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, and no default under
such contract has been waived, except that past due payments that are deemed
acceptable under paragraph (b), below, shall not cause an otherwise Eligible
Borrowing Base Contract to become ineligible;
(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 the
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 Lender 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
validity transferred by such Person to Borrower or Lender;
(e) If the contract is a lease, the lease and the equipment leased
thereunder are owned by Borrower and are subject to no Lien (other than
Permitted Liens) in favor of anyone other than Lender 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 security interest 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) Lender has a perfected first priority security interest in the
Revolving Loan Contract and, if the Revolving Loan Contract is a lease, Lender
has a perfected first-priority security interest in the equipment subject to
that lease (if the Revolving Loan Contract is an Indirect Lease or Indirect Loan
Contract, Lender has a first priority security interest 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 in favor of anyone other than Lender, and Borrower has a
perfected first priority security interest in the equipment that secures the
loan (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 equipment subject to the contract has been delivered to a customer
for business use and is located in the United States (unless Lender agrees in
writing to waive or modify this requirement as to specified equipment);
(i) The contract is written; the contract has not been amended or modified
except by a written document delivered to Lender; 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 the
best of 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; 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 the best of
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; and
(j) All existing originals of the contract, 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, have been delivered to, and are in the
possession of Lender (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");
(k) If the Revolving Loan Contract is an Indirect Lease or Indirect Loan
Contract, Borrower shall have, prior to the making of the Revolving Loan,
disclosed to Lender 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.
Eligible Residual Value - means Borrower's interest in the estimated value, at
the lease termination date, of equipment subject to a lease that is an Eligible
Borrowing Base Contract, as calculated by Borrower in its ordinary course of
business and in accordance with generally accepted industry standards for
valuation of such equipment. If a lease is an Indirect Lease, however, the
Eligible Residual Value shall be that percentage of the foregoing as corresponds
to Borrower's Beneficial Interest in the Person that is the lessor. If another
Person has an interest in a residual sharing agreement and/or a remarketing
agreement with respect to such equipment, the Eligible Residual Value shall be
net of that other Person's interest.
Environmental Law(s) - means all laws, codes, ordinances, rules, regulations,
orders, decrees and directives issued by any federal, state, local, foreign or
other governmental or quasi-governmental authority or body (or any agency,
instrumentality or political subdivision thereof) pertaining to the environment
or to any hazardous materials or wastes, toxic substances, flammable, explosive
or radioactive materials, asbestos, and/or other similar materials.
Equipment - all of Borrower's machinery, machine tools, apparatus, motors,
equipment, fittings, furniture, furnishings, fixtures, vehicles (including motor
vehicles and trailers), tools, parts, goods (including software imbedded in such
goods) and other tangible personal property (other than Inventory) of every kind
and description used in Borrower's operations or owned by Borrower or in which
Borrower has an interest, whether now owned or hereafter acquired by Borrower
and wherever located, and all parts, accessories, and special tools, and all
increases and accessions thereto and substitutions and replacements therefor.
Event of Default - has the meaning set forth in Article 8 hereof.
Funded Debt - as of any date of determination, all liabilities of Borrower of
whatever nature or duration including indebtedness for borrowed money,
obligations under capital leases, and all other indebtedness owed to other
Persons (including obligations under capital leases and letter of credit
obligations), excluding trade debt incurred in the ordinary course of business
to suppliers.
GAAP - generally accepted accounting principles as in effect from time to time
in the United States, consistently applied.
General Intangibles - all of Borrower's present and future general intangibles
and other personal property (including payment intangibles, electronic Chattel
Paper, contract rights, rights arising under common law, statutes, or
regulations, choses or things in action, goodwill, patents, trade names,
trademarks, servicemarks, trade secrets, inventions, copyrights, blueprints,
drawings, plans, diagrams, schematics, purchase orders, customer lists, monies
due or recoverable from pension funds, route lists, rights to payment and other
rights under any royalty or licensing agreements, infringement claims, software,
information contained on computer disks or tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral.
Governmental Authority - any federal, state, local or other governmental
instrumentality or authority or subdivision thereof, domestic or foreign.
Indebtedness - all (a) obligations of Borrower for borrowed money, (b)
obligations of Borrower evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations of Borrower in respect of
letters of credit, bankers acceptances, interest rate swaps, or other financial
products, (c) obligations of Borrower under capital leases, (d) obligations or
liabilities of others secured by a Lien on any property or asset of Borrower,
irrespective of whether such obligation or liability is assumed, and (e) any
obligation of Borrower guaranteeing or intended to guarantee (whether
guaranteed, endorsed, co-made, discounted, or sold with recourse to Borrower)
any indebtedness, lease, dividend, letter of credit, or other obligation of any
other Person.
Indirect Lease - 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 - 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.
Insolvency Proceeding - any proceeding commenced by or against any Person under
any provision of the Bankruptcy Code or under any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.
Instruments - any and all negotiable instruments, and every other writing which
evidences a right to the payment of a monetary obligation, in each case whether
now existing or hereafter acquired.
Intellectual Property Collateral - all of Borrower's right, title, and interest
in and to the following:
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all intellectual property rights
in computer software and computer software products now or hereafter existing,
created, acquired or held;
(c) Any and all design rights which may be available to Borrower now or
hereafter existing, creating, acquired or held;
(d) Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;
(e) All licenses or other rights to use any of the Copyrights, Patents or
Trademarks, and all license fees and royalties arising from such use to the
extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of the Copyrights,
Trademarks or Patents; and
(g) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
Inventory - all of Borrower's presently existing and hereafter acquired goods
(including software imbedded in such goods), merchandise and other personal
property which are held for sale or lease, including those held for display or
demonstration or out on lease or consignment, or to be furnished under a
contract of service or are raw materials, work in process or materials used or
consumed, or to be used or consumed in Borrower's business, and shall include
any returns or repossessions thereof and all property rights, patents,
copyrights, trademarks, plans, drawings, diagrams, schematics, assembly and
display materials relating thereto.
Investment Property - any and all of Borrower's presently existing and hereafter
acquired investment property (as defined in the Code).
Joint Venture - a joint venture in which Borrower has a beneficial interest,
including but not limited to a joint venture that is the lessor under a lease or
the lender under a loan contract.
Lease - 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.
Lending Office - Lender's office located at its address set forth on the
signature pages hereof, or such other office of Lender as it may hereafter
designate as its Lending Office by notice to Borrower.
Lessee - means a lessee under any Lease or Indirect Lease;
Letter of Credit Rights - any and all of Borrower's presently existing and
hereafter acquired letter of credit rights (as defined in the Code).
Lien - 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, and
also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
Loan Account - the Revolving Loan Account.
Loan Contract - 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 - the Agreement, all promissory notes executed by Borrower in
favor of Lender, any security agreements, guaranties, mortgages, deeds of trust,
environmental agreements, financing statements, guaranties, subordination
agreements or other documents with or in favor of Lender that relate to this
Agreement, and any other instruments, documents, or agreements entered into or
effective, now or in the future, in connection therewith, including but not
limited to the (a) Agreement Regarding EKA Chemicals, Inc. Lease, dated March
20, 2002, by and between Wells Fargo Bank Northwest, N.A., formerly known as
First Security Bank, National Association, as Trustee of the ICON/Nashville
Ferry Trust, ICON/Nashville Ferry LLC, ICON Cash Flow Partners L.P. Seven, ICON
Cash Flow Partners L.P. Six and ICON Cash Flow Partners L.P. Series E, on the
one hand, and Comerica Bank-California, on the other hand; and (b) Certificate
Regarding EKA Chemicals, Inc. Lease, dated March 20, 2002, executed by Wells
Fargo Bank Northwest, N.A., formerly known as First Security Bank, National
Association, as Trustee of the ICON/Nashville Ferry Trust, EKA Chemicals, Inc.
and Akzo Nobel, Inc. for the benefit of Comerica Bank-California.
Loans - all loans and advances of any kind made by Lender to Borrower pursuant
to the Agreement.
Long Term Capital Leases - as of any date of determination, all lease
obligations of Borrower or renewals or extensions thereof whose remaining term
exceeds 1 year.
Long Term Debt - as of any date of determination, all debts and other
obligations of Borrower for borrowed money and all renewals or extensions
thereof whose remaining term exceeds 1 year.
Material Adverse Change - a material adverse effect on (a) the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrower, (b) the business, prospects, operations,
results of operations, assets, liabilities or condition (financial or otherwise)
of ICON Capital Corp., (c) the business, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole, (d) the ability of Borrower or any Subsidiary or
Affiliate of Borrower to perform its obligations under the Loan Documents to
which it is a party or of Lender to enforce the Obligations or realize upon the
Collateral, (e) the value of the Collateral or the amount that Lender would be
likely to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral, (f) the validity or
enforceability of this Agreement, the other Loan Documents, or the rights and
remedies of Lender hereunder or thereunder, or (g) the priority of Lender's
liens with respect to the Collateral.
Maximum Revolving Amount - Seventeen Million Five Hundred Thousand Dollars
($17,500,000.00).
Negotiable Collateral - all of Borrower's present and future letters of credit,
advises of credit, certificates of deposit, notes, drafts, money, Instruments,
Documents, and tangible Chattel Paper.
Obligations - all Loans, advances, debt, principal, interest, fees, expenses,
costs and other amounts owed to Lender by Borrower pursuant to this Agreement,
any other agreement, or otherwise, together with all guaranties, covenants and
duties owing by Borrower to Lender of any kind or description, 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 Lender 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 others that Lender may
have obtained by assignment or otherwise. Notwithstanding the foregoing,
"Obligations" shall not include any agreement between Lender and a Borrower that
is not a Loan Document in which the obligations of Borrower are expressly
designated by Lender in writing as "non-recourse" or which Lender expressly
states in writing shall not be included within the definition of "Obligations"
in this Agreement.
Partnership - a partnership in which Borrower is a partner.
Patents - all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues
extensions and continuations-in-part of the same.
Permitted Liens - any: (a) Liens approved in writing by Lender 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 Lender's security interests; (c) Liens incurred in the
ordinary course of business of Borrower, except that (i) no Liens other than in
favor of Lender are permitted on any of the Leases, Loan Contracts and other
property identified in Schedule 1 or otherwise the subject of any Revolving
Loan, (ii) no Liens other than in favor of Lender are permitted on Borrower's
interest in any Person that is the lessor of an Indirect Lease or lender on an
Indirect Loan if such Indirect Lease or Indirect Loan was the subject of any
Revolving Loan, and (iii) no Lien is permitted on any equipment related to
clauses (i) or (ii) except in favor of Lender and, in the case of equipment
securing a Loan Contract, a Lien in favor of Borrower; (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
provided that the value of Borrower's interest in such equipment as shown on its
Books and in Borrower's calculation of Eligible Residual Value is net of such
other Person's interest; and (e) Liens on equipment subject to a Lease that are
expressly permitted by the terms of the Lease.
Person - any individual, sole proprietorship, corporation, limited liability
company, partnership, joint venture, trust, association, institution, public
benefit corporation, firm, or unincorporated organization, estate, joint stock
company or other similar organization, government agency or political
subdivision thereof, court, or other legal entity, whether acting in an
individual, fiduciary or other capacity.
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 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.
Real Property - means any estates or interests in real property now owned or
hereafter acquired by Borrower.
Regulation D - Regulation D of the Board of Governors of the Federal Reserve
System, as such regulation may be amended or supplemented from time to time.
Responsible Officer - the chief executive officer, chief financial officer or
chief operating officer of a Person, or such other officer, employee or agent of
such Person designated by a Responsible Officer in a writing delivered to
Lender.
Revolving Loan Account - has the meaning as set forth in Section 1.1.2 hereof.
Revolving Loan Contract - means a Lease, Loan Contract, Indirect Lease or
Indirect Loan Contract based on which Lender makes a Revolving Loan (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.
Revolving Loan Maturity Date - May 31, 2003.
Stock - means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a corporation or equivalent
entity, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Securities
Exchange Act of 1934).
Subordinated Debt - means any debt incurred by Borrower that is subordinated to
the debt owing by Borrower to Lender on terms reasonably acceptable to Lender
(and identified as being such by Borrower and Lender).
Subsidiary - of a Person means any corporation, partnership, limited liability
company, or other entity in which (i) any general partnership interest or (ii)
more than 50% of the Stock of which by the terms thereof having ordinary voting
power to elect the Board of Directors, managers or trustees of the entity, at
the time as of which any determination is being made, is owned by Borrower,
either directly or through an Affiliate.
Supporting Obligations - any and all of Borrower's presently existing and
hereafter acquired supporting obligations (as defined in the Code).
Tangible Net Worth - partners' equity less any value for goodwill, trademarks,
patents, copyrights, leaseholds, organizational expense and other similar
intangible items, and any amounts due from partners, officers and Affiliates.
Trademarks - any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Borrower connected with and symbolized by
such trademarks.
Trust - a trust in which Borrower has a beneficial interest, including but not
limited to a trust that is the lessor under a lease or the lender under a loan
contract.
