IDB
BANK
ISRAEL DISCOUNT BANK
OF NEW YORK
. MEMBER FDIC
511 FIFTH AVE. NEW
YORK, NY 10017-4997
. TEL: (212)
551-8500
EXHIBIT 10.2
January
29, 2009
Gary
Granoff, President
Elk
Associates Funding Corp.
747 Third Avenue
New York, NY 10017
Re:
Line Letter for
$420,000 Line of Credit
Dear Mr.
Granoff:
Israel
Discount Bank of New York (“IDB”) is pleased to advise
you that it is prepared to extend to Elk Associates Funding Corp.
(the “Borrower”), a corporation organized and in good
standing under the laws of the State of New York, an uncommitted
discretionary demand line of credit (“Line” or
“Credit Facility”) in the maximum principal amount of
$420,000.00, as pat of a co-lending facility in the amount of
$1,000,000 with Citibank, N.A. and Bank Leumi (and junior
indebtedness extended by the Small Business Administration
(“SBA”)), subject to the following terms and conditions
of this line letter agreement (“Line Letter”) used
forth below:
Borrower
may utilize this Line until April 30, 2009 (the “Expiration
Date”); provided, however, that Borrower acknowledges the
continuing availability of this Line is at all times subject to
IDB’s sole and absolute discretion, and nothing in this Line
Letter, the Note (as defined below) or any other documents relating
to this Line Letter, or the enumeration in this Line Letter or the
Note of specific events of default, conditions and/or covenants
shall be construed to qualify, define or otherwise limit
IDB’s right, power, or ability, at any time, under applicable
law, to (a) cancel this Line without prior notice, (b) demand
payment of the entire outstanding principal amount, accrued
interest and other fees and expenses due under this Line and the
Note or (c) deny any extension of credit under this Line.
Borrower agrees that Borrower’s breach of or default
under any enumerated obligations or conditions is not only basis
for demand to be made or for a request for an extension of credit
to be denied, as Borrower’s obligation to make payment shall
at all times remain a demand obligation. Notwithstanding
anything in this Line Letter to the contrary, this Line Letter does
not create a commitment or obligation to lend by IDB and Borrower
acknowledges that IDB has no obligation to lend.
Credit
Facility:
IDB
establishes for the benefit of the Borrower the uncommitted Credit
Facility pursuant to which IDB may, in its sole discretion and
pursuant to the Borrower’s requests, make advances under a
revolving credit line (“Revolving Credit Line” as
further described below in subparagraph (a)) in the aggregate
amount of the lesser of: (i) $420,000.00 or (ii) IDB’s pro
rata share of the Borrowing Base (“Maximum Credit
Amount”). Subject to such availability, such extensions
of credit shall be available under the Line and limited to the
following sublimits:
(a)
Revolving Credit
Line. Advances under
the Revolving Credit Line shall be evidenced by
IDB’s Demand Grid Promissory Note (the “Note”) in
the principal amount of $420,000. Any advance under the Line
made at the discretion of IDB shall be in an amount not less than
$100,000.00.
Purpose
:
The purpose
of the Credit Facility shall be for working capital.
Interest
and
Interest.
Principal
Payments:
(a)
Rate
.
Each advance under the Revolving Credit Line shall bear
interest at a rate of interest established by IDB as its prime rate
of interest, as determined by IDB from (the “Prime
Rate”), plus a margin of 100 basis points. Any change
in the Prime Rate shall take effect on the date of the change in
the Prime Rate; or
(b)
Interest
Payments . Interest on the
unpaid principal balance of the Note from time to time outstanding
shall be payable monthly pursuant to the terms of this
Note.
(c)
Interest
Rate Floor . There shall be
an interest rate floor of 4.00% for all borrowings under the Credit
Facility.
Principal.
Prior to
the Expiration Date and further provided that no Event of Default
has occurred, the unpaid principal amount due under the Line may be
repaid and reborrowed in accordance with and pursuant to the terms
of the Note.
All
payments of interest, principal and other fees and other charges
shall be payable no later than the Expiration Date, or upon the
occurrence and continuation of an Event of Default.
Borrowing
Base:
As noted
above, the Maximum Credit Amount for the Credit Facility shall be
the lesser of: (i) $420,000.00; or (ii) IDB’s pro rata share
of the Borrowing Base. The Borrowing Base shall mean that
amount of Bank debt plus SBA debt not to exceed:
a)
80% of
eligible receivables (less than 90 days past due) taxi loans, and
diversified loans, or assets acquired, excluding all bank
syndicated loans, plus
b)
70% of
ineligible taxi loans where such loans are less than 70% of
medallion values, plus
c)
50% of
delinquent diversified loans secured by first liens, real estate
owned equity investments or leased assets acquired, plus
d)
30% of
other assets, and loans with second mortgages on real estate,
plus
e)
60% of all
bank syndicated loans.
