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EXHIBIT 10.1
Citibank,N.A.
Commercial Banking
153 East 53 rd Street, 4 th Floor
New York, NY 10022
January 20, 2009
Elk Associates Funding Corporation
747 Third Avenue
New York, NY 10017
Re: $380,000 borrowing base line of credit
Gentlemen or Ladies:
Citibank, N.A. ("Citibank") is pleased to advise
you it holds available for Elk Associates Funding Corporation (the
"Borrower"), a corporation organized and in good standing under the
laws of the State of New York, a line of credit (the "Line")
in the amount of $380,000, subject to the following terms and
conditions:
1.
Description of the Line :
Loans provided under the Line shall be evidenced
by Citibank’s Master Note (the "Note") in the amount of the
Line which Note shall bear interest at a rate to be elected by the
Borrowers at the time of each request for an advance equal to
either:
(i)
Prime Rate Option : A rate of
interest equal to 1% above the prime rate of interest announced by
the Bank from time to time at its principal office as its prime
commercial lending rate (the "Prime Rate"). Any change in the
Prime Rate shall take effect on the date of the change in the Prime
Rate.
(ii)
LIBOR Rate Option : A rate of
interest equal to the Reserve Adjusted LIBOR, as such term is
defined in the Note, plus a margin of 300 basis points for interest
periods of 30 or 60 days.
Interest on the unpaid principal balance of the
Note from time to time outstanding shall be payable monthly in
arrears commencing on the first day of the month following the date
of the first advance under the Note. Any advance under the
Line made by Citibank in its discretion shall be in an amount not
less than $100,000 for both Prime Rate and LIBOR Rate advances.
In the case of a Prime Rate advance, such
advance may be prepaid, in whole or in part; in increments of not
less than $100,000, without premium or penalty.
The Borrower agrees to indemnify Citibank and
hold Citibank harmless from any loss or expense that Citibank may
sustain or incur, as more particularly described in the Note should
the Borrower make any prepayment of the principal of an advance
hereunder bearing interest at the LIBOR Rate or in the event of a
default by the Borrower in the payment or performance of any terms
of the Note or this line letter.
The Borrower acknowledges and agrees that the
Line is uncommitted and requests for advances or extensions of
credit thereunder shall be approved in the discretion of Citibank,
which may refuse to make an extension of credit under the Line at
any time without prior notice to the Borrower, and that the
performance or compliance by the Borrower of the agreements
contained in this letter, or in any other document or agreement
evidencing or securing such advances or extensions of credit, shall
not obligate Citibank to make an advance or
provide an extension of credit thereunder.
Subject to the terms and conditions hereof, the
Line shall be available until April 30, 2009.
2.
Guarantors :
Repayment of all loans, extensions of credit and
financial accommodations provided under the Line together with
interest and costs thereon shall be guaranteed, jointly and
severally, by Ameritrans Capital Corporation ("Ameritrans"), EAF
Holding Corporation and Elk Capital Corporation (the "Guarantors")
pursuant to Citibank’s Guarantee of All Liability.
3.
Purpose of the Line :
The purpose of the Line shall be to pay down
prior $16,000,000 revolving line of credit.
4.
Security for the Line :
The Line shall be secured by a first priority
security interest in all assets and personal property of the
Borrower pursuant to Citibank’s General Security Agreement
and duly filed UCC-1 Financing Statements. The priority of
Citibank’s security interest shall be ranked equally with the
security interest in favor of Israel Discount Bank of New York
("IDB") and Bank Leumi USA ("Bank Leumi") pursuant to an
intercreditor agreement among the banks satisfactory to
Citibank.
5.
Conditions Precedent :
Prior to the Borrower’s initial request
for an advance under the Line, it shall have provided to Citibank,
(if it has not already done so):
(i)
A copy of the resolutions passed by the
Borrower’s Board of Directors certified by its Secretary as
being in full force and effect authorizing the borrowing described
herein and the execution of all documents and agreements required
by Citibank to evidence and secure the Line; and
(ii)
A copy of the resolutions passed by each
Guarantor’s Board of Directors or member, as applicable,
certified by the Secretary of such Guarantor or Member, as
applicable, as being in full force and effect authorizing the
delivery of the guarantee described herein and the execution of all
documents and agreements required by Citibank to evidence and
secure the Credit Facilities ; and
(iii)
A copy of the certificate of incorporation or
formation of the Borrower.
