COMMERCIAL LOAN AGREEMENT

 

Exhibit 10.2

COMMERCIAL LOAN AGREEMENT

(Loan No. 9117000148)

This Commercial Loan Agreement dated as of August 31, 2005 ("Agreement") is by and among CALIFORNIA BANK & TRUST, a California banking corporation, as lender ("Bank"), and ICON INCOME FUND EIGHT B L.P.; ICON INCOME FUND NINE, LLC; ICON INCOME FUND TEN, LLC; and ICON LEASING FUND ELEVEN, LLC, as borrowers

(separately and collectively "Borrower").

1.       DEFINITIONS

1.1 The following terms shall have the following meanings when used in this

     Agreement:

     "Account Obligor" shall mean the obligor on any Accounts Receivable.

     "Accounts" shall mean each of the 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  therefore, irrespective of whether earned by performance.

     "Accounts Receivable" shall mean open Accounts which are Collateral.

     "Adjusted Total Liabilities" shall mean the sum of current liabilities plus long term  liabilities  (excluding  all  non-recourse  debt and all  other  debt subordinated to Borrower's  obligations to Bank in a manner acceptable to Bank), including, without limitation, accrued and deferred income taxes, all calculated in accordance with GAAP, consistently applied.

     "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"  shall  mean this  Commercial  Loan  Agreement  as  amended  or modified from time to time,  together  with all exhibits and schedules  attached hereto from time to time.

     "Authorized Officer” shall have the meaning given the term in Section 5.3.a.

     "Availability" shall mean, as of the date of determination, the difference between the Line of Credit Limit and the outstanding amount under the Line of Credit.

     "Bank" shall mean California Bank & Trust, its successors and assigns.

     "Banking Day" shall mean, unless otherwise provided in this Agreement, a day other than Saturday, Sunday, or a legal holiday on which Bank is open for business in the State of California.

     "Beneficial Interest” shall mean a beneficial interest in a trust, a partnership interest in a partnership, or a membership interest in a limited liability company.

     "Borrower" shall mean ICON Income Fund Eight B L.P.; ICON Income Fund Nine, LLC; ICON Income Fund Ten, LLC; and ICON Leasing Fund Eleven, LLC, separately and collectively.

     "Borrower’s Assets" shall mean any real or personal property owned, now or hereafter, in whole or in part by Borrower.

     "Borrowing Base"  shall  mean 85% of the  Present  Value  of the  Eligible Borrowing Base Contracts, with the limitation that no more than $5,000,000.00 in advances, in the aggregate,  shall be based on a contract or contracts involving the same Lessee or Debtor unless otherwise  approved in writing by Bank and with the  further  limitation  that no more  than  25% of the  Present  Value  of the Eligible  Borrowing  Base  Contracts  shall mature within 90 days (to the extent that the  $5,000,000.00 or 25% limitation is exceeded in the Eligible  Borrowing Base Contracts identified on Schedule 1, Bank approves that excess).

     "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

     "Collateral” means and includes, without limitation, all property and assets  granted as  collateral  security  for a Loan,  whether  real or personal property, whether granted directly or indirectly,  whether granted now or in the future  and  whether  granted in the form of a  security  interest,  assignment, pledge, lien, or any other security or lien interest whatsoever, whether created by law, contract or otherwise. The word "Collateral" includes without limitation all collateral described in the section of this Agreement titled "Collateral."

     "Collateral Documents” shall mean all the documents set forth in this Agreement in the section titled "Collateral Documents."

     "Contribution Agreement” shall have the meaning given the term in Section 8.23 of this Agreement.

     "Debt Service Coverage Ratio" means EBITDA divided by Interest Expense.

     "Debtor" means a borrower under a Loan Contract or Indirect Loan Contract.

     "Default” means an event which, with the passage of time or the giving of notice or both, would constitute an Event of Default.

     "Default Rate" shall have the meaning given the term in Section 5.8.

     "Designated Accounts" shall have the meaning given the term in Section 5.3 of this Agreement.

     "Discount Rate" means the rate of interest equal to one-quarter of one percent (0.25%) per annum in  excess  of the Prime  Rate,  which  shall  vary concurrently with any change in the Prime Rate.