Unmatured Event of Default - any condition or event which with the giving of
notice or lapse of time, or both, would, unless cured or waived become an Event
of Default.
SCHEDULE 1
LEASES, LOAN CONTRACTS AND RELATED PROPERTY
1. Schedule No. 03, dated May 16, 1997 between Varilease Corporation as
lessor and AZ3 as lessee, subject to Master Lease Agreement, dated April 25,
1997 between Varilease Corporation as Lessor and AZ3 as Lessee. Lessor's
interest assigned to Borrower 1 by means of Assignment and Assumption Agreement,
dated January 22, 1998. Borrower represents that Borrower 1 currently holds the
lessor's interest therein.
2. Equipment Schedule No. 101 dated November 10, 1998 between First
Commercial Capital Corp. as lessor and Saberliner Corporation, as lessee,
subject to Master Lease Agreement No. 1008MLSC dated November 10, 1998 between
First Commercial Capital Corp. as lessor and Saberline Corporation as lessee.
Lessor's interest in lease and equipment assigned to Borrower 1 by means of an
Assignment dated November 24, 1998. Borrower represents that Borrower 1
currently holds the lessor's interest therein.
3. Equipment Schedule No. 1, dated January 19, 1999 between National
Leasing, Inc. as lessor and Travel Bound, Inc. as lessee, subject to Master
Lease Agreement, dated January 19, 1999 between National Leasing, Inc. as lessor
and Travel Bound, Inc., as lessee. Lessor's interest in lease assigned to
Borrower 1 by Assignment dated May 3, 1999. Borrower represents that Borrower 1
currently holds the lessor's interest therein.
4. Rental Schedule No. 1C, dated August 1, 1998 between Bridgeway Capital
Corporation as lessor and Headway Technologies, Inc. as lessee, subject to
Master Equipment Lease Agreement dated August 1, 1998 between Bridgeway Capital
Corporation as lessor and Headway Technologies, Inc. as lessee. Lessor's
interest assigned to ICON Funding Corp. by Notice and Acknowledgment of
Assignment dated August ___ 1998. Lessor's interest assigned by ICON Funding
Corp. to Borrower 1 by Assignment dated August 13, 1998. Borrower represents
that Borrower 1 currently holds the lessor's interest therein.
5. Lease No. 2749-98 dated August 19, 1998 between National Credit Leasing
Services, Inc. as lessor and LYF Meat & Produce Corp. dba C-Town Supermarket and
Rancho's Food Corp. dba Bravo Supermarket and FJF Columbus Food Corp. dba C-Town
Supermarket, as co-lessees. Lessor's interest assigned to ICON Funding Corp. by
Assignment dated October 30, 1998. Lessor's interest assigned by ICON Funding
Corp. to Borrower 1 by Assignment dated October 30, 1998. Borrower represents
that Borrower 1 currently holds the lessor's interest therein.
6. Equipment Schedule No. I-3, dated September 30, 1998, between Borrower
1, lessor, and Petsmart, Inc., lessee, to Master Lease Agreement dated as of
December 26, 1997. Borrower represents that Borrower 1 currently holds the
lessor's interest therein.
7. Equipment Schedule No. I-4, dated September 30, 1998, between Borrower
1, lessor, and Petsmart, Inc., lessee, to Master Lease Agreement, dated as of
December 26, 1997. Borrower represents that Borrower 1 currently holds the
lessor's interest therein.
8. Aircraft Part(s) Lease Agreement, dated August 1, 1998, between AAR
Allen Aircraft, a division of AAR Airframe & Accessories Group, Inc. f/k/a AAR
Allen Group, Inc. as lessor and Sabena SA as lessee. Lessor's interest assigned
to Borrower 1 by Assignment and Consent dated August 31, 1998. Borrower
represents that Borrower 1 currently holds the lessor's interest therein.
9. Aircraft Part(s) Lease Agreement, dated September 1, 1998, between AAR
Allen Aircraft, a division of AAR Airframe Accessories Group, Inc., f/k/a AAR
Allen Group, Inc. as lessor and Sabena SA as lessee. Lessor's interest assigned
to Borrower 1 by Assignment and Consent dated September 30, 1998. Borrower
represents that Borrower 1 currently holds the lessor's interest therein.
10. Equipment Schedule No. 1, dated October 20, 2000, to Master Lease
Agreement No. 6463, dated October 20, 2000. The lessor under the Master Lease
Agreement is Insight Investments Corp. and the lessee is Petsmart, Inc. The
lessor under Equipment Schedule No. 1 is Borrower 3 and the lessee is Petsmart,
Inc. Borrower represents that Borrower 3 currently holds the lessor's interest
under Equipment Schedule No. 1.
11. Equipment Schedule Nos. I-7, I-8, I-9 and I-10, each of which is dated
December 28, 1998, to Master Lease Agreement, dated December 28, 1998. The
lessor under the Master Lease Agreement is General Electric Capital Corporation
and the lessee is Regus Business Centre Corp. The lessor under the Equipment
Schedules is Borrower 3 and the lessee is Regus Business Centre Corp. Borrower
represents that Borrower 3 currently holds the lessor's interest under these
equipment schedules.
12. Computer Equipment Schedule No. 04, dated June 7, 2000, to Master Lease
Agreement, dated September 7, 1999. The lessor under the Master Lease Agreement
is General Electric Capital Corporation and the lessee is CSK Auto, Inc. The
lessor under Computer Equipment Schedule No. 04 is General Electric Capital
Corporation and the lessee is CSK Auto, Inc. The lessor's interest was assigned
to Borrower 3 by an Assignment dated June 27, 2000. Borrower represents that
Borrower 3 currently holds the lessor's interest under that equipment schedule.
13. Borrower 1's interest in ICON/Nashville Ferry LLC. Borrower represents
that: (a) ICON/Nashville LLC is the beneficiary of ICON/Nashville Ferry Trust;
and (b) Wells Fargo Bank Northwest, N.A., as trustee of ICON/Nashville Ferry
Trust, is lessor under a lease under which EKA Chemicals, Inc. is the current
lessee, as reflected in that Lease dated December 4, 1984 by and between
Security Pacific Financial Leasing, Inc., lessor, and Kemanord, Inc., lessee, as
amended.
14. Equipment Schedule Nos. I-1, I-2, I-3, I-4, I-5 and I-6, each of which
is dated December 30, 1999, to Master Lease Agreement dated December 28, 1998.
The lessor under the Master Lease Agreement is General Electric Capital
Corporation and the lessee is Regus Business Centre Corp. The lessor under each
of the Equipment Schedules is ICON Income Fund Eight A L.P. and the lessee is
Regus Business Centre Corp. Borrower represents that ICON Income Fund Eight A
L.P. currently holds the lessor's interest under these Equipment Schedules.
15. Equipment Schedule No. I-5, dated October 30, 1998, and No. I-6, dated
December 29, 1998, to Master Lease Agreement dated December 26, 1997. The lessor
under the Master Lease Agreement is General Electric Capital Corporation and the
lessee is Petsmart, Inc. The lessor under each of the Equipment Schedules is
ICON Income Fund Eight A L.P. and the lessee is Petsmart, Inc. Borrower
represents and warrants that ICON Income Fund Eight A L.P. currently holds the
lessor's interest under these Equipment Schedules.
Exhibit 1
Borrower's Report
(Use Separate Form for Each Borrower's Loan Request)
To: Comerica Bank-California
1331 North California Blvd., Suite 400
Walnut Creek, California 94596
This Borrower's Report is being delivered to you pursuant to Section 1.1.3
of the Loan and Security Agreement, dated as of May 30, 2002, between ICON Cash
Flow Partners L.P. Seven, a Delaware limited partnership ("Borrower 1"), ICON
Income Fund Eight A L.P., a Delaware limited partnership ("Borrower 2"), and
ICON Income Fund Eight B L.P., a Delaware limited partnership ("Borrower 3," and
together with Borrower 1 and Borrower 2, jointly and severally, individually and
collectively, "Borrower"), on the one hand, and Comerica-Bank-California
("Lender"), on the other hand (herein, as amended, modified, supplemented,
extended or restated from time to time, the "Loan Agreement"). Terms defined in
the Loan Agreement are, unless otherwise defined herein or the context otherwise
requires, used herein as defined in the Loan Agreement. Section references
herein are to the applicable sections of the Loan Agreement.
Each Borrower hereby certifies to Lender as follows:
A. ICON Capital Corp. is the sole general partner of each Borrower.
B. ___________________________ is the duly qualified and acting
_________________ [title of officer] of ICON Capital Corp. and is authorized to
execute this document on behalf of each Borrower.
C. As of the date hereof, each Borrower has complied, and is in compliance,
with all of the terms, covenants and conditions of the Loan Agreement and the
other Loan Documents applicable to it. As of the date hereof, there exists no
Event of Default under the Loan Agreement or any of the other Loan Documents or
an event which would constitute an Event of Default upon the lapse of time or
upon the giving of notice and the lapse of time specified therein. The
representations and warranties of each Borrower in the Loan Agreement and the
other Loan Documents are true and with the same effect as though such
representations and warranties had been made by such Borrower as of the date
hereof. Each Borrower will continue to be in compliance with all of the terms,
covenants, and conditions of the Loan Agreement and the other Loan Documents,
and all representations and warranties will continue to be true, if the Loan
being requested herein is made.
D. Borrower hereby requests a Revolving Loan in the amount of $___________
pursuant to Section 1.1.3 of the Loan Agreement based on (i) the Present Value
of the contracts identified on Schedule 1 attached hereto, and (ii) the Eligible
Residual Values of equipment subject to the leases identified on Schedule 2
attached hereto. Borrower hereby certifies that each of the contracts identified
on Schedule 1 is an Eligible Borrowing Base Contract, and the Present Value
shown for each such contract was calculated in accordance with the terms of the
Loan Agreement. Borrower also certifies that the equipment identified on
Schedule 1 is a true and correct description of the equipment related to such
contract. Borrower hereby certifies that each of the leases identified on
Schedule 2 is an Eligible Borrowing Base Contract. Borrower further certifies
that the equipment identified on Schedule 2 is a true and correct description of
the equipment whose Eligible Residual Value is the subject of the requested
Revolving Loan and that the Eligible Residual Value shown for the equipment
subject to each such lease was calculated in accordance with the terms of the
Loan Agreement. The Borrower to whom the Revolving Loan is to be made is
________________________.
E. Attached hereto as Schedule 3 is a calculation, on a pro forma basis,
showing that, after the Requested Loan, Borrower shall be in compliance with the
Borrowing Base and each of the sublimits set forth in the Agreement.
F. Borrower requests that the Loan be made to it on the following date:
_______________________.
G. Borrower requests that the proceeds of the Loan be disbursed by Lender
in the following manner: _________________________________________.
H. The following are true and correct computations as of _________________
[date] of the items shown:
1. Maximum Loan Limitation
a. Maximum Availability:
i. Maximum Revolving Amount $17,500,000
ii. Borrowing Base $___________
iii. Lesser of i. or ii., above: $___________
b. Less: Principal Amount Outstanding
of All Revolving Loans, Prior to New
Revolving Loan $___________
c. Net Available: $___________
d. Amount of New Revolving Loan
(May Not Exceed 1.c., above) $___________
2. Individual Borrower Loan Limitation.
a. Name of Borrower to Whom New Revolving
Loan is Made ______________________________________________
b. Tangible Net Worth of Borrower to Whom New
Revolving Loan is Made $___________
c. One-half of 2.b., above: $___________
d. Principal Amount Outstanding of All Revolving Loans
to Individual Borrower to Whom New Revolving Loan
is Made, Including New Revolving Loan
(May Not Exceed 2.c., above) $___________
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Borrowing/Borrower's Report on ______________________ [date].
ICON CASH FLOW
PARTNERS L.P. SEVEN
By: ICON Capital
Corp., its general
partner
By:
Name:
Title:
ICON INCOME FUND
EIGHT A L.P.
By: ICON Capital
Corp., its general
partner
By:____________________________
Name:__________________________
Title:_________________________
ICON INCOME FUND
EIGHT B L.P.
By: ICON Capital
Corp., its general
partner
By:____________________________
Name:__________________________
Title:_________________________
Exhibit 2
Promissory Note
$17,500,000.00
Date: May 30, 2002
FOR VALUE RECEIVED, the undersigned, ICON Cash Flow Partners L.P. Seven, a
Delaware limited partnership, ICON Income Fund Eight A L.P., a Delaware limited
partnership, and ICON Income Fund Eight B L.P., a Delaware limited partnership,
jointly and severally promise to pay to Comerica Bank-California ("Bank") the
principal sum of Seventeen Million Five Hundred Thousand Dollars and No Cents
($17,500,000.00) or, if less, the unpaid principal amount owed pursuant to the
Loan made by Bank under the Loan and Security Agreement, dated May 30, 2002
between ICON Cash Flow Partners L.P. Seven, a Delaware limited partnership, ICON
Income Fund Eight A L.P., a Delaware limited partnership, and ICON Income Fund
Eight B L.P., a Delaware limited partnership, on the one hand, and Comerica
Bank-California, on the other hand ("Loan Agreement"), on the dates and in the
amounts set forth in the Loan Agreement. The undersigned further promises to pay
interest on the unpaid principal amount hereof on the dates and at the rates
calculated in accordance with the Loan Agreement.