6.
Financial Reporting :
The Borrower shall provide to Citibank:
(i)
As soon as available, but in any event within
one hundred twenty (120) days after the last day of each fiscal
year, a balance sheet of the Borrower, as of such last day of the
fiscal year, and statements of income and retained earnings and
cash flows for such fiscal year prepared in accordance with
generally accepted accounting principles consistently applied, in
reasonable detail, such statements to be audited by a firm of
independent certified public accountants satisfactory to
Citibank.
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(ii)
As soon as available, but in any event within
one hundred twenty (120) days after the last day of each fiscal
year, copies of Form 10-K of Ameritrans, filed or to be filed with
the Securities and Exchange Commission, which shall include
consolidated and consolidating balance sheets and consolidated and
consolidating statements of income and retained earnings and cash
flows for such fiscal year, each prepared in accordance with
generally accepted accounting principles consistently applied, in
reasonable detail, such statements to be audited by a firm of
independent certified public accountants satisfactory to
Citibank.
(iii)
As soon as available, but in any event within
seventy five (75) days after the end of the Borrower’s first,
second and third fiscal quarter, a balance sheet of the Borrower,
and statements of income and retained earnings and cash flows of
the Borrower for such quarters, and the portion of the fiscal year
through such date, all in reasonable detail, such statements to be
prepared by the Borrower in accordance with generally accepted
accounting principles consistently applied.
(iv)
As soon as available, but in any event within
ninety (90) days after the end of each fiscal quarter, copies of
Form 10-Q of Ameritrans, filed or to be filed with the Securities
and Exchange Commission, which shall include consolidated and
consolidating balance sheets and consolidated and consolidating
statements of income and retained earnings and cash flows for such
quarter, each prepared in accordance with generally accepted
accounting principles consistently applied, in reasonable detail,
such statements to be audited by a firm of independent certified
public accountants satisfactory to Citibank.
Each of the financial statements specified in
Sections (i), (ii), (iii) and (iv) above shall be accompanied
by a certificate signed by the president or chief financial officer
of the Borrower to the effect that such statements fairly present
the financial condition of the Borrower and Ameritrans as of the
balance sheet date and results of the operations of the Borrower
and Ameritrans for the period(s) then ended in accordance with
generally accepted accounting principles consistently applied.
(v)
As soon as available, but in any event within
sixty (60) days after the end of each calendar quarter,
(a) copies of the Borrowing Base Certificates submitted
quarterly by the Borrower to the SBA demonstrating compliance with
the SBA borrowing formula and (b) copies of the
Borrower’s loan lists and copies of custodian reports
generated by IDB, all in form and substance satisfactory to
Citibank.
(vi)
As soon as available, but in any event within
thirty (30) days after the end of each calendar month, copies of
the Borrower’s delinquency reports, all in form and substance
satisfactory to Citibank.
(vii)
Such other financial or additional information
as Citibank may from time to time request.
7.
Special Requirements :
a.
The Borrower agrees to maintain on a quarterly
basis:
(i)
a tangible net worth (the sum of capital
surplus, earned surplus, capital stock and such other items as are
allowable under generally accepted accounting principles minus
deferred charges, intangibles, receivables due from stockholders,
officers or affiliates and treasury stock) in an amount not less
than $12,500,000.
(ii)
a maximum leverage ratio (the ratio of total
unsubordinated liabilities to "capital base") of not greater than
2.0 to 1.0. Capital Base shall mean the sum of capital surplus,
earned surplus, capital stock and such other items as are allowable
under generally accepted accounting principles and subordinated
liabilities minus deferred charges, intangibles, receivables due
from stockholders, officers or affiliates and treasury stock.
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b.
The Borrower covenants and agrees not to accept
credit facilities from institutional or other lenders of funds in
an amount in excess of $1,000,000 in the aggregate for all such
credit facilities, unless acceptance of those credit facilities
will result in full repayment and termination of the Line.
c.
The Borrower agrees that any security interest
in its assets and personal property that it may have previously
granted or may hereafter grant to the SBA will rank junior to the
security interest in favor of Citibank, IDB and Bank Leumi pursuant
to a form of subordination agreement satisfactory to Citibank.
d.