     "EBITDA" means the sum of (a) Borrower's net income;  (b)  depreciation and amortization  expense  and  other  non-cash  items  deducted  on the  Borrower's financial  statements in determining such net income; (c) Interest Expense;  and (d) taxes imposed by any  jurisdiction  upon  Borrower's net income,  absent the effect of write-ups or forgiveness of debt; all as calculated in accordance with GAAP, consistently applied.

     "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, except that past due payments that are deemed acceptable under paragraph b. below shall not cause  an  otherwise   Eligible  Borrowing  Base  Contract  to  becomeineligible;

     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 such 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 Bank 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 validly transferred by such Person

          to Borrower or Bank;

     e.   If the  contract  is a  lease,  the  lease  and the  equipment  leased

          thereunder  are owned by Borrower  and are subject to no Liens  (other

          than  Permitted  Liens) in favor of anyone  other  than Bank 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 Lien 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.   Bank  has a  perfected  first  priority  Lien  in the  Revolving  Loan

          Contract  and, if the Revolving  Loan Contract is a lease,  Bank has a

          perfected  first-priority Lien in the equipment subject to that lease,

          subject to any Permitted  Liens (if the Revolving  Loan Contract is an

          Indirect  Lease or Indirect Loan  Contract,  Bank has a first priority

          Lien 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,  other than  Permitted  Liens,  in favor of anyone

          other than Bank,  and Borrower has a perfected  first priority Lien in

          the equipment  that secures the loan,  subject to any Permitted  Liens

          (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 contract is written; the contract has not been amended or modified

          except by a written  document  delivered  to Bank;  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 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 or other standard  document;  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  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;

     i.   All existing "chattel paper" originals of the contract,  together with

          any  and  all  schedules,   supplements  and  amendments  thereto  and

          modifications  thereof,  including  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 Bank

          (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");

     j.   If the Revolving  Loan Contract is an Indirect  Lease or Indirect Loan

          Contract, Borrower shall have, prior to the making of a Line of Credit

          advance,  disclosed  to Bank 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;

     k.   No  part  of the  contract,  or the  equipment  thereunder,  shall  be

          financed by non-recourse  or other debt (unless  subordinated on terms

          and conditions satisfactory to Bank); and

     l. The contract  shall have a remaining  term of not less than 31 days from the date of funding by Bank.

     "Environmental  Laws" shall mean each and every material federal,  state or local law, ordinance,  regulation,  permit,  license,  authorization,  judgment, decree,  agreement,  restriction or requirement pertaining to health, industrial hygiene, Hazardous Substances (as defined below), or the environment.

     "Event of Default" means and includes without  limitation any of the Events of  Default  set  forth in this  Agreement  in the  section  titled  "Events  of Default."

     "Facility Fee" shall have the meaning given the term in Section 3.5.a. of this Agreement.

     "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of purpose.

     "Hazardous Substance" shall mean any substance whose nature, existence, use or effect render it subject now, or in the future, to federal, state or local regulation, investigation, remediation or removal as potentially injurious to public health or welfare.

     "Indirect Lease" means 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" means 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.

     "Interest  Expense"  for any  applicable  period  shall  mean all  interest expense  as it appears on  Borrower's  income  statement  for such  period,  all calculated in accordance with GAAP, consistently applied.

     "Inventory" shall mean all finished goods wherever located, and goods which are or may at any time be held for sale or lease,  furnished  under any contract of service or held as raw materials,  work-in-progress,  supplies, components or materials used or consumed in Borrower's  business or which are or might be used in  connection  with  the  manufacturing,   shipping,  advertising,  selling  or finishing  of such  goods,  merchandise  and  other  personal  property  and all documents of title or documents  representing  the same,  whether  negotiable or non-negotiable and all such property, the sale or other disposition of which has given rise to Accounts  Receivable and which has been returned to or repossessed or stopped in transit by Borrower.

     "Lease"  shall mean 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.

     "Lessee" means a lessee under any Lease or Indirect Lease.

     "Lien"  shall mean 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.

     "LIBO Rate" shall have the meaning given the term in Sections 3.2.b.iii.

     "Line of Credit  Applicable  Interest  Period" shall have the meaning given the term in Section 3.2.b.

     "Line  of  Credit  Availability  Period"  shall  mean  the  period  of time commencing on the date of this Agreement and continuing until the Line of Credit Expiration Date.

     "Line of Credit Expiration Date" shall mean August 31, 2007.

     "Line of Credit" shall have the meaning given the term in Section 2.1.a.

     "Line of Credit LIBO Rate Portion" shall have the meaning given the term in Section 3.2.b.