Fees
and
Charges:
Other fees
and charges applicable to the Credit Facility are set forth on
Schedule 1 . Additionally, other fees may be
applicable to deposit accounts and other financial products and
services offered by IDB, which are set forth in separate account
agreements and schedules applicable to such accounts and products,
and are subject to change.
Collateral:
The Credit
Facility shall be secured by a perfected first priority security
interest in all assets and personal property of the Borrower,
whether now owned or hereafter acquired, pursuant to IDB’s
General Security Agreement, duly filed UCC financing statements and
such other and further documentation as IDB determines necessary in
its discretion. The security interest in the Collateral by
and among IDB, Citibank, N.A., Bank Leumi, and the SBA is governed
by a separate intercreditor agreement.
Guarantees:
The
following guarantors (each, a “Guarantor”,
collectively, “Guarantors”) shall guarantee the full
and prompt repayment of all loans, extensions of credit and
financial accommodations provided under the Credit Facility
together with interest and costs thereon pursuant to IDB’s
Guaranty Agreement (the “Guarantee”). In
addition, the Line shall be guaranteed by all subsidiaries
hereafter formed or acquired by the Borrower and each such new
subsidiary shall execute a Guarantee promptly after the
Bank’s request therefore.
|
|
|
Name
|
Address
|
|
Ameritrans Capital
Corp.
|
747 Third
Avenue
New York, NY
10017
|
Compensating
Balances:
The
Borrower agrees to maintain with the Bank deposit accounts having
average monthly balances, in the aggregate, of no less than
$400,000.00 (“Minimum Compensating Balance”). In
the event that the Borrower fails to maintain the Minimum
Compensating Balance, the interest rate per annum applicable to the
Prime Rate shall be increased by 200 basis points.
Covenants
and
Conditions:
The Credit
Facility is subject to the following financial covenants and
conditions:
1.
No
Change of Name . The Borrower
shall not change its name without the prior written consent of
IDB
2.
Compliance;
Existence . The Borrower
shall comply with laws and contractual obligations, payment of
obligations and preserve its existence.
Conditions
Precedent:
Prior to
the Borrower’s initial and each subsequent request for an
advance or financial accommodation under the Credit Facility, it
shall have provided to IDB the following:
1.
Payment of
all fees, expenses and charges invoiced by IDB;
2.
Satisfactory completion
of standard due diligence, including Know Your Customer procedures,
searches and reports required by IDB, including the Field Exam
confirming parameters of Borrowing Base, with all costs for the
account of the Borrower;
3.
Receipt of
satisfactory financial statements and projections for the current
fiscal year, which reflect compliance with all covenants of this
Line Letter;
4.
The
Borrower shall open and maintain its operating deposit accounts
with IDB; and
5.
The absence
of any action, suit, investigation or proceeding pending or
threatened in any court of before any arbitrator or governmental
authority that purports (a) to materially and adversely impact the
Borrower, its subsidiaries or any Guarantor, or (b) to affect any
transaction contemplated hereby or the ability of the Borrower, its
subsidiaries or any Guarantor to perform their respective
obligations under the Credit Facility.
Financial
Information:
The
Borrower agrees that, so long as any obligations under the Credit
Facility remain outstanding, the Borrower shall furnish to
IDB:
1.
Within 90
days after the end of each of its fiscal years, the financial
statements of the Borrower dated as of the end of the reported
fiscal year, which shall be audited by a certified public
accountant acceptable to IDB and be without material exception or
qualification, along with consolidating schedules of the
Borrower.
2.
Within 45
days of the fiscal quarter ending 3/30, 9/30 and 12/31 the
financial statements of the Borrower dated as of the end of the
reported fiscal quarters. These statements may be prepared by
management.
3.
Signed
monthly Borrowing Base Certificates by the 20 th of the
following month in form satisfactory to IDB and an accounts
receivable aging report, including a roll forward of accounts
receivable reflecting sales, collections and credits for the prior
month and such other information as IDB may require; and
4.
Notice of
default, litigation, proceedings or investigations, and material
changes in accounting or financing reporting practices.
Examinations:
The
Borrower shall allow representatives of IDB to examine any of its
books, records and collateral, at any reasonable time.