The principal of and interest on this Note shall be payable in lawful money
of the United States of America, in immediately available funds without set-off
or counterclaim, without penalty or premium, free and clear of, and without
deduction for, any taxes, restrictions or conditions of any nature (except as
otherwise permitted by the Loan Agreement). All payments hereunder shall be made
to the Bank at 1331 North California Boulevard., Suite 400, Walnut Creek,
California 94596, or such other address as Bank may designate in writing.
This Note is one of the Notes referred to in the Loan Agreement. Reference
is made to the Loan Agreement for provisions relating to, among other things,
prepayment and acceleration of the maturity hereof. Borrower will promptly pay
all costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel) suffered or incurred by Bank in connection with the
enforcement by Bank of its right to payment of any sum hereunder or any of its
rights hereunder.
Capitalized terms used but not otherwise defined herein are used as defined
in the Loan Agreement. This Note shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed as of the
date first written above.
ICON CASH FLOW PARTNERS L.P. SEVEN, a Delaware limited
partnership
By: ICON Capital Corp., its general partner
By:
Name:
Title:
ICON INCOME FUND EIGHT A, L.P.,
a Delaware limited partnership
By: ICON Capital Corp., its general partner
By:_______________________________
Name:___________________________
Title:____________________________
ICON INCOME FUND EIGHT B, L.P.,
a Delaware limited partnership,
By: ICON Capital Corp., its general partner
By:________________________________
Name:___________________________
Title:____________________________
Exhibit 3
Compliance Certificate
To: Comerica Bank-California
1331 North California Blvd., Suite 400
Walnut Creek, California 94596
This Compliance Certificate is given pursuant to Section 5.5.5 of that
certain Loan and Security Agreement, dated as of May 30, 2002 (the "Loan
Agreement"), by and between ICON Cash Flow Partners L.P. Seven, ICON Income Fund
Eight A L.P. and ICON Income Fund Eight B L.P. (collectively referred to as
"Borrower"), on the one hand, and Comerica Bank-California ("Lender"), on the
other hand. All initially capitalized terms used but not defined in this
Compliance Certificate shall have the meanings assigned to such terms in the
Agreement. Section references herein are to the applicable sections of the Loan
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
A. ICON Capital Corp. is the sole general partner of each Borrower.
B. ______________ (the person signing this certificate) is the duly
qualified and acting Chief Financial Officer of ICON Capital Corp. and is
authorized to execute this document on behalf of each Borrower.
C. Except as stated in Paragraph D, below: (i) As of the date hereof, each
Borrower has complied, and is compliance with, all of the terms, covenants and
conditions of the Loan Agreement and the other Loan Documents applicable to it;
(ii) As of the date hereof, therein exists no Event of Default under the Loan
Agreement or any of the other Loan Documents or an event which constitute an
Event of Default upon the lapse of time or upon the giving of notice and the
lapse of time specified therein; and (iii) As of the date hereof, the
representations and warranties of each Borrower in the Loan Agreement and the
other Loan Documents are true and with the same effect as though such
representations and warranties had been made by such Borrower as of the date
hereof.
D. Exceptions to Paragraph C (if none, so
state):______________________________
______________________________________________________________________________
The financial statement of Borrower attached hereto dated as of
___________________, and submitted to Lender pursuant to the Loan Agreement
shows compliance with all financial covenants specified therein, and Borrower is
in compliance with all such financial covenants (unless otherwise noted below),
as follows:
COVENANT: ACTUAL:
7.1 Minimum Aggregate Tangible Net Worth: $125,000,000 $_____________
7.2 Minimum Tangible Net Worth for Each Borrower:
a. ICON Cash Flow Partners L.P. Seven $____________
i. Outstanding Balance on Revolving
Loans Made to That Borrower $_____________
ii. Required Tangible Net Worth for
that Borrower
(Twice Amount in (i)) $_____________
b. ICON Income Fund Eight A L.P. $_____________
i. Outstanding Balance on Revolving
Loans Made to that Borrower $_____________
ii. Required Tangible Net Worth for
that Borrower
(Twice Amount in (i)) $______________
c. ICON Income Fund Eight B L.P. $______________
i. Outstanding Balance on Revolving
Loans Made to that Borrower $______________
ii. Required Tangible Net Worth for
that Borrower
(Twice Amount in (i)) $______________
7.3 Aggregate Maximum Debt to
Tangible Net Worth Ratio: 1.0 to 1.0 ________________
7.4 Profitability for Each Borrower
a. ICON Cash Flow Partners L.P. Seven $1.00 Annually _________________
b. ICON Income Fund Eight A, L.P. $1.00 Annually _________________
c. ICON Income Fund Eight B, L.P. $1.00 Annually _________________
ICON CASH FLOW PARTNERS L.P. SEVEN
By: ICON Capital Corp., its general partner
By:_________________________
Name:
Title: Chief Financial Officer
ICON INCOME FUND EIGHT A, L.P.
By: ICON Capital Corp., its general partner
By:_________________________
Name:
Title: Chief Financial Officer
ICON INCOME FUND EIGHT B, L.P.
By: ICON Capital Corp., its general partner
By:_________________________
Name:
Title: Chief Financial Officer
Exhibit 4
Borrowing Base / Eligible Borrowing Base Contract Aging Report
This Borrowing Base / Eligible Borrowing Base Contract Aging Report is being
delivered to you pursuant to Section 5.5.3 of the Loan and Security Agreement,
dated as of May 30, 2002, by and between ICON Cash Flow Partners L.P. Seven,
("Borrower 1" or "ICON 7"), ICON Income Fund Eight A L.P. ("Borrower 2" or ICON
8A"), ICON Income Fund Eight B L.P. ("Borrower 3" or "ICON 8B" and together with
Borrower 1 and Borrower 2, jointly and severally, individually and collectively,
"Borrower"), on the one hand, and Comerica Bank - California, on the other hand
("Lender") (herein, as amended, modified, supplemented or extended from time to
time called the "Loan Agreement". Terms defined in the Loan Agreement are,
unless otherwise defined herein or the context otherwise requires, used herein
as defined in the Loan Agreement. Section references herein are to the
applicable sections of the Loan Agreement
Each Borrower hereby certifies to Lender as follows:
1 Except as stated in Paragraph 2, below, each of the contracts described
below is an Eligible Borrowing Base Contract.
2 Exceptions to Paragraph 1 (if none, so
state):____________________________________
3 Except as stated in Paragraph 4, below, each of the contracts described
below is an Eligible Residual Value of an Eligible Borrowing Base Contract.
4 Exceptions to Paragraph 3 (if none, so
state):____________________________________
Present Value of Selected Eligible Borrowing Base Contracts and Eligible
Residual Values Projected as of ___________________ (Date) Calculated at a
Present Value of __________ (Base Rate plus 1.0%).
Notes to Borrowing Base
A) Maximum Line Availability to be the lesser of the Borrowing Base or
$17,500,000
B) Borrowing Base to be based on Eligible Residual Values will be capped at
$1,000,000
C) Gross and discounted lease receivables and residual values listed for the EKA
Chemicals reflect ICON 7's 50% interest in this lease investment.
- ------------------- --------------- ------------ --------------- ---------------- ----------------- ----------------
ICON 7 Lessee Equip. Type Gross PV of Lease Gross Residual PV of Residual
Lease Rec. Rec. Exp. Date
- ------------------- --------------- ------------ --------------- ---------------- ----------------- ----------------
EKA Chemicals
Petsmart
Petsmart
Sabena
Sabena
AZ 3
Sabreliner
Travel Bound
Headway Tech.
C-Town Sprmkt.
-------------- ------------ --------------- ---------------- -----------------
Sub Totals $0 $0 $0 $0
ICON 7 PV of Leases $0 x 85% = $0
Borrowing PV of Residuals $0 x 15% = $0
Base
---------
---------
ICON 7 Total $0
Tangible Net Worth of ICON 7 as of last day of preceding month (provide
exact amount if known; otherwise, provide estimate): $_______________
- ------------------- --------------- --------------- -------------- --------------- --------------- ---------------
ICON 8A Lessee Equip. Type Gross Lease PV of Lease Gross Residual PV of Residual
Rec. Rec Exp. Date
- ------------------- --------------- --------------- -------------- --------------- --------------- ---------------
Sub Totals $0 $0 $0 $0
ICON 8A PV of Leases $0 x 85% = $0
Borrowing PV of Residuals $0 x 15% = $0
--------
--------
Base ICON 8A Total $0
Tangible Net Worth of ICON 8A as of last day of preceding month (provide
exact amount if known; otherwise, provide estimate): $_______________.
- ------------------- --------------- --------------- -------------- --------------- --------------- ---------------
ICON 8B Lessee Equip. Type Gross Lease PV of Lease Gross Residual PV of Residual
Rec. Rec Exp. Date
- ------------------- --------------- --------------- -------------- --------------- --------------- ---------------
CSK Auto Regus
Petsmart
----------------- -------------- -------------- --------------- -------------- ---------
Sub Totals $0 $0 $0 $0
ICON 8B PV of Leases $0 x 85% = $0
Borrowing PV of Residuals $0 x 15% = $0
-----------
---------
Base ICON 8B Total $0
- --------------------------- ---------------------- ---------- ------------------------------- ----------
TOTALS
- --------------------------- ---------------------- ---------- ------------------------------- ----------
Total Borrowing PV of Leases $0 x 85% = $0
Base PV of Residuals $0 x 15% = $0
----------
----------
Total Borrowing Base $0
Tangible Net Worth of ICON 8B as of last day of preceding month (provide exact
amount if known; otherwise, provide estimate): $______________
IN WITNESS WHEREOF, the undersigned have executed and delivered this Report on
__________,____.
ICON CASH FLOW PARTNERS L.P. SEVEN
By: ICON Capital Corp., its general partner
By:_______________________________________
Name:____________________________________
Title:_____________________________________
ICON INCOME FUND EIGHT A L.P.
By: ICON Capital Corp., its general partner
By:_______________________________________
Name:____________________________________
Title:_____________________________________
ICON INCOME FUND EIGHT B L.P.
By: ICON Capital Corp., its general partner
By:_______________________________________
Name:____________________________________
Title:_____________________________________
SF 1254 1v2 04/08/2003
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
made as of December 12, 2002 by and between ICON Cash Flow Partners L.P. Seven,
a Delaware limited partnership ("Borrower 1"), ICON Income Fund Eight A L.P., a
Delaware limited partnership ("Borrower 2"), ICON Income Fund Eight B L.P., a
Delaware limited partnership ("Borrower 3"), and ICON Income Fund Nine, LLC, a
Delaware limited liability company ("Borrower 4"), on the one hand, and Comerica
Bank-California, a California banking corporation ("Lender"), on the other hand,
with respect to the Loan and Security Agreement, dated as of May 30, 2002,
entered into by Borrower 1, Borrower 2, Borrower 3 and Lender (as amended and
modified through but excluding the date hereof, the "Agreement")."
RECITALS
WHEREAS, Borrower 1, Borrower 2, Borrower 3, and Lender entered into the
Agreement;
WHEREAS, Borrower 1, Borrower 2, Borrower 3 and Borrower 4 have requested
that Borrower 4 be added as a Borrower under the Agreement;
WHEREAS, Lender is willing to agree to Borrower's request, on the terms and
conditions set forth below;
NOW, THEREFORE, IT IS AGREED THAT:
1. Definitions. Unless otherwise indicated, words and terms which are
defined in the Agreement shall have the same meaning where used herein.
2. Amendments.
(a) Borrower 4 is deemed a "Borrower," as that term is defined in the
Agreement.
(b) Section 1.9.1 of the Agreement is amended by inserting the following
sentence immediately after the third sentence in the first paragraph:
Borrower authorizes Lender to automatically deduct from deposit account
number 1892187368 maintained by Borrower 4 with Lender the portion of the amount
of principal, interest and late charges due allocable to Borrower 4 (which
allocation shall be based on Loans to Borrower 4 and payments by Borrower 4).
(c) Section 4.1 of the Agreement is amended by inserting the following
sentence immediately after the third sentence:
Borrower 4 is a limited liability company, duly organized and existing and
in good standing under the laws of the state of Delaware, which shall survive at
least two years beyond the maturity of any Loans hereunder.
(d) Section 4.2 of the Agreement is amended to read as follows:
4.2 Agreement Authorized. The execution, delivery and performance of this
Agreement and the Loan Documents are duly authorized and do not require any
registration with, consent or approval of, or notice to, or other action with or
by, any governmental body or other regulatory authority; are not in
contravention of or in conflict with any law or regulation or any term or
provision of the formation, organizing or operating agreements or other
documents of any Borrower, and this Agreement and each of the other Loan
Documents is a valid, binding and legally enforceable obligation of each
Borrower in accordance with its terms, subject only to bankruptcy, insolvency or
similar laws affecting creditors' rights generally.