     "Line of Credit  Limit"  shall have the  meaning  given the term in Section 2.1.a.

     "Line of Credit  Note"  shall  have the  meaning  given the term in Section 2.1.a.

     "Liquidity"  means Borrower's cash reserves (other than the Restricted Cash Deposit  and  other  deposits  reserved  pursuant  to  Borrower's   non-recourse financing, if any) and unused  vailability under the Line of Credit.

     "Loan" shall mean and include,  without limitation,  any and all commercial loans  and  financial  accommodations  from  Bank to  Borrower,  whether  now or hereafter existing, and however evidenced,  including without limitation,  those loans and financial accommodations described in this Agreement or on any exhibit or schedule attached to this Agreement from time to time.

     "Loan  Contract"  shall mean 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"  shall mean this  Agreement  and all other  documents and agreements executed or delivered to Bank in connection with this Agreement.

     "Manager"  means ICON Capital  Corp.,  a  Connecticut  corporation,  in its capacity  as manager of those  entities  comprising  Borrower  that are  limited liability  companies and in its capacity as general  partner of ICON Income Fund Eight B L.P.

     "Material  Adverse  Change"  means a  material  adverse  effect  on (a) the business,  operations,  results of operations,  assets, liabilities or condition (financial or otherwise) of Manager,  (b) the business,  operations,  results of operations,  assets,  liabilities  or  condition  (financial  or  otherwise)  of Borrower and its  Subsidiaries  taken as a whole, (c) the ability of Borrower to

perform its  obligations  under the Loan  Documents to which it is a party or of Bank to enforce the Obligations or realize upon the Collateral, (d) the value of the  Collateral or the amount that Bank would be likely to receive (after giving consideration  to delays in payment and costs of enforcement) in the liquidation of such Collateral,  (e) the validity or enforceability  of this Agreement,  the other  Loan  Documents,  or  the  rights  and  remedies  of  Bank  hereunder  or

thereunder, or (f) the priority of Bank's Liens with respect to the Collateral.

     "Note" shall mean the Line of Credit Note.

     "Obligation" shall mean all loans,  advances,  debt,  principal,  interest, fees,  expenses,  costs and other  amounts owed to Bank by Borrower  pursuant to this  Agreement,  together  with all  guaranties,  covenants and duties owing by Borrower  to Bank of any  kind  or  description  hereunder,  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 Bank 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 other Persons that Bank may have obtained by assignment or otherwise.

     "Optional  Line of Credit  Interest  Rate" shall have the meaning given the term in Section 3.2.b.

     "PBGC"  shall mean the Pension  Benefit  Guaranty  Corporation  established pursuant to Subtitle A of Title IV of ERISA.

     "Permitted  Liens" shall mean any: (a) Liens approved in writing by Bank 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 Bank's Liens;  (c) Liens  incurred in the ordinary course of business of Borrower,  except that (i) no Liens other than in favor of Bank are  permitted  on any of the Leases,  Loan  Contracts  and other  property identified in Schedule 1 or otherwise the subject of any Line of Credit advance, and (ii) no Lien is permitted on any  equipment  related to clause (i) except in favor of Bank and, in the case of equipment securing a Loan Contract,  a Lien in favor of Borrower; provided, however, that nothing herein shall prevent Borrower from incurring Liens in favor of carriers, warehousemen, mechanics, materialmen, workmen and  landlords  and other  similar  Liens,  in each case  arising in the ordinary course of business;  (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 or Indirect  Lease provided that the value of Borrower's interest in such equipment as shown on its books is net of such other Person's  interest;  (e) Liens on equipment subject to a Lease that are expressly  permitted by the terms of the Lease;  (f) judgment Liens not constituting  an Event of  Default  hereunder;  (g)  subordinate  Liens  granted pursuant to the Contribution  Agreement;  (h) Liens of the relevant deposit bank incurred  in the  ordinary  course of  business  encumbering  customary  deposit accounts or brokerage  accounts;  (i) Liens encumbering  deposits made to secure obligations  arising  from  statutory,   regulatory,   contractual  or  warranty

requirements,  including  rights  of  setoff;  and (j)  Liens  arising  from the refinancing of any of the indebtedness secured by any of the foregoing described Liens.

     "Person"  shall mean and include an individual,  a  partnership,  a limited liability company, a corporation,  a joint stock corporation,  an unincorporated association,  a  joint  venture  or  other  similar  entity  or  a  governmental authority.