Examinations will normally take place once a year but may be
done more frequently at IDB’s discretion and shall be for the
account of the Borrower.
Documentation:
The
utilization of the Credit Facility will be subject to the execution
and delivery to IDB of such agreements, documents, instruments, and
certificates as may be requested by IDB and its counsel to evidence
the Credit Facility, guarantees, security interests and other
matters relating to the Credit Facility in form and substance
satisfactory to IDB and its counsel, in their sole discretion.
The loan documents shall contain normal and customary default
provisions, as applicable. Reasonable legal fees and costs
shall be for the account of the Borrower.
Negative
Covenants:
The
Borrower is prohibited from: (1) incurring additional debt; (ii)
granting liens (except as set forth in any intercreditor agreement
to which IDB is a party); (iii), entering into agreements for joint
ventures, mergers or sales of all or substantially all of
Borrower’s assets; (iv) guaranteeing the indebtedness of
other persons or entities; (v) making loans and advances to
officers and related entities; (vi) entering into transactions with
affiliates; or (vii) making material changes in the nature of its
business.
USA
Patriot Act :
To comply
with applicable law, the Borrower, Guarantors and beneficial owners
of the Borrower and Guarantor shall provide IDB with verifiable
information including: name, address, and corporate tax
identification number, date of birth and social security number (if
an individual) and other information. This information may be
shared with governmental agencies and regulators as required by
applicable law. The Borrower further confirms and represents
that it is in compliance with all applicable terms and conditions
under the USA PATRIOT Act.
General
Information
:
The
Borrower shall supply IBD with other such information, reports, and
statements as it may reasonably request, and agrees to cooperate
with IDB in order to comply with the terms and conditions of this
Line Letter.
Events
of
Default
:
The
following shall constitute events of default (“Events of
Default”) under the Line, entitling IDB to pursue all rights
and remedies available under the loan documents and applicable
law:
1.
Nonpayment
of principal or interest due under the Credit Facility;
2.
Nonpayment
of fees or other amounts due under the Credit Facility and such
nonpayment is not cured within 5 business days from the due
date;
3.
Any
representation or warranty providing to have been materially
incorrect when made or confirmed;
4.
Failure to
perform or observe covenants set forth in the loan documents within
5 business days from such failure:
5.
Commencement of a
bankruptcy or insolvency proceeding against the Borrower or
Guarantors (and, in cases of an involuntary proceeding only, such
action is not dismissed within 20 days);
6.
Actual or
asserted invalidity of any loan document related to the Credit
Facility;
7.
Change in
control or ownership of Borrower; and
8.
Any other
Events of Default set forth in the Note.
General
Indemnity
:
Borrower
shall indemnify IDB, its affiliates and their officers, directors,
employees, agents and advisors (each, an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses
(including the reasonable fees, charges and disbursements of any
counsel of any Indemnitee), incurred by any Indemnitee or asserted
against any Indemnitee by any third party, Borrower, its affiliates
or any Guarantor arising out of, in connection with, or as a result
of the execution and delivery of the loan documents for the Credit
Facility or any related agreement or instrument contemplated, the
performance by the parties to the loan documents or their
respective obligations under such agreements or the consummation of
the transactions contemplated by such agreements.
Waiver:
Jurisdiction:
IT IS
UNDERSTOOD AND AGREED THAT IN THE EVENT OF ANY LITIGATION OR ACTION
ARISING OUT OF OR RELATING TO THE CREDIT FACILITY OR THEIR BANKING
RELATIONSHIP, THE UNDERSIGNED PARTIES UNCONDITIONALLY AND
IRREVOCABLY WAIVE TRIAL BY JURY AND CONSENT TO THE JURISDICTION OF
THE COURTS OF (I) THE STATE OF NEW YORK OR (II) THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK LOCATED
IN THE BOROUGH OF MANHATTAN, NEW YORK. No waiver of any
terms or conditions of this Line Letter or any other loan
documents shall be effective unless set forth in writing and
executed by the Borrower and officers of IDB.
Applicable
Law:
This Letter
and the terms and conditions contained herein are to be construed
according to and governed by the internal laws of the State of New
York.
Acceptance
:
By
signing below, the Borrower and Guarantors agrees to the terms and
conditions set forth in this Line Letter, which terms may not be
amended or modified unless in a writing executed by the Borrower
and IDB. The Guarantors unconditionally and irrevocably waive
notice of any such amendments or modifications.