(e) Section 4.7 of the Agreement is amended by inserting the following
sentence at the end:
The chief executive office of Borrower 4 is located in New York City, New
York. Borrower 4's Organizational Identification Number is 3413575. Borrower 4's
Tax Identification Number is 13-4183234.
(f) Section 4.8 of the Agreement is amended to read as follows:
General Partner/Manager. ICON Capital Corp. is the sole general partner of
each Borrower that is a partnership. ICON Capital Corp. is the sole manager of
each Borrower that is a limited liability company. ICON Capital Corp. is a
corporation duly organized and existing and in good standing under the laws of
the State of Connecticut. ICON Capital Corp. has the appropriate powers and
adequate authority, rights, licenses and franchises to own its property and to
carry on its business as now conducted, and is duly qualified, in good standing
and has all licenses necessary in California and in each state in which the
character of the properties owned by it therein or the conduct of its business
makes such qualification or licenses necessary. ICON Capital Corp. has the power
and adequate authority to make and carry out this Agreement and the other Loan
Documents in its capacity as general partner of each Borrower that is a
partnership
(g) Section 5.5.5 of the Agreement is amended by deleting the phrase "a
Compliance Certificate of the chief financial officer of Borrower's general
partner" and replacing it with the phrase "a Compliance Certificate of the chief
financial officer of Borrower's general partner (if the applicable Borrower is a
partnership) and of the chief financial officer of Borrower's manager (if the
applicable Borrower is a limited liability company)."
(h) Section 7.1 of the Agreement is amended to read as follows:
Aggregate Tangible Net Worth. All Borrowers, in the aggregate, shall
maintain, as of the last day of the specified quarter, a Tangible Net Worth of
not less than $140,000,000.
(i) Exhibits 1, 3 and 4 to the Agreement are deleted and replaced by
Exhibits 1, 3 and 4 to this Amendment.
3. Continued Validity of Agreement. Except as amended by this Amendment,
the Agreement and all security agreements, guaranties, and other documents
executed by Borrower with or in favor of Lender (collectively referred to as
"Loan Documents"), shall continue in full force and effect as originally
constituted and are ratified and affirmed by the parties hereto. Borrower 4 is
bound by the Loan Documents, as amended by this Amendment, to the same extent as
if it had executed them. Each reference in the Agreement or in the other Loan
Documents to the Agreement shall mean the Agreement as amended hereby unless the
context otherwise requires. This Amendment and the Agreement shall be read as
one document. Without limiting the generality of the foregoing, nothing in this
Amendment entitles Borrower to receive advances of any funds, or extends the
maturity date for repayment, beyond that expressly set forth in the Agreement.
4. Compliance with Loan Documents. Each Borrower represents and warrants to
Lender as follows: as of the date hereof, each Borrower has complied, and is in
compliance, with all of the terms, covenants and conditions of the Loan
Agreement and the other Loan Documents applicable to it. As of the date hereof,
there exists no Event of Default under the Loan Agreement or any of the other
Loan Documents or an event which would constitute an Event of Default upon the
lapse of time or upon the giving of notice and the lapse of time specified
therein. The representations and warranties of each Borrower in the Loan
Agreement and the other Loan Documents are true and with the same effect as
though such representations and warranties had been made by such Borrower as of
the date hereof. Each Borrower will continue to be in compliance with all of the
terms, covenants, and conditions of the Loan Agreement and the other Loan
Documents, and all representations and warranties will continue to be true, upon
this Amendment becoming effective.
5. Authorization. Each party hereto represents to the other that the
individual executing this Amendment on its behalf is the duly appointed
signatory of such party and that such individual is authorized to execute this
Amendment by or on behalf of such party and to take all action required by the
terms of this Amendment.
6. When Amendment is Effective. This Amendment shall be deemed binding and
effective as of December 12, 2002 when:
(a) This Amendment is executed by Borrower 1, Borrower 2, Borrower 3,
Borrower 4 and Lender;
(b) Lender shall have received an original, executed Amended and Restated
Note from Borrower, in the form of Exhibit 2 hereto, duly completed;
(c) Lender shall have received and filed a UCC financing statement with the
appropriate official of the state where Borrower 4 is located;
(d) Lender shall have received certified copies of the organizational
documents and operating agreements of Borrower 4 and its manager, in form and
substance satisfactory to Lender;
(e) Lender shall have received certified copies of all action taken by
Borrower 4 to authorize the execution, delivery and performance of the Loan
Documents;
(f) Lender shall have received good standing certificates from the
appropriate secretary of state of the state in which Borrower 4 and its manager
are organized;
(g) Borrower 4 shall have become a party to the Contribution Agreement
referred to in Section 5.18 of the Agreement by means of a document executed by
all Borrowers, and Lender shall have received a copy of such executed document.
7. Captions. Section headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each section applies equally to this entire Amendment.
8. No Novation. This Amendment is not intended to be, and shall not be
construed to create, a novation or accord and satisfaction, and, except as
otherwise provided herein, the Agreement shall remain in full force and effect.
9. Severability. Each provision of this Amendment shall be severable from
every other provision of this Amendment for the purpose of determining the legal
enforceability of any specific provision.
10. Entire Agreement. This Amendment constitutes the entire agreement by
and between Borrower and Banks with respect to the subject matter hereof and
supersedes all prior and contemporaneous negotiations, communications,
discussions and agreements concerning such subject matter.
11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first set forth above.
ICON CASH FLOW PARTNERS L.P. ICON INCOME FUND NINE, LLC,
SEVEN, a Delaware Limited Partnership a Delaware Limited Liability Company
By ICON Capital Corp., its general partner By: ICON Capital Corp., its manager
By:___________________________ By:__________________________
Paul B. Weiss, President Paul B. Weiss, President
Address for Notices:
ICON INCOME FUND NINE, LLC
Attention: General Counsel
100 5th Avenue, 10th Floor
New York, New York 10011
Facsimile No.: (212) 418-4739
ICON INCOME FUND EIGHT A L.P., COMERICA BANK-CALIFORNIA,
a Delaware Limited Partnership a California banking corporation
By ICON Capital Corp., its general partner
By: ___________________________
By:_____________________________ John Esposito
Paul B. Weiss, President Vice President
ICON INCOME FUND EIGHT B L.P.,
a Delaware Limited Partnership;;
By ICON Capital Corp., its general partner
By:______________________________
Paul B. Weiss, President
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
made as of April 9, 2003 by and between ICON Cash Flow Partners L.P. Seven, a
Delaware limited partnership ('Borrower 1"), ICON Income Fund Eight A L.P., a
Delaware limited partnership ('Borrower 2"), ICON Income Fund Eight B L.P., a
Delaware limited partnership ('Borrower 3"), and ICON Income Fund Nine, LLC, a
Delaware limited liability company ('Borrower 4" and together with Borrower 1,
Borrower 2 and Borrower 3, 'Borrower"), on the one hand, and Comerica
Bank-California, a California banking corporation ("Lender"), on the other hand,
with respect to the Loan and Security Agreement, dated as of May 30, 2002, and
the First Amendment to Loan and Security Agreement, dated as of December 1,
2002, entered into by Borrower 1, Borrower 2, Borrower 3, Borrower 4 and Lender
(as amended and modified through but excluding the date hereof, the
"Agreement")."
RECITALS
WHEREAS, Borrower and Lender entered into the Agreement;
WHEREAS, Borrower 1, Borrower 2 and Borrower 3 violated a covenant in the
Agreement by each failing to earn a net profit after taxes of at least $1.00 for
the fiscal year ending December 31, 2002, as required by Section 7.4 of the
Agreement ("Section 7.4 Profitability Covenant");
WHEREAS, Borrower has requested that Lender waive the violation of the
Section 7.4 Profitability Covenant described in the preceding recital for the
fiscal year ending December 31, 2002 only;
WHEREAS, Borrower represent and warrant that, except for the violation of
the Section 7.4 Profitability Covenant for the fiscal year ending December 31,
2002, described above, they each are in compliance with all terms, covenants and
conditions of the Agreement and all representations and warranties in the
Agreement are true and correct;
WHEREAS, Borrower represent and warrant that, upon execution of this
Amendment, they will each be in compliance with all terms, covenants and
conditions of the Agreement, as amended by this Amendment, and all
representations and warranties made by them in the Agreement, as amended by this
Amendment, are and will be true and correct;
WHEREAS, a deposit account in the name of Borrower 4 is maintained at
Lender, in the name of Borrower 4, and Lender has a perfected security interest
in that deposit account and the proceeds thereof pursuant to the Agreement,
which account has on deposit the sum of $9,000,000.00 or more;
Borrowers: ICON 7, ICON 8A, ICON 8B, ICON 9
2nd Amendment to Loan and Security Agreement
WHEREAS, Lender is willing to agree to Borrower's request, on the terms and
conditions set forth below;
NOW, THEREFORE, IT IS AGREED THAT:
1. Definitions. Unless otherwise indicated, words and terms which are
defined in the Agreement shall have the same meaning where used herein.
2. Amendments. A new Section 5.12.3 is added to Agreement, to read as
follows:
5.12.3 Maintain on deposit with Lender in Deposit Account 1892187368, or
such other deposit account or accounts as Borrower and Lender may agree, cash in
an amount equal to or greater than the outstanding principal balance of the
Loans. Borrower agree that Lender may refuse to allow any withdrawal from such
deposit account or accounts if the effect of doing so would be to reduce the
cash balance to an amount less than the outstanding principal balance of the
Loans. In addition, Borrower may not obtain a Revolving Loan if the effect of
doing so would be to increase the outstanding principal balance of the Loans to
an amount greater than the amount of cash in the above-described deposit account
or accounts.
3. Continued Validity of Agreement. Except as amended by this Amendment,
the Agreement and all security agreements, guaranties, and other documents
executed by Borrower with or in favor of Lender (collectively referred to as
"Loan Documents"), shall continue in full force and effect as originally
constituted and are ratified and affirmed by the parties hereto. Each reference
in the Agreement or in the other Loan Documents to the Agreement shall mean the
Agreement as amended hereby unless the context otherwise requires. This
Amendment and the Agreement shall be read as one document. Without limiting the
generality of the foregoing, nothing in this Amendment entitles Borrower to
receive advances of any funds, or extends the maturity date for repayment,
beyond that expressly set forth in the Agreement.
4. Compliance with Loan Documents. Borrower 1, Borrower 2, Borrower 3 and
Borrower 4 each represents and warrants to Lender as follows: Except as stated
in the Recitals to this Amendment: (a) as of the date hereof, each Borrower has
complied, and is in compliance, with all of the terms, covenants and conditions
of the Loan Agreement and the other Loan Documents applicable to it; (b) as of
the date hereof, there exists no Event of Default under the Loan Agreement or
any of the other Loan Documents or an event which would constitute an Event of
Default upon the lapse of time or upon the giving of notice and the lapse of
time specified therein; and (c) the representations and warranties of each
Borrower in the Loan Agreement and the other Loan Documents are true and with
the same effect as though such representations and warranties had been made by
such Borrower as of the date hereof Each Borrower further represents and
warrants that, upon this Amendment becoming
Borrowers: ICON 7, ICON SA, ICON 8B, ICON 9 2.
2nd Amendment to Loan and Security Agreement
effective, each Borrower will be in compliance with all of the terms, covenants,
and conditions of the Loan Agreement and the other Loan Documents, and all
representations and warranties will be true.
5. Authorization Each party hereto represents to the other that the
individual executing this Amendment on its behalf is the duly appointed
signatory of such party and that such individual is authorized to execute this
Amendment by or on behalf of such party and to take all action required by the
terms of this Amendment.
6. When Amendment is Effective. This Amendment shall be deemed binding and
effective as of April 9, 2003 when this Amendment is executed by Borrower 1,
Borrower 2, Borrower 3, Borrower 4 and Lender.
7. Captions. Section headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each section applies equally to this entire Amendment.
8. No Novation. This Amendment is not intended to be, and shall not be
construed to create, a novation or accord and satisfaction, and, except as
otherwise provided herein, the Agreement shall remain in full force and effect.
9. Severability. Each provision of this Amendment shall be severable from
every other provision of this Amendment for the purpose of determining the legal
enforceability of any specific provision.
10. Entire Agreement. This Amendment constitutes the entire agreement by
and between Borrower and Banks with respect to the subject matter hereof and
supersedes all prior and contemporaneous negotiations, communications,
discussions and agreements concerning such subject matter.
11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
Borrowers: ICON 7, ICON 8A, ICON 8B, ICON 9
2nd Amendment to Loan and Security Agreement
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first set forth above.
ICON CASH FLOW PARTNERS L.P.