     "Plan"  shall  mean  any  employee   pension  benefit  plan  maintained  or contributed to by Borrower and insured by the PBGC under Title IV of ERISA.

     "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  multiplied  by 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.

     "Prime  Rate" shall mean the rate of interest set from time to time by Bank at its head office as its Prime Rate.  The Prime Rate is determined by Bank as a means of pricing credit  extensions to some customers and is neither tied to any external  rate of  interest  or index nor is it  necessarily  the lowest rate of interest charged by Bank at any given time for any particular class of customers or credit extensions.

     "Regular  Line of Credit  Interest  Rate" shall have the meaning  given the term in Section 3.2.a.

     "Restricted  Cash Deposit" shall have the meaning given the term in Section 8.8.

     "Revolving Loan Contract" means a Lease,  Loan Contract,  Indirect Lease or Indirect  Loan  Contract  based on which  Bank  makes a Line of  Credit  advance (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.

     "Security  Agreement" shall mean the document delivered by Borrower to Bank detailed in the section of this Agreement titled "Collateral Documents."

     "Subsidiary" shall mean a business entity in which Borrower owns, directly or indirectly, an equity interest having sufficient ordinary voting power to elect a majority of the board of directors  or other  managers of such entity or the management of which is otherwise controlled,  directly or indirectly through one or more intermediaries, of which Borrower has a controlling interest.

     "Tangible  Net  Worth"  means the gross  book  value of  Borrower's  Assets (excluding goodwill, patents,  trademarks, trade names, organizational expenses, treasury stock,  unamortized  debt discount and expense,  deferred  research and development costs, other like intangibles, and monies due from Affiliates except in connection with sales to Affiliates on terms that Borrower  normally provides to third parties) plus debt that is subordinated to Bank in a manner  acceptable to Bank,  less    all  liabilities,  including,  without  limitation,  accrued  and deferred  income  taxes,  and any reserves  against  assets,  all  calculated in accordance with GAAP, consistently applied.

     "UCC-1 Financing  Statement" shall mean the document  delivered by Borrower to Bank detailed in the section of this Agreement titled "Collateral Documents."

     "Unused Commitment Fee" shall have the meaning given to the term in Section 3.5.c.

2.       LOAN FACILITY

     2.1 Bank agrees to make  available to Borrower the following  credit on the following terms, covenants and conditions:

     a.   Revolving  Line of  Credit.  During  the Line of  Credit  Availability

          Period  and so  long  as no  Event  of  Default  has  occurred  and is

          continuing, Bank will, on a revolving basis, make advances to Borrower

          ("Line of Credit"),  which,  except as set forth below, may not at any

          time exceed an  aggregate  amount  outstanding  equal to the lesser of

          Seventeen  Million  Dollars  ($17,000,000.00)  or the  Borrowing  Base

          (collectively  the "Line of Credit Limit").  Borrower's  obligation to

          repay  advances  under  the Line of  Credit  shall be  evidenced  by a

          promissory  note in a form  acceptable  to Bank  (the  "Line of Credit

          Note").  During the Line of Credit Availability  Period,  Borrower may

          repay  principal  amounts  and  reborrow  them.  Borrower  agrees that

          Borrower  will not permit the  outstanding  balance  under the Line of

          Credit to exceed the Line of Credit  Limit unless  Borrower  increases

          the  Restricted  Cash Deposit by an amount equal to the sum that would

          otherwise be overadvanced, in which case Borrower shall have the right

          to borrow an amount in excess of the Borrowing  Base but not more than

          $17,000,000.00.  Provided  no Event of  Default  has  occurred  and is

          continuing at such time, Borrower may request (i) a one year extension

          of the Line of Credit  Availability  Period  within  sixty days of the

          Line of Credit  Expiration  Date,  but Bank has no obligation to grant

          the  extension  and/or (ii) the addition to Borrower of an  additional

          fund or funds managed by Manager or an Affiliate of Manager acceptable

          to Bank, but Bank has no obligation to grant the addition.

3.       TERMS

3.1      Availability Period.

     a.   Availability  Period Line of Credit.  Borrower may draw on the Line of

          Credit  during the Line of Credit  Availability  Period,  unless (i) a

          Default or an Event of Default has occurred and is  continuing or (ii)

          Borrower  has  failed  to  satisfy  any  condition  hereunder  to such

          borrowing and Bank has refused to waive such condition.

