Exhibit 10.23
December 27, 2005
Elk Associates Funding Corp.
747 Third Avenue
New York, NY 10017
Re: $16,000,000 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 $16,000,000, 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.
Each advance thereunder shall bear interest at a rate to be
elected
by the Borrower at the time of each request for an advance equal to
either:
(i) Prime Rate Option: A rate of
interest equal to 1/2%
below the prime rate of interest as published in the Money Rates
column
of the Wall Street Journal from time to time (the "Prime Rate").
Any change in the Prime Rate shall take effect on the date of
the change in the Prime Rate, or
(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 150 basis points for interest periods of 30, 60, or 90 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 the
amount not less than $100,000 for Prime Rate advances and $250,000
for
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.
<PAGE>
Notwithstanding anthing to the contrary contained herein,
availability
under the Line shall be subject to such limitations as may be
imposed by the
US. Small Business Administration (the "SBA") from time to time
pursuant to a
borrowing base formula established and monitored by the SBA.
In addition, availability under the Line shall be reduced by the
greater
of (a) a $237,000 assumed exposure under two $5,000,000 swap
agreements between
the Borrower and Citibank due October 15, 2007 and October 14,
2008,
respectively plus the assumed exposure on any hereafter created
swap agreements
or (b) the Bank's actual liability or obligations in connection
with such swap
agreements.
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 December 31, 2006.
2. Purpose of the Line:
The purpose of the Line shall be to support a portion of the
loan
portfolio of the Borrower.
3. 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 "Corporate Guarantors") and Medallion Auto Management LLC,
EAF Enterprises LLC,EAF Leasing II LLC and EAF Leasing III LLC
(the "LLC Guarantors") pursuant to Citibank's Guarantee of All
Liability.
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, the Corporate Guarantors and
the LLC
Guarantors 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 hae 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 certified
copy of the certificate of incorporation 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.
(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 ninety (90)
days after
the end of each fiscal quarter, copies of Form 10-Q Ameritrans,
filed or to be
filed with the Securities 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)
and
(iii) 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.
(iv) 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.
(v) 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.
(vi) Such other
financial or additional information as Citibank may
from time to time request.
7. Special
Requirements:
a. The
Borrower agrees to maintian at all times:
(i) a tangible
net worth (the sum of capital surplus, earned
surplus, capital sotck and such other items as are allowable under
generally
accepted accounting principles minus deferred charges, intangibles,
receivables
due from stockholders, officers or affiliates and tresury 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, officer of affiliates and treasury
stock.
b. The
Borrower covenants and agrees not to apply for or accept
crdit facilities from institutional ro other lenders of funds in an
amount
in excess of 440,000,000 in the aggregate for all such credit
facilities.
c. The
Borrower agrees that, with the exception of medallion loans
which shall constitute at all times not less than sixty-five (65%)
of the
Borrower's total loan portfolio, loan concentrations in any other
single
industry shall not exceed twenty-five (25%) of the Borrower's
aggregate loan
receivable portfolio.
d. 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.
e. 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 under any of such obligations shall constitute a default
under the
Line and the Note.
f. The
Borrower agrees to limit its ownership to forty (40) taxi
medallions through four of its five leasing subsidiaries, comprised
of the LLC
Guarantors excluding Medallion Auto Management LLC.
g. 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 filed examination shall disclose
no material
adverse facts or ciercumstances not currently known to
Citibank.
8.
Integration:
This letter amends, replaces and supersedes that certain letter
agreement
dated December 14, 2004 between the Borrower and Citibank.
9.
Acceptance:
If the foregooing is acceptable, please so indicate by signing and
returning
this letter before January 10, 2005, the date this letter will
otherwise
expire, unless extended in writing by Citibank.
Very truly yours,
CITIBANK, N.A.
By: /s/Melina Granato
------------------------
Melina
Granato
Vice
President
Agreed and Accepted this
day of
ELK ASSOCIATES FUNDING CORPORATION
By: /s/ Gary C. Granoff
-------------------------------
Name:
Gary C.
Granoff
Title:
President
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
MASTER NOTE (Eurodollar/Prime Rate)
$16,000,000
Date:
FOR VALUE
RECEIVED, the undersigned, a New York corporation, promises to
pay to the order of CITIBANK, N.A. (the "Bank"), on or before
December 31, 2006
(the "Maturity Date"), the sum of Sixteen Million Dollars
($16,000,000), 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
Sixteen Million Dollars ($16,000,000), 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 Reserved
Adjusted
LIBOR determined for each Interest Period therefor in accordance
with the terms
of this Note plus a margin of 150 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 1/2% below the
Prime Rate. 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 Reserved Adjusted LIBOR (a "Eurodollar
Advance"), and
not later than 12 noon on the date of each Advance which the
undersigned
requests to maintain at a rate of interest based on the Prime Rate
(a "Prime
Rate Advance"). All requests for Advances shall be irrevocable and
shall be in
the minimum amount of $100,000 with respect to each Prime Rate
Advance and
$250,000 with respect to each Eurodollar Advance. Each request by
the
undersigned for an Advance hereunder shall specify whether the
requested
Advance is a Eurodollar Advance or a Prime Rate Advance, the
proposed date
to fund the Advance, and if a Eurodollar Advance is requested, the
Interest
Period applicable
thereto.
Any
Eurodollar Advance may be continued as a Eurodollar Advance
upon
expiration of an Interest Period with respect thereto by complying
with the
notice provisions contained in the definition of the Interest
Period; provided,
however, that no Eurodollar Advance may be continued as such when
any Event of
Default or event which upon notice, passage of time or both would
constitute an