SEVEN, a Delaware Limited Partnership
By ICON Capital Corp., its general partner
By:____________________________
Paul B. Weiss, President
ICON INCOME FUND EIGHT A L.P., a Delaware Limited Partnership By ICON
Capital Corp., its general partner
ICON INCOME FUND NINE, LLC, a Delaware Limited Liability Company
By: ICON Capital Corp., its manager
By:_______________________________
Paul B. Weiss, President
Address for Notices:
ICON INCOME FUND NINE, LLC
Attention: General Counsel
100 5thAvenue, 10th Floor
New York, New York 10011
Facsimile No.: (212) 418-4739
COMERICA BANK-CALIFORNIA, a California banking corporation
By:______________________________
John Esposito, Vice President
By:_________________________
Paul B. Weiss, President
ICON INCOME FUND EIGHT B L.P.,
a Delaware Limited Partnership;;
By ICON Capital corp., its general partner
By:__________________________
Paul B. Weiss, President
Borrowers: ICON 7, ICON 8A, ICON 88, ICON 9 2'" Amendment to Loat and Security
Agreement
THIRD AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
made as of July 31, 2003 by and between ICON Cash Flow Partners L.P. Seven, a
Delaware limited partnership ("Borrower 1"), ICON Income Fund Eight A L.P., a
Delaware limited partnership ("Borrower 2"), ICON Income Fund Eight B L.P., a
Delaware limited partnership ("Borrower 3"), and ICON Income Fund Nine, LLC, a
Delaware limited liability company ("Borrower 4" and together with Borrower 1,
Borrower 2 and Borrower 3, "Borrower" or "Borrowers"), on the one hand, and
Comerica Bank, successor by merger to Comerica Bank-California ("Lender"), on
the other hand, with respect to the Loan and Security Agreement, dated as of May
30, 2002, the First Amendment to Loan and Security Agreement, dated as of
December 1, 2002, entered into by Borrower 1, Borrower 2, Borrower 3, and
Comerica Bank-California, the Second Amendment to Loan and Security Agreement,
dated as of April 9, 2003, entered into by Borrower 1, Borrower 2, Borrower 3,
Borrower 4 and Comerica Bank-California, and the letter agreement dated May 31,
2003 entered into by Borrower 1, Borrower 2, Borrower 3, Borrower 4 and Comerica
Bank-California (as amended and modified through but excluding the date hereof,
the "Agreement")."
RECITALS
WHEREAS, Borrower and Lender entered into the Agreement;
WHEREAS, the Revolving Loan Maturity Date under the Agreement is July 31,
2003;
WHEREAS, Borrower has requested that Lender extend the Revolving Loan
Maturity Date to May 31, 2004;
WHEREAS, Lender is willing to agree to Borrower's request, on the terms and
conditions set forth below;
NOW, THEREFORE, IT IS AGREED THAT:
1. Definitions. Unless otherwise indicated, words and terms which are
defined in the Agreement shall have the same meaning where used herein.
2. Amendments.
(a) The definition of "Borrowing Base" in the Agreement is amended to read
as follows:
Borrowing Base - means 80% of the Present Value of the Eligible Borrowing
Base Contracts, plus Pledged Cash.
(b) A new definition of "Cash Equivalents" is added to the Agreement, to
read as follows:
Cash Equivalents - the sum outstanding, at any one time, of (i) all cash
(in United States dollars) owned by Borrower at such time plus (ii) the fair
market value of all cash equivalents and short term investments (as those terms
are defined in GAAP) owned by Borrower at such time, in each case excluding
Pledged Cash.
(c) The definition of "Eligible Borrowing Base Contract" in the Agreement
is amended by adding the following subsections:
(l) At the time Borrower seeks to have Lender make a Revolving Loan based
on such contract, the Lessee or Debtor, as the case may be, must have a Standard
& Poor's bond rating of BBB or better or a Risk Rating of 3 or better on
Lender's internal risk rating system;
(m) Lender, in its sole and absolute discretion, determines that it is
willing to make a Revolving Loan based on such contract;
(n) Lender shall have received a written acknowledgment, in form and
substance satisfactory to Lender, from the Debtor or Lessee, as the case may be
(and from the lender or lessor if the contract is an Indirect Loan Contract or
an Indirect Lease) authenticating the contract, identifying the existing parties
to the contract, stating that the contract is in full force and effect, stating
that no default exists under the contract, stating that no prepayments on the
contract have been made (or identifying such prepayments if any have been made),
stating that the acknowledging party has not received any notice that the
lender's/lessor's interest in the contract has been assigned or pledged to any
other person, and providing such other information as Lender may request. As to
contracts based on which Lender made a Revolving Loan prior to July 31, 2003,
such written acknowledgment must be received by Lender within 45 days after
Lender's demand to Borrower for such an acknowledgment; and
(o) Payments made on contracts of the type described in Sections 2.11(a)
and 2.11(c) of this Agreement on or after October 1, 2003 are received in the
Lockbox; and payments paid to a Borrower with respect to contracts of the type
described in Section 2.11(b) of this Agreement on or after October 1, 2003 are
received in the Lockbox.
(d) A new definition is added to the Agreement, to read as follows:
Lockbox - has the meaning set forth in Section 2.11(a) hereof.
(e) A new definition is added to the Agreement, to read as follows:
Pledged Cash - Cash owned by Borrower maintained in a deposit account or
deposit accounts with Lender in the name of one or more Borrowers, in which
Lender has a perfected first priority security interest to secure payment and
performance of the Obligations, and which Borrower has agreed in writing may not
be withdrawn by Borrower.
(f) The definition of "Revolving Loan Maturity Date" in the Agreement is
amended to read as follows:
Revolving Loan Maturity Date - May 31, 2004.
(g) Section 1.3.1 of the Agreement is amended to read as follows:
1.31 Facility Fee. A Facility Fee in the amount of $87,500.00 per year,
payable in arrears in installments of $21,875.00 per quarter payable on June 30,
September 30, December 31, and March 31 of each year through the Revolving Loan
Maturity Date or, if an extension of time beyond the Revolving Loan Maturity
Date for advances and repayment is provided, through the end of the extension
period.
(h) A new Section 2.11 is added to the Agreement to read as follows:
2.11 Lockbox.
(a) On all Loan Contracts and Leases based on which Lender has made a Loan,
Borrower shall notify all Debtors and Lessees in writing, by means of a letter
in the form attached hereto as Exhibit 5, to remit all payments to a post office
box designated by Lender, to which only Lender shall have access ("Lockbox"),
and notify such Debtors and Lessees that such designation may not be changed
without the written consent of Comerica Bank.
(b) On all Indirect Loan Contracts and Indirect Leases based on which
Lender has made a Loan, when the lender or lessor is not an Affiliate of any
Borrower, Borrower shall notify the applicable lender or lessor in writing, by
means of a letter in the form attached hereto as Exhibit 6, to remit all
payments payable to such Borrower to the Lockbox, and notify such lender or
lessor that such designation may not be changed without the written consent of
Comerica Bank.
(c) On all Indirect Loan Contracts and Indirect Leases based on which
Lender has made a Loan, when the lender or lessor is an Affiliate of any
Borrower, Borrower shall cause such lender or lessor to notify the Debtor and
Lessee in writing, by means of a letter in the form attached hereto as Exhibit
7, to remit all payments to the Lockbox, and notify such Debtors and Lessees
that such designation may not be changed without the written consent of Comerica
Bank. Borrower shall also cause such lender or lessor to execute a power of
attorney in form and substance satisfactory to Lender authorizing Lender to
endorse and negotiate all items received in the Lockbox and collect all proceeds
thereof, and shall obtain the written consent of all Persons that have a direct
or indirect interest in the lender's or lessor's interest in the contract to
this procedure.
(d) Borrower shall provide the notices described in subsections (a), (b)
and (c) by a means requiring a written receipt and promptly deliver to Lender
copies of the notices and proof of receipt by each of the recipients. For Loan
Contracts and Leases based on which Lender has made a Loan prior to July 31,
2003, such notices must be sent by Borrower no later than three Business Days
after the execution of the Third Amendment to the Agreement. For Loan Contracts
and Leases based on which Lender makes a Loan on or after July 31, 2003, such
notices must be sent within three Business Days after the Loan is made. All
invoices and other documents sent by Borrower to any person to whom the notices
described in subsections (a), (b) and (c) are to be sent, stating where the
recipient is to remit payment, shall identify the Lockbox as the place to remit
payment.
(e) For the Loan Contracts and Leases described in subsections (a) and (b),
as long as no Event of Default has occurred, Lender shall deliver the items
received in the Lockbox to Borrower. For the Loan Contracts and Leases described
in subsections (a) and (b), effective upon the occurrence of an Event of
Default, Lender may retain items received in the Lockbox and apply them, and the
proceeds thereof, to the Obligations.
(f) For the Loan Contracts and Leases described in subsection (c), as long
as no Event of Default has occurred, Lender shall deliver the items received in
the Lockbox to the applicable Affiliate lender or lessor. For the Loan Contracts
and Leases described in subsection (c), effective upon the occurrence of an
Event of Default, Lender may endorse and negotiate all items received in the
Lockbox and collect all proceeds thereof, apply to the Obligations any portion
thereof to which any Borrower is entitled, and remit the excess to the
applicable Affiliate lender or lessor on such Loan Contract or Lease.
(i) Section 5.12.3 of the Agreement is deleted.
(j) Section 5.14 of the Agreement is amended to read as follows:
5.14 Audits. Permit Lender or representatives of Lender to conduct audits
of Borrower's books and records relating to the Accounts, Inventory, Leases,
Loan Contracts and other Collateral and make extracts therefrom no less
frequently than annually (or at any time and without notice required if an Event
of Default has occurred and is continuing) with results satisfactory to Lender,
provided that Lender shall use its best efforts to not interfere with the
conduct of Borrower's business, and arrange for verification of the Accounts
directly with the account debtors obligated thereon or otherwise, of the Leases
directly with the Lessees, and of the Loan Contracts directly with the Debtors,
all under reasonable procedures acceptable to Lender and at Borrower's sole
expense. Borrower shall pay all reasonable expenses incurred by Lender with
respect to such audits.
(k) Section 6.9 of the Agreement is amended by adding the following
sentence at the end: "Notwithstanding anything to the contrary indicated above,
Borrower shall not without Lender's prior written consent, after the end of a
particular Borrower's reinvestment period, pay distributions or dividends to
members, partners or shareholders of such particular Borrower, or redeem or
retire any interest of any partner, member or shareholder of such particular
Borrower if any amount of principal, interest or late charges remains
outstanding on Revolving Loans made to such particular Borrower. In addition, a
Borrower may not use proceeds received from the sale or other disposition of
assets after the end of its reinvestment period to purchase Leases, Loan
Contracts or other assets."
(l) Section 7.1 of the Agreement is amended to read as follows:
7.1 Aggregate Tangible Net Worth. All Borrowers, in the aggregate, shall
maintain, as of the last day of the specified quarter, a Tangible Net Worth of
not less than $155,000,000.
(m) Section 7.3 of the Agreement is deleted and replaced by the following:
7.3 Total Liabilities to Tangible Net Worth. All Borrowers, in the
aggregate, shall maintain, as of the last day of each quarter, a ratio of total
liabilities to Tangible Net Worth of not greater than 3.00 to 1.00.
(n) Section 7.4 of the Agreement is deleted and replaced by the following:
7.4 Minimum Cash Balance. Borrower shall ensure that at all times the sum
of (a) the fair market value of Cash Equivalents owned by Borrower plus (b)
Borrower's Unused Loan Capacity totals at least $7,500,000. For purposes of this
section, "Borrower's Unused Loan Capacity" at any point in time equals the
amount by which the lesser of (i) the Borrowing Base or (ii) the Maximum
Revolving Amount exceeds the Obligations, as reflected to Lender's reasonable
satisfaction in the monthly report described in the next sentence. Borrower
shall provide to Lender as part of its monthly Borrowing Base/Eligible Borrowing
Base Contract Aging Report within 15 days of each month end, information
sufficient to show the amount of Cash Equivalents owned by it and its Unused
Loan Capacity.
(o) A new Section 10.19 is added to the Agreement, to read as follows:
10.19 Waivers and Consents. Except as otherwise expressly provided in this
Agreement, each Borrower waives notice of any Loans, notice of the occurrence of
any default, Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by Lender under or
in respect of any of the Obligations, any requirement of diligence or to
mitigate damages and, generally, to the extent permitted by applicable law, all
demands, notices, and other formalities of every kind in connection with this
Agreement (except as otherwise provided in this Agreement). Each Borrower hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Lender at any time or times in
respect of any default by any Borrower in the performance or satisfaction of any
term, covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Lender in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any time or
times, of any security for any of the Obligations or the addition, substitution
or release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay
in acting or failure to act on the part of Lender with respect to the failure by
any Borrower to comply with any of its respective Obligations, including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this section, afford grounds
for terminating, discharging or relieving any Borrower, in whole or in part,
from any of its Obligations, it being the intention of each Borrower that, so
long as any of the Obligations hereunder remain unsatisfied, the Obligations of
such Borrower shall not be discharged except by performance and then only to the
extent of such performance. The Obligations of each Borrower shall not be
diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with respect to
any Borrower or Lender. Each Borrower represents and warrants that it is
currently informed of the financial condition of all Borrowers and of all other
circumstances which a diligent inquiry would reveal and which bear upon the risk
of nonpayment of the Obligations, and will continue to keep so informed. Each
Borrower waives all rights and defenses arising out of an election of remedies
by Lender.