3.2      Interest Rate.

     a.   Line of Credit  Interest  Rate.  Interest  on  advances on the Line of

          Credit  shall  accrue  at the  Prime  Rate  plus one  quarter  percent

          (P+0.25%)  per annum in effect from time to time (the "Regular Line of

          Credit  Interest  Rate").  Any changes in the  Regular  Line of Credit

          Interest  Rate  resulting  from a change in the Prime  Rate shall take

          effect without notice at the time the Prime Rate is set.

     b.   Line of Credit  Optional  Interest.  Instead  of the  Regular  Line of

          Credit  Interest  Rate,  Borrower  may  elect  to have up to five  (5)

          advances on the  outstanding  principal  balance of the Line of Credit

          (each a "Line of Credit LIBO Rate Portion")  during the Line of Credit

          Availability  Period bear interest at the LIBO Rate, as defined below,

          plus two and  three-quarters  percent (L+2.75%) (the "Optional Line of

          Credit  Interest  Rate") during an interest rate period  designated by

          Borrower (the "Line of Credit Applicable  Interest Period").  Borrower

          shall not  select a Line of Credit  Applicable  Interest  Period  that

          would extend beyond the Line of Credit  Expiration Date. Each interest

          rate is a rate per annum. At the end of any Line of Credit  Applicable

          Interest Period,  the interest rate will revert to the Regular Line of

          Credit Interest Rate, unless Borrower has designated  another Optional

          Line of  Credit  Interest  Rate  for that  Line of  Credit  LIBO  Rate

          Portion.

          Designation  of a Line of Credit  LIBO Rate  Portion  shall be made by

          delivery or telephone facsimile transmission to Bank of written notice

          signed  by  an  Authorized   Officer  of  such   election,   including

          designation  of the amount of the  proposed  Line of Credit  LIBO Rate

          Portion,  the proposed Line of Credit  Applicable  Interest Period and

          the proposed effective date of the election. The notice shall be given

          at least three (3) Banking  Days in advance of the  effective  date of

          the  election.  The  election  shall also be subject to the  following

          requirements:

     i.   The Line of Credit  Applicable  Interest  Period during which the LIBO

          Rate will be in effect will be three (3)  months,  so long as no Event

          of Default has occurred and is  continuing.  In  determining a Line of

          Credit Applicable  Interest Period, a month means a period that starts

          on one  Banking  Day in a  month  and  ends  on and  includes  the day

          preceding the numerically corresponding day in the next month. For any

          month in which there is no such numerically corresponding day, then as

          to that month, such day shall be deemed to be the last calendar day of

          such month. Any Line of Credit Applicable  Interest Period which would

          otherwise  end on a non-Banking  Day shall end on the next  succeeding

          Banking  Day unless  that is the first day of a month,  in which event

          such Line of Credit  Applicable  Interest Period shall end on the next

          preceding Banking Day.

     ii.  Each Line of Credit LIBO Rate Portion  shall be for an amount not less

          than Two Hundred Fifty Thousand Dollars ($250,000.00).

     iii. The  "LIBO  Rate"  shall  mean,  for each  Line of  Credit  Applicable

          Interest  Period with  respect to a Line of Credit LIBO Rate  Portion,

          the per annum rate  determined  by the Bank as of the first day of the

          Line of Credit  Applicable  Interest Period to be equal to the rate at

          which  U.S.  dollar  deposits  can be  acquired  by Bank in the London

          Interbank   Eurocurrency  Market  two  (2)  Banking  Days  before  the

          commencement of such Line of Credit  Applicable  Interest Period in an

          amount comparable to such Line of Credit LIBO Rate Portion.

     iv.  No Line of Credit LIBO Rate Portion bearing  interest at the LIBO Rate

          may be  converted  to a  different  rate  during  the  Line of  Credit

          Applicable Interest Period.

     v.   Each  prepayment  of a Line  of  Credit  LIBO  Rate  Portion,  whether

          voluntary, by reason of acceleration or otherwise, will be accompanied

          by the  amount  of  accrued  interest  on the  amount  prepaid,  and a

          prepayment  fee equal to the amount  (if any) by which the  additional

          interest  which would have been  payable on the amount  prepaid had it

          not been  paid  until  the last day of the Line of  Credit  Applicable

          Interest Period exceeds the interest which would have been recoverable

          by Bank by  placing  the  amount  prepaid  on deposit in the LIBO Rate

          Market for a period  starting  on the date on which it was prepaid and

          ending on the last day of the interest  period for such Line of Credit

          LIBO Rate Portion.  Any such calculation  shall be made by Bank in the

          same manner in which such  calculation is made in respect to all other

          customers  of Bank  and Bank  shall,  upon the  request  of  Borrower,

          deliver  to  Borrower  all  backup  information  showing  how any such

          prepayment fee is calculated.

