Exhibit 10.3
December 16, 2004
Mr. Gary Granoff
President
Elk Associates Funding Corp.
747 Third Avenue
New York, NY 10017
Re: Line Renewal Documentation
Dear Gary:
Enclosed please find the following
documentation:
1. Line Letter
Agreement i/a/o $16,000,000
2. Master Note
i/a/o $16,000,000 expiring 12/31/05
Please sign and date each document
and have your signature witnessed on the
Note as well.
As always, if you have any questions or
comments,
please do not hesitate to contact me at
212-830-4929.
Sincerely yours,
/s/ Andrew R. Cunningham
Andrew R. Cunningham
Vice President
Encls.
<PAGE>
December 14, 2004
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>
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 30, 2005
(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
Event of Default has occurred and is
continuing but shall be automatically
converted to a Prime Rate Advance on the
last date of the Interest Period in
effect when the Bank is notified of such
default or Event of Default.
The
undersigned may elect from time to time to convert outstanding
Eurodollar Advances to Prime Rate Advances
by giving the Bank at least three
Business Days prior irrevocable notice of
such election; provided that any
conversion of a Eurodollar Advance may be
made only on the last day of an
Interest Period with respect thereto. The
undersigned may elect from time to
time to convert an outstanding Prime Rate
Advance to a Eurodollar Advance by
giving the Bank irrevocable written notice
of such election not later than 12
noon, three Business Days prior to the date
of the proposed conversion and
further provided that (i) the conversion
shall be in the minimum principal
amount of $250,000 and (ii) no Event of
Default or event upon notice, passage
of time or both would constitute an Event
of Default shall have occurred and be
continuing.
Interest
in respect of Prime Rate Advances shall be payable on the first
day of each month commencing on the first
such date to occur after the date the
Advance is made, and on the Maturity Date.
Interest in respect of Eurodollar
Advances shall be payable on the last day
of the Interest Period in respect
thereof. Interest shall be calculated on
the basis of a 360-day year for the
actual number of days elapsed. All payments
hereunder shall be payable in
immediately available funds in lawful money
of the United States. The
undersigned authorizes the Bank to charge
any of the undersigned's accounts for
payment of principal or interest. Any
payment of principal of orinterest
payable hereunder which is not paid when
due, whether at maturity, by
acceleration, or otherwise, shall bear
----------
This note provides that interest be paid in
respect of Prime Rate Advances and
on the last day of any Interest Period in
respect of Eurodollar Advances.
<PAGE>
interest from the date due until paid in
full at a rate per annum equal to
three percent (3%) above the rate otherwise
payable with respect thereto.
All
requests for advances shall be irrevocable and must be received
by
the Bank no later than 12:00 noon on the
date of the proposed advance.
The Bank may act without liability upon the
basis of telephonic notice
believed by the Bank in good faith to be
from the undersigned.
In each such case, the undersigned hereby
waives the right to dispute the
Bank's record of the terms of such
telephonic notice. All advances under the
Line are at the Bank's sole and
absolute discretion and the Bank, at its
option and in its sole and absolute
discretion and without notice to the
undersigned, may decline to make any
advance requested by the undersigned.
Subject to
the terms and conditions hereof and the terms and conditions
set forth in any agreement in writing
between the Bank and the undersigned, the
undersigned may borrow, repay in whole or
in part, and reborrow on a revolving
basis, up to the maximum amount of the
Line. Prime Rate Advances may be prepaid
without premium or penalty together with
accrued interest thereon to and
including the date of the prepayment.
Eurodollar Advances may be prepaid
without premium or penalty (except as
provided
in the next succeeding paragraph)
together with accrued interest thereon to
and including the date of prepayment,
provided such prepayment date must be the
last day of the then current Interest
Period of such Advance. The Bank shall
maintain its records to reflect the
amount and date of each Advance and of each
payment of principal and interest
thereon. All such records shall, absent
manifest error, be conclusive as to the
outstanding principal amount hereof;
provided, however, that the failure to
make any notation on the Bank's records
shall not limit or otherwise affect the
obligations of the undersigned to repay
each advance made by the Bank, in
accordance with the terms hereof.
The
undersigned agrees to indemnify the Bank and hold the Bank
harmless
from any loss or expense which the Bank may
sustain or incur, including without
limitation, interest or fees payable by the
Bank to lenders of funds obtained
by it in order to maintain a Eurodollar
Advance hereunder, as a consequence of
(a) default by the undersigned in payment
of the principal amount of or
interest on a Eurodollar Advance,
(b) default by the undersigned in making
any prepayment of
a Eurodollar Advance after the undersigned
gives notice in accordance with this
Note, and/or (c) the making of any payment
of a Eurodollar Advance on a day
which is not the last day of the then
applicable Interest Period with respect
thereto. When claiming the indemnification
under this paragraph, the Bank shall
provide to the undersigned a statement
explaining the amount of any such loss
or expense which statement shall in the
absence of manifest error be conclusive
with respect to the undersigned. The
indemnity obligations hereunder shall
survive payment in full of the Note.
As
security for the payment of this Note, and of all other
obligations
and liabilities of the undersigned to the
Bank, whet