3. Continued Validity of Agreement. Except as amended by this Amendment,
the Agreement and all security agreements, guaranties, and other documents
executed by Borrower with or in favor of Lender (collectively referred to as
"Loan Documents"), shall continue in full force and effect as originally
constituted and are ratified and affirmed by the parties hereto. Each reference
in the Agreement or in the other Loan Documents to the Agreement shall mean the
Agreement as amended hereby unless the context otherwise requires. This
Amendment and the Agreement shall be read as one document. Without limiting the
generality of the foregoing, nothing in this Amendment entitles Borrower to
receive advances of any funds, or extends the maturity date for repayment,
beyond that expressly set forth in the Agreement.
4. Compliance with Loan Documents. Borrower 1, Borrower 2, Borrower 3 and
Borrower 4 each represents and warrants to Lender as follows: (a) as of the date
hereof, each Borrower has complied, and is in compliance, with all of the terms,
covenants and conditions of the Loan Agreement and the other Loan Documents
applicable to it; (b) as of the date hereof, there exists no Event of Default
under the Loan Agreement or any of the other Loan Documents or an event which
would constitute an Event of Default upon the lapse of time or upon the giving
of notice and the lapse of time specified therein; and (c) the representations
and warranties of each Borrower in the Loan Agreement and the other Loan
Documents are true and with the same effect as though such representations and
warranties had been made by such Borrower as of the date hereof. Each Borrower
further represents and warrants that, upon this Amendment becoming effective,
each Borrower will be in compliance with all of the terms, covenants, and
conditions of the Loan Agreement and the other Loan Documents, and all
representations and warranties will be true.
5. Authorization. Each party hereto represents to the other that the
individual executing this Amendment on its behalf is the duly appointed
signatory of such party and that such individual is authorized to execute this
Amendment by or on behalf of such party and to take all action required by the
terms of this Amendment.
6. When Amendment is Effective. This Amendment shall be deemed binding and
effective as of July 31, 2003 when this Amendment is executed by Borrower 1,
Borrower 2, Borrower 3, Borrower 4 and Lender.
7. Captions. Section headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each section applies equally to this entire Amendment.
8. No Novation. This Amendment is not intended to be, and shall not be
construed to create, a novation or accord and satisfaction, and, except as
otherwise provided herein, the Agreement shall remain in full force and effect.
9. Severability. Each provision of this Amendment shall be severable from
every other provision of this Amendment for the purpose of determining the legal
enforceability of any specific provision.
10. Entire Agreement. This Amendment constitutes the entire agreement by
and between Borrower and Banks with respect to the subject matter hereof and
supersedes all prior and contemporaneous negotiations, communications,
discussions and agreements concerning such subject matter.
11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first set forth above.
ICON CASH FLOW PARTNERS L.P. ICON INCOME FUND NINE, LLC,
SEVEN, a Delaware Limited Partnership a Delaware Limited Liability Company
By ICON Capital Corp., its general partner By: ICON Capital Corp., its manager
By:___________________________ By:__________________________
Paul B. Weiss, President Paul B. Weiss, President
ICON INCOME FUND EIGHT A L.P., COMERICA BANK,
SUCCESSOR BY MERGER TO COMERICA
a Delaware Limited Partnership BANK-CALIFORNIA
By ICON Capital Corp., its general partner
By: ___________________________
By:_____________________________
Paul B. Weiss, President
ICON INCOME FUND EIGHT B L.P.,
a Delaware Limited Partnership
By ICON Capital Corp., its general partner
By:______________________________
Paul B. Weiss, President
Exhibit 5
Notice to Debtor/Lessee
[Stationery of Borrower]
[Date]
[Name and Address
of Debtor/Lessee]
Re: [Identify Loan Contract/Lease]
Gentlemen:
The undersigned is the [lender/lessor] on the above contract. This letter
is to inform you that the undersigned has assigned to Comerica Bank the right to
receive payments hereafter made on that contract. Accordingly, all payments you
make to the undersigned on the above contract should hereafter be made payable
to [Name of applicable Borrower] and sent to Post Office Box
________________________[Address]. If you do not remit your payments in that
manner and send the payments to that address, the payments may not discharge
your obligation under that contract.
Thank you for your cooperation in this matter. This instruction is
irrevocable and may not be changed without the written consent of Comerica Bank.
This letter does not, however, change the identity of the persons to whom you
are otherwise obligated to give notices with respect to the above contract.
Yours truly,
[SIGNATURE BLOCK FOR
APPLICABLE BORROWER]
Cc: Comerica Bank
Exhibit 6
Notice to Non-Affiliate Lender/Lessor on Indirect Loan Contracts and Indirect
Leases
[Stationery of Borrower]
[Date]
[Name and Address
of Non-Affiliate
Lender/Lessee]
Re: [Identify Applicable Indirect Loan Contract/Indirect Lease]
Gentlemen:
The undersigned is one of the [partners/members/beneficiaries]of [name of
Addressee]. [Name of Addressee] is the [lender/lessor] under the above contract.
This letter is to notify you that the undersigned has assigned to Comerica Bank
the right to receive payments hereafter payable by you to the undersigned in
connection with that contract. Accordingly, all payments you make to the
undersigned in connection with that contract should hereafter be made payable to
[Name of applicable Borrower] and sent to Post Office Box ____________[Address].
If you do not remit your payments in that manner and send the payments to that
address, the payments may not discharge your obligation.
Thank you for your cooperation in this matter. This instruction is
irrevocable and may not be changed without the written consent of Comerica Bank.
This letter does not, however, change the identity of the persons to whom you
are otherwise obligated to give notices with respect to the above contract.
Yours truly,
[SIGNATURE BLOCK FOR
APPLICABLE BORROWER]
Cc: Comerica Bank
Exhibit 7
Notice from Affiliate Lender/Lessor on Indirect Loan Contracts and Indirect
Leases
[Stationery of Affiliate Lender/Lessor]
[Date]
[Name and Address
of Debtor/Lessee]
Re: [Identify Loan Contract/Lease]
Gentlemen:
The undersigned is the [lender/lessor] on the above contract. This letter
is to inform you that the undersigned has assigned to Comerica Bank the right to
receive payments hereafter made on that contract. Accordingly, all payments you
make to the undersigned on the above contract should hereafter be made to [Name
of Affiliate] and sent to Post Office Box ______________ [Address]. If you do
not remit your payment in that manner and send the payments to that address, the
payment may not discharge your obligation under that contract.
Thank you for your cooperation in this matter. This instruction is
irrevocable and may not be changed without the written consent of Comerica Bank.
This letter does not, however, change the identity of the persons to whom you
are otherwise obligated to give notices with respect to the above contract.
Yours truly,
[SIGNATURE BLOCK
FOR AFFILIATE]
Cc: Comerica Bank
FOURTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
made as of November 3, 2003 by and between ICON Cash Flow Partners L.P. Seven, a
Delaware limited partnership ("Borrower 1"), ICON Income Fund Eight A L.P., a
Delaware limited partnership ("Borrower 2"), ICON Income Fund Eight B L.P., a
Delaware limited partnership ("Borrower 3"), and ICON Income Fund Nine, LLC, a
Delaware limited liability company ("Borrower 4" and together with Borrower 1,
Borrower 2 and Borrower 3, "Borrower" or "Borrowers"), on the one hand, and
Comerica Bank, successor by merger to Comerica Bank-California ("Lender"), on
the other hand, with respect to the Loan and Security Agreement, dated as of May
30, 2002, the First Amendment to Loan and Security Agreement, dated as of
December 1, 2002, entered into by Borrower 1, Borrower 2, Borrower 3, and
Comerica Bank-California, the Second Amendment to Loan and Security Agreement,
dated as of April 9, 2003, entered into by Borrower 1, Borrower 2, Borrower 3,
Borrower 4 and Comerica Bank-California, the letter agreement dated May 31, 2003
entered into by Borrower 1, Borrower 2, Borrower 3, Borrower 4 and Comerica
Bank-California, and the Third Amendment to Loan and Security Agreement dated as
of July 31, 2003, entered into by Borrower 1, Borrower 2, Borrower 3, Borrower 4
and Comerica Bank (as amended and modified through but excluding the date
hereof, the "Agreement")."
RECITALS
WHEREAS, Borrower and Lender entered into the Agreement;
WHEREAS, the Revolving Loan Maturity Date under the Agreement is May 31,
2004;
WHEREAS, Borrower has requested that Lender extend the Revolving Loan
Maturity Date to December 31, 2004 and make certain other changes in the
Agreement;
WHEREAS, Lender is willing to agree to Borrower's request, on the terms and
conditions set forth below;
NOW, THEREFORE, IT IS AGREED THAT:
1. Definitions. Unless otherwise indicated, words and terms which are
defined in the Agreement shall have the same meaning where used herein.
3. Amendments.
(a) The definition of "Revolving Loan Maturity Date" in the Agreement is
amended to read as follows:
Revolving Loan Maturity Date - December 31, 2004.
(b) Section 1.11 of the Agreement is deleted.
(c) Section 3.1.5 of the Agreement is amended to read as follows:
3.1.5 Insurance. Borrower shall have delivered to Lender satisfactory
evidence of insurance coverage required by Section 5.3 of this Agreement, to the
extent requested by Lender.
(d) Section 5.3 of the Agreement is amended to read as follows:
5.3 Insurance. Maintain, or cause the Lessee under each Lease and the
Debtor under each Loan Contract or Indirect Loan Contract to maintain, insurance
on the equipment subject thereto with responsible insurance carriers, insuring
against loss or damage by fire, theft, explosion, sprinklers and all other
hazards and risks ordinarily insured against by other owners who use such
equipment in similar businesses, for the full insurable value thereof; and
provide evidence of such insurance to Lender upon Lender's request. This Section
5.3 does not require Borrower to have Lender added as a loss payee or additional
insured on insurance policies for Revolving Loan Contracts, although Lender may
impose such a requirement if an Event of Default has occurred.
3. Continued Validity of Agreement. Except as amended by this Amendment,
the Agreement and all security agreements, guaranties, and other documents
executed by Borrower with or in favor of Lender (collectively referred to as
"Loan Documents"), shall continue in full force and effect as originally
constituted and are ratified and affirmed by the parties hereto. Each reference
in the Agreement or in the other Loan Documents to the Agreement shall mean the
Agreement as amended hereby unless the context otherwise requires. This
Amendment and the Agreement shall be read as one document. Without limiting the
generality of the foregoing, nothing in this Amendment entitles Borrower to
receive advances of any funds, or extends the maturity date for repayment,
beyond that expressly set forth in the Agreement.
4. Compliance with Loan Documents. Borrower 1, Borrower 2, Borrower 3 and
Borrower 4 each represents and warrants to Lender as follows: (a) as of the date
hereof, each Borrower has complied, and is in compliance, with all of the terms,
covenants and conditions of the Loan Agreement and the other Loan Documents
applicable to it; (b) as of the date hereof, there exists no Event of Default
under the Loan Agreement or any of the other Loan Documents or an event which
would constitute an Event of Default upon the lapse of time or upon the giving
of notice and the lapse of time specified therein; and (c) the representations
and warranties of each Borrower in the Loan Agreement and the other Loan
Documents are true and with the same effect as though such representations and
warranties had been made by such Borrower as of the date hereof. Each Borrower
further represents and warrants that, upon this Amendment becoming effective,
each Borrower will be in compliance with all of the terms, covenants, and
conditions of the Loan Agreement and the other Loan Documents, and all
representations and warranties will be true.
5. Authorization. Each party hereto represents to the other that the
individual executing this Amendment on its behalf is the duly appointed
signatory of such party and that such individual is authorized to execute this
Amendment by or on behalf of such party and to take all action required by the
terms of this Amendment.
6. When Amendment is Effective. This Amendment shall be deemed binding and
effective as of November 3, 2003 when this Amendment is executed by Borrower 1,
Borrower 2, Borrower 3, Borrower 4 and Lender.
7. Captions. Section headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each section applies equally to this entire Amendment.
8. No Novation. This Amendment is not intended to be, and shall not be
construed to create, a novation or accord and satisfaction, and, except as
otherwise provided herein, the Agreement shall remain in full force and effect.
9. Severability. Each provision of this Amendment shall be severable from
every other provision of this Amendment for the purpose of determining the legal
enforceability of any specific provision.
10. Entire Agreement. This Amendment constitutes the entire agreement by
and between Borrower and Banks with respect to the subject matter hereof and
supersedes all prior and contemporaneous negotiations, communications,
discussions and agreements concerning such subject matter.
11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first set forth above.