3.3      Repayment Terms.

     a.   Line of Credit.

     i.   Borrower  shall pay  interest  monthly in  arrears on the  outstanding

          balance under the Line of Credit  commencing on September 1, 2005, and

          then on the first  Banking Day of each month  thereafter,  except that

          interest  accruing at the Optional Line of Credit  Interest Rate shall

          be due at the end of the applicable Interest Rate Period.

     ii.  Borrower shall pay in full, all principal,  interest and other charges

          outstanding  under the Line of Credit no later than the Line of Credit

          Expiration Date.

3.4      Expenses.

     a.   Subject to any limitations contained herein,  Borrower agrees to repay

          Bank for the  reasonable  expenses  incurred in processing and funding

          the Line of Credit,  including the  following:  filing,  recording and

          search  fees,  appraisal  fees,  asset based field  report  fees,  and

          documentation fees.

     b.   Borrower  agrees to  reimburse  Bank for any  reasonable  expenses  it

          incurs in the  negotiation  and  preparation of this Agreement and any

          agreement or instrument required by this Agreement.

     c.   Borrower's prior deposit of Twenty Thousand Dollars ($20,000.00) shall

          be applied to Bank's expenses under this Section.

3.5      Fees.

     a.   Facility Fee. Borrower agrees to pay the amount of Eight-Five Thousand

          Dollars  ($85,000.00)  to Bank as a loan  fee for the  Line of  Credit

          ("Facility Fee").

     b.   Renewal Fee.  Borrower agrees to pay a fee equal to one-quarter of one

          percent (0.25%) of the Bank's  committed amount for the Line of Credit

          upon any renewal of the Line of Credit.

     c.   Unused Commitment Fee. For the Line of Credit,  Borrower agrees to pay

          a fee  ("Unused  Commitment  Fee") equal to the product of one-half of

          one percent  (0.50%)  multiplied by the difference  between  Seventeen

          Million Dollars  ($17,000,000.00) and the amount of credit extended to

          Borrower,  determined by the Average Loan Balance,  as defined  below,

          maintained during the Line of Credit Availability Period. For purposes

          of this section,  the "Average Loan Balance" is calculated by dividing

          the sum of the daily loan  balances  on the Line of Credit  during the

          applicable  period by the number of days in that  period.  This fee is

          due and payable each  calendar  quarter in arrears,  and is due on the

          tenth (10th) day of each of the  following  months  during the Line of

          Credit  Availability  Period:   October,   January,  April  and  July,

          respectively,  except a  prorated  fee for the first  partial  quarter

          shall be due in October,  2005 and for the final  quarter shall be due

          and payable on the Line of Credit Expiration Date.

4.                SECURITY

     4.1  Collateral.  All obligations of Borrower under this Agreement shall be

          secured by the following:

     a.   Personal Property. Borrower's obligations to Bank under this Agreement

          shall be secured by, and Borrower shall grant to Bank, a first Lien in

          all business  personal  property  Borrower now owns or will own in the

          future, including without limitation,  Borrower's Accounts Receivable,

          equipment,  equipment held for lease,  Leases,  chattel paper, general

          intangibles,  Inventory, any money deposit accounts or other assets of

          Borrower which hereafter come into the possession,  custody or control

          of  Bank  and  all  products  and  proceeds  of  the   above-described

          collateral,  including,  but not limited to, money,  deposit accounts,

          goods,  insurance proceeds and other property,  except that Collateral

          shall not include  Leases,  Indirect  ------ Leases,  Loan  Contracts,

          Indirect Loan Contracts (and the equipment  subject thereto) which are

          financed by Borrower  with  non-recourse  debt and which have not been

          financed by Bank.  The  Collateral  shall be further  described in the

          Security Agreement executed by Borrower.

     4.2 Collateral Documents.  In connection with the foregoing,  Borrower will

execute the following "Collateral D