The Borrower agrees that the Line shall be
"cross defaulted" to the obligations of the Borrower to IDB and
Bank Leumi such that the occurrence of a default or event of
default under any of such obligations shall constitute a default
under the Line and the Note.
e.
The Borrower agrees to permit Citibank or its
agents or representatives to conduct an annual field examination of
the Borrower’s books and records and operations, which field
examination shall disclose no material adverse facts or
circumstances not currently known to Citibank. The Borrower
authorize and direct Citibank to charge any of its accounts
maintained at Citibank for such cost and expense.
f.
The Borrower agrees to operate its business in
such a manner as not to sustain or incur a net loss in any fiscal
year.
8.
XXXXXXX [Confidential and Proprietary
Information redacted] XXXXX
9.
Integration :
This letter amends, replaces and supersedes that
certain letter agreement dated November 5, 2008 (the "Original
Letter Agreement") between the Borrower and Citibank, which shall
be of no further force and effect. The terms and conditions of this
letter agreement and the rights and remedies of Citibank under this
letter agreement shall apply to all of the obligations incurred
prior to the date hereof pursuant to the Original Letter Agreement,
in addition to any obligations incurred on or after the date
hereof. This letter agreement does not constitute and shall
not be construed to evidence a novation of or a payment and
re-advance of any all loans, extensions of credit or financial
accommodations, interest or other sums, if any outstanding under
the Credit Line prior to the date hereof, it being the intention of
the Borrower, the Guarantor(s) and Citibank that this letter
agreement, together with the Credit Line, provide for the terms and
conditions of, and evidences, the same loans, extensions of credit
or financial accommodations as was outstanding prior to the date
hereof, in addition to any loans, extensions of credit or financial
accommodation incurred on or after the date hereof. The
indebtedness and obligations incurred prior to the date hereof, in
addition to any incurred on or after the date hereof, shall be and
shall continue to be secured as set forth in the Credit Line and
the liens granted to Citibank pursuant to the Credit Line shall
continue in full force and effect during the term of the Credit
Line and any renewals thereof.
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12.
Acceptance :
If the foregoing is acceptable, please so
indicate by signing and returning this letter together with the
administration fee before February 3, 2009 the date this letter
will otherwise expire, unless extended in writing by Citibank.
Very truly yours,
CITIBANK, N.A.
By:
/s/ Kel Christensen
Kel Christensen
Vice President
Agreed and Accepted this
20 th day of January, 2009
ELK ASSOCIATES FUNDING CORPORATION
By:
/s/ Gary C. Granoff
Name: Gary C. Granoff
Title: President
5
MASTER NOTE (Eurodollar/Prime
Rate)
$380,000
Date:
January 20, 2009
FOR VALUE RECEIVED, the undersigned, a
New York corporation, promises to pay to the order of CITIBANK,
N.A. (the "Bank"), on or before April 30, 2009 (the "Maturity
Date"), the sum of Three Hundred Eighty Thousand Dollars
($380,000), or, if less, the aggregate unpaid principal amount of
all advances made by the Bank pursuant to the line of credit (each
an "Advance" and collectively, the "Advances"), not to exceed an
aggregate amount at any one time outstanding of Three Hundred
Eighty Thousand Dollars ($380,000), available to the undersigned
hereunder (the "Line") together with interest thereon as set forth
herein.
Each Advance hereunder which is a Eurodollar
Advance (as defined below) shall bear interest on the unpaid
principal amount thereof for the Interest Period applicable thereto
at a rate per annum equal to the Libor Rate determined for each
Interest Period therefor in accordance with the terms of this Note
plus a margin of 300 basis points. Each Advance which is a
Prime Rate Advance (as defined below) shall bear interest on the
unpaid principal amount thereof from the date thereof until payment
of such Prime Rate Advance in full at a fluctuating rate per annum
equal to the Prime Rate plus a margin of 1% per annum. The
undersigned shall notify the Bank not later than 12 noon three
Business Days prior to each Advance hereunder which the undersigned
requests to maintain at a rate of interest based on Libor Rate (a
"Eurodollar Advance"), and not later than 12 noon on the date of
each Advanc
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