ICON CASH FLOW PARTNERS L.P. ICON INCOME FUND NINE, LLC,
SEVEN, a Delaware Limited Partnership a Delaware Limited
Liability Company
By ICON Capital Corp., its general partner By: ICON Capital Corp.,
its manager
By:___________________________ By:__________________________
Paul B. Weiss, President Paul B. Weiss, President
ICON INCOME FUND EIGHT A L.P., COMERICA BANK, SUCCESSOR BY
MERGER TO COMERICA
a Delaware Limited Partnership BANK-CALIFORNIA
By ICON Capital Corp., its general partner
By: ___________________________
By:_____________________________ Todd Robertson
Paul B. Weiss, President Corporate BankingOfficer-
Western Division
ICON INCOME FUND EIGHT B L.P.,
a Delaware Limited Partnership
By ICON Capital Corp., its general partner
By:______________________________
Paul B. Weiss, President
FIFTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
made as of July 29, 2004 by and between ICON Cash Flow Partners L.P. Seven, a
Delaware limited partnership ("Borrower 1"), ICON Income Fund Eight A L.P., a
Delaware limited partnership ("Borrower 2"), ICON Income Fund Eight B L.P., a
Delaware limited partnership ("Borrower 3"), ICON Income Fund Nine, LLC, a
Delaware limited liability company ("Borrower 4"), and ICON Income Fund Ten,
LLC, a Delaware limited liability company ("Borrower 5" and together with
Borrower 1, Borrower 2, Borrower 3 and Borrower 4, "Borrower" or "Borrowers"),
on the one hand, and Comerica Bank, successor by merger to Comerica
Bank-California ("Lender"), on the other hand, with respect to the Loan and
Security Agreement, dated as of May 30, 2002, entered into by Borrower 1,
Borrower 2, Borrower 3 and Comerica Bank-California; the First Amendment to Loan
and Security Agreement, dated as of December 12, 2002, entered into by Borrower
1, Borrower 2, Borrower 3, Borrower 4 and Comerica Bank-California; the Second
Amendment to Loan and Security Agreement, dated as of April 9, 2003, entered
into by Borrower 1, Borrower 2, Borrower 3, Borrower 4 and Comerica
Bank-California; the letter agreement dated May 31, 2003 entered into by
Borrower 1, Borrower 2, Borrower 3, Borrower 4 and Comerica Bank-California; the
Third Amendment to Loan and Security Agreement, dated as of July 31, 2003,
entered into by Borrower 1, Borrower 2, Borrower 3, Borrower 4 and Comerica
Bank; and the Fourth Amendment to Loan and Security Agreement, dated as of
November 3, 2003, entered into by Borrower 1, Borrower 2, Borrower 3, Borrower 4
and Comerica Bank (as amended and modified through but excluding the date
hereof, the "Agreement")."
RECITALS
WHEREAS, Borrower 1, Borrower 2, Borrower 3, Borrower 4 and Lender entered
into the Agreement;
WHEREAS, Borrower 1, Borrower 2, Borrower 3, Borrower 4, and Borrower 5
have requested that Borrower 5 be added as a Borrower under the Agreement;
WHEREAS, Lender is willing to agree to Borrower's request, on the terms and
conditions set forth below;
NOW, THEREFORE, IT IS AGREED THAT:
1. Definitions. Unless otherwise indicated, words and terms which are
defined in the Agreement shall have the same meaning where used herein.
2. Amendments.
(b) Borrower 5 is deemed a "Borrower," as that term is defined in the
Agreement.
(b) Section 1.9.1 of the Agreement is amended by inserting the following
sentence immediately before the last sentence in the first paragraph:
Borrower authorizes Lender to automatically deduct from deposit account
number 1892721851 maintained by Borrower 5 with Lender the portion of the amount
of principal, interest and late charges due allocable to Borrower 5 (which
allocation shall be based on Loans to Borrower 5 and payments by Borrower 5).
(c) Section 4.1 of the Agreement is amended by inserting the following
sentence immediately after the fourth sentence:
Borrower 5 is a limited liability company, duly organized and existing and
in good standing under the laws of the state of Delaware, which shall survive at
least two years beyond the maturity of any Loans hereunder.
(d) Section 4.7 of the Agreement is amended by inserting the following
sentence at the end:
The chief executive office of Borrower 5 is located in New York City, New
York. Borrower 5's Organizational Identification Number is 3610250. Borrower 5's
Tax Identification Number is 35-2193184.
(e) Exhibits 1, 2 and 3 to the Agreement are deleted and replaced by
Exhibits 1, 2 and 3 to this Amendment.
3. Continued Validity of Agreement. Except as amended by this Amendment,
the Agreement and all security agreements, guaranties, and other documents
executed by Borrower with or in favor of Lender (collectively referred to as
"Loan Documents"), shall continue in full force and effect as originally
constituted and are ratified and affirmed by the parties hereto. Borrower 5 is
bound by the Loan Documents, as amended by this Amendment, to the same extent as
if it had executed them. Each reference in the Agreement or in the other Loan
Documents to the Agreement shall mean the Agreement as amended hereby unless the
context otherwise requires. This Amendment and the Agreement shall be read as
one document. Without limiting the generality of the foregoing, nothing in this
Amendment entitles Borrower to receive advances of any funds, or extends the
maturity date for repayment, beyond that expressly set forth in the Agreement.
4. Compliance with Loan Documents. Each Borrower represents and warrants to
Lender as follows: as of the effective date of this Amendment, each Borrower has
complied, and is in compliance, with all of the terms, covenants and conditions
of the Loan Agreement and the other Loan Documents applicable to it. As of the
effective date of this Amendment, there exists no Event of Default under the
Loan Agreement or any of the other Loan Documents or an event which would
constitute an Event of Default upon the lapse of time or upon the giving of
notice and the lapse of time specified therein. The representations and
warranties of each Borrower in the Loan Agreement and the other Loan Documents
are true and with the same effect as though such representations and warranties
had been made by such Borrower as of the date hereof. Each Borrower will
continue to be in compliance with all of the terms, covenants, and conditions of
the Loan Agreement and the other Loan Documents, and all representations and
warranties will continue to be true, upon this Amendment becoming effective.
5. Authorization. Each party hereto represents to the other that the
individual executing this Amendment on its behalf is the duly appointed
signatory of such party and that such individual is authorized to execute this
Amendment by or on behalf of such party and to take all action required by the
terms of this Amendment.
6. When Amendment is Effective. This Amendment shall be deemed binding and
effective if all of the following conditions are satisfied within seven days
after the date of this Amendment (or such longer time as the Bank in its sole
discretion agrees), and, in such event, at the time the last of the conditions
is satisfied:
(a) This Amendment is executed by Borrower 1, Borrower 2, Borrower 3,
Borrower 4, Borrower 5, and Lender, and Lender has received the fully executed
Amendment;
(b) Lender shall have received an original, executed Amended and Restated
Promissory Note from Borrowers, in the form of Exhibit 2 hereto, duly completed;
(c) Lender shall have filed a UCC financing statement with the appropriate
official of the state where Borrower 5 is located;
(d) Lender shall have received certified copies of the organizational
documents and operating agreements of Borrower 5 and its manager, in form and
substance satisfactory to Lender;
(e) Lender shall have received certified copies of all action taken by
Borrowers to authorize the execution, delivery and performance of the Loan
Documents, and identifying the persons authorized to sign Loan Documents on
behalf of each Borrower;
(f) Lender shall have received good standing certificates from the
appropriate secretary of state of the state in which each Borrower and its
general partner or manager, as the case may be, are organized;
(g) Lender shall have received UCC searches for each Borrower that are
satisfactory to Lender;
(h) Borrower 5 shall have become a party to the Contribution Agreement
referred to in Section 5.18 of the Agreement, or an amended and restated
contribution agreement, by means of a document executed by all Borrowers, and
Lender shall have received a copy of such executed document;
(i) Lender shall have received an opinion from counsel for Borrowers in
form and substance satisfactory to Lender.
7. Captions. Section headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each section applies equally to this entire Amendment.
8. No Novation. This Amendment is not intended to be, and shall not be
construed to create, a novation or accord and satisfaction, and, except as
otherwise provided herein, the Agreement shall remain in full force and effect.
9. Severability. Each provision of this Amendment shall be severable from
every other provision of this Amendment for the purpose of determining the legal
enforceability of any specific provision.
10. Entire Agreement. This Amendment constitutes the entire agreement by
and between Borrower and Banks with respect to the subject matter hereof and
supersedes all prior and contemporaneous negotiations, communications,
discussions and agreements concerning such subject matter.
11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first set forth above.
ICON CASH FLOW PARTNERS L.P. ICON INCOME FUND NINE, LLC,
SEVEN, a Delaware Limited Partnership a Delaware Limited Liability Company
By ICON Capital Corp., its general partner By: ICON Capital Corp., its manager
By:___________________________ By:__________________________
Thomas W. Martin Thomas W. Martin
Executive Vice President Executive Vice President
ICON INCOME FUND EIGHT A L.P., ICON INCOME FUND TEN, LLC,
a Delaware Limited Partnership A Delaware Limited Liability Company
By ICON Capital Corp., its general partner By: ICON Capital Corp., its manager
By:_____________________________ By: _________________________
Thomas W. Martin Thomas W. Martin
Executive Vice President Executive Vice President
Address for Notices:
ICON INCOME FUND TEN, LLC
Attention: General Counsel
100 5th Avenue, 10th Floor
New York, New York 10011
Facsimile No.: (212) 418-4739
ICON INCOME FUND EIGHT B L.P., COMERICA BANK
a Delaware Limited Partnership;;
By ICON Capital Corp., its general partner
By: ___________________________
By:______________________________ Name:
Thomas W. Martin Title:
Executive Vice President
Exhibit 1
Borrower's Report
(Use Separate Form for Each Borrower's Loan Request)
To: Comerica Bank
1331 North California Blvd., Suite 400
Walnut Creek, California 94596
This Borrower's Report is being delivered to you pursuant to Section 1.1.3
of the Loan and Security Agreement, dated as of May 30, 2002, between ICON Cash
Flow Partners L.P. Seven, a Delaware limited partnership ("Borrower 1"), ICON
Income Fund Eight A L.P., a Delaware limited partnership ("Borrower 2"), ICON
Income Fund Eight B L.P., a Delaware limited partnership ("Borrower 3,"), ICON
Income Fund Nine, LLC, a Delaware limited liability company ("Borrower 4"), and
ICON Income Fund Ten, LLC, a Delaware limited liability company ("Borrower 5"
and together with Borrower 1, Borrower 2, Borrower 3, and Borrower 4 jointly and
severally, individually and collectively, "Borrower"), on the one hand, and
Comerica Bank ("Lender"), on the other hand (herein, as amended, modified,
supplemented, extended or restated from time to time, the "Loan Agreement").
Terms defined in the Loan Agreement are, unless otherwise defined herein or the
context otherwise requires, used herein as defined in the Loan Agreement.
Section references herein are to the applicable sections of the Loan Agreement.
Each Borrower hereby certifies to Lender as follows:
A. ICON Capital Corp. is the sole general partner of each Borrower, that is
a partnership and is the sole manager of each Borrower that is a limited
liability company.
B. ___________________________ is the duly qualified and acting
_________________ [title of officer] of ICON Capital Corp. and is authorized to
execute this document on behalf of each Borrower.
C. As of the date hereof, each Borrower has complied, and is in
compliance, with all of the terms, covenants and conditions of the Loan
Agreement and the other Loan Documents applicable to it. As of the date
hereof, there exists no Event of Default under the Loan Agreement or any of
the other Loan Documents or an event which would constitute an Event of
Default upon the lapse of time or upon the giving of notice and the lapse
of time specified therein. The representations and warranties of each
Borrower in the Loan Agreement and the other Loan Documents are true and
with the same effect as though such representations and warranties had been
made by such Borrower as of the date hereof. Each Borrower will continue to
be in compliance with all of the terms, covenants, and conditions of the
Loan Agreement and the other Loan Documents, and all representations and
warranties will continue to be true, if the Loan being requested herein is
made.
D. Borrower hereby requests a Revolving Loan in the amount of
$___________ pursuant to Section 1.1.3 of the Loan Agreement based on (i)
the Present Value of the contracts identified on Schedule 1 attached
hereto; and (ii) Pledged Cash. Borrower hereby certifies that each of the
contracts identified on Schedule 1 is an Eligible Borrowing Base Contract,
and the Present Value shown for each such contract was calculated in
accordance with the terms of the Loan Agreement. Borrower also certifies
that the equipment identified on Schedule 1 is a true and correct
description of the equipment related to such contract. The Borrower to whom
the Revolving Loan is to be made is ________________________.
E. Attached hereto as Schedule 2 is a calculation, on a pro forma
basis, showing that, after the Requested Loan, Borrower shall be in
compliance with the Borrowing Base and each of the sublimits set forth in
the Agreement.
F. Borrower requests that the Loan be made to it on the following
date: _______________________.