Please
indicate your agreement and acceptance of the foregoing by signing
and returning the enclosed copy of this letter by December _____,
2008. Should you have any questions, please contact the
undersigned at your convenience at (212) 551-8228.
Very truly
yours,
ISRAEL
DISCOUNT BANK OF NEW YORK
By:
____________________________________________
Name:
Kenneth Lipke
Title:
First
Vice President
By:
____________________________________________
Name:
Jeffrey Ackerman
Title:
Senior Vice
President
AGREED
AND ACCEPTED:
Borrower:
ELK
ASSOCIATES FUNDING CORP.
By: _/s/
Michael Feinsod _____________
Name:
Michael Feinsod
Title:
Senior Vice President
W:\AMERITRANS\SEC
filings\10-Q's\10Q February 2009\Exhibit 10.2.doc
IDB
BANK
Guarantor:
AMERITRANS CAPITAL
CORP.
By: _/s/
Michael Feinsod _____________
Name:
Michael Feinsod
Title:
Chief Executive Officer &
President
2
W:\AMERITRANS\SEC
filings\10-Q's\10Q February 2009\Exhibit 10.2.doc
IDB
BANK
Schedule
1
(Loan
Fees 1 )
|
|
|
Description of
Fee, Charge or Premium
|
Amount
|
|
Audit Confirmation Fee
(administrative costs associated with each responses to
auditors, accountants and other professionals)
|
$50.00
|
|
Custodial Monitoring
Fee (payable $5,000 quarterly)
|
$20,000 per
annum
|
|
Field Exam Fee (Annual)
(to be paid directly to field examiner)
|
Actual Fees
|
|
Late Payment Premium
(imposed after ten days from due date) 2
|
Greater of: (a) 5% of
Late Payment Amount; or (b) $200.00
|
|
Legal Fee (actual fees
for IDB’s counsel, or market rate for IDB’s in-house
counsel, for services rendered to and costs incurred by IDB in
connection with the review and preparation of loan documents and
other banking related services)
|
Actual fees or market
rate (in-house counsel) and costs
|
|
Overadvance Fee
(administrative costs associated with each advance exceeding
approved Maximum Credit Amount)
|
$500.00
|
|
Small Item Advances
(for each advance under the credit facility that is less than
$100,000)
|
$150.00
|
|
Small Item Paydowns
(for each principal paydown under the credit facility that is less
than $100,000)
|
$150.00
|
3
W:\AMERITRANS\SEC
filings\10-Q's\10Q February 2009\Exhibit 10.2.doc
IDB
BANK
DEMAND
GRID PROMISSORY NOTE
PRIME
RATE
$420,000
January
29, 2009
New
York, New York
FOR
VALUE RECEIVED , the
undersigned, ELK ASSOCIATES FUNDING CORP. (the “
Borrower ”) HEREBY PROMISES TO PAY to the order
of ISRAEL DISCOUNT BANK OF NEW YORK , its successors and
assigns (hereinafter the “ Bank ”), the
principal amount of Four Hundred and Twenty Thousand ($420,000.00),
in lawful money of the United States (the “ Loan
”), or the aggregate unpaid principal amount of all revolving
credit advances (hereinafter each being referred to as an “
Advance ” and collectively, the “
Advances ”) made to Borrower, as set forth on
Bank’s computer system on the Loan Enquiry Page(s) (the
“ Loan Enquiry Page(s) ”) ON DEMAND or on
the maturity date of each such Advance as shown on the Loan Enquiry
Page(s), and in no event later than the Maturity Date, and to pay
interest on the unpaid principal balance of this Demand Grid
Promissory Note (this “ Note”) in the manner and
at the rate as hereinafter specified and such amounts due
hereunder.
Borrower
acknowledges that this Note is an obligation which is payable on
demand and that notwithstanding anything to the contrary in any
other instrument, agreement or other document to which Borrower
and/or Bank is a party, the enumeration in any such document of
specific events of default, conditions and/or covenants relating to
the Advances evidenced by this Note or to any other Obligations,
shall not be construed to qualify, define or otherwise limit in any
way Bank’s right, power or ability, at any time, to make
demand for payment of the principal of and interest on this Note,
and Borrower agrees that the occurrence of any event of default or
breach of any condition or covenant in any such document is not the
only basis for demand to be made on this Note.
1.
Defined
Terms :
As
used in this Note the following terms shall have the following
meanings:
The
term “ Additional Costs ” shall have the meaning
as defined in Section 17.
The
terms “ Advance ” or “A dvances
” shall have the meanings as defined in the introductory
paragraph.