G. Borrower requests that the proceeds of the Loan be disbursed by
Lender in the following manner: _________________________________________.
H. The following are true and correct computations as of
_________________ [date] of the items shown:
1. Maximum Loan Limitation
a. Maximum Availability:
i. Maximum Revolving Amount $17,500,000
ii. Borrowing Base $___________
iii. Lesser of i. or ii., above: $___________
b. Less: Principal Amount Outstanding
of All Revolving Loans, Prior to New
Revolving Loan $___________
c. Net Available: $___________
d. Amount of New Revolving Loan
(May Not Exceed 1.c., above) $___________
2. Individual Borrower Loan Limitation.
a. Name of Borrower to Whom New Revolving
Loan is Made ______________________________________________
b. Tangible Net Worth of Borrower to Whom New
Revolving Loan is Made $___________
c. One-half of 2.b., above: $___________
d. Principal Amount Outstanding of All Revolving Loans
to Individual Borrower to Whom New Revolving Loan
is Made, Including New Revolving Loan
(May Not Exceed 2.c., above) $___________
3. Minimum Cash Balance (after Revolving Loan)
a. Fair Market Value of Cash Equivalents Owned
by Borrower $_______________
b. Borrower's Unused Loan Capacity
(defined as the amount by which the lesser of
(i) the Borrowing Base or (ii) the Maximum
Revolving Amount exceeds the Obligations) $_______________
c. Sum of a and b (Must be at least $7,500,000) $_______________
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Borrowing/Borrower's Report on ______________________ [date].
ICON CASH FLOW PARTNERS L.P. SEVEN
By: ICON Capital Corp., its general partner
By:
Name:
Title:
ICON INCOME FUND EIGHT A L.P.
By: ICON Capital Corp., its general partner
By:_________________________________
Name:____________________________
Title:_____________________________
ICON INCOME FUND EIGHT B L.P.
By: ICON Capital Corp., its general partner
By:________________________________
Name:___________________________
Title:____________________________
ICON INCOME FUND NINE, LLC
By: ICON Capital Corp., its manager
By:________________________________
Name:___________________________
Title:____________________________
ICON INCOME FUND TEN, LLC
By: ICON Capital Corp., its manager
By: ______________________________
Name:________________________
Title: ________________________
Exhibit 2
Amended and Restated
Promissory Note
$17,500,000.00
Date: July 29, 2004
FOR VALUE RECEIVED, the undersigned, ICON Cash Flow Partners L.P. Seven, a
Delaware limited partnership, ICON Income Fund Eight A L.P., a Delaware limited
partnership, ICON Income Fund Eight B L.P., a Delaware limited partnership, ICON
Income Fund Nine, LLC, a Delaware limited liability company, and ICON Income
Fund Ten, LLC, a Delaware limited liability company, jointly and severally
promise to pay to the order of Comerica Bank ("Bank") the principal sum of
Seventeen Million Five Hundred Thousand Dollars and No Cents ($17,500,000.00)
or, if less, the unpaid principal amount owed pursuant to the Loan made by Bank
under the Loan and Security Agreement, dated May 30, 2002 between ICON Cash Flow
Partners L.P. Seven, a Delaware limited partnership, ICON Income Fund Eight A
L.P., a Delaware limited partnership, ICON Income Fund Eight B L.P., a Delaware
limited partnership, ICON Income Fund Nine, LLC, a Delaware limited liability
company, and ICON Income Fund Ten, LLC, a Delaware limited liability company, on
the one hand, and Comerica Bank, on the other hand, as amended, modified
supplemented, extended or restated from time to time ("Loan Agreement"), on the
dates and in the amounts set forth in the Loan Agreement. The undersigned
further promises to pay interest on the unpaid principal amount hereof on the
dates and at the rates calculated in accordance with the Loan Agreement.
The principal of and interest on this Note shall be payable in lawful money
of the United States of America, in immediately available funds without set-off
or counterclaim, without penalty or premium, free and clear of, and without
deduction for, any taxes, restrictions or conditions of any nature (except as
otherwise permitted by the Loan Agreement). All payments hereunder shall be made
to the Bank at 1331 North California Boulevard, Suite 400, Walnut Creek,
California 94596, or such other address as Bank may designate in writing.
This Note is one of the Notes referred to in the Loan Agreement. Reference
is made to the Loan Agreement for provisions relating to, among other things,
prepayment and acceleration of the maturity hereof. Borrower will promptly pay
all costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel) suffered or incurred by Bank in connection with the
enforcement by Bank of its right to payment of any sum hereunder or any of its
rights hereunder.
Capitalized terms used but not otherwise defined herein are used as defined
in the Loan Agreement. This Note shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned have caused this Note to be executed as
of the date first written above.
ICON CASH FLOW PARTNERS L.P. ICON INCOME FUND EIGHT A, L.P.,
SEVEN, a Delaware limited partnership a Delaware limited partnership
By: ICON Capital Corp., its general partner By: ICON Capital Corp., its general partner
By: ______________________________ By: _______________________________
Thomas W. Martin Thomas W. Martin
Executive Vice President Executive Vice President
ICON INCOME FUND EIGHT B, L.P., ICON INCOME FUND NINE, LLC,
a Delaware limited partnership, a Delaware Limited Liability Company
By: ICON Capital Corp., its general partner By: ICON Capital Corp., its manager
By: ______________________________ By:________________________________
Thomas W. Martin Thomas W. Martin
Executive Vice President Executive Vice President
ICON INCOME FUND TEN, LLC,
a Delaware limited liability company
By: ICON Capital Corp., its manager
By: ________________________________
Thomas W. Martin
Executive Vice President
Exhibit 3
Compliance Certificate
To: Comerica Bank
1331 North California Blvd., Suite 400
Walnut Creek, California 94596
This Compliance Certificate is given pursuant to Section 5.5.5 of that
certain Loan and Security Agreement, dated as of May 30, 2002, as amended,
modified, supplemented, extended or restated from time to time (the "Loan
Agreement"), by and between ICON Cash Flow Partners L.P. Seven, ICON Income Fund
Eight A L.P., ICON Income Fund Eight B L.P., ICON Income Fund Nine, LLC, and
INCON Income Fund Ten, LLC (collectively referred to as "Borrower"), on the one
hand, and Comerica Bank-California ("Lender"), on the other hand. All initially
capitalized terms used but not defined in this Compliance Certificate shall have
the meanings assigned to such terms in the Agreement. Section references herein
are to the applicable sections of the Loan Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
A. ICON Capital Corp. is the sole general partner of each Borrower, that is
a partner and is the sole
manager of each Borrower that is a limited liability company.
B. ______________ (the person signing this certificate) is the duly
qualified and acting Chief Financial Officer of ICON Capital Corp. and is
authorized to execute this document on behalf of each Borrower.
C. Except as stated in Paragraph D, below: (i) As of the date hereof, each
Borrower has complied, and is compliance with, all of the terms, covenants and
conditions of the Loan Agreement and the other Loan Documents applicable to it;
(ii) As of the date hereof, therein exists no Event of Default under the Loan
Agreement or any of the other Loan Documents or an event which constitute an
Event of Default upon the lapse of time or upon the giving of notice and the
lapse of time specified therein; and (iii) As of the date hereof, the
representations and warranties of each Borrower in the Loan Agreement and the
other Loan Documents are true and with the same effect as though such
representations and warranties had been made by such Borrower as of the date
hereof.
D. Exceptions to Paragraph C (if none, so
state):______________________________
______________________________________________________________________________
The financial statement of Borrower attached hereto dated as of
___________________, and submitted to Lender pursuant to the Loan Agreement
shows compliance with all financial covenants specified therein, and Borrower is
in compliance with all such financial covenants (unless otherwise noted below),
as follows:
COVENANT: ACTUAL:
7.1 Minimum Aggregate Tangible Net Worth: $155,000,000 $_____________
7.2 Minimum Tangible Net Worth for Each Borrower:
a. ICON Cash Flow Partners L.P. Seven $____________
i. Outstanding Balance on Revolving
Loans Made to That Borrower $_____________
ii. Required Tangible Net Worth for
that Borrower
(Twice Amount in (i)) $_____________
b. ICON Income Fund Eight A L.P. $_____________
i. Outstanding Balance on Revolving
Loans Made to that Borrower $_____________
ii. Required Tangible Net Worth for
that Borrower
(Twice Amount in (i)) $______________
c. ICON Income Fund Eight B L.P. $______________
i. Outstanding Balance on Revolving
Loans Made to that Borrower $______________
ii. Required Tangible Net Worth for
that Borrower
(Twice Amount in (i)) $______________
d. ICON Income Fund Nine, LLC $______________
i. Outstanding Balance on Revolving
Loans Made to that Borrower $______________
ii. Required Tangible Net Worth for
that Borrower
(Twice Amount in (i)) $______________
e. ICON Income Fund Ten, LLC $_______________
i. Outstanding Balance on Revolving
Loans Made to that Borrower $_______________
ii. Required Tangible Net Worth for
that Borrower
(Twice Amount in (i)) $__________________
7.3 Total Liabilities to Tangible Net
Worth (Must not be greater than
3.00 to 1.00) ________________
7.4 Minimum Cash Balance
a. Fair Market Value of Cash Equivalents Owned
By Borrower $________________
b. Borrower's Unused Loan Capacity
(defined as the amount by which the lesser of
(i) the Borrowing Base or (ii) the Maximum
Revolving Amount exceeds the Obligations) $________________
c. Sum of a and b (Must be at least $7,500,000) $________________
ICON CASH FLOW PARTNERS L.P. SEVEN
By: ICON Capital Corp., its general partner
By:_________________________
Name:
Title: Chief Financial Officer
ICON INCOME FUND EIGHT A, L.P.
By: ICON Capital Corp., its general partner
By:_________________________
Name:
Title: Chief Financial Officer
ICON INCOME FUND EIGHT B, L.P.
By: ICON Capital Corp., its general partner
By:_________________________
Name:
Title: Chief Financial Officer
ICON INCOME FUND NINE, LLC,
By: ICON Capital Corp., its manager
By:__________________________
Name:
Title: Chief Financial Officer
ICON INCOME FUND TEN, LLC
By: ICON Capital Corp., its manager
By: ____________________________
Name:
Title: Chief Financial Officer
Certifications - 10-Q
---------------------
EXHIBIT 32.1
I, Beaufort J.B. Clarke, certify that:
1. I have reviewed this quarterly report of ICON Income Fund Ten, LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the condensed consolidated financial statements and
other financial information included in this quarterly report, fairly
present in all material respects the consolidated financial condition,
results of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the Manager (or
persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: August 16, 2004
/s/ Beaufort J.B. Clarke
- -----------------------------
Beaufort J. B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
Manager of ICON Income Fund Ten, LLC
Certifications - 10-Q
---------------------
EXHIBIT 32.2
I, Thomas W. Martin, certify that:
1. I have reviewed this quarterly report of ICON Income Fund Ten, LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statements of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the condensed consolidated financial statements and
other financial information included in this quarterly report, fairly
present in all material respects the consolidated financial condition,
results of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures as
of the end of the period covered by this quarterly report based on
such evaluation; and
c) disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the board of directors of the Manager (or
persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control, are reasonably likely to materially
affect the registrant's ability to record, process, summarize and
report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls over financial reporting.
Dated: August 16, 2004
/s/ Thomas W. Martin
- ----------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
ICON Capital Corp.
Manager of ICON Income Fund Ten, LLC
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
June 30, 2004
EXHIBIT 33.1
I, Beaufort J.B. Clarke, Chairman and Chief Executive Officer of ICON
Capital Corp, the Manager of ICON Income Fund Ten, LLC, certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, (18 U.S.C. 1350), that, to the
best of my knowledge and belief:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2004
(the "Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in
all material respects, the financial condition and results of operations of ICON
Income Fund Ten, LLC.
Dated: August 16, 2004
/s/ Beaufort J.B. Clarke
------------------------------------------------------
Beaufort J.B. Clarke
Chairman and Chief Executive Officer
ICON Capital Corp.
Manager of ICON Income Fund Ten, LLC
ICON Income Fund Ten, LLC
(A Delaware Limited Liability Company)
June 30, 2004
EXHIBIT 33.2
I, Thomas W. Martin, Executive Vice President (Principal Financial and
Accounting Officer) of ICON Capital Corp, the Manager of ICON Income Fund Ten,
LLC, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, (18
U.S.C. 1350), that, to the best of my knowledge and belief:
(1) the Quarterly Report on Form 10-Q for the period ended June 30, 2004
(the "Periodic Report") which this statement accompanies fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(15 U.S.C. 78m); and
(2) the information contained in the Periodic Report fairly presents, in
all material respects, the financial condition and results of operations of ICON
Income Fund Ten, LLC.
Dated: August 16, 2004
/s/ Thomas W. Martin
-------------------------------------------------------
Thomas W. Martin
Executive Vice President
(Principal Financial and Accounting Officer)
ICON Capital Corp.
Manager of ICON Income Fund Ten, LLC