The
term “ Bank ” shall have the meaning as defined
in the introductory paragraph.
The
term “ Bankruptcy Code ” shall mean Title 11 of
the United States Code, as amended.
The
term “ Borrower ” shall have the meaning as
defined in the introductory paragraph.
The
term “ Business Day ” shall mean any day other
than a Saturday, Sunday, or other day on which commercial banks in
New York are authorized or required to close under the laws of the
State of New York.
The
term “ Collateral ” shall mean any and all of
the Borrower’s right, title and interest in and to all
properties, assets and rights of Borrower, whether now owned or
hereafter created, acquired or arising and wheresoever located
together with all of the proceeds and products thereof in which the
Bank has been granted or otherwise obtained a security
interest.
The
term “ Default Interest Rate ” shall have the
meaning as defined in Section 4.
The
term “ Event of Default ” shall mean any of the
events or conditions specified in Section 12
hereof.
The
term “ Guarantor ” means each endorser,
guarantor and surety of this Note or the Obligations evidenced
hereby and any person who is primarily or secondary liable, in
whole or in part, for the repayment of the Obligations or any
portion thereof (including without limitation each Guarantor), any
person who has granted security for the repayment of the
Obligations, together with such person’s heirs, personal
representatives, successors and assigns.
The
term “ Indebtedness ” shall mean all items of
indebtedness, obligation or liability, whether matured or
unmatured, liquidated or unliquidated, funded or unfunded, direct
or contingent, joint or several, which would properly be included
in the liability section of a balance sheet or in a footnote to a
financial statement in accordance with generally accepted
accounting principles, and shall also include (a) all indebtedness
guaranteed, directly or indirectly in any manner, or endorsed
(other than for collection or deposit in the ordinary course of
business) or sold with recourse, (b) all indebtedness in effect
guaranteed, directly or indirectly, through agreements, contingent
or otherwise, and (c) all indebtedness secured by (or for which the
holder of such indebtedness has a right, contingent or otherwise,
to be secured by) any mortgage, deed of trust, pledge, assignment,
lien, security interest or other charge or encumbrance upon
property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed or
guaranteed.
The
terms “ Indemnified Party ” or “
Indemnified Parties” shall have the meanings as
defined in Section 27.
The
term “ Interest ” means the annual rate of
interest payable on the outstanding Advances in accordance with
Section 3 and 4.
The
term “ Late Charge ” shall have the meaning as
defined in Section 10.
The
term “ Loan ” shall have the meaning as defined
in the introductory paragraph.
The
term “ Loan Documents ” shall mean the Note and
any other document, instrument or agreement and any amendments
thereto, evidencing or securing the Obligations, or now or at any
time hereafter executed, delivered or recorded in connection with
the Obligations, any other note, any loan commitment, requisition,
letter agreement, line of credit agreement, commercial financing
agreement, security agreement, guaranty of payment, mortgage, deed
of trust, pledge agreement, loan agreement, loan and security
agreement, hypothecation agreement, indemnity agreement, letter of
credit application and agreement, and assignment, all as amended,
restated, extended, renewed, supplemented, modified or replaced
from time to time.
The
term “ Loan Enquiry Page(s) ” shall have the
meaning as defined in the introductory paragraph.
The
term “ Margin ” shall mean: (i) one hundred
basis points (100 bps) for Prime Rate Advances.
The
term “ Maturity Date ” shall mean April 30,
2009.
The
term “ Minimum Advance ” shall have the meaning
as defined in Section 2(c).
The
term “ Note ” shall mean this Demand Grid
Promissory Note.
The
term “ Obligations ” shall mean all existing and
future debts, liabilities and obligations of every kind or nature
at any time owing by Borrower to Bank, whether under this Note or
any other existing or future instrument, document or agreement,
between Borrower and Bank, whether joint or several , related or
unrelated, primary or secondary, matured or contingent, due or to
become due, including, without limitation, the debts, liabilities
and obligations in respect of this Note and any extensions,
modifications, substitutions, increases and renewals thereof.
Without limiting the generality of the foregoing, Obligations
shall include any other loan, advance or extension of credit, under
any existing or future loan agreement, promissory note, or other
instrument, document or agreement either arising directly between
Borrower and Bank or acquired outright, conditionally or as
collateral security from another person or entity by
Bank.
The
term “ Obligor ” shall mean individually and
collectively Borrower, each endorser and surety of this Note, any
person who is primarily or secondary liable for the repayment of
this Note or any portion thereof (including without limitation each
Guarantor), any person who has gr
